3. Real Estate Assets

Real estate assets consist of:


	Estimated
	Useful Lives	Aug. 31, 2018		Nov. 30, 2017
Land		$	23,395	$	20,403
Land improvements	10 to 30 years		31,786		30,833
Buildings and improvements	10 to 40 years		187,752		187,116
Tenant improvements	Shorter of useful life or terms of related lease		28,032		27,924
Machinery and equipment	3 to 20 years		10,958		10,958
Construction in progress			22,729		486
Development costs			13,068		14,132
			317,720		291,852
Accumulated depreciation			(102,500)		(95,112)
		$	215,220	$	196,740

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


	For the Three Months Ended				For the Nine Months Ended
	Aug. 31, 2018		Aug. 31, 2017		Aug. 31, 2018		Aug. 31, 2017
Depreciation expense	$	2,399	$	2,283	$	7,258	$	6,490

Capitalized interest	$	206	$	26	$	338	$	26

On April 26, 2018, Griffin closed on the sale of approximately 49 acres (the “2018 Southwick Land Sale”) of undeveloped land in Southwick, Massachusetts. Griffin received cash proceeds of $850, before transaction costs, and recorded a pretax gain of $794 on the 2018 Southwick Land Sale. The net cash proceeds, after transaction costs, of $847 from the 2018 Southwick Land Sale were deposited into escrow for the acquisition of a replacement property in a like-kind exchange (“1031 Like-Kind Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, for income tax purposes. On July 18, 2018, Griffin closed on the purchase of an approximately 22 acre parcel of undeveloped land in Concord, North Carolina (the “Concord Land”) for a purchase price of $2,600, before transaction costs, as a replacement property under a 1031 Like-Kind Exchange.

On August 4, 2017, Griffin completed the sale of approximately 76 acres (the “2017 Southwick Land Sale”) of undeveloped land in Southwick, Massachusetts. Griffin received cash proceeds of $2,100, before transaction costs, and recorded a pretax gain of $1,890 on the 2017 Southwick Land Sale. The net cash proceeds, after transaction costs, of $1,943 from the 2017 Southwick Land Sale were deposited into escrow for the acquisition of a replacement property as part of a 1031 Like-Kind Exchange. On August 24, 2017, Griffin closed on the purchase of an approximately 14 acre parcel of undeveloped land in Upper Macungie Township, Lehigh County, Pennsylvania (the “Macungie Land”) for a purchase price of $1,800, before transaction costs, as a replacement property under a 1031 Like-Kind Exchange.

On April 28, 2017, Griffin closed on the sale of approximately 67 acres (the “2017 Phoenix Crossing Land Sale”) of undeveloped land in Phoenix Crossing, the approximately 268 acre business park master planned by Griffin that straddles the town line between Windsor and Bloomfield, Connecticut. Griffin received cash proceeds of $10,250, before transaction costs, and recorded a pretax gain of $7,975 on the 2017 Phoenix Crossing Land Sale. The net cash proceeds, after transaction costs, of $9,711 from the 2017 Phoenix Crossing Land Sale were deposited into escrow and subsequently used for the acquisition (see below) of 215 International Drive (“215 International”), an approximately 277,000 square foot industrial/warehouse building in Concord, North Carolina, as the replacement property under a 1031 Like-Kind Exchange.

On June 9, 2017, Griffin closed on the purchase of 215 International Drive for a purchase price of $18,440. The purchase price was paid in cash at closing using proceeds of $9,711 held in escrow from the 2017 Phoenix Crossing Land Sale with the balance paid from Griffin’s cash on hand. Griffin incurred approximately $71 of acquisition costs on the purchase of 215 International which are included in general and administrative expenses on Griffin’s consolidated statements of operations for the 2017 third quarter and 2017 nine month period. 215 International was constructed in 2015 and was 74% leased at the time it was acquired. Subsequent to the closing, one of the tenants in 215 International leased an additional approximately 73,000 square feet, which resulted in 215 International being fully leased. 215 International was Griffin’s first property in the Charlotte area. Griffin determined that the fair value of the assets acquired approximated the purchase price. Of the $18,440 purchase price, $16,789 represented the fair value of the real estate assets and $1,651 represented the fair value of the acquired intangible assets, comprised of the value of the in-place leases at the time of purchase and the value of tenant relationships. The intangible assets are included in other assets on Griffin’s consolidated balance sheet.

Real estate assets held for sale consist of:


	Aug. 31, 2018		Nov. 30, 2017
Land	$	210	$	504
Land improvements		—		354
Development costs		1,007		1,074
	$	1,217	$	1,932

Real estate assets held for sale were reduced in the 2018 nine month period by $105 related to property sales that closed and by $610, which was reclassified into real estate assets as a result of a proposed property sale that is no longer expected to take place.