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Real Estate Assets
6 Months Ended
May 31, 2020
Real Estate Assets  
Real Estate Assets

3.    Real Estate Assets

 

Real estate assets consist of:

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

    

Useful Lives

    

May 31, 2020

 

Nov. 30, 2019

Land

 

 

 

$

32,753

 

$

30,750

Land improvements

 

10 to 30 years

 

 

45,508

 

 

40,992

Buildings and improvements

 

10 to 40 years

 

 

236,621

 

 

220,086

Tenant improvements

 

Shorter of useful life or terms of related lease

 

 

32,939

 

 

30,318

Machinery and equipment

 

3 to 20 years

 

 

10,958

 

 

7,557

Construction in progress

 

 

 

 

3,745

 

 

3,542

Development costs

 

 

 

 

5,169

 

 

10,404

 

 

 

 

 

367,693

 

 

343,649

Accumulated depreciation

 

 

 

 

(120,536)

 

 

(105,035)

 

 

 

 

$

247,157

 

$

238,614

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

May 31, 2020

    

May 31, 2019

    

May 31, 2020

    

May 31, 2019

 

Depreciation expense

 

$

2,967

 

$

2,599

 

$

5,830

 

$

5,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capitalized interest

 

$

 —

 

$

87

 

$

 —

 

$

129

 

 

Real estate assets held for sale consist of:

 

 

 

 

 

 

 

 

    

May 31, 2020

    

Nov. 30, 2019

Land

 

$

508

 

$

323

Land improvements

 

 

269

 

 

388

Buildings and improvements

 

 

 —

 

 

417

Development costs

 

 

6,163

 

 

1,009

 

 

$

6,940

 

$

2,137

 

On March 9, 2020, Griffin, through a consolidated VIE, purchased 170 Sunport Lane (“170 Sunport”), an approximately 68,000 square foot industrial/warehouse building in Orlando, Florida for $5,749, including acquisition costs. Griffin provided all of the funding to the VIE to purchase 170 Sunport and determined that the fair value of the assets acquired approximated the purchase price. The $5,749 purchase price represented the cost of the assets which were allocated to the real estate assets on a relative fair value basis. The real estate assets primarily reflect the building and land improvements that are being depreciated principally over forty years and building and land improvements that are being depreciated over a period of fifteen years.

 

On February 18, 2020, Griffin, through a consolidated VIE, purchased 3320 Maggie Boulevard (“3320 Maggie”), an approximately 108,000 square foot industrial/warehouse building in Orlando, Florida for $7,921, including acquisition costs. Griffin provided all of the funding to the VIE to purchase 3320 Maggie and determined that the purchase price represented the cost of the assets which were allocated to the real estate assets on a relative fair value basis. Of the $7,921 purchase price, $7,941 represented the relative fair value of real estate assets,  $770 represented the relative fair value of the acquired intangible asset and $790 represented the relative fair value of the acquired intangible liability, comprised of the value of the below market lease at the time of acquisition (see Notes 2 and 8).  The intangible asset is included in other assets and the intangible liability is included in other liabilities on Griffin’s consolidated balance sheet. The real estate assets primarily reflect the building and land improvements that are being depreciated principally over forty years and building and tenant improvements that are being depreciated over a period of seven years. The intangible liability is being amortized over the term of the lease.

 

The acquisitions of 170 Sunport and 3320 Maggie were made utilizing Reverse 1031 Like-Kind Exchanges that were entered into at the time the properties were acquired. As such, as of May 31, 2020, 170 Sunport and 3320 Maggie are in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchanges until the potential real estate sales transactions and the Reverse 1031 Like-Kind Exchanges are completed. Griffin retains essentially all of the legal and economic benefits and obligations related to 170 Sunport and 3320 Maggie prior to the completion or termination of the Reverse 1031 Like-Kind Exchanges. Accordingly, 170 Sunport and 3320 Maggie are included in Griffin’s consolidated financial statements as consolidated VIEs until legal title is transferred to Griffin upon completion of the Reverse 1031 Like-Kind Exchanges.  

 

In the 2020 six month period, real estate assets held for sale increased by $4,803, reflecting: (a) an increase of $5,987 from real estate assets transferred into real estate assets held for sale as a result of entering into agreements to sell such real estate; partially offset by (b) a decrease of $1,084 from real estate assets held for sale being transferred back into real estate assets, as a result of the termination of agreements to sell such real estate assets; and (c) a reduction of $100 for a property sale that closed. The real estate assets held for sale that were returned to real estate assets, in the 2020 six month period were Griffin’s farm in Quincy, Florida and the approximately 7,200 square foot restaurant building in Griffin Center in Windsor, Connecticut.