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Investment in Real Estate
 3 Months Ended
Mar. 31, 2017
Real Estate [Abstract]  
Investment in Real Estate
Investment in Real Estate

Acquisitions

The Company’s acquisitions are accounted for using the acquisition method. The results of operations for each of these acquisitions are included in the Company’s Consolidated Statements of Operations from the date of acquisition.
    
The Company assesses fair value based on Level 2 and Level 3 inputs within the fair value framework, which includes estimated cash flow projections that utilize appropriate discount, capitalization rates, renewal probability and available market information, which includes market rental rate and market rent growth rates. Estimates of future cash flows are based on a number of factors, including historical operating results, known and anticipated trends, and market and economic conditions.

The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant. The fair value of acquired “above- and below-” market leases are based on the estimated cash flow projections utilizing discount rates that reflect the risks associated with the leases acquired. The amount recorded is based on the present value of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease and (ii) management’s estimate of fair market lease rates for each in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the extended below-market term for any leases with below-market renewal options. Other intangible assets acquired include amounts for in-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease-up periods, market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes estimates of lost rents at market rates during the hypothetical expected lease-up periods, which are dependent on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, and legal and other related costs.

The Company had no acquisitions during the three months ended March 31, 2017.

On May 1, 2017, the Company completed its acquisition of Sunset Las Palmas Studios (formerly Hollywood Center Studios) located in Hollywood, California. See Note 19 for details.

Dispositions

The following table summarizes the properties sold during the three months ended March 31, 2017. These properties were non-strategic assets to the Company’s portfolio:
Property
 
Date of Disposition
 
Square Feet
 
Sales Price(1) (in millions)
222 Kearny Street
 
February 14, 2017
 
148,797

 
$
51.8

3402 Pico Boulevard
 
March 21, 2017
 
50,687

 
35.0

Total dispositions
 
 
 
199,484

 
$
86.8

_________________ 
(1)
Represents gross sales price before certain credits, prorations and closing costs.

The dispositions of these properties resulted in gains of $16.9 million for the three months ended March 31, 2017. These amounts are included in gains on sale of real estate in the Consolidated Statements of Operations.
    
Held for Sale

The Company had two properties held for sale as of December 31, 2016. Both properties were disposed of during the first quarter of 2017. The Company had no properties classified as held for sale as of March 31, 2017.

Cost Capitalization

The Company recognized the following capitalized costs during the periods presented:
 
Three Months Ended March 31,
 
2017
 
2016
Capitalized personnel costs
$
2,737

 
$
2,319

Capitalized interest
2,446

 
2,628



Impairment of Long-Lived Assets

No impairment indicators have been noted and the Company recorded no impairment charges for the three months ended March 31, 2017.