Note 5 - Real Estate Transaction

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Real Estate Transaction [Text Block]

5

. REAL ESTATE

TRANSACTION

In

March 2019,

the Company completed the purchase of an office building and land located in Kirkland, Washington for

$52.9

million in cash. The property also has in-place leases which were assumed by the Company. The Company accounted for the purchase as an asset acquisition and capitalized

$0.4

million of transaction costs. The consideration paid was allocated to the individual assets based on their relative fair values as follows (in thousands):

Building	$	30,078
Land		22,254
In-place leases		981
Total	$	53,313

The fair value of the building was determined based on the income approach, which considered the discounted cash flows and direct capitalization analysis, and the sales comparison approach. The fair value of land was determined based on the sales comparison approach. The fair value of the in-place leases was determined primarily based on the analysis of the economic benefits of avoiding certain costs to acquire new tenants.

The building is depreciated over a useful life of

40

years and the in-place leases are amortized over the average remaining lease terms of

3.5

years. Land is

not

depreciated.