Real Estate Assets

3 Months Ended

Feb. 28, 2017

Real Estate Assets

Real Estate Assets

3.    Real Estate Assets

Real estate assets consist of:

	Estimated
	Useful Lives	Feb. 28, 2017		Nov. 30, 2016
Land		$	17,895	$	17,895
Land improvements	10 to 30 years		27,615		27,592
Buildings and improvements	10 to 40 years		164,678		164,353
Tenant improvements	Shorter of useful life or terms of related lease		22,619		21,925
Machinery and equipment	3 to 20 years		11,022		11,022
Construction in progress			2,667		1,659
Development costs			14,616		14,615
			261,112		259,061
Accumulated depreciation			(88,796)		(86,801)
		$	172,316	$	172,260

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

	For the Three Months Ended
	Feb. 28, 2017		Feb. 29, 2016
Depreciation expense	$	2,095	$	1,884
Capitalized interest	$	—	$	84

In fiscal 2013, Griffin completed the sale of approximately 90 acres of undeveloped land for $8,968 in cash, before transaction costs (the “Windsor Land Sale”). The land sold is located in Windsor, Connecticut and is part of an approximately 268 acre parcel of undeveloped land that straddles the town line between Windsor and Bloomfield, Connecticut. Under the terms of the Windsor Land Sale, Griffin and the buyer were each required to construct roadways connecting the land parcel sold with existing town roads. Once completed, the roads constructed by the buyer and the road being constructed by Griffin will become new town roads, thereby providing public access to the remaining acreage in Griffin’s land parcel. As a result of Griffin's continuing involvement with the land sold, the Windsor Land Sale is being accounted for under the percentage of completion method. Accordingly, the revenue and 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 costs of the required roadwork. Costs included in determining the percentage of completion include the cost of the land sold, allocated master planning costs and the cost of road construction. During the 2017 first quarter and the 2016 first quarter, there were no costs incurred related to the Windsor Land Sale, therefore, there is no related revenue or pretax gain recognized in Griffin’s consolidated statements of operations for either the 2017 first quarter or the 2016 first quarter. 

As of February 28, 2017, approximately 99% of the total costs related to the Windsor Land Sale have been incurred; therefore, from the date of the Windsor Land Sale through February 28, 2017, approximately 99% of the total revenue and pretax gain on the sale have been recognized in Griffin’s consolidated statements of operations. The total pretax gain on the Windsor Land Sale is expected to be approximately $6,686 after all revenue is recognized and all costs are incurred. From the time the Windsor Land Sale closed in fiscal 2013 through February 28, 2017, Griffin’s consolidated statements of operations reflected total revenue of $8,864 and a total pretax gain of $6,608 from the Windsor Land Sale. The balance of the revenue and pretax gain on sale will be recognized when the remaining costs are incurred, which is expected to be in the second quarter of fiscal 2017. Deferred revenue on Griffin's consolidated balance sheet as of February 28, 2017 includes $104 related to the Windsor Land Sale that will be recognized as the remaining costs are incurred. While management has used its best estimates, based on industry knowledge and experience, in projecting the total costs of the required roadways being constructed, increases or decreases in future costs as compared with current estimated amounts would reduce or increase the gain recognized in future periods.

Real estate assets held for sale consist of:

	Feb. 28, 2017		Nov. 30, 2016
Land	$	264	$	264
Development costs		2,728		2,728
	$	2,992	$	2,992