NOTE 4 – REAL ESTATE INVESTMENTS, NET AND INTANGIBLE ASSETS AND LIABILITIES, NET

Real estate investments, net, which consist of land, buildings and improvements leased to others subject to net operating leases and those utilized in the operations of Kerrow Restaurant Operating Business are summarized as follows:


(In thousands)	June 30, 2024			December 31, 2023
Land	$	1,264,216		$	1,240,865
Buildings and improvements		1,608,505			1,572,590
Equipment		136,039			135,966
Total gross real estate investments		3,008,760			2,949,421
Less: Accumulated depreciation		(757,054	)		(738,946	)
Total real estate investments, net		2,251,706			2,210,475
Intangible lease assets, net		114,087			118,027
Total Real Estate Investments and Intangible Lease Assets, Net	$	2,365,793		$	2,328,502

During the six months ended June 30, 2024, the Company invested $63.8 million, including transaction costs, in 21 properties located in thirteen states, and allocated the investment as follows: $23.4 million to land, $35.9 million to buildings and improvements, and $4.5 million to intangible assets. There was no contingent consideration associated with these acquisitions. These properties are 100% occupied under net leases, with a weighted average remaining lease term of 12.2 years as of June 30, 2024. During the six months ended June 30, 2024, no properties were sold.

During the six months ended June 30, 2023, the Company invested $195.0 million, including transaction costs, in 59 properties located in twenty-four states, and allocated the investment as follows: $70.7 million to land, $105.1 million to buildings and improvements and $19.2 million to intangible assets. There was no contingent consideration associated with these acquisitions. These properties were 100% occupied under net leases, with a weighted average remaining lease term of 12.1 years as of June 30, 2023. During the six months ended June 30, 2023, the Company sold four properties with a combined net book value of $11.0 million for a realized gain of $1.7 million.

During the six months ended June 30, 2023, the Company exercised its option to purchase one of the properties where the Company was the lessee under the ground lease. This lease was previously accounted for as a finance lease. This purchase resulted in an increase in land and corresponding decrease in finance lease right-of-use assets of $2.3 million.

Acquired in-place lease intangibles are amortized over the remaining lease term as depreciation and amortization expense. Above-market and below-market leases are amortized over the initial term of the respective leases as an adjustment to rental revenue. Lease incentives are amortized over the initial term of the respective leases as an adjustment to rental revenue. Intangible lease liabilities are included in Other liabilities in our Consolidated Balance Sheets.

The following tables detail intangible lease assets and liabilities.


(In thousands)	June 30, 2024			December 31, 2023
Acquired in-place lease intangibles	$	141,225		$	136,940
Above-market leases		13,821			13,821
Finance leases - right of use asset (1)		14,040			14,040
Lease incentives		9,603			8,224
Tenant improvements intangibles		3,605			3,605
Direct lease costs		547			360
Total		182,841			176,990
Less: Accumulated amortization		(68,754	)		(58,963	)
Intangible Lease Assets, Net	$	114,087		$	118,027

(1)

See Note 5 - Leases for additional information on finance leases - right of use assets.


(In thousands)	June 30, 2024			December 31, 2023
Below-market leases	$	2,610		$	2,610
Less: Accumulated amortization		(1,518	)		(1,414	)
Intangible Lease Liabilities, Net	$	1,092		$	1,196

The value of acquired in-place leases amortized and included in depreciation and amortization expense was $4.2 million and $4.0 million for the three months ended June 30, 2024 and 2023, respectively, and $8.6 million and $7.9 million for the six months ended June 30, 2024 and 2023, respectively. The value of above-market and below-market leases amortized as an adjustment to revenue was $292 thousand and $338 thousand for the three months ended June 30, 2024 and 2023, respectively, and $599 thousand and $692 thousand for the six months ended June 30, 2024 and 2023, respectively. For the three months ended June 30, 2024 and 2023, lease incentive amortization was $195 thousand and $146 thousand, respectively, and $431 thousand and $281 thousand for the six months ended June 30, 2024 and 2023, respectively.

At June 30, 2024, the total weighted average amortization period remaining for our intangible lease assets and liabilities was 8.5 years, and the individual weighted average amortization period remaining for acquired in-place lease intangibles, above-market leases, below-market leases, lease incentives, and tenant improvement intangible was 8.1 years, 6.4 years, 10.1 years, 11.3 years, and 14.7 years, respectively.

The following table presents the estimated impact during the next five years and thereafter related to the amortization of in-place lease intangibles, and above-market and below-market lease intangibles for properties held for investment.


(In thousands)	June 30,
2024 (Six Months)	$	8,714
2025		15,528
2026		13,753
2027		11,372
2028		8,957
Thereafter		32,953
Total Future Amortization	$	91,277