Real Estate Assets

12 Months Ended

Dec. 01, 2012

Real Estate Assets

Real Estate Assets

7. Real Estate Assets

        Real estate assets consist of:

	Estimated Useful Lives	December 1, 2012			December 3, 2011
Land		$	10,267		$	10,435
Land improvements	10 to 30 years		15,138			14,037
Buildings and improvements	10 to 40 years		125,971			117,120
Tenant improvements	Shorter of useful life or terms of related lease		14,738			14,104
Development costs			14,557			12,464
			180,671			168,160
Accumulated depreciation			(56,744	)		(51,865	)
		$	123,927		$	116,295

        Included in real estate assets, net as of December 1, 2012 and December 3, 2011 was $1,921 and $2,161, respectively, reflecting the net book value of Imperial's Florida farm that was shut down during fiscal 2009 and is being leased to another landscape nursery grower (see Note 15).

        Total depreciation expense and capitalized interest related to real estate assets, net were as follows:

	For the Fiscal Years Ended,
	December 1, 2012		December 3, 2011		November 27, 2010
Depreciation expense	$	5,237	$	5,632	$	5,837
Capitalized interest	$	596	$	134	$	—

        On July 6, 2012, Griffin Land completed the sale of 93 acres of undeveloped land in New England Tradeport ("Tradeport"), Griffin Land's industrial park located in Windsor and East Granby, Connecticut, to Dollar Tree Distribution, Inc., for cash proceeds of $7,000, before transaction costs (the "Dollar Tree Sale"). As required under the terms of the Dollar Tree Sale, Griffin Land will construct a sewer line to service the land that was sold. As a result of Griffin Land's continuing involvement with the land sold, the Dollar Tree Sale is accounted for under the percentage of completion method. Accordingly, the revenue and the pretax gain on the sale are being recognized on a pro rata basis in a ratio equal to the percentage of the total costs incurred to the total anticipated costs of sale, including the costs of the required construction of the sewer line. Costs included in determining the percentage of completion are the cost of the land sold, allocated master planning costs of Tradeport, selling and transaction costs and estimated future costs related to the land sold. Upon completion of the sale, Griffin Land deposited the cash of $6,929 received from the Dollar Tree Sale at closing into an escrow account, reflected as Proceeds Held in Escrow on Griffin's consolidated balance sheet as of December 1, 2012, for the potential purchase of a replacement property under a Section 1031 like-kind exchange. Subsequent to the end of fiscal 2012, Griffin Land closed on the acquisition of a parcel of undeveloped land in the Lehigh Valley of Pennsylvania, using the proceeds that were being held in escrow to complete the Section 1031 like-kind exchange (see Note 19).

        As of December 1, 2012, approximately 67% of the total costs related to the Dollar Tree Sale have been incurred, therefore, from the date of the Dollar Tree Sale through December 1, 2012, 67% of the total revenue and pretax gain on the sale have been recognized in Griffin's consolidated statement of operations. Griffin's statement of operations for fiscal 2012 includes revenue of $4,703 and a pretax gain of $3,942 from the Dollar Tree Sale. The balance of the revenue and the pretax gain on sale will be recognized as the remaining costs, principally the required construction of a sewer line, are incurred, which is expected to take place in the first half of fiscal 2013. Included on Griffin's consolidated balance sheet as of December 1, 2012 is deferred revenue of $2,297 that will be recognized as the construction of the sewer line is completed. Including the pretax gain on the sale of $3,942 recognized in fiscal 2012, the total pretax gain on the Dollar Tree Sale is expected to be approximately $5,900 after all revenue is recognized and all costs incurred. Management has used its best estimates, based on industry knowledge and experience, in projecting the total costs of the required construction of the sewer line, however, increases or decreases in projected future costs from current estimated amounts would reduce or increase the amount of gain to be recognized in future periods.

        On January 8, 2010, Griffin Land closed on the purchase of a 120,000 square foot industrial building in Breinigsville, Pennsylvania. Griffin Land paid $6,400 in cash for the building, including approximately $1,000 paid as a deposit in the 2009 fourth quarter. The building is located in a major industrial area of Pennsylvania's Lehigh Valley and is currently under a full building lease to Olympus Corporation of the Americas ("Olympus"). Griffin Land incurred $301 of acquisition costs on the purchase of this building, which are included in selling, general and administrative expenses on Griffin's consolidated statement of operations in fiscal 2010. Subsequent to the purchase of this building, Griffin Land completed a lease amendment with Olympus that extends the lease term through 2025. On January 29, 2010, Griffin closed on a $4,300 nonrecourse mortgage on this building (see Note 12). This was Griffin Land's first real estate purchase outside of the Hartford, Connecticut market, where Griffin Land's core real estate holdings are located.

        Based on an independent appraisal of the building acquired, Griffin determined that the fair value of the assets acquired approximated the purchase price. Of the $6,400 purchase price, approximately $5,400 represented the fair value of the real estate assets and approximately $1,000 represented the fair value of the acquired intangible assets, comprised of the value of the in-place lease at the time of purchase and a tenant relationship intangible asset. The intangible assets are included in other assets on Griffin's consolidated balance sheets.

        On March 17, 2010, Griffin Land closed on the purchase of approximately 51 acres of undeveloped land in Lower Nazareth, Pennsylvania. The purchase price was $1,800 plus acquisition expenses, with approximately $300 paid as a deposit in the 2009 fourth quarter. The undeveloped land is located in a major industrial area of Pennsylvania's Lehigh Valley and has approvals for the development of two industrial buildings totaling approximately 530,000 square feet. In fiscal 2012, Griffin Land completed construction, on speculation, of a 228,000 square foot building on this land.

        Real estate assets held for sale consist of:

	Estimated Useful Lives	December 1, 2012		December 3, 2011
Land		$	35	$	1,911
Land improvements	10 to 30 years		—		4
Buildings and improvements	10 to 40 years		—		11,855
Development costs			1,151		1,151
			1,186		14,921
Accumulated depreciation			—		(1,932	)
		$	1,186	$	12,989

        The decrease in real estate held for sale in fiscal 2012 principally reflects the sale of the warehouse in Manchester, Connecticut that closed on January 31, 2012 (see Note 2).