INVESTMENTS IN REAL ESTATE

6 Months Ended

Jun. 30, 2024

3. INVESTMENTS IN REAL ESTATE

Investments in real estate consist of the following (in thousands):


	June 30, 2024		December 31, 2023
Land	$	175,682	$	175,715
Land improvements	5,863		5,862
Buildings and improvements	635,273		633,299
Furniture, fixtures, and equipment	11,562		11,627
Tenant improvements	26,547		26,460
Work in progress	18,848		15,915
Investments in real estate	873,775		868,878
Accumulated depreciation	(174,446)		(164,116)
Net investments in real estate	$	699,329	$	704,762

For the three months ended June 30, 2024 and 2023, the Company recorded depreciation expense of $5.8 million and $5.9 million, respectively. For the six months ended June 30, 2024 and 2023, the Company recorded depreciation expense of $11.7 million and $10.7 million, respectively.

2024 Transactions—There were no acquisitions or dispositions during the six months ended June 30, 2024.

2023 Transactions—During the six months ended June 30, 2023, the Company acquired an interest in the following properties from subsidiaries indirectly wholly-owned by a fund that is managed by affiliates of CIM Group. The purchases were accounted for as asset acquisitions.


	Asset	Date of		Interest		Purchase
Property	Type	Acquisition	Units	Acquired		Price
						(in thousands)
Channel House	Multifamily(1)	January 31, 2023	333	89.4	%	$	134,615
F3 Land Site	Multifamily (1)	January 31, 2023	N/A	89.4	%	$	250
466 Water Street Land Site	Multifamily (1)	January 31, 2023	N/A	89.4	%	$	2,500
1150 Clay	Multifamily (2)	March 28, 2023	288	98.1	%	$	145,500

(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of these properties totaled $37,000, which are not included in the purchase prices above. The building at Channel House also includes approximately 1,864 square feet of retail space. The F3 Land Site is currently being utilized as a surface parking lot and being evaluated for future development options including hotel development but there are no formal plans in place to begin development as of June 30, 2024.

(2)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $149,000, which are not included in the purchase price above. The building also includes approximately 3,968 square feet of retail space.

In addition, please see “Investments in Unconsolidated Entities” (Note 4) for information on the Company’s real estate acquisitions through its investments in Unconsolidated Joint Ventures.

The Company sold an interest in the following property during the six months ended June 30, 2023.

Asset

Date of

Interest

Sales

Gain on

Property

Type

Sale

Sold

Price

Sale

(in thousands)

4750 Wilshire Boulevard (1)

Office / Multifamily

February 17, 2023

80.0

34,400

1,104

(1)The Company sold 80% of its interest in 4750 Wilshire Boulevard (excluding a vacant land parcel which was not included in the sale) to co-investors with whom the Company formed the 4750 Wilshire JV (defined in Note 4). At the acquisition date, the Company received net proceeds of $16.7 million and recorded a receivable of $17.7 million, all of which has been collected as of June 30, 2024. Additionally, as of June 30, 2024, the Company has a receivable of $396,000 due from the 4750 Wilshire JV included in other assets on the Company’s consolidated balance sheet related to development costs incurred by the Company at 4750 Wilshire Boulevard prior to the sale of 80% of its interest in the property to the 4750 Wilshire JV. The Company owns a 20% interest in the 4750 Wilshire JV and accounts for its investment as an equity method investment.

The results of operations of the properties the Company acquired have been included in the consolidated statements of operations from the dates of acquisition. The following table summarizes the purchase price allocation of the aforementioned acquisitions during the six months ended June 30, 2023. There were no acquisitions during the six months ended June 30, 2024.


	Six Months Ended June 30, 2023



	(in thousands)
Land	$	36,613
Land improvements	4,523
Buildings and improvements	206,717

Furniture, fixtures, and equipment	8,140
Acquired in-place leases (1)	27,210
Acquired above-market leases (2)	71
Acquired below-market leases (3)	(223)
Net assets acquired	$	283,051

(1)The amortization period for the in-place leases acquired during the six months ended June 30, 2023 was approximately 6 months at the date of acquisition.

(2)The amortization period for the above-market leases acquired during the six months ended June 30, 2023 was approximately 7 months at the date of acquisition.

(3)The amortization period for the below-market leases acquired during the six months ended June 30, 2023 was approximately 5 months at the date of acquisition.