Real Estate Assets

3 Months Ended

Mar. 02, 2013

Real Estate Assets

Real Estate Assets

6.     Real Estate Assets

Real estate assets consist of:

	Estimated Useful Lives	March 2, 2013			December 1, 2012
Land		$	17,531		$	10,267
Land improvements	10 to 30 years	15,139			15,138
Buildings and improvements	10 to 40 years	126,012			125,971
Tenant improvements	Shorter of useful life or terms of related lease	14,707			14,738
Development costs		15,351			14,557
		188,740			180,671
Accumulated depreciation		(58,063		)	(56,744		)
		$	130,677		$	123,927

Included in real estate assets, net as of March 2, 2013 and December 1, 2012 was $1,869 and $1,921, respectively, reflecting the net book value of Imperial’s Florida farm that was shut down in fiscal 2009 and is being leased to another landscape nursery grower.

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

	For the 13 Weeks Ended,
	March 2, 2013		March 3, 2012
Depreciation expense	$	1,380	$	1,281
Capitalized interest	$	—	$	149

In the 2012 third quarter, Griffin Land sold 93 acres of undeveloped land in the New England Tradeport (“Tradeport”), Griffin Land’s industrial park located in Windsor and East Granby, Connecticut, 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 is required to 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 was accounted for under the percentage of completion method.  Accordingly, the revenue and the pretax gain on 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.   On December 28, 2012, Griffin Land closed on the acquisition of approximately 49 acres of undeveloped land in the Lehigh Valley of Pennsylvania for $7,119 in cash, using the proceeds from the Dollar Tree Sale that were being held in escrow to complete the Section 1031 like-kind exchange.  The land acquired is expected to support the development of two buildings totaling at least 500,000 square feet.  As governmental approvals of such development were not in place at the time of closing, the seller agreed to provide Griffin Land with rescission rights if the required approvals are not obtained or the seller does not complete certain post-closing obligations.

As of March 2, 2013, approximately 80% of the total costs related to the Dollar Tree Sale have been incurred; therefore, from the date of the Dollar Tree Sale through March 2, 2013, approximately 80% of the total revenue and the pretax gain on sale have been recognized in Griffin’s consolidated statements of operations.  Griffin’s consolidated statement of operations for the 2013 first quarter includes revenue of $884 and a pretax gain of $741 from the Dollar Tree Sale.  The balance of the revenue and the pretax gain on sale will be recognized as the remaining costs for the construction of the sewer line are incurred, which is expected to take place during the 2013 second quarter. Included on Griffin’s consolidated balance sheet as of March 2, 2013 is deferred revenue of  $1,413 that will be recognized as the construction of the sewer line is completed.  Including the pretax gain on 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 a 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.

Real estate assets held for sale consist of:

	Estimated Useful Lives	March 2, 2013		December 1, 2012
Land		$	35	$	35
Development costs		1,151		1,151
		1,186		1,186
Accumulated depreciation		—		—
		$	1,186	$	1,186