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REAL ESTATE INVESTMENTS

12 Months Ended

Dec. 31, 2024

NOTE 4 — REAL ESTATE INVESTMENTS

Acquisitions

The following tables detail the Company’s real estate asset acquisitions and purchase price allocations during 2024 and 2023 (amounts in thousands):


		Contract			Capitalized
		Purchase			Transaction
Description of Industrial Property	Date Acquired	Price		Terms of Payment	Costs
Quality Custom Distribution Services, Inc.
Albuquerque, New Mexico	April 24, 2024	$	6,450	All cash (a)	$	55
Russell Equipment, Inc.
Savannah, Georgia	May 23, 2024		5,240	All cash (b)		53
Multi-tenant
Council Bluffs, Iowa	August 19, 2024		33,000	Cash and $18,425 mortgage (c)		79
Totals for 2024		$	44,690		$	187

Multi-tenant
Blythewood, South Carolina	July 13, 2023	$	13,400	Cash and $4,280 mortgage (d)	$	109
Totals for 2023		$	13,400		$	109

(a)	Subsequent to the acquisition of this property, the Company obtained new mortgage debt of $3,401 bearing an interest rate of 6.00% and maturing in 2032.

(b)	Subsequent to the acquisition of this property, the Company obtained new mortgage debt of $2,812 bearing an interest rate of 6.00% and maturing in 2035.

(c)	Simultaneously with the acquisition of this property, the Company obtained new mortgage debt of $18,425 bearing an interest rate of 6.08% and maturing in 2034.

(d)	Simultaneously with the acquisition of this property, the Company assumed a mortgage of $4,280 bearing an interest rate of 4.60% and maturing in 2029.


			Building &		Intangible Lease				Mortgage
Description of Industrial Property	Land		Improvements		Asset (a)		Liability (b)		Intangible (c)		Total
Quality Custom Distribution Services, Inc.
Albuquerque, New Mexico	$	1,341	$	6,330	$	689	$	(1,855)	$	—	$	6,505
Russell Equipment, Inc.
Savannah, Georgia		1,044		3,724		525		—		—		5,293
Multi-tenant
Council Bluffs, Iowa		3,811		28,462		2,512		(1,706)		—		33,079
Totals for 2024	$	6,196	$	38,516	$	3,726	$	(3,561)	$	—	$	44,877

Multi-tenant
Blythewood, South Carolina	$	311	$	12,304	$	871	$	(237)	$	260	$	13,509
Totals for 2023	$	311	$	12,304	$	871	$	(237)	$	260	$	13,509

(a)	With respect to the intangible lease assets, the weighted average amortization period for the 2024 and 2023 acquisitions is 5.4 years and 1.1 years, respectively.

(b)	With respect to the intangible lease liabilities, the weighted average amortization period for the 2024 and 2023 acquisitions is 8.7 years and 1.1 years, respectively.

(c)	With respect to the mortgage intangible asset, the weighted average amortization period for the 2023 acquisition is 5.4 years.

NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED)

The following table details the market capitalization and discount rates associated with the assessment of the fair value of the related lease and mortgage intangibles for the Company’s acquisitions of real estate:


			Discount Rate (a)
Year		Market Cap	Lease	Mortgage
Acquired	Description of Industrial Property	Rate (a)	Intangible	Intangible
2024	Quality Custom Distribution Services, Inc.
	Albuquerque, New Mexico	6.75%	7.14%	—
2024	Russell Equipment, Inc.
	Savannah, Georgia	7.00%	7.15%	—
2024	Multi-tenant
	Council Bluffs, Iowa	6.60%	7.41%	—
2023	Multi-tenant
	Blythewood, South Carolina	6.75%	6.75%	6.00%

(a)

The fair value of the tangible and intangible leases and mortgages were assessed as of the acquisition date using an income approach and estimated cash flow projections which utilize an appropriate market capitalization rate and discount rate which are categorized as Level 3 unobservable inputs in the fair value hierarchy (as defined in Note 2).

The following table details the accumulated amortization of acquired intangibles during the periods indicated (amounts in thousands):


		December 31, 2024						December 31, 2023
		Intangible						Intangible
		Lease Assets		Mortgage Asset		Lease Liabilities		Lease Assets		Mortgage Asset		Lease Liabilities
Accumulated amortization	$	17,090	$	263	$	2,787	$	19,377	$	126	$	5,191

The following table details the amortization of acquired intangibles and the classification in the Company’s consolidated statements of income for the periods indicated (amounts in thousands):


	Year Ended December 31,
	2024		2023		2022		Classification
Intangible lease assets/liabilities	$	1,210	$	952	$	831	Rental income, net
Tenant origination costs		3,980		4,821		4,722	Depreciation and amortization
Intangible mortgage assets		137		114		12	Interest expense

As of December 31, 2024, the future amortization of the Company’s acquired intangibles are as follows (amounts in thousands):


For the year ending December 31,		Intangible Lease Assets (a)		Tenant Origination Costs (b)		Intangible Mortgage Assets (c)		Intangible Lease Liabilities (d)
2025	$	91	$	3,352	$	137	$	1,033
2026		55		3,158		137		1,013
2027		5		2,490		137		1,065
2028		2		1,537		137		976
2029		2		1,039		111		859
Thereafter		5		1,913		8		6,806
Total	$	160	$	13,489	$	667	$	11,752

(a)	The result of acquired above-market leases and will be deducted from rental income through 2032.

(b)	The result of acquired in-place leases and will be charged to Depreciation and amortization expense through 2034.

(c)	The result of acquired below-market mortgages and will be charged to interest expense through 2030.

(d)	The result of acquired below-market leases and will be added to rental income through 2052.

NOTE 4 — REAL ESTATE INVESTMENTS (CONTINUED)

Acquisitions Subsequent to December 31, 2024

On January 16, 2025, the Company acquired two industrial properties located in Theodore, Alabama, and leased by four tenants, for $49,000,000. In connection with these acquisitions, the Company obtained $29,000,000 of mortgage debt on these properties bearing an interest rate of 6.12% and maturing in 2035.

On February 6, 2025, the Company acquired an industrial property located in Wichita, Kansas, and leased by one tenant, for $13,300,000. In connection with this acquisition, the Company obtained $7,500,000 of mortgage debt on this property bearing an interest rate of 6.09% and maturing in 2030.

Depreciation and Amortization

Depreciation of buildings is computed on the straight-line method over an estimated useful life of 40 years. Depreciation of building improvements is computed on the straight-line method over the estimated useful life of the improvements. If the Company determines it is the owner of tenant improvements, the amounts funded to construct the tenant improvements are treated as a capital asset and depreciated over the lesser of the remaining lease term or the estimated useful life of the improvements on the straight-line method. Leasehold interests and the related ground lease payments are amortized over the initial lease term of the leasehold position. During 2024, 2023 and 2022, the Company recorded depreciation expense (including amortization of a leasehold position, lease origination costs, and capitalized leasing commissions) of $24,291,000, $24,789,000 and $23,781,000, respectively.