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Real Estate and Intangible Assets (Tables) | 12 Months Ended
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Dec. 31, 2019
Real Estate [Abstract] |
Components of Investments in Real Estate | The following table sets forth the components of our investments in real estate as of December 31, 2019 and 2018, respectively, excluding real estate held for sale as of December 31, 2019 and 2018, respectively (dollars in thousands):
|  | December 31, 2019 |  | December 31, 2018
Real estate: |  |  |  |
Land |  | $ | 137,532 |  |  | $ | 125,905 |
Building and improvements |  | 851,245 |  |  | 755,584 |
Tenant improvements |  | 68,201 |  |  | 65,160 |
Accumulated depreciation |  | (207,523 | ) |  | (178,257 | )
Real estate, net |  | $ | 849,455 |  |  | $ | 768,392 |
Summary of Properties Acquired | During the year ended December 31, 2019 and 2018 we acquired 18 and five properties, respectively, which are summarized below (dollars in thousands):
Year Ended |  | Aggregate Square Footage |  | Weighted Average Lease Term |  | Aggregate Purchase Price |  | Acquisition Costs |  | Aggregate Annualized GAAP Rent |  | Aggregate Mortgage Debt Issued or Assumed |
December 31, 2019 | (1) | 2,562,483 |  |  | 12.8 Years |  | $ | 130,313 |  |  | $ | 1,231 |  | (3) | $ | 10,009 |  |  | $ | 37,410 |  |
December 31, 2018 | (2) | 591,037 |  |  | 11.1 Years |  | $ | 63,245 |  |  | $ | 905 |  | (3) | $ | 5,984 |  |  | $ | 11,663 |  | (4)
(1) | On February 8, 2019, we acquired a 26,050 square foot property in Moorestown, New Jersey for $2.7 million. The annualized GAAP rent on the 15.1 year lease is $0.2 million. On February 28, 2019, we acquired a 34,800 square foot property in Indianapolis, Indiana for $3.6 million. The annualized GAAP rent on the 10.0 year lease is $0.3 million. On April 5, 2019, we acquired a 383,000 square foot, two property portfolio located in Ocala, Florida for $19.2 million. This portfolio has a weighted average lease term of 20.1 years, and annualized GAAP rent of $1.5 million. On April 30, 2019, we acquired a 54,430 square foot property in Columbus, Ohio for $3.2 million. The annualized GAAP rent on the 7.0 year lease is $0.2 million. On June 18, 2019, we acquired a 676,031 square foot property in Tifton, Georgia, for $17.9 million. The annualized GAAP rent on the 8.5 year lease is $1.6 million. We issued $8.9 million of mortgage debt with a fixed interest rate of 4.35% in connection with this acquisition. On July 30, 2019, we acquired a 78,452 square foot property in Denton, Texas, for $6.6 million. The annualized GAAP rent on the 11.9 year lease is $0.5 million. On September 26, 2019, we acquired a 211,000 square foot two property portfolio in Temple, Texas, for $14.1 million. The portfolio has a weighted average lease term of 20.0 years, and annualized GAAP rent of $1.2 million. On November 14, 2019, we acquired a 231,509 square foot property in Indianapolis, Indiana, for $8.2 million. The annualized GAAP rent on the 13.5 year lease is $0.6 million. On December 16, 2019, we acquired a 241,000 square foot property in Jackson, Tennessee, for $9.1 million. The annualized GAAP rent on the 9.7 year lease is $0.7 million. We issued $4.8 million of mortgage debt with a fixed interest rate of 3.97% in connection with this acquisition. On December 17, 2019, we acquired a 117,000 square foot property in Carrollton, Georgia, for $8.1 million. The annualized GAAP rent on the 12.0 year lease is $0.6 million. We issued $4.2 million of mortgage debt with a fixed interest rate of 3.97% in connection with this acquisition. On December 17, 2019, we acquired a 509,211 square foot six property portfolio, for $37.6 million. The portfolio has a weighted average lease term of 10.0 years, and annualized GAAP rent of $2.7 million. We issued $19.5 million of mortgage debt with a fixed interest rate of 3.75% in connection with this acquisition.
(2) | On March 9, 2018, we acquired a 127,444 square foot property in Vance, Alabama for $14.3 million. The annualized GAAP rent on the 9.8 year lease is $1.1 million. On September 20, 2018, we acquired a 157,810 square foot property in Columbus, Ohio for $8.5 million. We entered into an interest rate swap in connection with our $4.7 million of issued debt on our Columbus, Ohio acquisition resulting in a fixed interest rate of 5.32% on such debt. The annualized GAAP rent on the 15.0 year lease is $0.8 million. On October 30, 2018, we acquired a 218,703 square foot, two property portfolio located in Detroit, Michigan for $21.7 million. We assumed $6.9 million of mortgage debt with a fixed interest rate of 4.63% and issued 742,937 OP Units in connection with this acquisition. This portfolio has a weighted average lease term of 10.5 years, and annualized GAAP rent of $1.7 million. On December 27, 2018, we acquired an 87,080 square foot property in Lake Mary, Florida for $18.7 million. The annualized GAAP rent on the 11.0 year lease is $2.4 million.
(3) | We accounted for these transactions under ASU 2017-01. As a result, we treated our acquisitions during the years ended December 31, 2019 and 2018 as asset acquisitions rather than business combinations. As a result of this treatment, we capitalized $1.2 million and $0.9 million, respectively, of acquisition costs that would otherwise have been expensed under business combination treatment.
(4) | We entered into an interest rate swap in connection with $4.7 million of issued debt on our Columbus, Ohio acquisition, pursuant to which we will pay our counterparty a fixed interest rate of 3.22%, and receive a variable interest rate of one month LIBOR from our counterparty. Our total interest rate on this debt is fixed at 5.32%. We have elected to treat this interest rate swap as a cash flow hedge, and all changes in fair market value will be recorded to accumulated other comprehensive income on the consolidated balance sheets.
Fair Value of Acquired Assets and Liabilities Assumed | We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the year ended December 31, 2019 and 2018, respectively, as follows (dollars in thousands):
|  | Year ended December 31, 2019 |  | Year ended December 31, 2018
Acquired assets and liabilities |  | Purchase price |  | Purchase price
Land |  | $ | 12,351 |  |  | $ | 6,278 |
Building |  | 93,502 |  |  | 44,754 |
Tenant Improvements |  | 3,119 |  |  | 2,400 |
In-place Leases |  | 9,013 |  |  | 4,418 |
Leasing Costs |  | 7,274 |  |  | 3,933 |
Customer Relationships |  | 5,019 |  |  | 2,698 |
Above Market Leases |  | 1,950 |  |  | 239 |
Below Market Leases (1) |  | (1,915 | ) |  | (1,475 | )
Total Purchase Price |  | $ | 130,313 |  |  | $ | 63,245 |
Summary of Leased Properties | During the year ended December 31, 2019 and 2018, we executed six and three leases, respectively, which are aggregated below (dollars in thousands):
Year Ended |  | Aggregate Square Footage |  | Weighted Average Remaining Lease Term |  | Aggregate Annualized GAAP Rent |  | Aggregate Tenant Improvement |  | Aggregate Leasing Commissions
December 31, 2019 |  | 266,021 |  |  | 9.0 Years | (1) | $ | 3,739 |  |  | $ | 2,215 |  |  | $ | 1,312 |
December 31, 2018 |  | 97,178 |  |  | 6.3 Years | (2) | $ | 1,253 |  |  | $ | 433 |  |  | $ | 242 |
(1) | Weighted average lease term is weighted according to the annualized GAAP rent earned by each lease. Our leases have terms ranging from 5.0 years to 11.5 years.
(2) | Weighted average lease term is weighted according to the annualized GAAP rent earned by each lease. Our leases have terms ranging from 3.6 years to 7.0 years.
During the year ended December 31, 2019 and 2018, we had three and two lease contractions or terminations, respectively, which are aggregated below (dollars in thousands):
Year Ended |  | Aggregate Square Footage Reduced |  | Aggregate Square Footage Remaining |  | Aggregate Termination Fee |  | Aggregate Deferred Rent Write Off
December 31, 2019 | (1) | 111,309 |  |  | 39,417 |  |  | $ | 301 |  |  | $ | — |
December 31, 2018 | (2) | 44,032 |  |  | 169,133 |  |  | 559 |  |  | 184 |
(1) | A tenant in one of our Columbus, Ohio properties exercised a lease termination option effective October 31, 2019. In connection with this termination, we earned a termination fee of $0.1 million, which was recognized through lease revenue on the consolidated statements of operations and comprehensive income. The tenant in our Fridley, Minnesota property executed a termination agreement to vacate the property on March 31, 2020. In connection with the early termination, we will earn a termination fee of $0.2 million, which is recognized through lease revenue on the consolidated statements of operations and comprehensive income through the remaining lease term. The tenant in one of our Mason, Ohio properties executed a lease contraction in conjunction with a lease renewal. At the conclusion of their current lease term on June 30, 2020, they will continue to lease 39,417 square feet through June 30, 2030.
(2) | A tenant in our Salt Lake City, Utah property exercised a lease contraction to reduce their occupancy in our building by 23,632 square feet. They will continue to lease 81,271 square feet through their original lease term. In connection with this contraction, we will earn a contraction fee of $0.3 million, which is recognized through lease revenue on the consolidated statements of operations and comprehensive income through the contraction term, and we wrote off $0.1 million of deferred rent asset to property operating expenses on the consolidated statements of operations and comprehensive income. A tenant in our Champaign, Illinois property exercised a lease contraction to reduce its occupancy in our building by 20,400 square feet. They will continue to lease 87,862 square feet through their original lease term. In connection with this contraction, we will earn a contraction fee of $0.2 million, which is recognized through lease revenue on the consolidated statements of operations and comprehensive income through the contraction term, and we wrote off $0.1 million of deferred rent asset to property operating expenses on the consolidated statements of operations and comprehensive income. We recorded contraction fees of $0.2 million, in the aggregate, during the year ended December 31, 2018.
Future Operating Lease Payments from Tenants under Non-Cancelable Leases | Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses and excluding real estate held for sale as of December 31, 2019, for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
Year | Tenant Lease Payments
2020 | $ | 107,159 |
2021 | 101,794 |
2022 | 94,252 |
2023 | 86,460 |
2024 | 77,414 |
Thereafter | 307,591 |
| $ | 774,670 |
Future minimum lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses and real estate held for sale as of December 31, 2018, for each of the five succeeding fiscal years and thereafter, is as follows (dollars in thousands):
Year | Tenant Lease Payments
2019 | $ | 103,322 |
2020 | 97,302 |
2021 | 89,057 |
2022 | 82,336 |
2023 | 74,337 |
Thereafter | 279,424 |
| $ | 725,778 |
Carrying Value of Intangible Assets and Accumulated Amortization | The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of December 31, 2019 and 2018, excluding real estate held for sale as of December 31, 2019 and 2018, respectively (dollars in thousands):
|  | December 31, 2019 |  | December 31, 2018
|  | Lease Intangibles |  | Accumulated Amortization |  | Lease Intangibles |  | Accumulated Amortization
In-place leases |  | $ | 92,906 |  |  | $ | (48,468 | ) |  | $ | 83,894 |  |  | $ | (40,445 | )
Leasing costs |  | 68,256 |  |  | (33,705 | ) |  | 59,671 |  |  | (28,092 | )
Customer relationships |  | 65,363 |  |  | (28,887 | ) |  | 60,455 |  |  | (24,035 | )
|  | $ | 226,525 |  |  | $ | (111,060 | ) |  | $ | 204,020 |  |  | $ | (92,572 | )
|  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion |  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion
Above market leases |  | $ | 16,502 |  |  | $ | (10,005 | ) |  | $ | 14,551 |  |  | $ | (8,981 | )
Below market leases and deferred revenue |  | (34,322 | ) |  | 15,000 |  |  | (29,807 | ) |  | 12,502 |
|  | $ | (17,820 | ) |  | $ | 4,995 |  |  | $ | (15,256 | ) |  | $ | 3,521 |
Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed | The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the years ended December 31, 2019 and 2018, respectively, were as follows:
Intangible Assets & Liabilities |  | 2019 |  | 2018
In-place leases |  | 13.6 |  | 11.7
Leasing costs |  | 13.6 |  | 11.7
Customer relationships |  | 19.0 |  | 19.3
Above market leases |  | 10.7 |  | 10.4
Below market leases |  | 10.3 |  | 12.4
All intangible assets & liabilities |  | 15.0 |  | 13.6
Estimated Aggregate Amortization Expense | The estimated aggregate amortization expense to be recorded for in-place leases, leasing costs and customer relationships for each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of December 31, 2019 (dollars in thousands):
Year | Estimated Amortization Expense of In-Place Leases, Leasing Costs and Customer Relationships
2020 | $ | 20,919 |
2021 | 17,920 |
2022 | 15,313 |
2023 | 13,119 |
2024 | 10,949 |
Thereafter | 37,245 |
| $ | 115,465 |
Summary of Estimated Aggregate Rental Income | The estimated aggregate rental income to be recorded for the amortization of both above and below market leases for each of the five succeeding fiscal years and thereafter is as follows, excluding real estate held for sale as of December 31, 2019 (dollars in thousands):
Year | Net Increase to Rental Income Related to Above and Below Market Leases
2020 | $ | 2,674 |
2021 | 2,218 |
2022 | 1,746 |
2023 | 1,378 |
2024 | 1,411 |
Thereafter | 3,212 |
| $ | 12,639 |
(1) Does not include ground lease amortization of $186.

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