As of March 31, 2021, the Company’s real estate portfolio consisted of 123 properties (including one land parcel held for future development), in 26 states consisting substantially of office, warehouse, and manufacturing facilities with a combined acquisition value of approximately $5.4 billion, including the allocation of the purchase price to above and below-market lease valuation.

Depreciation expense for buildings and improvements for the three months ended March 31, 2021 was $26.5 million. Amortization expense for intangibles, including, but not limited to, tenant origination and absorption costs for the three months ended March 31, 2021 was $17.8 million.

The CCIT II Merger was accounted for as an asset acquisition under ASC 805, with the Company treated as the accounting acquirer. The total purchase price was allocated to the individual assets acquired and liabilities assumed based upon their relative fair values. Intangible assets were recognized at their relative fair values in accordance with ASC 350, Intangibles. Based on an evaluation of the relevant factors and the guidance in ASC 805 requiring significant management judgment, the entity considered the acquirer for accounting purposes is also the legal acquirer. In order to make this consideration, various factors have been analyzed including which entity issued its equity interests, relative voting rights, existence of minority interests (if any), control of the board of directors, management composition, existence of a premium as it applies to the exchange ratio, relative size, transaction initiation, operational structure, relative composition of employees, surviving brand and name, and other factors. The strongest factor identified was the relative size of the Company as compared to CCIT II. Based on financial measures, the Company was a significantly larger entity than CCIT II and its stockholders hold the majority of the voting shares of the Company.

The assets (including identifiable intangible assets) and liabilities (including executory contracts and other commitments) of CCIT II as of the effective time of the CCIT II Merger was recorded at their respective relative fair values and added to those of the Company. Transaction costs incurred by the Company were capitalized in the period in which the costs were incurred and services were received. The total purchase price was allocated to the individual assets acquired and liabilities assumed based upon their relative fair values. Intangible assets were recognized at their relative fair values in accordance with ASC 805.

Upon the effective time of the CCIT II Merger on March 1, 2021, each of CCIT II's 67.1 million issued and outstanding shares of common stock were converted into the right to receive 1.392 newly issued shares of the Class E common stock of the Company (approximately 93.5 million shares). Total consideration transferred is calculated as such:


	As of March 1, 2021
CCIT II's common stock shares prior to conversion	67,139,129
Exchange ratio	1.392
Implied GCEAR common stock issued as consideration	93,457,668
GCEAR's Class E NAV per share in effect at March 1, 2021	$	8.97
Total consideration	$	838,315


	March 1, 2021
Assets:
Cash assumed	$	2,721
Land	141,892
Building and improvements	992,779
Tenant origination and absorption cost	152,793
In-place lease valuation (above market)	11,591
Intangibles	27,788
Other assets	3,522
Total assets	$	1,333,086
Liabilities:
Debt	$	415,926
In-place lease valuation (below market)	10,026
Lease liability	4,616
Accounts payable and other liabilities	20,604
Total liabilities	451,172
Fair value of net assets acquired	881,914
Less: GCEAR's CCIT II Merger expenses	43,599
Fair value of net assets acquired, less GCEAR's CCIT II Merger expenses	$	838,315

In connection with the CCIT II Merger, the Company incurred various transaction and administrative costs. These costs included advisory fees, legal, tax, accounting, valuation fees, and other costs. These costs were capitalized as a component of the cost of the assets acquired.

The Company allocates the purchase price to the relative fair value of the tangible assets of a property by valuing the property as if it were vacant. This “as-if vacant” value is estimated using an income, or discounted cash flow, approach that relies upon Level 3 inputs, which are unobservable inputs based on the Company's review of the assumptions a market participant would use. These Level 3 inputs include discount rates, capitalization rates, market rents and comparable sales data for similar properties. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. In calculating the “as-if vacant” value for the properties acquired during the three months ended March 31, 2021, the Company used a discount rate range of 5.75% to 8.75%.

In determining the fair value of intangible lease assets or liabilities, the Company also considers Level 3 inputs. Acquired above and below-market leases are valued based on the present value of the difference between prevailing market rates and the in-place rates measured over a period equal to the remaining term of the lease for above-market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases, if applicable. The estimated fair value of acquired in-place at-market tenant leases are the costs that would have been incurred to lease the property to the occupancy level of the property at the date of acquisition. Such estimates include the value associated with leasing commissions, legal and other costs, as well as the estimated period necessary to lease such properties that would be incurred to lease the property to its occupancy level at the time of its acquisition. Acquisition costs associated with asset acquisitions are capitalized during the period they are incurred.


Acquisition	Land			Building		Improvements		Tenant origination and absorption costs		Other Intangibles		In-place lease valuation - above/(below) market		Financing Leases		Total (1)
CCIT II Properties	$	141,892	(2)	$	958,166	$	34,613	$	152,793	$	27,788	$	1,565	$	(3,681)	$	1,313,136

The Company allocated a portion of the acquired and contributed real estate asset value to in-place lease valuation, tenant origination and absorption cost, and other intangibles, net of the write-off of intangibles for the three months ended March 31, 2021 and December 31, 2020:


	March 31, 2021		December 31, 2020
In-place lease valuation (above market)	$	54,545	$	43,576
In-place lease valuation (above market) - accumulated amortization	(36,963)		(35,604)
In-place lease valuation (above market), net	$	17,582	$	7,972

Ground leasehold interest (below market)	2,254		2,254
Ground leasehold interest (below market) - accumulated amortization	(198)		(191)
Ground leasehold interest (below market), net	2,056		2,063
Intangibles - other	32,028		4,240
Intangibles - other - accumulated amortization	(4,367)		(4,240)
Intangible assets, net	$	47,299	$	10,035

In-place lease valuation (below market)	$	(77,862)	$	(68,334)
Land leasehold interest (above market)	(3,072)		(3,072)
Intangibles - other (above market)	(387)		—
In-place lease valuation & land leasehold interest - accumulated amortization	45,372		44,073
Intangible liabilities, net	$	(35,949)	$	(27,333)

Tenant origination and absorption cost	$	888,291	$	740,489
Tenant origination and absorption cost - accumulated amortization	(423,868)		(412,462)
Tenant origination and absorption cost, net	$	464,423	$	328,027

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, other intangibles, and other leasing costs as of March 31, 2021 for the next five years:


Year	In-place lease valuation, net		Tenant origination and absorption costs		Ground leasehold interest		Other intangibles		Other leasing costs
2021	$	(1,464)	$	61,186	$	(218)	$	1,125	$	4,702
2022	$	(2,339)	$	76,904	$	(290)	$	1,495	$	5,769
2023	$	(2,845)	$	69,849	$	(290)	$	1,495	$	5,637
2024	$	(1,803)	$	54,791	$	(291)	$	1,499	$	5,412
2025	$	(1,331)	$	43,007	$	(290)	$	1,495	$	5,386
2026	$	(1,156)	$	38,348	$	(290)	$	1,495	$	4,761

During the three months ended March 31, 2021, in connection with the preparation and review of the Company's financial statements, the Company recorded an impairment provision of approximately $4.2 million as it was determined that the carrying value of the real estate would not be recoverable on two properties. This impairment resulted from change in expected hold period and selling price. In determining the fair value of property, the Company considered Level 3 inputs. See Note 8, Fair Value Measurements, for details.

In conjunction with the acquisition of certain assets, as required by certain lease provisions or certain lenders in conjunction with an acquisition or debt financing, or credits received by the seller of certain assets, the Company assumed or funded reserves for specific property improvements and deferred maintenance, re-leasing costs, and taxes and insurance, which are included on the consolidated balance sheets as restricted cash. Additionally, an ongoing replacement reserve is funded by certain tenants pursuant to each tenant’s respective lease as follows: