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Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

3 Months Ended

Mar. 31, 2024

Real Estate [Abstract]

Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

Note 5—Real Estate, Real Estate-Related Intangibles and Real Estate Available and Held for Sale

The Company’s real estate assets consist of the following ($ in thousands):


		As of
		March 31, 2024			December 31, 2023
Land and land improvements, at cost		$	550,191		$	551,105
Buildings and improvements, at cost			193,232			193,232
Less: accumulated depreciation			(41,907)			(40,400)
Total real estate, net		$	701,516		$	703,937
Real estate-related intangible assets, net			212,657			211,113
Real estate available and held for sale⁽¹⁾			10,625			9,711
Total real estate, net and real estate-related intangible assets, net and real estate available and held for sale		$	924,798		$	924,761

(1)	During the three months ended March 31, 2024, the Company transferred $0.9 million of real property that is being marketed for sale to real estate available and held for sale.

Real estate-related intangible assets, net consist of the following items ($ in thousands):


		As of March 31, 2024
		Gross			Accumulated			Carrying
		Intangible			Amortization			Value
Above-market lease assets, net⁽¹⁾		$	186,002		$	(19,172)		$	166,830
In-place lease assets, net⁽²⁾			68,551			(23,427)			45,124
Other intangible assets, net			750			(47)			703
Total		$	255,303		$	(42,646)		$	212,657


		As of December 31, 2023
		Gross			Accumulated			Carrying
		Intangible			Amortization			Value
Above-market lease assets, net⁽¹⁾		$	186,002		$	(18,388)		$	167,614
In-place lease assets, net⁽²⁾			65,345			(22,551)			42,794
Other intangible assets, net			750			(45)			705
Total		$	252,097		$	(40,984)		$	211,113

(1)

Above-market lease assets are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease is less than the present value of the contractual in-place rental cash flows. Above-market lease assets are amortized over the non-cancelable term of the leases.

(2)

In-place lease assets are recognized during asset acquisitions and are estimated based on the value associated with the costs avoided in originating leases comparable to the acquired in-place leases as well as the value associated with lost rental revenue during the assumed lease-up period. In-place lease assets are amortized over the non-cancelable term of the leases.

The amortization of real estate-related intangible assets had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2024 and 2023 ($ in thousands):


		Income Statement		For the Three Months Ended March 31,
Intangible asset		Location		2024			2023
Above-market lease assets (decrease to income)		Operating lease income		$	784		$	784
In-place lease assets (decrease to income)		Depreciation and amortization			876			889
Other intangible assets (decrease to income)		Operating lease income			2			2

The estimated amortization of real estate-related intangible assets for each of the five succeeding fiscal years is as follows ($ in thousands):⁽¹⁾


Year		Amount
2024 (remaining nine months)		$	5,000
2025			6,667
2026			3,288
2027			3,288
2028			3,280

(1)	As of March 31, 2024, the weighted average amortization period for the Company’s real estate-related intangible assets was approximately 80.7 years.

Real estate-related intangible liabilities, net consist of the following items ($ in thousands):


		As of March 31, 2024
		Gross			Accumulated			Carrying
		Intangible			Amortization			Value
Below-market lease liabilities⁽¹⁾		$	68,618		$	(5,072)		$	63,546


		As of December 31, 2023
		Gross			Accumulated			Carrying
		Intangible			Amortization			Value
Below-market lease liabilities⁽¹⁾		$	68,618		$	(4,863)		$	63,755

(1)

Below-market lease liabilities are recognized during asset acquisitions when the present value of market rate rental cash flows over the term of a lease exceeds the present value of the contractual in-place rental cash flows. Below-market lease liabilities are amortized over the non-cancelable term of the leases.

The amortization of real estate-related intangible liabilities had the following impact on the Company’s consolidated statements of operations for the three months ended March 31, 2024 and 2023 ($ in thousands):


		Income Statement		For the Three Months Ended March 31,
Intangible liability		Location		2024			2023
Below-market lease liabilities (increase to income)		Operating lease income		$	208		$	209

Future Minimum Operating Lease Payments—Future minimum lease payments to be collected under non-cancelable operating leases, excluding lease payments that are not fixed and determinable, in effect as of March 31, 2024, are as follows by year ($ in thousands):


					Fixed Bumps									Fixed
					with									Bumps with
		Inflation-			Inflation			Fixed			Percentage			Percentage
Year		Linked			Adjustments			Bumps			Rent⁽¹⁾			Rent			Total
2024 (remaining nine months)		$	4,354		$	13,284		$	1,689		$	8,264		$	316		$	27,907
2025			5,807			18,004			2,313			11,018			421			37,563
2026			5,807			18,370			2,357			986			421			27,941
2027			5,807			18,755			2,388			986			421			28,357
2028			5,807			19,101			2,421			986			304			28,619
Thereafter			429,125			4,289,009			430,688			14,841			—			5,163,663

(1)	During the three months ended March 31, 2024 and 2023, the Company recognized $4.6 million and $3.7 million, respectively, of percentage rent in “Operating lease income” in the Company’s consolidated statements of operations.