UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED March 31, 2021

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             

Commission File Number 1-12879

INDUS REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland	06-0868496
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
641 Lexington Avenue, New York, New York	10022
(Address of principal executive offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code (212) 218-7910

______________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INDT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding at May 7, 2021: 7,717,018

INDUS REALTY TRUST, INC.

FORM 10-Q

Index

PART I -		FINANCIAL INFORMATION
	ITEM 1	Financial Statements
		Consolidated Balance Sheets (unaudited) as of March 31, 2021, December 31, 2020 and November 30, 2020	3
		Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2021 and 2020 and the Months Ended December 31, 2020 and 2019	4
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three Months Ended March 31, 2021 and 2020 and the Months Ended December 31, 2020 and 2019	5
		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2021 and 2020 and the Months Ended December 31, 2020 and 2019	6
		Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2021 and 2020 and the Months Ended December 31, 2020 and 2019	7
		Notes to Consolidated Financial Statements (unaudited)	8
	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	40
	ITEM 4	Controls and Procedures	40
PART II -		OTHER INFORMATION
	ITEM 1	Not Applicable
	ITEM 1A	Risk Factors	41
	ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	41
	ITEMS 3-5	Not Applicable
	ITEM 6	Exhibits	41
		SIGNATURES	48

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INDUS REALTY TRUST, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)

	Mar. 31, 2021		Dec. 31, 2020		Nov. 30, 2020
ASSETS
Real estate assets at cost, net	$	242,271	$	242,321	$	242,875
Cash and cash equivalents		132,033		28,124		28,540
Real estate assets held for sale, net		6,402		6,802		6,802
Other assets		24,109		22,137		23,145
Total assets	$	404,815	$	299,384	$	301,362
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans, net of debt issuance costs	$	159,463	$	160,655	$	161,048
Deferred revenue		8,472		9,586		10,121
Warrant liability		8,685		8,790		11,550
Accounts payable and accrued liabilities		6,484		3,669		4,092
Other liabilities		14,391		17,567		17,652
Total liabilities		197,495		200,267		204,463
Commitments and Contingencies (Note 10)
Stockholders' Equity
Common stock, par value $0.01 per share, 50,000,000 shares authorized as of March 31, 2021 and 10,000,000 shares authorized as of December 31, 2020 and November 30, 2020, 8,333,350 shares issued as of March 31, 2021 and 6,280,856 shares issued as of December 31, 2020 and November 30, 2020 and 7,715,534 shares outstanding as of March 31, 2021 and 5,663,040 shares outstanding as of December 31, 2020 and November 30, 2020		83		63		63
Additional paid-in capital		255,135		138,413		138,372
Accumulated deficit		(21,835)		(9,817)		(11,798)
Accumulated other comprehensive loss, net of tax		(4,376)		(7,855)		(8,051)
Treasury stock, at cost, 617,816 shares		(21,687)		(21,687)		(21,687)
Total stockholders' equity		207,320		99,117		96,899
Total liabilities and stockholders' equity	$	404,815	$	299,384	$	301,362

See Notes to Consolidated Financial Statements.

3

INDUS REALTY TRUST, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)

	For the Three Months Ended				For the Month Ended
	Mar. 31, 2021		Mar. 31, 2020		Dec. 31, 2020		Dec. 31, 2019
Rental revenue	$	10,087	$	8,862	$	3,345	$	3,083
Expenses:
Operating expenses of rental properties		1,633		1,172		497		681
Real estate taxes		1,447		1,381		482		458
Depreciation and amortization expense		3,343		3,306		1,122		1,059
General and administrative expenses		2,970		2,143		1,172		629
Total operating expenses		9,393		8,002		3,273		2,827
Other income (expense):
Interest expense		(1,749)		(1,840)		(602)		(589)
Change in fair value of financial instruments		260		—		2,785		—
Gain on sales of real estate assets		20		584		—		—
Other expense		—		—		(281)		—
Investment income		7		25		7		2
		(1,462)		(1,231)		1,909		(587)
(Loss) income before income tax benefit		(768)		(371)		1,981		(331)
Income tax benefit		—		85		—		76
Net (loss) income	$	(768)	$	(286)	$	1,981	$	(255)
Basic net (loss) income per common share	$	(0.12)	$	(0.06)	$	0.35	$	(0.05)
Diluted net (loss) income per common share	$	(0.12)	$	(0.06)	$	0.34	$	(0.05)

See Notes to Consolidated Financial Statements.

4

INDUS REALTY TRUST, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)

	For the Three Months Ended				For the Month Ended
	Mar. 31, 2021		Mar. 31, 2020		Dec. 31, 2020		Dec. 31, 2019
Net (loss) income	$	(768)	$	(286)	$	1,981	$	(255)
Other comprehensive income (loss), net of tax:
Reclassifications included in net loss		488		103		182		33
Unrealized gain (loss) on cash flow hedges		2,991		(4,964)		14		568
Total other comprehensive income (loss), net of tax		3,479		(4,861)		196		601
Total comprehensive income (loss)	$	2,711	$	(5,147)	$	2,177	$	346

See Notes to Consolidated Financial Statements.

5

INDUS REALTY TRUST, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands)

(unaudited)

For the Periods Ended March 31, 2021 and 2020
	Shares of			Additional		(Deficit)		Accumulated Other
	Common Stock	Common		Paid-in		Retained		Comprehensive		Treasury
	Issued	Stock		Capital		Earnings		Income (Loss)		Stock		Total
Balance at November 30, 2020	6,280,856	$	63	$	138,372	$	(11,798)	$	(8,051)	$	(21,687)	$	96,899
Stock-based compensation expense	—		—		41		—		—		—		41
Total other comprehensive income, net of tax	—		—		—				196		—		196
Net income	—		—		—		1,981		—		—		1,981
Balance at December 31, 2020	6,280,856		63		138,413		(9,817)		(7,855)		(21,687)		99,117
Stock-based compensation expense	—		—		214		—		—		—		214
Exercise of stock options	233		—		6		—		—		—		6
Sale of common stock, net	1,927,049		19		108,657		—		—		—		108,676
Special dividend	125,212		1		7,845		(11,250)		—		—		(3,404)
Net loss	—		—		—		(768)		—		—		(768)
Total other comprehensive income, net of tax	—		—		—		—		3,479		—		3,479
Balance at March 31, 2021	8,333,350	$	83	$	255,135	$	(21,835)	$	(4,376)	$	(21,687)	$	207,320
Balance at November 30, 2019	5,668,043	$	57	$	113,256	$	919	$	(3,141)	$	(20,329)	$	90,762
Stock-based compensation expense	—		—		19		—		—		—		19
Total other comprehensive income, net of tax	—		—		—		—		601		—		601
Net loss	—		—		—		(255)		—		—		(255)
Balance at December 31, 2019	5,668,043		57		113,275		664		(2,540)		(20,329)		91,127
Stock-based compensation expense	—		—		122		—		—		—		122
Sale of common stock	53,293		—		2,500		—		—		—		2,500
Net loss	—		—		—		(286)		—		—		(286)
Total other comprehensive loss, net of tax	—		—		—		—		(4,861)		—		(4,861)
Balance at March 31, 2020	5,721,336	$	57	$	115,897	$	378	$	(7,401)	$	(20,329)	$	88,602

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

	For the Three Months Ended				For the Month Ended
	Mar. 31, 2021		Mar. 31, 2020		Dec. 31, 2020		Dec. 31, 2019
Operating activities:
Net (loss) income	$	(768)	$	(286)	$	1,981	$	(255)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		3,343		3,306		1,122		1,059
Change in fair value of financial instruments		(260)		—		(2,785)		—
Noncash rental revenue including straight-line rents		(437)		(532)		(250)		(157)
Stock-based compensation expense		214		122		41		19
Amortization of debt issuance costs		166		105		42		34
Gain on sales of real estate assets		(20)		(584)		—		—
Deferred income taxes		—		(85)		—		(76)
Changes in assets and liabilities:
Other assets		(254)		(981)		933		(448)
Accounts payable and accrued liabilities		(423)		513		(42)		710
Deferred revenue		(652)		(348)		(378)		(317)
Other liabilities		237		(15)		146		(408)
Net cash provided by operating activities		1,146		1,215		810		161
Investing activities:
Additions to real estate assets		(1,200)		(3,090)		(768)		(1,698)
Acquisitions of land and buildings		—		(13,670)		—		—
Proceeds from sales of real estate assets, net of expenses		496		740		—		—
Deferred leasing costs and other		(284)		(213)		(41)		(68)
Changes in short-term investments, net		—		1,011		—		—
Net cash used in investing activities		(988)		(15,222)		(809)		(1,766)
Financing activities:
Proceeds from sale of common stock		108,676		2,500		—		—
Dividends paid to stockholders		(3,404)		—		—		(2,538)
Principal payments on mortgage loans		(1,267)		(4,296)		(417)		(357)
Payment of debt issuance costs		(260)		(231)		—		(162)
Net proceeds from revolving lines of credit		—		11,100		—		(2,875)
Proceeds from mortgage loans		—		15,000		—		6,500
Proceeds from exercise of stock options		6		—		—		—
Net cash provided by (used in) financing activities		103,751		24,073		(417)		568
Net increase (decrease) in cash and cash equivalents		103,909		10,066		(416)		(1,037)
Cash and cash equivalents at beginning of period		28,124		4,837		28,540		5,874
Cash and cash equivalents at end of period	$	132,033	$	14,903	$	28,124	$	4,837

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Notes to Consolidated Financial Statements

(dollars in thousands unless otherwise noted, except per share data)

(unaudited)

1.    Summary of Significant Accounting Policies

Basis of Presentation

INDUS Realty Trust, Inc., a Maryland corporation, (“INDUS” or the “Company”) (f/k/a Griffin Industrial Realty, Inc.) is a real estate business principally engaged in developing, acquiring, managing and leasing high-quality industrial and logistics properties in select supply-constrained markets in the United States. INDUS seeks to add to its property portfolio through the development of land or the acquisition of modern, market-appropriate logistics buildings in the markets it targets, all of which can serve multiple drivers of demand in the modern supply chain. Although the Company’s real estate holdings primarily consist of industrial/logistics properties, it also owns a limited number of office/flex properties and undeveloped land parcels. INDUS may sell certain office/flex properties or portions of its undeveloped land that it has owned for an extended time and the use of which is not consistent with the Company’s core industrial and logistics strategy.

On December 30, 2020, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), by and among INDUS, Griffin Industrial Realty, Inc., a Delaware corporation, and Griffin Industrial Maryland, LLC, a Maryland limited liability company and a wholly-owned subsidiary of INDUS, the Company completed an internal merger to reincorporate in Maryland. On December 30, 2020, following this merger, the Company changed its name to INDUS Realty Trust, Inc.

On January 4, 2021, the Company announced that it intends to elect to be taxed as a real estate investment trust (“REIT”) under sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) for its taxable year ending December 31, 2021 (see Note 9). This decision was based on the Company’s consideration of ways to maximize stockholder value and generate growth opportunities as the Company continues to expand its industrial/logistics portfolio. Subsequently, INDUS declared a special dividend to distribute the Company’s estimated accumulated earnings and profits (the “E&P Distribution”) based on the Company’s estimated taxable income through December 31, 2020 that was paid on March 8, 2021 (see Note 7).

Through November 30, 2020, INDUS reported on a twelve month fiscal year that ended on November 30. On November 17, 2020, in connection with the anticipated election to become a REIT, the Company’s Board of Directors approved a change in the Company’s fiscal year from November 30 to December 31, effective beginning with the Company’s next fiscal year, which began on January 1, 2021 and will end on December 31, 2021 (“fiscal 2021”). As a result of this change, INDUS had a one-month transition period (the “Transition Period”) that began on December 1, 2020 and ended on December 31, 2020. The months included in the Company’s 2020 first quarter have been recast to conform to the months reflected in the 2021 first quarter. This Quarterly Report on Form 10-Q includes both the one-month Transition Period and the first fiscal quarter for the three months ended March 31, 2021, as well as comparable periods from the prior fiscal year.

INDUS’s consolidated financial statements reflect its accounts and its consolidated subsidiaries. INDUS consolidates the subsidiaries it controls through (i) voting rights or similar rights or (ii) by means other than voting rights if INDUS is the primary beneficiary of a variable interest entity (“VIE”). There have been no VIEs in which INDUS is not a primary beneficiary.

INDUS may acquire property using a reverse like-kind exchange structure (a “Reverse 1031 Like-Kind Exchange”) under Section 1031 of the Code, to defer taxable gains on the subsequent sale of real estate property. As such, the acquired property (the “Parked Property”) is in the possession of a VIE whose legal equity interests are owned by a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the subsequent sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Although the VIE is legally owned by the qualified intermediary, INDUS retains essentially all of the legal and economic benefits and obligations related to the VIE (which holds the legal title to the Parked Property prior to the completion of the Reverse 1031 Like-Kind Exchange) and, as its designated manager, has the key decision-making power over the Parked Property. As discussed in Note 4, the VIE (including the Parked Property) is included in INDUS’s consolidated financial statements as a consolidated VIE

8

until legal title is transferred to the Company upon completion of the Reverse 1031 Like-Kind Exchange. There were no consolidated VIEs on INDUS's consolidated balance sheet as of March 31, 2021.

These financial statements have been prepared in conformity with the standards of accounting measurement set forth by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and in accordance with the accounting policies stated in INDUS’s audited consolidated financial statements for the fiscal year ended November 30, 2020 (“fiscal 2020”) included in INDUS’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”) on February 18, 2021. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing in that report. All adjustments, comprising only normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of results for the interim periods, have been reflected and all intercompany transactions have been eliminated.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. INDUS regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense and the valuation of derivative financial instruments. INDUS bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by INDUS may differ materially and adversely from INDUS’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

INDUS considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. At March 31, 2021 and December 31, 2020, $129,062 and $26,641, respectively, of the cash and cash equivalents included on INDUS’s consolidated balance sheets were held in cash equivalents.

Pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”) dated as of August 24, 2020, between INDUS and CM Change Industrial LP (“Conversant”), an investment entity managed by Conversant Capital LLC (f/k/a Cambiar Management LLC), INDUS, among other things, issued a Warrant (as defined below) to Conversant to acquire 504,590 shares of INDUS’s common stock, par value $0.01 per share (the “Common Stock”) (as exercised, collectively, the “Warrant Shares”) as part of a private placement of Common Stock to raise capital (see Note 9). INDUS applied ASC 815 to the Warrant and it is being classified as a derivative liability on the Company’s consolidated balance sheet. The Warrant was initially recorded at its fair value and will be reported at fair value at each subsequent reporting date when liability classification of the Warrant is appropriate. Changes in the fair value of the Warrant are included in change in fair value of financial instruments on INDUS’s consolidated statement of operations during the period of the change.

The results of operations for the three months ended March 31, 2021 (the “2021 first quarter”) are not necessarily indicative of the results to be expected for the full year. The three months ended March 31, 2020 are referred to herein as the “2020 first quarter.” Certain amounts from the prior year periods have been reclassified to conform to the current presentation.

COVID-19

Since March 2020, the world has been impacted by the coronavirus (“COVID-19”) pandemic, which has created significant economic uncertainty and volatility. The full extent to which the coronavirus pandemic further impacts the Company’s business or impacts the Company’s operations, liquidity and financial results will depend on numerous evolving factors that the Company is not able to predict at this time, including: the duration and scope of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the availability, adoption and effectiveness of vaccines to combat COVID-19; the impact on economic activity from the pandemic and actions taken in response, including ongoing travel restrictions; the impact on the availability and pricing of certain materials and supplies; the effect on the Company’s tenants and their businesses; the ability of tenants to make their rental payments; any closures of tenants’ facilities; the ability of existing or prospective tenants to evaluate or enter into leases; and the Company’s ability to complete sales and acquisitions of real estate assets

9

or planned construction and development. Any of these events could materially adversely impact the Company’s business, financial condition, results of operations or stock price. COVID-19 has also disrupted the availability, supply and costs of raw materials, particularly the increased cost and decreased availability of structural steel, which could result in an increase in the Company’s cost of construction and a delay in completion of the Company’s construction projects.

COVID-19 did not have a material impact on the Company’s rent collections in the 2021 first quarter as over 99% of cash rent due each month in the 2021 first quarter, inclusive of rent relief agreements, was collected. In the 2021 first quarter, the Company entered into an agreement with a tenant that leases the approximately 7,200 square feet restaurant building (included in the Company’s office/flex portfolio). The rent relief granted is less than $20 over the remainder of that tenant’s lease term. Subsequent to the end of the 2021 first quarter, the Company and the tenant entered into a lease amendment whereby the tenant agreed to purchase the small restaurant building for $575. As a result of the pandemic there could be future reductions in the Company’s rental revenue, particularly with respect to its office/flex portfolio.

Recent Accounting Pronouncements Adopted

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU No. 2018-13”). ASU No. 2018-13 removes, modifies and adds certain disclosure requirements in FASB ASC 820, “Fair Value Measurement” (“ASC 820”). The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively in the year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU No. 2018-13 became effective for INDUS in the Transition Period. The application of ASU No. 2018-13 did not have an impact on INDUS’s consolidated financial statements.

2. Sales of Common Stock

Public Offering

On February 2, 2021, INDUS filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the SEC. Under the Universal Shelf, the Company may offer and sell up to $500,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, units or any combination of such securities during the three year period that commenced on February 22, 2021. Under the Universal Shelf, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced. When INDUS obtains additional capital by issuing equity, the interests of its existing stockholders will be diluted. If the Company incurs additional indebtedness, that indebtedness may impose financial and other covenants that may significantly restrict INDUS’s operations.

On March 5, 2021, under its Universal Shelf, INDUS completed an underwritten public offering of 1,750,000 shares of its Common Stock at a price to the underwriters of $56.85 per share. On March 15, 2021, the underwriters exercised their option to purchase an additional 177,049 shares of common stock from INDUS at the same price. INDUS received net proceeds of $108,676, after expenses of $877, from the aggregate of 1,927,049 shares sold on March 5, 2021 and March 15, 2021. The Company intends to use the proceeds from the sale of its Common Stock to finance its development pipeline and acquisitions and for other corporate purposes.

As of March 31, 2021, the Company has approximately $384,377 available for issuance under its Universal Shelf.

Private Placement

On March 3, 2020, Gordon F. DuGan was appointed to serve as a Director of INDUS, effective immediately. Mr. DuGan also was appointed as Chairman of the Board of Directors. Mr. DuGan and INDUS entered into a Chairmanship and Advisory Agreement (the “Advisory Agreement”) on March 3, 2020 (subsequently amended on May 7, 2021) whereby Mr. DuGan agreed to also serve as a non-employee advisor to INDUS on, amongst other things, growth strategy, including identifying markets, acquisitions and other transactions, recruitment of key personnel,

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potential capital raising efforts and general management advice (collectively the “Advisory Services”). As compensation to Mr. DuGan for providing such Advisory Services, Mr. DuGan received: (i) a non-qualified stock option to acquire 48,000 shares of INDUS Common Stock at an exercise price of $45.98 per share (subsequently adjusted to 49,061 shares at $44.99 per share due to the stock dividend in the 2021 first quarter) under the 2009 Stock Option Plan (see Note 7) and (ii) a non-qualified stock option to acquire 52,000 shares of INDUS Common Stock at an exercise price of $46.91 per share (subsequently adjusted to 53,149 shares at $45.90 per share due to the stock dividend in the 2021 first quarter) under the 2020 Incentive Award (see Note 7). On March 9, 2020, INDUS completed the sale of 53,293 shares of its Common Stock at a price per share of $46.91, for cash proceeds of $2,500, in accordance with the Advisory Agreement and pursuant to a Stock Purchase Agreement, dated as of March 5, 2020, between Mr. DuGan and INDUS.

3.    Fair Value

INDUS applies the provisions of ASC 820, which establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs, when measuring fair value. The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value, as follows:

Level 1 applies to assets or liabilities for which there are quoted market prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 assets and liabilities include INDUS’s interest rate swap agreements (see Note 5). These inputs are readily available in public markets or can be derived from information available in publicly quoted markets, therefore, INDUS has categorized these derivative instruments as Level 2 within the fair value hierarchy.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. INDUS’s consolidated balance sheet includes the Warrant liability and CVR liability related to the private placement on August 24, 2020 (see Note 9). INDUS derived these values based on the Cox-Ross-Rubenstein option-pricing model and a Monte Carlo simulation valuation methodology, respectively. Therefore, INDUS recognized these liabilities as Level 3 within the fair value hierarchy and they will be measured on a recurring basis.

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The following are INDUS’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:

	March 31, 2021
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap asset	$	—	$	249	$	—
Interest rate swap liabilities	$	—	$	5,536	$	—
Common stock warrant liability	$	—	$	—	$	8,685
Contingent value rights liability	$	—	$	—	$	501

	December 31, 2020
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap liabilities	$	—	$	8,766	$	—
Common stock warrant liability	$	—	$	—	$	8,790
Contingent value rights liability	$	—	$	—	$	656

	November 30, 2020
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap liabilities	$	—	$	8,962	$	—
Common stock warrant liability	$	—	$	—	$	11,550
Contingent value rights liability	$	—	$	—	$	681

The amounts included in the consolidated financial statements for cash and cash equivalents, leasing receivables from tenants, accounts payable and accrued liabilities, interest rate swap assets and liabilities, warrant liability and CVR liability approximate their fair values because of the short-term maturities of these instruments. The fair values of the interest rate swaps (used for purposes other than trading) are determined based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current Overnight Index Swap Rate and swap curve along with other market data, taking into account current interest rates and the credit worthiness of the counterparty for assets and the credit worthiness of INDUS for liabilities.

The fair values of the mortgage loans, net of debt issuance costs, are estimated based on current rates offered to INDUS for similar debt of the same remaining maturities and, additionally, INDUS considers its credit worthiness in determining the fair value of its mortgage loans. At March 31, 2021, December 31, 2020 and November 30, 2020, the carrying values of the mortgage loans were $159,463, $160,655 and $161,048, respectively, and the fair values of the mortgage loans were $162,625, $163,906 and $164,331, respectively.

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The fair value of the Warrant liability was estimated using the Cox-Ross-Rubenstein option-pricing model. A summary of the weighted-average significant unobservable inputs (Level 3 inputs) used in determining fair value of the Warrant liability is as follows:

		Warrant Liability
Expected volatility		46.53	%
Risk free interest rate		0.24	%
Expected term (in years)		2.4
Annual dividend yield		0.94	%
		Fair Value of Derivative Warrant Liability
Fair value at November 30, 2020	$	11,550
Change in fair value		(2,760)
Fair value at December 31, 2020		8,790
Change in fair value		(105)
Fair value at March 31, 2021	$	8,685

Although the fair value of the Warrant was $8,685 as of March 31, 2021, the maximum amount that INDUS would be required to pay if the Warrant were to be settled in cash is $2,018.

The fair value of the CVR liability (see Note 9) was estimated using a Monte Carlo simulation valuation methodology. A summary of the weighted-average significant unobservable inputs (Level 3 inputs) used in determining fair value of the CVR liability is as follows:

		Contingent Value Rights Liability
Expected volatility		48.80	%
Risk free interest rate		0.04	%
Expected term (in years)		0.4
Annual dividend yield		0.61	%
		Fair Value of Contingent Value Rights Liability
Fair value at November 30, 2020	$	681
Change in fair value		(25)
Fair value at December 31, 2020		656
Change in fair value		(155)
Fair value at March 31, 2021	$	501

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4.    Real Estate Assets

Real estate assets consist of:

	Estimated
	Useful Lives	Mar. 31, 2021		Dec. 31, 2020		Nov. 30, 2020
Land		$	33,043	$	33,084	$	33,084
Land improvements	10 to 30 years		45,827		45,827		45,827
Buildings and improvements	10 to 40 years		233,264		233,250		233,250
Tenant improvements	Shorter of useful life or terms of related lease		35,009		34,899		34,899
Machinery and equipment	3 to 20 years		10,958		10,958		10,958
Construction in progress			6,835		4,036		3,613
Development costs			5,090		5,106		5,106
			370,026		367,160		366,737
Accumulated depreciation			(127,755)		(124,839)		(123,862)
		$	242,271	$	242,321	$	242,875

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

	For the Three Months Ended				For the Month Ended
	Mar. 31, 2021		Mar. 31, 2020		Dec. 31, 2020		Dec. 31, 2019
Depreciation expense	$	2,916	$	2,901	$	977	$	936
Capitalized interest	$	122	$	—	$	12	$	—

On February 18, 2020, INDUS, through a consolidated VIE, purchased 3320 Maggie Boulevard (“3320 Maggie”), an approximately 108,000 square foot industrial/logistics building in Orlando, Florida for $7,921, including acquisition costs. INDUS provided all of the funding to the VIE to purchase 3320 Maggie and determined that the fair value of the assets acqu