5. REAL ESTATE AND RELATED LEASE INTANGIBLES, NET

The following tables present additional detail related to our real estate portfolio ($ in thousands):



	September 30, 2016			December 31, 2015

Land	$	140,872		$	138,128
Building	646,183			640,206
In-place leases and other intangibles	149,204			139,501
Less: Accumulated depreciation and amortization	(110,666		)	(83,056		)
Real estate, net	$	825,593		$	834,779

Below market lease intangibles, net (other liabilities)	$	(16,549	)	$	(17,021	)

The following table presents depreciation and amortization expense on real estate recorded by the Company ($ in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015

Depreciation expense (1)	$	6,272	$	5,900	$	18,540	$	17,802
Amortization expense	3,433		3,633		10,164		11,356
Total real estate depreciation and amortization expense	$	9,705	$	9,533	$	28,704	$	29,158


(1)	Depreciation expense on the combined consolidated statements of income also includes $28,493 and $28,493 of depreciation on corporate fixed assets for the three months ended September 30, 2016 and 2015, respectively, and $85,416 and $79,904 of depreciation on corporate fixed assets for the nine months ended September 30, 2016 and 2015, respectively.

The Company’s intangible assets are comprised of in-place leases, favorable leases compared to market leases and other intangibles. At September 30, 2016, gross intangible assets totaled $149.2 million with total accumulated amortization of $43.7 million, resulting in net intangible assets of $105.5 million, including $5.4 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. At December 31, 2015, gross intangible assets totaled $139.5 million with total accumulated amortization of $32.7 million, resulting in net intangible assets of $106.8 million, including $6.5 million of unamortized favorable lease intangibles which are included in real estate and related lease intangibles, net on the combined consolidated balance sheets. For the three and nine months ended September 30, 2016, the Company recorded an offset against operating lease income of $0.4 million and $1.0 million, respectively, for favorable leases, compared to $0.4 million and $1.2 million for the three and nine months ended September 30, 2015, respectively.

The following table presents expected amortization expense during the next five years and thereafter related to the acquired in-place lease intangibles for property owned as of September 30, 2016 ($ in thousands):



Period Ending December 31,	Amount

2016 (last 3 months)	$	3,831
2017	7,662
2018	7,662
2019	7,662
2020	7,662
Thereafter	71,000
Total	$	105,479

There were $1.5 million and $5.0 million of unbilled rent receivables included in other assets on the combined consolidated balance sheets as of September 30, 2016 and December 31, 2015, respectively.

There was unencumbered real estate of $33.0 million and $47.8 million as of September 30, 2016 and December 31, 2015, respectively.

The following is a schedule of non-cancellable, contractual, future minimum rent under leases (excluding property operating expenses paid directly by tenant under net leases or rent escalations under other leases from tenants) at September 30, 2016 ($ in thousands):



Period Ending December 31,	Amount

2016 (last 3 months)	$	18,630
2017	73,312
2018	70,101
2019	64,930
2020	55,231
Thereafter	532,118
Total	$	814,322

Acquisitions

During the nine months ended September 30, 2016, the Company acquired the following properties ($ in thousands):



Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)

April 2016	Land	St. Paul, MN	$	200	100.0%
April 2016	Net Lease	Dimmitt, TX	1,319		100.0%
April 2016	Net Lease	Philo, IL	1,156		100.0%
April 2016	Net Lease	St.Charles, MN	1,198		100.0%
May 2016	Net Lease	San Antonio, TX	1,096		100.0%
May 2016	Net Lease	Borger, TX	978		100.0%
June 2016	Net Lease	Champaign, IL	1,324		100.0%
June 2016	Net Lease	Decatur, IL	1,181		100.0%
June 2016	Net Lease	Flora Vista, NM	1,305		100.0%
June 2016	Net Lease	Mountain Grove, MO	1,279		100.0%
June 2016	Net Lease	Rantoul, IL	1,204		100.0%
June 2016	Net Lease	Decatur, IL	1,365		100.0%
June 2016	Net Lease	Cape Girardeau, MO	1,281		100.0%
June 2016	Net Lease	Linn, MO	1,122		100.0%
July 2016	Net Lease	Union, IL	1,227		100.0%
July 2016	Net Lease	Pawnee, IL	1,201		100.0%
July 2016	Net Lease	Lamar, MO	1,176		100.0%
August 2016	Other	Ewing, NJ	30,640		100.0%
Total real estate acquisitions			$	50,252

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the nine months ended September 30, 2016, as follows ($ in thousands):



	Purchase Price Allocation

Land	$	6,407
Building	34,396
Intangibles	11,364
Below Market Lease Intangibles	(1,915		)
Total purchase price	$	50,252

During the nine months ended September 30, 2015, the Company acquired the following properties ($ in thousands):



Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)

January 2015	Net Lease	Jacksonville, NC	$	7,877	100.0%
January 2015	Net Lease	Iberia, MO	1,328		100.0%
January 2015	Net Lease	Isle, MN	1,078		100.0%
January 2015	Net Lease	Pine Island, MN	1,142		100.0%
January 2015	Net Lease	Kings Mountain, NC	21,241		100.0%
February 2015	Net Lease	Village of Menomonee Falls, WI	17,050		100.0%
February 2015	Net Lease	Rockland, MA	7,316		100.0%
February 2015	Net Lease	Crawfordsville, IA	6,000		100.0%
February 2015	Net Lease	Boardman Township, OH	5,400		100.0%
March 2015	Net Lease	Hilliard, OH	6,384		100.0%
March 2015	Net Lease	Weathersfield Township, OH	5,200		100.0%
March 2015	Net Lease	Rotterdam, NY	12,000		100.0%
March 2015	Net Lease	Wheaton, MO	970		100.0%
March 2015	Net Lease	Paynesville, MN	1,254		100.0%
March 2015	Net Lease	Loveland, CO	5,600		100.0%
March 2015	Net Lease	Battle Lake, MN	1,098		100.0%
March 2015	Net Lease	Yorktown, TX	1,207		100.0%
March 2015	Net Lease	St. Francis, MN	1,117		100.0%
May 2015	Net Lease	Red Oak, IA	1,185		100.0%
May 2015	Net Lease	Zapata, TX	1,150		100.0%
June 2015	Net Lease	Aurora, MN	952		100.0%
June 2015	Net Lease	Canyon Lake, TX	1,377		100.0%
June 2015	Net Lease	Wheeler, TX	1,075		100.0%
June 2015	Other	Grand Rapids, MI	9,300		97.0%
June 2015	Other	Grand Rapids, MI	6,300		97.0%
June 2015	Net Lease	Bridgeport, IL	1,186		100.0%
June 2015	Net Lease	Peoria, IL	1,226		100.0%
June 2015	Net Lease	Pleasanton, TX	1,316		100.0%
June 2015	Other	Wayne, NJ	9,700		100.0%
June 2015	Net Lease	Warren, MN	1,055		100.0%
June 2015	Net Lease	Tremont, IL	1,150		100.0%



Acquisition Date	Type	Primary Location(s)	Purchase Price		Ownership Interest (1)

August 2015	Net Lease	Ponce, Puerto Rico	8,900		100.0%
August 2015	Net Lease	Effingham County, IL	1,195		100.0%
August 2015	Net Lease	Lebanon, MI	1,200		100.0%
August 2015	Net Lease	Minot, ND	6,644		100.0%
August 2015	Net Lease	Floresville, TX	1,251		100.0%
August 2015	Net Lease	Kerrville, TX	1,174		97.0%
September 2015	Net Lease	De Soto, IL	1,066		97.0%
September 2015	Net Lease	Biscoe, NC	1,216		100.0%
September 2015	Net Lease	Moultrie, GA	1,305		100.0%
September 2015	Net Lease	Rose Hill, NC	1,420		100.0%
September 2015	Net Lease	Rockingham, NC	1,158		100.0%
Total real estate acquisitions			$	166,763

(1) Properties were consolidated as of acquisition date.

The purchase prices were allocated to the net assets acquired during the nine months ended September 30, 2015, as follows ($ in thousands):



	Purchase Price Allocation

Land	$	21,794
Building	129,032
Intangibles	23,728
Below Market Lease Intangibles	(7,791		)
Total purchase price	$	166,763

Sales

The Company sold the following properties during the nine months ended September 30, 2016 ($ in thousands):



Sales Date	Type	Primary Location(s)	Net Sales Proceeds		Net Book Value		Realized Gain/(Loss)		Properties	Units Sold	Units Remaining

Mar 2016	Net Lease	Rockland, MA	9,148		8,436		712		1	—	—
Sep 2016	Net Lease	Crawfordsville, IN	6,190		5,723		467		1	—	—
Various	Condominium	Las Vegas, NV	24,534		13,507		11,027		—	58	74
Various	Condominium	Miami, FL	14,162		10,752		3,410		—	49	104
Totals			$	54,034	$	38,418	$	15,616

The Company sold the following properties during the nine months ended September 30, 2015 ($ in thousands):



Sales Date	Type	Primary Location(s)	Net Sales Proceeds			Net Book Value		Realized Gain/(Loss)			Properties	Units Sold	Units Remaining

May 2015	Net Lease	Plattsmouth, NE	$	8,440		$	7,983	$	457		1	—	—
May 2015	Net Lease	Worthington, MN	8,793			8,321		472			1	—	—
May 2015	Net Lease	Loveland, CO	6,249			5,600		649			1	—	—
Sep 2015	Net Lease	Village of Menomonee Falls, WI	17,856		(1)	16,827		1,029		(2)	1	—	—
Various	Condominium	Las Vegas, NV	31,997			18,617		13,380			—	72	148
Various	Condominium	Miami, FL	22,301			17,271		5,030			—	74	178
Totals			$	95,636		$	74,619	$	21,017

(1) Includes $11.3 million of mortgage debt assumed by the buyer, which is included in non-cash transactions on the Company’s combined consolidated statement of cash flows.

(2) Excludes $0.3 million of gain on mortgage debt assumed by the buyer, which is included in realized gain on sale of real estate, net on the Company’s combined consolidated statement of cash flows.

Real Estate Sold or Classified as Held for Sale

On January 1, 2014, the Company early adopted ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, and as the properties sold or classified as real estate held for sale in the nine months ended September 30, 2016 and 2015 did not represent a strategic shift (as the Company is not entirely exiting markets or property types), they have not been reflected as part of discontinued operations.

Unaudited Pro Forma Information

The following unaudited pro forma information has been prepared based upon our historical combined consolidated financial statements and certain historical financial information of the acquired properties, which are accounted for as business combinations, and should be read in conjunction with the combined consolidated financial statements and notes thereto. The unaudited pro forma combined consolidated financial information reflects the 2016 acquisition adjustments made to present financial results as though the acquisition of such properties occurred on January 1, 2015 through the date of acquisition and the 2015 acquisition adjustments made to present financial results as though the acquisition of the properties occurred on January 1, 2014 through the date of acquisition. This unaudited pro forma information may not be indicative of the results that actually would have occurred if these transactions had been in effect on the dates indicated, nor do they purport to represent our future results of operations ($ in thousands):



	Three Months Ended September 30, 2016									Nine Months Ended September 30, 2016
	Company Historical			Acquisitions			Consolidated Pro Forma			Company Historical			Acquisitions			Consolidated Pro Forma

Operating lease income	$	19,466		$	195		$	19,661		$	57,845		$	2,475		$	60,320
Net income (loss)	49,598			113			49,711			42,099			1,514			43,613
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures	439			—			439			436			—			436
Net (income) loss attributable to noncontrolling interest in operating partnership	(22,429		)	(48		)	(22,477		)	(17,664		)	(642		)	(18,306		)
Net income attributable to Class A common shareholders	27,608			65			27,673			24,871			873			25,744

The Company recorded $0.6 million and $1.0 million in revenues from its 2016 acquisitions for the three and nine months ended September 30, 2016, respectively, which are included in operating lease income on the combined consolidated statements of income.



	Three Months Ended September 30, 2015							Nine Months Ended September 30, 2015
	Company Historical		Acquisitions			Consolidated Pro Forma		Company Historical			Acquisitions			Consolidated Pro Forma

Operating lease income	$	20,671	$	1,127		$	21,798	$	60,207		$	3,419		$	63,626
Net income	2,798		693			3,491		89,458			1,470			90,928
Net (income) loss attributable to noncontrolling interest in consolidated joint ventures	85		—			85		578			—			578
Net (income) loss attributable to noncontrolling interest in operating partnership	430		(294		)	136		(43,338		)	(623		)	(43,961		)
Net income attributable to Class A common shareholders	3,313		399			3,712		46,698			847			47,545

The Company recorded $0.2 million and $6.4 million, respectively, in revenues from its 2015 acquisitions for the three and nine months ended September 30, 2015, which are included in operating lease income on the combined consolidated statements of income.

The most significant adjustments made in preparing the unaudited pro forma information were to: (i) include the incremental operating lease income, (ii) include the incremental depreciation, and (iii) adjust for transaction costs associated with the properties acquired in 2016 as if they were incurred on January 1, 2015 and the properties acquired in 2015 as if they were incurred on January 1, 2014.