5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

Acquisitions

The purchase price for certain of the Company’s 2015 acquisitions was allocated to the assets acquired and liabilities assumed based upon their preliminary estimated fair values, which are based on management’s best estimates to date. The Company is in the process of finalizing its assessment of the fair value of the assets acquired and liabilities assumed.

During the nine months ended September 30, 2015, the Company acquired the following properties ($ in thousands):



Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)

January 2015	Net Lease	Jacksonville, NC	$	7,877	100.0%
January 2015	Net Lease	Iberia, MO	1,328		100.0%
January 2015	Net Lease	Isle, MN	1,078		100.0%
January 2015	Net Lease	Pine Island, MN	1,142		100.0%
January 2015	Net Lease	Kings Mountain, NC	21,241		100.0%
February 2015	Net Lease	Village of Menomonee Falls, WI	17,050		100.0%
February 2015	Net Lease	Rockland, MA	7,316		100.0%
February 2015	Net Lease	Crawfordsville, IA	6,000		100.0%
February 2015	Net Lease	Boardman Township, OH	5,400		100.0%
March 2015	Net Lease	Hilliard, OH	6,384		100.0%
March 2015	Net Lease	Weathersfield Township, OH	5,200		100.0%
March 2015	Net Lease	Rotterdam, NY	12,000		100.0%
March 2015	Net Lease	Wheaton, MO	970		100.0%
March 2015	Net Lease	Paynesville, MN	1,254		100.0%
March 2015	Net Lease	Loveland, CO	5,600		100.0%
March 2015	Net Lease	Battle Lake, MN	1,098		100.0%
March 2015	Net Lease	Yorktown, TX	1,207		100.0%
March 2015	Net Lease	St. Francis, MN	1,117		100.0%
May 2015	Net Lease	Red Oak, IA	1,185		100.0%
May 2015	Net Lease	Zapata, TX	1,150		100.0%
June 2015	Net Lease	Aurora, MN	952		100.0%
June 2015	Net Lease	Canyon Lake, TX	1,377		100.0%
June 2015	Net Lease	Wheeler, TX	1,075		100.0%
June 2015	Other	Grand Rapids, MI	9,300		97.0%
June 2015	Other	Grand Rapids, MI	6,300		97.0%
June 2015	Net Lease	Bridgeport, IL	1,186		100.0%
June 2015	Net Lease	Peoria, IL	1,226		100.0%
June 2015	Net Lease	Pleasanton, TX	1,316		100.0%
June 2015	Other	Wayne, NJ	9,700		100.0%
June 2015	Net Lease	Warren, MN	1,055		100.0%
June 2015	Net Lease	Tremont, IL	1,150		100.0%
August 2015	Net Lease	Ponce, Puerto Rico	8,900		100.0%
August 2015	Net Lease	Effingham County, IL	1,195		100.0%
August 2015	Net Lease	Lebanon, MI	1,200		100.0%
August 2015	Net Lease	Minot, ND	6,644		100.0%
August 2015	Net Lease	Floresville, TX	1,251		100.0%
August 2015	Net Lease	Kerrville, TX	1,174		97.0%
September 2015	Net Lease	De Soto, IL	1,066		97.0%
September 2015	Net Lease	Biscoe, NC	1,216		100.0%
September 2015	Net Lease	Moultrie, GA	1,305		100.0%
September 2015	Net Lease	Rose Hill, NC	1,420		100.0%
September 2015	Net Lease	Rockingham, NC	1,158		100.0%
Totals			$	166,763

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the nine months ended September 30, 2015, as follows ($ in thousands):



	Purchase Price Allocation

Land	$	21,794
Building	129,032
Intangibles	15,937
Total purchase price	$	166,763

The Company recorded $3.9 million and $7.9 million in revenues from its 2015 acquisitions for the three and nine months ended September 30, 2015, respectively, which are included in operating lease income on the combined consolidated statements of income.

During the nine months ended September 30, 2014, the Company acquired the following properties ($ in thousands):



Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)

August 2014	Net Lease	O'Fallon, IL	$	8,000	100.0%
August 2014	Net Lease	El Centro, CA	4,277		100.0%
August 2014	Other	Richmond, VA	19,850		77.5%
August 2014	Net Lease	Conyers, GA	32,530		100.0%
September 2014	Other	St. Paul, MN	62,340		97.0%
Totals			$	126,997

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the nine months ended September 30, 2014, as follows ($ in thousands):



	Purchase Price Allocation

Land	$	17,886
Building	82,233
Intangibles	26,878
Total purchase price	$	126,997

The Company recorded $0.9 million in revenues from its 2014 acquisitions for the three and nine months ended September 30, 2014, which are included in operating lease income on the combined consolidated statements of income.

Sales

The Company sold the following properties during the nine months ended September 30, 2015 ($ in thousands):



Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units

May 2015	Net Lease	Plattsmouth, NE	$	8,440	$	7,983	$	457	1	—
May 2015	Net Lease	Worthington, MN	8,793		8,321		472		1	—
May 2015	Net Lease	Loveland, CO	6,249		5,600		649		1	—
Sep 2015	Net Lease	Village of Menomonee Falls, WI	18,186		16,827		1,359		1	—
Various	Condominium	Las Vegas, NV	31,997		18,617		13,380		—	72
Various	Condominium	Miami, FL	22,301		17,271		5,030		—	74
Totals			$	95,966	$	74,619	$	21,347

The Company sold the following properties during the nine months ended September 30, 2014 ($ in thousands):



Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units

May 2014	Net Lease	Tilton, NH	$	8,432	$	6,743	$	1,689	1	—
Jun 2014	Other	Richmond, VA	16,793		15,642		1,151		1	—
Sep 2014	Net Lease	Yulee, FL	1,436		1,246		190		1	—
Sep 2014	Net Lease	Middleburg, FL	1,262		1,077		185		1	—
Sep 2014	Net Lease	Jonesboro, AR	9,413		8,016		1,397		1	—
Sep 2014	Net Lease	Mt. Juliet, TN	10,167		8,724		1,443		1	—
Various	Condominium	Las Vegas, NV	46,213		30,035		16,178		—	96
Various	Condominium	Miami, FL	9,746		7,754		1,992		—	34
Totals			$	103,462	$	79,237	$	24,225

Real Estate Held for Sale

During the nine months ended September 30, 2015, the Company entered into a purchase and sale agreement to sell a 26-story office building in Minneapolis, MN. The sale of this property, which resulted in a gain, occurred on November 3, 2015. As of September 30, 2015, this property was designated as real estate held for sale in the combined consolidated statements of financial condition. The real estate held for sale, recorded at carrying value, is $49.0 million as of September 30, 2015. There was no real estate designated as real estate held for sale as of December 31, 2014.

Real Estate Sold or Classified as Held for Sale

On January 1, 2014, the Company early adopted ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, and as the properties sold or classified as real estate held for sale in the nine months ended September 30, 2015 will not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.

The following table summarizes income from the properties sold or classified as held for sale during the nine months ended September 30, 2015, for the three and nine months ended September 30, 2015 and 2014 ($ in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014

Operating lease income	$	1,663		$	1,304		$	5,517		$	4,687
Tenant recoveries	1,348			1,233			3,806			3,228
Depreciation and amortization	(32		)	(1,067		)	(1,962		)	(3,176		)
Income from properties sold	$	2,979		$	1,470		$	7,361		$	4,739

The following table summarizes income from the properties sold or classified as held for sale during the nine months ended September 30, 2014, for the three and nine months ended September 30, 2014 ($ in thousands):



	Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014

Operating lease income	$	469		$	2,682
Tenant recoveries	—			278
Depreciation and amortization	(14		)	(1,223		)
Income from properties sold	$	455		$	1,737

The following unaudited pro forma information has been prepared based upon our historical combined consolidated financial statements and certain historical financial information of the acquired properties, which are accounted for as business combinations, and should be read in conjunction with the combined consolidated financial statements and notes thereto. The unaudited pro forma combined consolidated financial information reflects the 2014 acquisition adjustments made to present financial results as though the acquisition of the properties occurred on January 1, 2013 and the 2015 acquisition adjustments made to present financial results as though the acquisition of the properties occurred on January 1, 2014. This unaudited pro forma information may not be indicative of the results that actually would have occurred if these transactions had been in effect on the dates indicated, nor do they purport to represent our future results of operations. ($ in thousands)



	Three Months Ended September 30, 2015							Nine Months Ended September 30, 2015
	Company Historical		Acquisitions			Consolidated Pro Forma		Company Historical			Acquisitions			Consolidated Pro Forma

Operating lease income	$	20,671	$	240		$	20,911	$	60,207		$	1,077		$	61,284
Net income	2,798		138			2,936		89,458			625			90,083
Net loss attributable to noncontrolling interest in consolidated joint ventures	85		—			85		578			—			578
Net (income) loss attributable to noncontrolling interest in operating partnership	430		(64		)	366		(43,338		)	(292		)	(43,630		)
Net income attributable to Class A common shareholders	3,313		73			3,386		46,698			332			47,030



	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014
	Company Historical			Acquisitions			Consolidated Pro Forma			Company Historical			Acquisitions			Consolidated Pro Forma

Operating lease income	$	12,810		$	433		$	13,243		$	38,827		$	1,299		$	40,126
Net income	37,176			(183		)	36,993			85,820			307			86,127
Net loss attributable to noncontrolling interest in consolidated joint ventures	306			—			306			451			—			451
Net (income) loss attributable to predecessor unitholders	—			—			—			12,628			—			12,628
Net (income) loss attributable to noncontrolling interest in operating partnership	(22,826		)	86			(22,740		)	(59,086		)	(143		)	(59,229		)
Net income attributable to Class A common shareholders	14,656			(97		)	14,559			39,813			163			39,976

The most significant adjustments made in preparing the unaudited pro forma information were to: (i) include the incremental operating lease income, (ii) include the incremental depreciation, and (iii) adjust for transaction costs associated with the properties acquired in 2015 as if they incurred on January 1, 2014.

Real Estate and Related Lease Intangibles, Net

The following tables present additional detail related to our real estate portfolio ($ in thousands):



	September 30, 2015			December 31, 2014

Land	$	9,447		$	—
Building	30,429			—
In-place leases and other intangibles	14,516			—
Real estate	54,392			—
Less: Accumulated depreciation and amortization	(5,370		)	—
Real estate held for sale	$	49,022		$	—



	September 30, 2015			December 31, 2014

Land	$	128,446		$	122,458
Building	605,347			569,774
In-place leases and other intangibles	131,252			127,359
Real estate	865,045			819,591
Less: Accumulated depreciation and amortization	(73,468		)	(50,605		)
Real estate and related lease intangibles, net	$	791,577		$	768,986

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014

Depreciation expense (1)	$	5,900	$	3,399	$	17,802	$	12,713
Amortization expense	3,633		3,293		11,356		8,150
Total real estate depreciation and amortization expense	$	9,533	$	6,692	$	29,158	$	20,863


(1)	Depreciation expense on the combined consolidated statements of income also includes $28,493 and $0.1 million of depreciation on corporate fixed assets for the three months ended September 30, 2015 and 2014, respectively, and $79,904 and $0.4 million of depreciation on corporate fixed assets for the nine months ended September 30, 2015 and 2014, respectively.

The Company’s intangible assets are comprised of in-place leases, favorable leases compared to market leases and other intangibles. At September 30, 2015, gross intangible assets totaled $145.8 million with total accumulated amortization of $31.8 million, resulting in net intangible assets of $114.0 million, including $7.2 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. At December 31, 2014, gross intangible assets totaled $127.4 million with total accumulated amortization of $19.9 million, resulting in net intangible assets of $107.5 million, including $7.4 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. For the three and nine months ended September 30, 2015, the Company recorded an offset against operating lease income of $0.4 million and $1.2 million, respectively, for favorable leases, compared to $0.4 million and $1.1 million, respectively, for the three and nine months ended September 30, 2014.

The following table presents expected amortization expense during the next five years and thereafter related to the acquired in-place lease intangibles for property owned as of September 30, 2015 ($ in thousands):



Period Ending December 31,	Amount

2015 (last 3 months)	$	5,256
2016	13,271
2017	8,657
2018	7,609
2019	7,346
Thereafter	60,258
Total	$	102,397

There were $5.0 million and $3.0 million of unbilled rent receivables included in other assets on the combined consolidated balance sheets as of September 30, 2015 and December 31, 2014, respectively.

There was unencumbered real estate of $60.9 million and $85.7 million as of September 30, 2015 and December 31, 2014, respectively.

The following is a schedule of contractual future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases or rent escalations under other leases from tenants) at September 30, 2015 ($ in thousands):



Period Ending December 31,	Amount

2015 (last 3 months)	$	22,651
2016	67,685
2017	63,553
2018	61,015
2019	56,697
Thereafter	529,372
Total	$	800,973