Real Estate and Intangibles

3 Months Ended

Mar. 31, 2020

3. Real Estate and Intangibles

Acquisitions

During the three months ended March 31, 2020, we acquired two operating properties in asset acquisitions, consisting of DHA – Aurora and FBI / DEA – El Paso for an aggregate purchase price of $51.6 million. We allocated the aggregate purchase price of these acquisitions based on the estimated fair values of the acquired assets and assumed liabilities as follows (amounts in thousands):

	Total
Real estate
Land	$	4,215
Building		38,705
Acquired tenant improvements		4,394
Total real estate		47,314
Intangible assets
In-place leases		4,384
Acquired leasing commissions		2,138
Above-market leases		6,553
Total intangible assets		13,075
Intangible liabilities
Below-market leases		(8,491	)
Total intangible liabilities		(8,491	)
Accounts payable, accrued expenses and other liabilities
Contingent consideration		(336	)
Purchase price	$	51,562

We did not assume any debt upon acquisition of these properties. The intangible assets and liabilities of operating properties acquired during the three months ended March 31, 2020 have a weighted average amortization period of 8.93 years as of March 31, 2020. During the three months ended March 31, 2020, we included $0.6 million of revenues and $0.1 million of net income in our Consolidated Statements of Operations related to the operating properties acquired.

During the three months ended March 31, 2020, we incurred $0.5 million of acquisition-related expenses mainly consisting of internal costs associated with property acquisitions.

Consolidated Real Estate and Intangibles

Real estate and intangibles consisted of the following as of March 31, 2020 (amounts in thousands):

	Total
Real estate properties, net
Land	$	197,383
Building and improvements		1,868,593
Acquired tenant improvements		73,248
Construction in progress		71,329
Accumulated depreciation		(170,085	)
Total Real estate properties, net		2,040,468
Intangible assets, net
In-place leases		244,607
Acquired leasing commissions		54,825
Above market leases		17,607
Accumulated amortization		(145,156	)
Total Intangible assets, net		171,883
Intangible liabilities, net
Below market leases		(73,950	)
Accumulated amortization		42,731
Total Intangible liabilities, net	$	(31,219	)

The following table summarizes the scheduled amortization of the Company’s acquired above- and below-market lease intangibles for each of the five succeeding years as of March 31, 2020 (amounts in thousands):

	Acquired Above-Market Lease Intangibles		Acquired Below-Market Lease Intangibles
2020	$	1,439	$	(5,813	)
2021		1,514		(5,832	)
2022		1,424		(4,223	)
2023		1,400		(4,024	)
2024		1,314		(2,877	)

Above-market lease amortization reduces Rental income on our Consolidated Statements of Operations and below-market lease amortization increases Rental income on our Consolidated Statements of Operations.