Significant Acquisitions

9 Months Ended

Sep. 30, 2013

Significant Acquisitions

Significant Acquisitions

3. Significant Acquisitions

During the nine months ended September 30, 2013, the Company acquired three properties with an aggregate of approximately 1,951,000 rentable square feet at an aggregate purchase price of approximately $558 million excluding closing costs and adjustments.  One property is located in Atlanta, Georgia and two properties are located in Denver, Colorado.  The Company expensed acquisition costs of approximately $556,000 related to these acquisitions.

The purchase price of the properties was allocated to real estate investments and leases, including lease origination costs.  Lease origination costs represent the value associated with acquiring an in-place lease (i.e. the market cost to execute a similar lease, including leasing commission, legal, vacancy, and other related costs).  The value assigned to buildings approximates their replacement cost; the value assigned to land approximates its appraised value; and the value assigned to leases approximates their fair value.  Other assets and liabilities are recorded at their historical costs, which approximates fair value.

The following table summarizes the estimated fair value of the assets acquired at the date of acquisition:

Real estate assets	$	454,447
Value of acquired real estate leases	110,039
Acquired unfavorable leases	(9,897		)
Total	$	554,589

The Company assessed the fair value of the acquired real estate leases based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs are Level 3 in the fair value hierarchy.

Pro forma operating results for the Company and the acquisitions are shown in the following table.  The results assume that the properties were acquired on January 1, 2012.  The results are not necessarily indicative of what the Company’s actual results of operations would have been for the periods indicated, nor do they purport to represent the results of operations of any future periods.

	For the Three Months Ended					For the Nine Months Ended
(unaudited)	September 30,					September 30,
(in thousands except per share amounts)	2013		2012			2013		2012
Revenue	$	61,300	$	53,895		$	178,322	$	155,747
Income from continuing operations	$	4,080	$	2,539		$	8,175	$	7,687
Net income	$	4,178	$	(11,930	)	$	8,469	$	(7,176	)
Weighted average shares outstanding	100,187		82,937			91,720		82,937
Income from continuing operations per share	$	0.04	$	0.03		$	0.09	$	0.09
Net income per share	$	0.04	$	(0.14	)	$	0.09	$	(0.09	)

During the nine months ended September 30, 2013, the Company recognized approximately $14.2 million of revenues and $1.4 million of net income from operations of these acquisitions.