Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets (Tables)

v3.20.1
Real Estate and Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2020
Real Estate [Abstract]  
Components of Investments in Real Estate
The following table sets forth the components of our investments in real estate as of March 31, 2020 and December 31, 2019, excluding real estate held for sale as of December 31, 2019 (dollars in thousands):
 
 
 
March 31, 2020

December 31, 2019
Real estate:
 
 
 
 
Land (1)
 
$
146,580

 
$
137,532

Building and improvements
 
907,577

 
851,245

Tenant improvements
 
69,487

 
68,201

Accumulated depreciation
 
(216,547
)
 
(207,523
)
Real estate, net
 
$
907,097

 
$
849,455


(1)
This amount includes $4,436 of land value subject to land lease agreements which we may purchase at our option for a nominal fee.

Acquisitions
We acquired five properties during the three months ended March 31, 2020, and two properties during the three months ended March 31, 2019. The acquisitions are summarized below (dollars in thousands):

Three Months Ended
 
Aggregate Square Footage
 
Weighted Average Lease Term
 
Aggregate Purchase Price
 
Acquisition Expenses
 
Aggregate Annualized GAAP Rent
 
Aggregate Debt Issued or Assumed
March 31, 2020
(1)
890,038

 
14.8 Years
 
$
71,965

 
$
255

(3)
$
5,303

 
$
35,855

March 31, 2019
(2)
60,850

 
12.2 Years
 
6,318

 
130

(3)
516

 


(1)
On January 8, 2020, we acquired a 64,800 square foot property in Indianapolis, Indiana for $5.3 million. The property is leased to three tenants with a weighted average lease term of 7.2 years with annualized GAAP rent of $0.5 million. On January 27, 2020, we acquired a 320,838 square foot, three-property portfolio in Houston, Texas, Charlotte, North Carolina, and St. Charles, Missouri for $34.7 million. The portfolio has a weighted average lease term of 20.0 years, and an annualized GAAP rent of $2.6 million. We issued $18.3 million of mortgage debt with a fixed interest rate of 3.625% in connection with the acquisition. On March 9, 2020, we acquired a 504,400 square foot property in Chatsworth, Georgia for $32.0 million. We entered into an interest rate swap in connection with our $17.5 million of issued debt, resulting in a fixed interest rate of 2.8%. The annualized GAAP rent on the 10.5 Years lease is $2.2 million.
(2)
On February 8, 2019, we acquired a 26,050 square foot property in a suburb of Philadelphia, Pennsylvania, for $2.7 million. The annualized GAAP rent on the 15.1 year lease is $0.2 million. On February 28, 2019, we acquired a 34,800 square foot property in Indianapolis, Indiana for $3.6 million. The annualized GAAP rent on the 10.0 year lease is $0.3 million.
(3)
We accounted for these transactions under ASU 2017-01, “Clarifying the Definition of a Business.” As a result, we treated our acquisitions during the three months ended March 31, 2020 and 2019 as asset acquisitions rather than business combinations. As a result of this treatment, we capitalized $0.3 million and $0.1 million, respectively, of acquisition costs that would otherwise have been expensed under business combination treatment.
Fair Value of Assets Acquired and Liabilities Assumed
We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the three months ended March 31, 2020 and 2019 as follows (dollars in thousands):

 
 
Three months ended March 31, 2020
 
Three months ended March 31, 2019
Acquired assets and liabilities
 
Purchase price
 
Purchase price
Land (1)
 
$
7,296

 
$
726

Building and improvements
 
54,000

 
4,541

Tenant Improvements
 
1,285

 
93

In-place Leases
 
4,442

 
432

Leasing Costs
 
4,261

 
307

Customer Relationships
 
2,223

 
196

Above Market Leases (2)
 
210

 
23

Below Market Leases (3)
 
(1,752
)
 

Total Purchase Price
 
$
71,965

 
$
6,318



(1)
This amount includes $2,711 of land value subject to a land lease agreement.
(2)
This amount includes $53 of loan receivable included in Other assets on the condensed consolidated balance sheets.
(3)
This amount includes $62 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets.
Summary of Lease on Property
During the three months ended March 31, 2020 and 2019, we executed three and two leases, respectively, which are summarized below (dollars in thousands):

Three Months Ended
 
Aggregate Square Footage
 
Weighted Average Remaining Lease Term
 
Aggregate Annualized GAAP Rent
 
Aggregate Tenant Improvement
 
Aggregate Leasing Commissions
March 31, 2020
 
232,648

 
6.8 years
 
$
3,185

 
$
1,892

 
$
715

March 31, 2019
 
130,240

 
6.2 years
 
1,187

 

 
71



Future Lease Payments From Tenants
Future minimum lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses and real estate held for sale as of December 31, 2019, for each of the five succeeding fiscal years and thereafter, is as follows (dollars in thousands):
 
Year
Tenant Lease Payments
2020
$
107,159

2021
101,794

2022
94,252

2023
86,460

2024
77,414

Thereafter
307,591

 
$
774,670

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the nine months ending December 31, 2020 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year
Tenant Lease Payments
Nine Months Ending 2020
$
82,835

2021
107,411

2022
101,883

2023
94,182

2024
85,298

2025
76,287

Thereafter
293,679

 
$
841,575

Lease Revenue
The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, 2020 and 2019, respectively (dollars in thousands):

 
 
For the three months ended March 31,
 
 
(Dollars in Thousands)
Lease revenue reconciliation
 
2020
 
2019
Fixed rental payments
 
$
29,479

 
$
27,162

Variable rental payments
 
4,140

 
975

 
 
$
33,619

 
$
28,137

Carrying Value of Intangible Assets and Accumulated Amortization
The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of March 31, 2020 and December 31, 2019, excluding real estate held for sale as of December 31, 2019 (dollars in thousands):

 
 
March 31, 2020

December 31, 2019
 
 
Lease Intangibles
 
Accumulated Amortization
 
Lease Intangibles
 
Accumulated Amortization
In-place leases
 
$
97,348

 
$
(50,602
)
 
$
92,906

 
$
(48,468
)
Leasing costs
 
73,231

 
(35,240
)
 
68,256

 
(33,705
)
Customer relationships
 
67,587

 
(30,288
)
 
65,363

 
(28,887
)
 
 
$
238,166

 
$
(116,130
)
 
$
226,525

 
$
(111,060
)
 
 
 
 
 
 
 
 
 
 
 
Deferred Rent Receivable/(Liability)
 
Accumulated (Amortization)/Accretion
 
Deferred Rent Receivable/(Liability)
 
Accumulated (Amortization)/Accretion
Above market leases
 
$
14,818

 
$
(10,112
)
 
$
16,502

 
$
(10,005
)
Below market leases and deferred revenue
 
(36,365
)
 
15,686

 
(34,322
)
 
15,000

 
 
$
(21,547
)
 
$
5,574

 
$
(17,820
)
 
$
4,995

Weighted Average Amortization Periods
The weighted average amortization periods in years for the intangible assets acquired during the three months ended March 31, 2020 and 2019 were as follows:
 
Intangible Assets & Liabilities
 
2020
 
2019
In-place leases
 
16.3
 
13.0
Leasing costs
 
16.3
 
13.0
Customer relationships
 
19.5
 
17.9
Above market leases
 
18.0
 
10.0
Below market leases
 
14.2
 
0.0
All intangible assets & liabilities
 
16.9
 
14.5