Real Estate (Tables)

6 Months Ended

Jun. 30, 2019

As the Mergers were accounted for as a reverse acquisition, the total consideration transferred was computed by dividing the Company's outstanding shares as of April 30, 2019 by the exchange ratio of 1.04807 and multiplied by EA-1’s estimated value per share of $10.02 (including transaction costs) as of April 30, 2019. Consideration transferred is calculated as such (in thousands except share and per share data):



GCEAR's common shares outstanding as of April 30, 2019	78,054,934
Exchange ratio	1.04807
Implied EA-1 common stock issued in consideration	74,474,924

GCEAR's operating partnership units outstanding as of April 30, 2019	527,045
Exchange ratio	1.04807
Implied EA-1 operating partnership units issued in consideration	502,872
EA-1's net asset value per share as of April 30, 2019	$	10.02
Total consideration	$	751,278

Schedule Of Asset Acquisition

The following summarizes the purchase price allocations of the properties acquired during the six months ended June 30, 2019:



Acquisition	Land		Building		Improvements		Tenant origination and absorption costs		In-place lease valuation - above market		In-place lease valuation - (below) market			Total ⁽¹⁾		2019 Revenue ⁽²⁾
Mergers	$	135,875	$	849,236	$	62,928	$	214,428	$	3,627	$	(12,476	)	$	1,253,618	$	16,493


(1)	The allocations noted above are based on a determination of the relative fair value of the total consideration provided and represent the amount paid including capitalized acquisition costs.


(2)	The operating results of the properties acquired in the Mergers have been included in the Company's consolidated statement of operations since the acquisition date of April 30, 2019.

The following table summarizes the final purchase price allocation based on a valuation report prepared by the Company's third-party valuation specialist that was subject to management's review and approval:



	Amount
Assets:
Cash assumed	$	35,659
Land	135,875
Building and improvements	912,164
Tenant origination and absorption cost	214,428
Intangibles	3,627
Construction in progress	263
Other assets	8,188
Total assets	1,310,204
Liabilities:
Debt (net of $1.1 million premium)	498,906
Below market leases	12,476
Due to Affiliates	8,804
Distribution payable	1,854
Restricted reserves	11,050
Accounts payable and other liabilities	15,498
Total liabilities	548,588
Fair value of net assets acquired	761,616
Less: EA-1's Merger expenses	10,338
Fair value of net assets acquired, less EA-1's Merger expenses	$	751,278

Schedule of Merger Related Costs Incurred

The following is a breakdown of the Company's costs incurred during the six months ended June 30, 2019 related to the Mergers:



	Amount
Advisory and valuation fees	$	8,592
Legal, accounting and tax fees	1,384
Other fees	362
Total Merger-related fees	$	10,338

Schedule of in-place lease valuation and tenant origination and absorption cost

The Company allocated a portion of the acquired and contributed real estate asset value to in-place lease valuation and tenant origination and absorption cost, net of the write-off of intangibles, as of June 30, 2019 and December 31, 2018:



	June 30, 2019			December 31, 2018
In-place lease valuation (above market)	$	46,363		$	42,736
In-place lease valuation (above market) - accumulated amortization	(33,639		)	(31,995		)
In-place lease valuation (above market), net	12,724			10,741

Ground leasehold interest (below market)	2,254			2,255
Ground leasehold interest (below market) - accumulated amortization	(150		)	(137		)
Ground leasehold interest (below market), net	2,104			2,118
Intangibles - other	—			4,240
Intangible assets, net	$	14,828		$	17,099

In-place lease valuation (below market)	$	(67,622	)	$	(55,147	)
In-place lease valuation (below market) - accumulated amortization	35,444			32,032
In-place lease valuation (below market), net	$	(32,178	)	$	(23,115	)

Tenant origination and absorption cost	$	744,610		$	530,181
Tenant origination and absorption cost - accumulated amortization	(326,520		)	(296,201		)
Tenant origination and absorption cost, net	$	418,090		$	233,980

Schedule of estimated annual amortization (income) expense

The following table sets forth the estimated annual amortization (income) expense for in-place lease valuation, net, tenant origination and absorption costs, ground leasehold improvements, and other leasing costs as of June 30, 2019 for the next five years:



Year	In-place lease valuation, net			Tenant origination and absorption costs		Ground leasehold improvements		Other leasing costs
Remaining 2019	$	(1,872	)	$	35,936	$	27	$	4,496
2020	$	(1,813	)	$	68,322	$	27	$	5,837
2021	$	(1,952	)	$	60,341	$	27	$	6,446
2022	$	(2,434	)	$	57,000	$	27	$	6,414
2023	$	(2,441	)	$	51,692	$	27	$	6,351

Restrictions on cash and cash equivalents

Additionally, an ongoing replacement reserve is funded by certain tenants pursuant to each tenant’s respective lease as follows:



	Balance as of
	June 30, 2019		December 31, 2018
Cash reserves	$	27,535	$	12,945
Restricted lockbox	5,916		2,862
Total	$	33,451	$	15,807