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Real Estate and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2020

Real Estate [Abstract]

Components of Investments in Real Estate

The following table sets forth the components of our investments in real estate as of September 30, 2020 and December 31, 2019, excluding real estate held for sale as of September 30, 2020 and December 31, 2019, respectively (dollars in thousands):

						September 30, 2020						December 31, 2019
Real estate:
Land (1)						$	140,465					$	137,532
Building and improvements						886,138						851,245
Tenant improvements						68,251						68,201
Accumulated depreciation						(221,849)						(207,523)
Real estate, net						$	873,005					$	849,455

(1)This amount includes $4,436 of land value subject to land lease agreements which we may purchase at our option for a nominal fee.

Acquisitions

We acquired six properties during the nine months ended September 30, 2020, and nine properties during the nine months ended September 30, 2019. The acquisitions are summarized below (dollars in thousands):

Nine Months Ended						Aggregate Square Footage						Weighted Average Lease Term						Aggregate Purchase Price						Capitalized Acquisition Expenses						Aggregate Annualized GAAP Fixed Lease Payments						Aggregate Debt Issued or Assumed
September 30, 2020			(1)			1,043,638						14.2 years						$	82,599					$	339		(3)			$	6,146					$	35,855
September 30, 2019			(2)			1,463,763						14.8 years						67,272						621			(3)			5,437						8,900

(1)On January 8, 2020, we acquired a 64,800 square foot property in Indianapolis, Indiana for $5.3 million. The property is leased to three tenants with a weighted average lease term of 7.2 years with annualized GAAP rent of $0.5 million. On January 27, 2020, we acquired a 320,838 square foot, three-property portfolio in Houston, Texas, Charlotte, North Carolina, and St. Charles, Missouri for $34.7 million. The portfolio has a weighted average lease term of 20.0 years, and an annualized GAAP rent of $2.6 million. We issued $18.3 million of mortgage debt with a fixed interest rate of 3.625% in connection with the acquisition. On March 9, 2020, we acquired a 504,400 square foot property in Chatsworth, Georgia for $32.0 million. We entered into an interest rate swap in connection with our $17.5 million of issued debt, resulting in a fixed interest rate of 2.8%. The annualized GAAP rent on the 10.5 year lease is $2.2 million. On September 1, 2020, we acquired a 153,600 square foot property in Indianapolis, Indiana for $10.6 million. The annualized GAAP rent on the 9.7 year lease is $0.8 million.

(2)On February 8, 2019, we acquired a 26,050 square foot property in a suburb of Philadelphia, Pennsylvania, 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 207,000 square foot property in Ocala, Florida, for $11.9 million. The annualized GAAP rent on the 20.1 year lease is $0.8 million. On April 5, 2019, we acquired a 176,000 square foot property in Ocala, Florida, for $7.3 million. The annualized GAAP rent on the 20.1 year lease is $0.7 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 annualized GAAP rent on the 20.0 year lease is $1.2 million.

(3)We treated our acquisitions during the nine months ended September 30, 2020 and 2019 as asset acquisitions rather than business combinations. As a result of this treatment, we capitalized $0.3 million and $0.6 million, respectively, of acquisition costs that would otherwise have been expensed under business combination treatment.

Fair Value of Assets Acquired and Liabilities Assumed

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the nine months ended September 30, 2020 and 2019 as follows (dollars in thousands):

						Nine Months Ended September 30, 2020						Nine Months Ended September 30, 2019
Acquired assets and liabilities						Purchase price						Purchase price
Land (1)						$	7,798					$	5,046
Building and improvements						61,930						48,898
Tenant Improvements						1,431						1,541
In-place Leases						5,411						4,868
Leasing Costs						4,664						4,481
Customer Relationships						2,808						2,200
Above Market Leases (2)						309						1,865
Below Market Leases (3)						(1,752)						(1,627)
Total Purchase Price						$	82,599					$	67,272

(1)This amount includes $2,711 of land value subject to a land lease agreement, which we may purchase for a nominal fee.

(2)This amount includes $53 of loans receivable included in Other assets on the condensed consolidated balance sheets.

(3)This amount includes $62 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets.

Schedule of Real Estate Activity

During the nine months ended September 30, 2020 and 2019, we executed 13 and five leases, respectively, which are summarized below (dollars in thousands):

Nine Months Ended						Aggregate Square Footage						Weighted Average Remaining Lease Term						Aggregate Annualized GAAP Fixed Lease Payments						Aggregate Tenant Improvement						Aggregate Leasing Commissions
September 30, 2020						987,902						7.9 years						$	8,340					$	2,903					$	1,285
September 30, 2019						230,264						8.8 years						3,366						785						910

During the nine months ended September 30, 2020 and 2019, we had one lease termination each, which are summarized below (dollars in thousands):

Nine Months Ended						Aggregate Square Footage Reduced												Aggregate Termination Fee						Aggregate Deferred Rent Write Off
September 30, 2020						61,358												$	1,119					$	225
September 30, 2019						16,566												61						—

Future Lease Payments From Tenants

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the three months ending December 31, 2020 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year			Tenant Lease Payments
Three Months Ending 2020			$	27,401
2021			109,326
2022			103,896
2023			96,136
2024			87,999
2025			79,061
Thereafter			305,402
			$	809,221

Lease Revenue

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the nine months ended September 30, 2020 and 2019, respectively (dollars in thousands):

						For the three months ended September 30,												For the nine months ended September 30,
Lease revenue reconciliation						2020						2019						2020						2019
Fixed lease payments						$	29,116					$	27,660					$	88,286					$	82,076
Variable lease payments						4,026						1,007						12,001						2,925
						$	33,142					$	28,667					$	100,287					$	85,001

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 September 30, 2020 and December 31, 2019, excluding real estate held for sale as of September 30, 2020 and December 31, 2019, respectively (dollars in thousands):

						September 30, 2020												December 31, 2019
						Lease Intangibles						Accumulated Amortization						Lease Intangibles						Accumulated Amortization
In-place leases						$	96,058					$	(52,589)					$	92,906					$	(48,468)
Leasing costs						72,604						(36,920)						68,256						(33,705)
Customer relationships						66,276						(31,187)						65,363						(28,887)
						$	234,938					$	(120,696)					$	226,525					$	(111,060)
						Deferred Rent Receivable/(Liability)						Accumulated (Amortization)/Accretion						Deferred Rent Receivable/(Liability)						Accumulated (Amortization)/Accretion
Above market leases						$	14,857					$	(10,462)					$	16,502					$	(10,005)
Below market leases and deferred revenue						(36,793)						17,020						(34,322)						15,000
						$	(21,936)					$	6,558					$	(17,820)					$	4,995

Weighted Average Amortization Periods

The weighted average amortization periods in years for the intangible assets acquired during the nine months ended September 30, 2020 and 2019 were as follows:

Intangible Assets & Liabilities						2020						2019
In-place leases						15.7						15.9
Leasing costs						15.7						15.9
Customer relationships						18.9						20.6
Above market leases						16.6						9.3
Below market leases						14.2						9.6
All intangible assets & liabilities						16.3						17.3

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