Lease Intangible Assets and Liabilities

9 Months Ended

Sep. 30, 2016

Real Estate [Abstract]

Lease Intangible Assets and Liabilities

Note 4 – Lease Intangible Assets and Liabilities

As of September 30, 2016, lease intangible assets (acquired in-place leases, above-market leases, and below-market ground leases) and liabilities (acquired below-market leases), net of accumulated amortization, were $505.6 million and $17.4 million, respectively.  The following table summarizes the Company’s lease intangible assets and liabilities as of September 30, 2016 (in thousands):

	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	595,350	$	(108,614	)	$	486,736
Below-market ground leases, net		11,766		(254	)		11,512
Above-market leases, net		8,964		(1,648	)		7,316
Total	$	616,080	$	(110,516	)	$	505,564

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	20,045	$	(2,687	)	$	17,358
Total	$	20,045	$	(2,687	)	$	17,358

As of December 31, 2015, lease intangible assets (acquired in-place leases, above-market leases, and below-market ground leases) and liabilities (acquired below-market leases), net of accumulated amortization, were $578.8 million and $19.0 million, respectively.  The following table summarizes the Company’s lease intangible assets and liabilities as of December 31, 2015 (in thousands):

	Gross		Accumulated
Lease Intangible Assets	Asset		Amortization			Balance
In-place leases, net	$	595,443	$	(36,800	)	$	558,643
Below-market ground leases, net		11,766		(102	)		11,664
Above-market leases, net		9,058		(570	)		8,488
Total	$	616,267	$	(37,472	)	$	578,795

	Gross		Accumulated
Lease Intangible Liabilities	Liability		Amortization			Balance
Below-market leases, net	$	20,045	$	(1,059	)	$	18,986
Total	$	20,045	$	(1,059	)	$	18,986

Amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of $0.3 million for the three months ended September 30, 2016 and $0.2 million for the period from July 7, 2015 (Date Operations Commenced) to September 30, 2015.  For the nine months ended September 30, 2016, amortization of acquired below-market leases, net of acquired above-market leases, resulted in additional rental income of $0.9 million.  Future amortization of these intangibles is estimated to increase rental income as set forth below (in thousands):

Remainder of 2016	$	(248	)
2017		(991	)
2018		(991	)
2019		(964	)
2020		(830	)
2021		(817	)

Amortization of acquired below-market ground leases resulted in additional property expense of $50 thousand for the three months ended September 30, 2016 and $50 thousand for the period from July 7, 2015 (Date Operations Commenced) to September 30, 2015.  For the nine months ended September 30, 2016, amortization of acquired below-market ground leases resulted in additional property expense of $150 thousand. Future amortization of below-market ground leases is estimated to increase property expenses as set forth below (in thousands):

Remainder of 2016	$	51
2017		203
2018		203
2019		203
2020		203
2021		203

Amortization of acquired in-place leases resulted in additional depreciation and amortization expense of $27.4 million for the three months ended September 30, 2016 and $18.4 million for the period from July 7, 2015 (Date Operations Commenced) to September 30, 2015.  For the nine months ended September 30, 2016, amortization of acquired in-place leases resulted in additional depreciation and amortization expense of $72.1 million.  Future estimated amortization of acquired in-place leases is set forth below (in thousands):

Remainder of 2016	$	37,422
2017		69,997
2018		68,021
2019		65,617
2020		63,290
2021		55,697