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Real Estate and Intangible Assets | 3 Months Ended
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Mar. 31, 2022
Real Estate [Abstract] |
Real Estate and Intangible Assets | Real Estate and Intangible Assets Real Estate The following table sets forth the components of our investments in real estate as of March 31, 2022 and December 31, 2021, respectively (dollars in thousands):
|  | March 31, 2022 |  | December 31, 2021
Real estate: |  |  |  |
Land (1) |  | $ | 150,589 |  |  | $ | 149,773 |
Building and improvements |  | 1,019,020 |  |  | 1,004,362 |
Tenant improvements |  | 71,319 |  |  | 71,123 |
Accumulated depreciation |  | (276,612) |  |  | (266,672) |
Real estate, net |  | $ | 964,316 |  |  | $ | 958,586 |
(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. Real estate depreciation expense on building and tenant improvements was $9.9 million and $10.7 million for the three months ended March 31, 2022 and 2021, respectively. Acquisitions We acquired two properties during the three months ended March 31, 2022, and one property during the three months ended March 31, 2021. The acquisitions are summarized below (dollars in thousands):
Three Months Ended |  | Aggregate Square Footage |  | Weighted Average Lease Term |  | Aggregate Purchase Price |  | Aggregate Capitalized Acquisition Costs |  |  |  |  |
March 31, 2022 | (1) | 136,000 |  |  | 10.2 years |  | $ | 13,463 |  |  | $ | 163 |  |  |  |  |  |
March 31, 2021 | (2) | 180,152 |  |  | 14.2 years |  | $ | 11,146 |  |  | $ | 146 |  |  |  |  |  |
(1)On February 24, 2022, we acquired an 80,000 square foot property in Wilkesboro, North Carolina for $7.5 million. The property is fully leased to one tenant and had 12.7 years of remaining lease term at the time we acquired the property. On March 11, 2022, we acquired a 56,000 square foot property in Oklahoma City, Oklahoma for $6.0 million. The property is fully leased to one tenant and had 7.0 years of remaining lease term at the time we acquired the property. (2)On January 22, 2021, we acquired a 180,152 square foot property in Findlay, Ohio for $11.1 million. The property is fully leased to one tenant and had 14.2 years of remaining lease term at the time we acquired the property. We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the three months ended March 31, 2022 and 2021, respectively, as follows (dollars in thousands):
|  | Three Months Ended March 31, 2022 |  | Three Months Ended March 31, 2021 |
Acquired assets and liabilities |  | Purchase price |  | Purchase price |
Land |  | $ | 816 |  |  | $ | 258 |  |
Building |  | 10,250 |  |  | 8,759 |  |
Tenant Improvements |  | 196 |  |  | 88 |  |
In-place Leases |  | 847 |  |  | 817 |  |
Leasing Costs |  | 525 |  |  | 803 |  |
Customer Relationships |  | 567 |  |  | 294 |  |
Above Market Leases |  | 279 |  |  | 127 |  |
Below Market Leases |  | (17) |  | (1) | — |  |
Total Purchase Price |  | $ | 13,463 |  |  | $ | 11,146 |  |
(1)This amount includes $17 of prepaid rent included in Other liabilities on the condensed consolidated balance sheets. Future Lease Payments Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the nine months ending December 31, 2022 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
Year | Tenant Lease Payments
Nine Months Ending 2022 | $ | 88,866 |
2023 | 110,944 |
2024 | 104,954 |
2025 | 101,197 |
2026 | 92,659 |
2027 | 74,431 |
Thereafter | 284,547 |
| $ | 857,598 |
In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant directly, or reimbursed to us from the tenant; however, we would be required to pay operating expenses on the respective properties in the event the tenants fail to pay them. Lease Revenue Reconciliation The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three months ended March 31, 2022 and 2021, respectively (dollars in thousands):
|  | For the three months ended March 31,
|  | (Dollars in Thousands)
Lease revenue reconciliation |  | 2022 |  | 2021 |  | $ Change |  | % Change
Fixed lease payments |  | $ | 31,332 |  |  | $ | 30,757 |  |  | $ | 575 |  |  | 1.9 | %
Variable lease payments |  | 4,199 |  |  | 3,920 |  |  | 279 |  |  | 7.1 | %
|  | $ | 35,531 |  |  | $ | 34,677 |  |  | $ | 854 |  |  | 2.5 | %
Intangible Assets The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of March 31, 2022 and December 31, 2021, respectively (dollars in thousands):
|  | March 31, 2022 |  | December 31, 2021
|  | Lease Intangibles |  | Accumulated Amortization |  | Lease Intangibles |  | Accumulated Amortization
In-place leases |  | $ | 106,738 |  |  | $ | (64,497) |  |  | $ | 105,891 |  |  | $ | (62,604) |
Leasing costs |  | 82,974 |  |  | (45,477) |  |  | 81,487 |  |  | (43,982) |
Customer relationships |  | 72,489 |  |  | (39,572) |  |  | 71,922 |  |  | (38,220) |
|  | $ | 262,201 |  |  | $ | (149,546) |  |  | $ | 259,300 |  |  | $ | (144,806) |
|  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion |  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion
Above market leases |  | $ | 15,817 |  |  | $ | (11,718) |  |  | $ | 15,538 |  |  | $ | (11,520) |
Below market leases and deferred revenue |  | (51,581) |  |  | 22,284 |  |  | (48,241) |  |  | 21,471 |
Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $4.7 million and $6.0 million for the three months ended March 31, 2022 and 2021, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income. Total amortization related to above-market lease values was $0.2 million and $0.2 million for the three months ended March 31, 2022 and 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income. Total amortization related to below-market lease values was $0.8 million and $1.6 million for the three months ended March 31, 2022 and 2021, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income. The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the three months ended March 31, 2022 and 2021, respectively, were as follows:
Intangible Assets & Liabilities |  | 2022 |  | 2021
In-place leases |  | 10.7 |  | 14.2
Leasing costs |  | 10.7 |  | 14.2
Customer relationships |  | 16.1 |  | 19.2
Above market leases |  | 12.7 |  | 14.2
Below market leases |  | 7.1 |  | 0.0
All intangible assets & liabilities |  | 11.9 |  | 15.4

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