Real Estate Assets

9 Months Ended

Aug. 31, 2020

Real Estate Assets

Real Estate Assets

4.    Real Estate Assets

Real estate assets consist of:

	Estimated
	Useful Lives	Aug. 31, 2020		Nov. 30, 2019
Land		$	33,485	$	30,750
Land improvements	10 to 30 years		45,673		40,992
Buildings and improvements	10 to 40 years		236,482		220,086
Tenant improvements	Shorter of useful life or terms of related lease		35,100		30,318
Machinery and equipment	3 to 20 years		10,958		7,557
Construction in progress			3,954		3,542
Development costs			5,111		10,404
			370,763		343,649
Accumulated depreciation			(123,452)		(105,035)
		$	247,311	$	238,614

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, 2020		Aug. 31, 2019		Aug. 31, 2020		Aug. 31, 2019
Depreciation expense	$	3,063	$	2,583	$	8,893	$	7,773
Capitalized interest	$	79	$	160	$	79	$	289

Real estate assets held for sale consist of:

	Aug. 31, 2020		Nov. 30, 2019
Land	$	518	$	323
Land improvements		269		388
Buildings and improvements		—		417
Development costs		6,133		1,009
	$	6,920	$	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, which was allocated to the real estate assets on a relative fair value basis. Of the $5,749 purchase price, $5,678 represented the relative fair value of real estate assets and $71 represented the relative fair value of the acquired intangible asset, comprised of the value of leases in-place. 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. The intangible assets are being amortized over the term of the leases.

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 fair value of the assets acquired approximated the purchase price, which was 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 Note 9). 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 each made utilizing a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under Section 1031 of the Code. As Griffin did not complete the sale transactions contemplated under the Reverse 1031 Like-Kind Exchanges prior to August 31, 2020, the legal titles of 170 Sunport and 3320 Maggie were transferred from the qualified intermediary to Griffin. As Griffin retained essentially all of the legal and economic benefits and obligations related to 170 Sunport and 3320 Maggie from the date they were acquired, 170 Sunport and 3320 Maggie were included in Griffin’s consolidated financial statements as consolidated variable interest entities from the dates they were acquired through the expiration of the Reverse 1031 Like-Kind Exchanges.

In the 2020 nine month period, real estate assets held for sale increased by $4,783, reflecting: (a) an increase of $6,064 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 $197 for property sales that closed. The real estate assets held for sale that were returned to real estate assets in the 2020 nine month period were Griffin’s farm in Quincy, Florida and the small restaurant building in Griffin Center in Windsor, Connecticut.