Supplemental Financial Statement Information

12 Months Ended

Dec. 31, 2022

Supplemental Financial Statement Information

Supplemental Financial Statement Information

9. Supplemental Financial Statement Information

Other Assets

INDUS’ other assets are comprised of the following:

	December 31, 2022		December 31, 2021
Deposits on building and land acquisitions	$	15,588	$	9,800
Straight-line rents		7,547		5,909
Deferred leasing costs, net		7,118		6,310
Intangible assets, net		5,813		5,495
Prepaid expenses		3,497		3,236
Accounts receivable (primarily leases)		2,790		399
Right-of-use assets		2,123		593
Furniture, fixtures and equipment, net		1,791		369
Deferred financing costs related to revolving lines of credit		631		917
Registration statement costs		341		341
Prepaid development costs		88		143
Other		447		402
Total other assets	$	47,774	$	33,914

INDUS’ intangible assets relate to the acquisition of several buildings and consist of the values of in-place leases and the associated relationships with tenants (see Note 4). The values of in-place leases and tenant relationships are amortized to depreciation and amortization expense over the remaining non-cancelable term of their respective leases.

INDUS’ intangible liabilities relate to the acquisition of several buildings and consist of the values of below-market leases (see Note 4). The values of the below-market leases are amortized as an increase to rental revenue over the remaining non-cancelable term of their respective leases.

Intangible assets and liabilities consist of the following:

	Year Ended December 31,
	2022		2021
Intangible assets:
In-place leases, net of accumulated amortization of $3,505 and $2,476, respectively	$	5,495	$	5,036
Tenant relationships, net of accumulated amortization of $1,094 and $953, respectively		318		459
Total intangible assets	$	5,813	$	5,495
Intangible liabilities:
Below market leases, net of accumulated amortization of $812 and $367, respectively	$	3,203	$	3,000
Total intangible liabilities	$	3,203	$	3,000

INDUS recorded amortization expense of intangible assets of $1,170 and $1,229 in 2022 and 2021, respectively. INDUS recorded an increase to rental revenue from the amortization of intangible liabilities of $445 and $272 in 2022 and 2021, respectively.

Estimated amortization expense of intangible assets and liabilities over each of the next five years is:

		2023		2024		2025		2026		2027
In-place leases	$	1,070	$	868	$	716	$	707	$	562
Tenant relationships		91		56		56		28		28
Total to be included in depreciation and amortization expense	$	1,161	$	924	$	772	$	735	$	590
Below market lease liabilities	$	(467)	$	(391)	$	(379)	$	(379)	$	(275)
Total to be included in rental revenue	$	(467)	$	(391)	$	(379)	$	(379)	$	(275)

Deferred leasing costs, net, reflected accumulated amortization of $6,208 and $6,673 as of December 31, 2022 and 2021, respectively. Amortization expense related to deferred leasing costs in 2022 and 2021 was $1,110 and $1,091, respectively. Furniture, fixtures and equipment, net, reflected accumulated depreciation of $381 and $1,051 as of December 31, 2022 and 2021, respectively. Total depreciation expense related to furniture, fixtures and equipment in 2022 and 2021 was $112 and $88, respectively.

Accounts Payable and Accrued Liabilities

INDUS’ accounts payable and accrued liabilities are comprised of the following:

	December 31, 2022		December 31, 2021
Accrued construction costs and retainage	$	5,030	$	5,800
Accrued salaries, wages and other compensation		2,363		1,796
Trade payables		2,143		481
Accrued interest payable		447		556
Accrued lease commissions		191		468
Other		766		570
Total accounts payable and accrued liabilities	$	10,940	$	9,671

Other Liabilities

INDUS’ other liabilities are comprised of the following:

	December 31, 2022		December 31, 2021
Deferred compensation plan	$	3,363	$	5,097
Intangible liability, net		3,203		3,000
Lease liabilities		2,150		626
Prepaid rent from tenants		1,449		1,483
Security deposits of tenants		1,229		900
Other		143		153
Total other liabilities	$	11,537	$	11,259

Supplemental Cash Flow Information

Accounts payable and accrued liabilities related to additions to real estate assets decreased by $770 in 2022 and increased by $5,719 in 2021.

Other assets and other liabilities each increased by $1,638 when the lease for the Bloomfield, Connecticut office commenced on December 1, 2022 and the right-of-use asset and liability were recorded. The recording of this lease had no effect on the Company’s cash.

INDUS did not receive any tax refunds in 2022 or 2021. Interest payments in 2022 and 2021 were $5,477 and $7,018, respectively, including capitalized interest of $1,532 and $1,164 in 2022 and 2021, respectively.

Savings Plan

INDUS maintains the INDUS Realty Trust, Inc. 401(k) Savings Plan (the “INDUS Savings Plan”) for its employees, which is a defined contribution plan. On January 1, 2022, the INDUS Savings Plan was amended and restated to convert from a traditional 401(k) plan to a Safe Harbor 401(k) plan and, as part of the amendment, changed the employer contributions to 100% of the first 3% of employee contributions, plus 50% of the next 2% of employee contributions. Prior to such amendment and restatement, through December 31, 2021, the Company matched 60% of the first 5% of employee contributions.

The Company’s contributions to the INDUS Savings Plan in 2022 and 2021 were $159 and $89, respectively.

Deferred Compensation Plan

INDUS maintains a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for certain of its employees who, due to IRC regulations, could not take full advantage of the INDUS Savings Plan. Effective January 1, 2022, INDUS closed the Deferred Compensation Plan to any further contributions.

The Company’s liability under its Deferred Compensation Plan at December 31, 2022 and 2021 was $3,363 and $5,097, respectively. Noncash expense related to the Deferred Compensation Plan in 2022 and 2021 was ($616) and $677, respectively.

These amounts are included in other liabilities on INDUS’ consolidated balance sheets. The expense for the Company’s matching benefit to the Deferred Compensation Plan in 2021 was $9.

The Deferred Compensation Plan is unfunded, with benefits to be paid from INDUS’ assets. The liability for the Deferred Compensation Plan reflects the amounts previously withheld from employees, the Company’s matching benefit and any gains or losses on participant account balances based on the assumed investment of amounts credited to participants’ accounts in certain mutual funds. Participant balances are tracked and any gain or loss is determined based on the performance of the mutual funds as selected by the participants and included in general and administrative expenses on INDUS’ consolidated statements of operations.

Income Taxes

For the year ended December 31, 2022, the Company recorded an income tax benefit of $585 related to the reclassification of gains included in other comprehensive income related to the termination of several interest rate swap agreements that were associated with the nonrecourse mortgages that were prepaid (see Note 5).

The Company has elected to be treated as a REIT for federal tax purposes, however, the Company does conduct business in its TRS which is subject to federal, state and local income tax for income received in the TRS. For the year ended December 31, 2021, the Company recorded a provision for taxes of $26 related to the TRS.

INDUS evaluates each tax position taken in its tax returns and recognizes a liability for any tax position deemed less likely than not to be sustained under examination by the relevant taxing authorities. The Company believes that its income tax filing positions will be sustained on examination and does not anticipate any adjustments that would result in a material change on its financial statements. As a result, no accrual for uncertain income tax positions has been recorded pursuant to ASC 740.

Federal income tax returns for the year ended December 31, 2021, the one-month transition period from December 1, 2020 to December 31, 2020 and the fiscal year ended November 30, 2020 are open to examination by the Internal Revenue Service.