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Investment in Real Estate | 6 Months Ended
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Jun. 30, 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 following table summarizes the information on the acquisitions completed during the six months ended June 30, 2017:
Property |  | Submarket |  | Segment |  | Date of Acquisition |  | Square Feet (unaudited) |  | Purchase Price(1) (in millions)
Sunset Las Palmas Studios(2) |  | Hollywood |  | Media and Entertainment |  | 5/1/2017 |  | 369,000 |  |  | $ | 200.0 |
11601 Wilshire land(3) |  | West Los Angeles |  | Office |  | 6/15/2017 |  | N/A |  |  | 50.0 |
6666 Santa Monica(4) |  | Hollywood |  | Media and Entertainment |  | 6/29/2017 |  | 4,150 |  |  | 3.2 |
Total acquisitions |  |  |  |  |  |  |  | 373,150 |  |  | $ | 253.2 |
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(1) | Represents purchase price before certain credits, prorations and closing costs.
(2) | The property consists of stages, production office and support space on 15 acres near Sunset Gower Studios and Sunset Bronson Studios. The purchase price above does not include equipment purchased by the Company for $2.8 million, which purchase was transacted separately from the studio acquisition. In April 2017, the Company drew $150.0 million under the unsecured revolving credit facility to fund the acquisition.
(3) | On July 1, 2016 the Company purchased a partial interest in land held as a tenancy in common in conjunction with its acquisition of the 11601 Wilshire property. The land interest held as a tenancy in common was accounted for as an equity method investment. On June 15, 2017, the Company purchased the remaining interest which was re-measured and allocated to land and building.
(4) | This parcel is adjacent to the Sunset Las Palmas Studios property.
The Company evaluated each acquisition to determine if the integrated set of assets and activities acquired meet the definition of a business and need to be accounted for as a business combination in accordance with ASC 805, Business Combinations. An integrated set of assets and activities would fail to qualify as a business if either (i) substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets or (ii) the integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction). An acquired process is considered substantive if (i) the process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable and experienced in performing the process, (ii) the process cannot be replaced without significant cost, effort, or delay or (iii) the process is considered unique or scarce. These acquisitions did not meet the definition of a business and were therefore accounted for as asset acquisitions. The following table represents the Company’s final aggregate purchase price accounting, as of the respective acquisition dates, for each of the Company’s acquisitions completed in the six months ended June 30, 2017:
| Sunset Las Palmas Studios(1) |  | 11601 Wilshire land |  | 6666 Santa Monica |  | Total
Investment in real estate, net | $ | 202,723 |  |  | $ | 50,034 |  |  | $ | 3,091 |  |  | $ | 255,848 |
Deferred leasing costs and in-place lease intangibles(2) | 1,741 |  |  | — |  |  | 145 |  |  | 1,886 |
Total asset assumed | $ | 204,464 |  |  | $ | 50,034 |  |  | $ | 3,236 |  |  | $ | 257,734 |
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(1) | The purchase price allocation includes equipment purchased by the Company of $2.8 million.
(2) | Represents weighted-average amortization period of 1.21 years.
Dispositions The following table summarizes the properties sold during the six months ended June 30, 2017. These properties were non-strategic assets to the Company’s portfolio:
Property |  | Date of Disposition |  | Square Feet (unaudited) |  | 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 |
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(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 six months ended June 30, 2017. This amount is included in gains on sale of real estate in the Consolidated Statements of Operations. There were no dispositions for the three months ended June 30, 2017. Held for Sale The Company had two properties classified as 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 June 30, 2017. Impairment of Long-Lived Assets No impairment indicators have been noted and the Company recorded no impairment charges for the six months ended June 30, 2017.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 + Details
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