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REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS | 12 Months Ended
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Dec. 31, 2017
REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS |
REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS | NOTE 4—REAL ESTATE INVESTMENTS AND MINIMUM FUTURE RENTALS Real Estate Acquisitions The following charts detail the Company's acquisitions of real estate during 2017 and 2016 (amounts in thousands):
Description of Property |  | Date Acquired |  | Contract Purchase Price |  | Terms of Payment |  | Third Party Real Estate Acquisition Costs(a) |
Forbo industrial facility, Huntersville, North Carolina |  | May 25, 2017 |  | $ | 8,700 |  | Cash and $5,190 mortgage(b) |  | $ | 72 |
Saddle Creek Logistics industrial facility, Pittston, Pennsylvania |  | June 9, 2017 |  |  | 11,750 |  | All cash(c) |  |  | 199 |
Corporate Woods industrial facility, Ankeny, Iowa |  | June 20, 2017 |  |  | 14,700 |  | All cash(d) |  |  | 29 |
Dufresne Spencer Group industrial facility, Memphis, Tennessee |  | October 10, 2017 |  |  | 8,000 |  | All cash |  |  | 87 |
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Totals for 2017 |  |  |  | $ | 43,150 |  |  |  | $ | 387 |
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Description of Property |  | Date Acquired |  | Contract Purchase Price |  | Terms of Payment |  | Third Party Real Estate Acquisition Costs(e) |
Multi-tenant industrial facility, Greenville, South Carolina |  | March 30, 2016 |  | $ | 8,100 |  | All cash |  | $ | 80 |
Multi-tenant industrial facility, Greenville, South Carolina |  | March 30, 2016 |  |  | 8,950 |  | All cash |  |  | 81 |
Toro distribution facility, El Paso, Texas |  | June 3, 2016 |  |  | 23,695 |  | All cash |  |  | 72 |
4 Advanced Auto retail stores, Ohio |  | June 16, 2016 |  |  | 6,523 |  | Cash and $4,300 mortgage(b) |  |  | 80 |
Land—The Briarbrook Village Apartments, Wheaton, Illinois |  | August 2, 2016 |  |  | 10,530 |  | All cash |  |  | — | (f)
Burlington Coat and Micro Center retail stores, St. Louis Park, Minnesota |  | August 12, 2016 |  |  | 14,150 |  | All cash |  |  | 74 |
Land—The Vue Apartments, Beachwood, Ohio |  | August 16, 2016 |  |  | 13,896 |  | All cash |  |  | — | (g)
Famous Footwear distribution facility, Lebanon, Tennessee |  | September 1, 2016 |  |  | 32,734 |  | Cash and $21,288 mortgage(b) |  |  | 195 |
Other costs(h) |  |  |  |  | — |  |  |  |  | 14 |
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Totals for 2016 |  |  |  | $ | 118,578 |  |  |  | $ | 596 |
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(a) | Transaction costs incurred with these asset acquisitions were capitalized.
(b) | The new mortgage debt was obtained simultaneously with the acquisition of the property.
(c) | In August 2017, the Company obtained new mortgage debt of $7,200.
(d) | In July 2017, the Company obtained new mortgage debt of $8,820.
(e) | Included as an expense in Real estate acquisition costs in the accompanying consolidated statement of income.
(f) | Transaction costs aggregating $6 incurred with this asset acquisition were capitalized.
(g) | Transaction costs aggregating $5 incurred with this asset acquisition were capitalized.
(h) | Costs incurred for properties purchased in the previous year.
The following charts detail the allocation of the purchase price for the Company's acquisitions of real estate during 2017 and 2016 (amounts in thousands):
|  |  |  |  |  |  |  | Intangible Lease |  |  |
|  |  |  |  |  | Building Improvements |  |  |
Description of Property |  | Land |  | Building |  | Asset |  | Liability |  | Total |
Forbo industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Huntersville, North Carolina |  | $ | 1,046 |  | $ | 6,452 |  | $ | 222 |  | $ | 1,052 |  | $ | — |  | $ | 8,772 |
Saddle Creek Logistics industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pittston, Pennsylvania |  |  | 999 |  |  | 9,675 |  |  | 247 |  |  | 1,028 |  |  | — |  |  | 11,949 |
Corporate Woods industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ankeny, Iowa |  |  | 1,351 |  |  | 11,420 |  |  | 187 |  |  | 1,929 |  |  | (158 | ) |  | 14,729 |
Dufresne Spencer Group industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Memphis, Tennessee |  |  | 135 |  |  | 7,750 |  |  | 202 |  |  | — |  |  | — |  |  | 8,087 |
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Totals for 2017 |  | $ | 3,531 |  | $ | 35,297 |  | $ | 858 |  | $ | 4,009 |  | $ | (158 | ) | $ | 43,537 |
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Multi-tenant industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Greenville, South Carolina |  | $ | 693 |  | $ | 6,718 |  | $ | 175 |  | $ | 514 |  | $ | — |  | $ | 8,100 |
Multi-tenant industrial facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Greenville, South Carolina |  |  | 528 |  |  | 7,893 |  |  | 181 |  |  | 441 |  |  | (93 | ) |  | 8,950 |
Toro distribution facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
El Paso, Texas |  |  | 3,691 |  |  | 17,525 |  |  | 379 |  |  | 2,100 |  |  | — |  |  | 23,695 |
4 Advanced Auto retail stores, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ohio |  |  | 653 |  |  | 5,012 |  |  | 189 |  |  | 912 |  |  | (243 | ) |  | 6,523 |
Land—The Briarbrook Village Apartments, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wheaton, Illinois |  |  | 10,536 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,536 |
Burlington Coat and Micro Center retail stores, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
St. Louis Park, Minnesota |  |  | 3,388 |  |  | 12,632 |  |  | 456 |  |  | 651 |  |  | (2,977 | ) |  | 14,150 |
Land—The Vue Apartments, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beachwood, Ohio |  |  | 13,901 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 13,901 |
Famous Footwear distribution facility, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Lebanon, Tennessee |  |  | 2,094 |  |  | 29,436 |  |  | 603 |  |  | 3,576 |  |  | (2,975 | ) |  | 32,734 |
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Totals for 2016 |  | $ | 35,484 |  | $ | 79,216 |  | $ | 1,983 |  | $ | 8,194 |  | $ | (6,288 | ) | $ | 118,589 |
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As of December 31, 2017, the weighted average amortization period for the 2017 acquisitions is 6.8 years and 12.2 years for the intangible lease assets and intangible lease liabilities, respectively. As of December 31, 2016, the weighted average amortization period for the 2016 acquisitions is 9.3 years and 13.0 years for the intangible lease assets and intangible lease liabilities, respectively. The Company assessed the fair value of the lease intangibles based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs are Level 3 (as defined in Note 2) in the fair value hierarchy. At December 31, 2017 and 2016, accumulated amortization of intangible lease assets was $17,542,000 and $16,074,000, respectively, and accumulated amortization of intangible lease liabilities was $7,849,000 and $6,386,000, respectively. During 2017, 2016 and 2015, the Company recognized net rental income of $897,000, $712,000 and $723,000, respectively, for the amortization of the above/below market leases. During 2017, 2016 and 2015, the Company recognized amortization expense of $4,984,000, $3,612,000 and $3,467,000, respectively, relating to the amortization of the origination costs associated with in-place leases, which is included in Depreciation and amortization expense. The unamortized balance of intangible lease assets as a result of acquired above market leases at December 31, 2017 will be deducted from rental income through 2032 as follows (amounts in thousands):
2018 |  | $ | 748 |
2019 |  |  | 646 |
2020 |  |  | 620 |
2021 |  |  | 614 |
2022 |  |  | 448 |
Thereafter |  |  | 1,217 |
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Total |  | $ | 4,293 |
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The unamortized balance of intangible lease liabilities as a result of acquired below market leases at December 31, 2017 will be added to rental income through 2055 as follows (amounts in thousands):
2018 |  | $ | 1,794 |
2019 |  |  | 1,781 |
2020 |  |  | 1,629 |
2021 |  |  | 1,593 |
2022 |  |  | 1,468 |
Thereafter |  |  | 9,286 |
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Total |  | $ | 17,551 |
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The unamortized balance of origination costs associated with in-place leases at December 31, 2017 will be charged to amortization expense through 2055 as follows (amounts in thousands):
2018 |  | $ | 4,056 |
2019 |  |  | 3,669 |
2020 |  |  | 3,435 |
2021 |  |  | 3,168 |
2022 |  |  | 2,672 |
Thereafter |  |  | 9,232 |
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Total |  | $ | 26,232 |
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Minimum Future Rents The rental properties owned at December 31, 2017 are leased under operating leases with current expirations ranging from 2018 to 2037, with certain tenant renewal rights. The minimum future contractual rents do not include (i) straight-line rent or amortization of intangibles and (ii) rental income which can be deferred under the Company's ground leases on the basis of the respective property's operating performance. Such rents were $3,623,000, $2,379,000 and $1,458,000 during 2017, 2016 and 2015, respectively. The minimum future contractual rents to be received over the next five years and thereafter on non-cancellable operating leases in effect at December 31, 2017 are as follows (amounts in thousands):
2018 |  | $ | 64,412 |
2019 |  |  | 62,360 |
2020 |  |  | 60,035 |
2021 |  |  | 56,965 |
2022 |  |  | 47,434 |
Thereafter |  |  | 176,838 |
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Total |  | $ | 468,044 |
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Unbilled Rent Receivable At December 31, 2017 and 2016, the Company's unbilled rent receivables aggregating $14,125,000 and $13,797,000, respectively, represent rent reported on a straight-line basis in excess of rental payments required under the respective leases. The unbilled rent receivable is to be billed and received pursuant to the lease terms during the next 24 years. During 2017 and 2016, the Company wrote off $105,000 and $2,060,000, respectively, of unbilled straight-line rent receivable related to the properties sold during such years, which reduced the gain on sale reported on the consolidated statements of income. During 2017, 2016 and 2015, the Company also wrote off $362,000, $7,000 and $89,000, respectively, of unbilled straight-line rent receivable related to properties at which the tenant filed for Chapter 11 bankruptcy. During 2015, the Company wrote off unbilled straight-line rent receivables of $477,000 related to lease terminations effected prior to lease expirations (see below). Lease Termination Fees In 2015, the Company received lease termination fees of $2,886,000 from tenants in lease buy-out transactions. In connection with the receipt of these fees, the Company wrote off an aggregate of $530,000 as offsets to rental income, representing the entire balance of the unbilled rent receivables and the intangible lease assets related to these tenants as of December 31, 2015. The Company re-leased substantially all of such spaces simultaneously with the termination of the leases. Purchase of Partner's 50% Interest In March 2015, the Company purchased for $6,300,000, its partner's 50% interest in an unconsolidated joint venture that owned a property in Lincoln, Nebraska, and as a result, the Company obtained a controlling financial interest. The payment was comprised of (i) $2,636,000 paid directly to the partner and (ii) $3,664,000, substantially all of which was used to pay off the partner's 50% share of the underlying joint venture mortgage. In consolidating the investment, the Company recorded a purchase price fair value adjustment of $960,000 on the consolidated statement of income, representing the difference between the book value of its preexisting equity investment on the March 31, 2015 purchase date and the fair value of the net assets acquired.

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