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Real Estate and Intangible Assets | 12 Months Ended
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Dec. 31, 2024
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 December 31, 2024 and 2023, respectively, excluding real estate held for sale as of December 31, 2024 (dollars in thousands):
|  | December 31, 2024 |  | December 31, 2023
Real estate: |  |  |  |
Land (1) |  | $ | 139,743 |  |  | $ | 143,442 |
Building and improvements |  | 1,017,534 |  |  | 1,020,661 |
Tenant improvements |  | 54,516 |  |  | 57,261 |
Accumulated depreciation |  | (319,646) |  |  | (299,662) |
Real estate, net |  | $ | 892,147 |  |  | $ | 921,702 |
(1)This amount includes $2,711 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 $39.5 million, $41.2 million, and $41.1 million for the years ended December 31, 2024, 2023, and 2022, respectively. Acquisitions During the years ended December 31, 2024 and 2023, we acquired seven and five properties, respectively, which are summarized below (dollars in thousands):
Year Ended |  | Aggregate Square Footage |  | Weighted Average Lease Term |  | Aggregate Purchase Price |  | Aggregate Capitalized Acquisition Costs |  |  |  |  |
December 31, 2024 | (1) | 316,727 |  |  | 20.8 years |  | $ | 27,357 |  |  | $ | 570 |  |  |  |  |  |
December 31, 2023 | (2) | 321,432 |  |  | 19.3 years |  | $ | 30,018 |  |  | $ | 528 |  |  |  |  |  |
(1)On May 7, 2024, we acquired a five-property, 142,125 square foot portfolio in Warfordsburg, Pennsylvania for $12.0 million. The property is fully leased to one tenant and had 25.1 years of remaining lease term at the time we acquired the property. On August 29, 2024, we acquired a 50,102 square foot property in Midland, Texas for $10.2 million. The property is fully leased to one tenant and had 15.0 years of remaining lease term at the time we acquired the property. On November 15, 2024, we acquired a 124,500 square foot property in St. Clair, Missouri for $5.2 million. The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property. (2)On April 14, 2023, we acquired a 76,089 square foot property in Riverdale, Illinois for $5.4 million. The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property. On July 10, 2023, we acquired a 7,714 square foot property in Dallas-Fort Worth, Texas for $3.0 million. The property is fully leased to one tenant and had 9.9 years of remaining lease term at the time we acquired the property. On July 28, 2023, we acquired a 100,000 square foot property in Dallas-Fort Worth, Texas for $9.2 million. The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property. On October 12, 2023, we acquired a 69,920 square foot property in Allentown, Pennsylvania for $7.9 million. The property is fully leased to one tenant and had 20.1 years of remaining lease term at the time we acquired the property. On November 3, 2023, we acquired a 67,709 square foot property in Indianapolis, Indiana for $4.6 million. The property is fully leased to one tenant and had 20.1 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 years ended December 31, 2024 and 2023, respectively, as follows (dollars in thousands):
|  | Year ended December 31, 2024 |  | Year ended December 31, 2023 |
Acquired assets and liabilities |  | Purchase price |  | Purchase price |
Land |  | $ | 2,862 |  |  | $ | 4,629 |  |
Building |  | 18,919 |  |  | 19,726 |  |
Tenant Improvements |  | 613 |  |  | 997 |  |
In-place Leases |  | 1,921 |  |  | 1,642 |  |
Leasing Costs |  | 2,580 |  |  | 2,733 |  |
Customer Relationships |  | 527 |  |  | 684 |  |
Above Market Leases |  | 90 |  | (1) | — |  |
Below Market Leases |  | (155) |  | (2) | (393) |  | (2)
Total Purchase Price |  | $ | 27,357 |  |  | $ | 30,018 |  |
(1)This amount includes $90 of loans receivable included in Other assets on the consolidated balance sheets. (2)This amount includes $155 and $393 of prepaid rent included in Other liabilities on the consolidated balance sheets, respectively. Future Lease Payments Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
Year | Tenant Lease Payments
2025 | $ | 121,496 |
2026 | 117,748 |
2027 | 103,289 |
2028 | 90,869 |
2029 | 82,912 |
Thereafter | 400,392 |
| $ | 916,706 |
Future sales-types lease payments from tenants under non-cancelable leases and reasonably certain purchase options, for each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):
Year | Tenant Lease Payments
2025 | $ | 19,722 |
2026 | — |
2027 | — |
2028 | — |
2029 | — |
Thereafter | — |
| $ | 19,722 |
Difference between undiscounted cash flow and present value | 1,086 |
Sales-type lease receivable | $ | 18,636 |
In accordance with the lease terms, substantially all operating expenses are required to be paid by 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 lease payments and variable lease payments for the years ended December 31, 2024, 2023, and 2022, respectively (dollars in thousands):
|  | For the year ended December 31,
Lease revenue reconciliation |  | 2024 |  | 2023 |  | 2022
Fixed lease payments |  | $ | 132,272 |  |  | $ | 130,551 |  |  | $ | 132,032 |
Variable lease payments |  | 17,116 |  |  | 17,033 |  |  | 16,949 |
|  | $ | 149,388 |  |  | $ | 147,584 |  |  | $ | 148,981 |
Sales-Type Leases For the year ended December 31, 2024, we had one lease classified as a sales-type lease. We recorded a sales-type lease receivable of $18.6 million in the consolidate d balance sheet, net of $0.02 million in allowance for credit loss, and derecognized the carry value of $14.6 million in the consolidated balance sheet. We recognized a $3.9 million selling profit from sale-type leases, net, that was included in gain on sale of real estate, net, in the consolidated statements of operations. For the year ended December 31, 2024, t he interest income earned from sales-types leases of $0.1 million was included in other income in the consolidated statements of operations. There was no sales-type lease activity in the years ended December 31, 2023 and 2022. In developing the expected credit loss, we reviewed the tenant’s credit rating, which is AA- stable, and performed a collectibility analysis, confirming they were current on payments as of December 31, 2024. The sales-type lease receivable, net, approximates fair value as of December 31, 2024. Accounts Receivable At December 31, 2024 and 2023, accounts receivable from tenants totaled $1.4 million and $1.5 million, respectively, included in other assets on the consolidated balance sheets. 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 December 31, 2024 and 2023, excluding real estate held for sale as of December 31, 2024 (dollars in thousands):
|  | December 31, 2024 |  | December 31, 2023
|  | Lease Intangibles |  | Accumulated Amortization |  | Lease Intangibles |  | Accumulated Amortization
In-place leases |  | $ | 96,392 |  |  | $ | (64,830) |  |  | $ | 98,615 |  |  | $ | (63,269) |
Leasing costs |  | 89,093 |  |  | (48,963) |  |  | 84,844 |  |  | (46,096) |
Customer relationships |  | 60,377 |  |  | (36,962) |  |  | 63,185 |  |  | (36,231) |
|  | $ | 245,862 |  |  | $ | (150,755) |  |  | $ | 246,644 |  |  | $ | (145,596) |
|  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion |  | Deferred Rent Receivable/(Liability) |  | Accumulated (Amortization)/Accretion
Above market leases |  | $ | 13,718 |  |  | $ | (11,582) |  |  | $ | 13,431 |  |  | $ | (10,675) |
Below market leases and deferred revenue |  | (56,616) |  |  | 34,620 |  |  | (59,411) |  |  | 30,087 |
Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $16.3 million, $16.7 million, and $19.1 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in depreciation and amortization expense in the consolidated statement of operations and comprehensive income. Total amortization related to above-market lease values was $0.5 million, $0.6 million, and $0.8 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in lease revenue in the consolidated statement of operations and comprehensive income. Total amortization related to below-market lease values was $7.3 million, $8.0 million, and $5.1 million for the years ended December 31, 2024, 2023, and 2022, respectively, and is included in lease revenue in the consolidated statement of operations and comprehensive income. The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the years ended December 31, 2024 and 2023, respectively, were as follows:
Intangible Assets & Liabilities |  | 2024 |  | 2023
In-place leases |  | 20.9 |  | 18.9
Leasing costs |  | 20.9 |  | 18.9
Customer relationships |  | 26.9 |  | 26.3
Above market leases |  | 25.1 |  | 0.0
Below market leases |  | 20.1 |  | 20.1
All intangible assets & liabilities |  | 22.3 |  | 21.1
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, 2024 (dollars in thousands):
Year | Estimated Amortization Expense of In-Place Leases, Leasing Costs and Customer Relationships
2025 | $ | 15,229 |
2026 | 13,546 |
2027 | 11,896 |
2028 | 9,744 |
2029 | 8,976 |
Thereafter | 35,716 |
| $ | 95,107 |
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, 2024 (dollars in thousands):
Year | Net Increase to Rental Income Related to Above and Below Market Leases (1)
2025 | $ | 5,862 |
2026 | 3,771 |
2027 | 2,479 |
2028 | 2,468 |
2029 | 2,420 |
Thereafter | 2,761 |
| $ | 19,761 |
(1)Does not include ground lease amortization of $99.

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