As of December 31, 2023 and 2022, our real estate investment portfolio classified as income producing property that is held and used, at cost, consists of properties valued as follows (in thousands):

Our results of operations are dependent on the overall economic health of our markets and residents which are affected by external economic factors, such as inflation, consumer confidence and unemployment rates, as well as changing residents and consumer requirements.

As of December 31, 2023, one property, Riverside Apartments, accounted for more than approximately 10% of total assets and more than approximately 10% of real estate rental revenue.

From time to time, we have properties under development/redevelopment and held for current or future development. The cost of our real estate portfolio under development or held for future development as of December 31, 2023 and 2022 was $31.0 million and $31.3 million, respectively.

As of December 31, 2023, we have invested $30.4 million, including the cost of acquired land, in a residential development adjacent to Riverside Apartments. During the second quarter of 2022, we paused development activities at the aforementioned property and ceased associated capitalization of interest on spending and real estate taxes, though we still consider the future completion of this development to be probable. We also continue to capitalize qualifying costs on several other projects with minor development activity necessary to ready each project for its intended use.


Acquisition Date	Property	Type	# of Homes (unaudited)	Ending Occupancy	Contract Purchase Price (in thousands)
September 29, 2023	Elme Druid Hills	Residential	500	93.8%	$	108,000
			500		$	108,000

February 1, 2022	Elme Sandy Springs	Residential	389	91.3%	$	105,586
May 5, 2022	Elme Marietta	Residential	420	90.7%	107,900
May 5, 2022	Elme Cumberland	Residential	270	91.1%	69,750
			1,079		$	283,236

August 10, 2021	Elme Conyers	Residential	240	93.3%	$	48,000
November 19, 2021	Elme Eagles Landing	Residential	490	89.0%	106,000
			730		$	154,000

As discussed in note 2, we record the acquired physical assets (land and building) and in-place leases (absorption costs) and any other assumed liabilities by allocating the total cost of the acquisitions on a relative fair value basis.


	2023		2022		2021
Land	$	25,249	$	50,547	$	20,914

Building	79,281		220,825		128,540

Absorption costs	3,660		7,300		4,786



Aggregate discount on assumed mortgages	—		5,042		—

Total acquisition cost	108,190		283,714		154,240
Outstanding balance on assumed mortgages	—		(76,554)		—
Total carrying amounts recorded	$	108,190	$	207,160	$	154,240

The difference in the total acquisition cost of $108.2 million for the 2023 acquisition and the cash paid for the 2023 acquisition per the consolidated statements of cash flows of $107.6 million is due to net credits received at settlement totaling $0.6 million.

The difference in the total cost of the 2022 acquisitions of $283.7 million for the 2022 acquisitions and the cash paid for the acquisitions per the consolidated statements of cash flows of $204.4 million is due to the assumption of two mortgage notes secured by Elme Marietta and Elme Cumberland for an aggregate outstanding balance of $76.6 million and credits received at settlement totaling $2.8 million. In September 2022, we extinguished the liabilities associated with the two mortgage notes though defeasance arrangements.

The difference in the total cost of the 2021 acquisitions of $154.2 million and the cash paid for the 2021 acquisitions per the consolidated statements of cash flows of $153.7 million is primarily due to credits received at settlement totaling $0.5 million.

Balances, net of accumulated depreciation or amortization, as appropriate, of the components of the fair value of in-place leases at December 31, 2023 and 2022 were as follows (in thousands):


	December 31,
	2023						2022
	Gross Carrying Value		Accumulated Amortization		Net		Gross Carrying Value		Accumulated Amortization		Net
Tenant origination costs	$	2,262	$	281	$	1,981	$	11,723	$	8,000	$	3,723
Leasing commissions/absorption costs	67,504		60,887		6,617		63,064		56,416		6,648

Net lease intangible liabilities	13,055		10,499		2,556		13,055		9,683		3,372


	Year Ended December 31,
	2023		2022		2021
Depreciation and amortization expense	$	4,530	$	12,604	$	4,378
Real estate rental revenue increase, net	(806)		(944)		(765)
	$	3,724	$	11,660	$	3,613


	Depreciation and amortization expense		Real estate rental revenue, net increase		Total
2024	$	3,870	$	(708)	$	3,162
2025	2,011		(710)		1,301
2026	1,698		(662)		1,036
2027	1,019		(476)		543
2028	—		—		—

We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning our properties, and to make occasional sales of the properties that no longer meet our long-term strategy or return objectives and where market conditions for sale are favorable. The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs or distributed to our shareholders. Depreciation on these properties is discontinued when classified as held for sale, but operating revenues, other operating expenses and interest continue to be recognized through the date of sale.

We sold no properties in 2023 and 2022. We sold twelve office and eight retail properties for an aggregate gain of $46.4 million during the year ended December 31, 2021. The dispositions of the office and retail properties in 2021 represented a strategic shift that had a major effect on our financial results, and we accordingly reported them as discontinued operations.

We have fully transferred control of the assets associated with these disposed properties and do not have continuing involvement in the operations of these properties.

During 2023, we recognized an impairment charge of $41.9 million on Watergate 600 in order to reduce its carrying value to its estimated fair value, which declined due to changes in market conditions in the Washington, DC metro region office market. The estimated fair value is inherently subjective because there are few observable market transactions for similar office properties. This fair valuation fell into Level 3 in the fair value hierarchy due to its reliance on significant unobservable inputs (see note 9). In accordance with ASC 820, we estimated the fair value using a discounted cash flow model which required certain significant assumptions, including a discounted cash flow term of 5 years, an average economic occupancy of 80.5%, and a terminal capitalization rate of 7.5%.

No other properties, including assets held for development, had any recognized impairment charges during 2023. Should external or internal circumstances change requiring the need to shorten holding periods or adjust future estimated cash flows from our properties, we could be required to record additional impairment charges in the future.

The results of the twelve office and eight retail properties sold in 2021 are classified as discontinued operations and are summarized as follows (amounts in thousands, except for share data):



	Year Ended December 31, 2021
Real estate rental revenue	$	70,519
Expenses:
Property operating and maintenance	(11,201)
Real estate taxes and insurance	(11,136)
Property management	(2,195)
Depreciation and amortization	(22,904)


Gain on sale of real estate, net	46,441
Income from discontinued operations	$	69,524

Basic net income per share	$	0.82
Diluted net income per share	$	0.82

Capital expenditures	$	3,316

All assets and liabilities related to the twelve office properties (the “Office Portfolio”) and eight retail properties (the “Retail Portfolio”) were sold as of December 31, 2021.