INTANGIBLE ASSETS AND LIABILITIES

6 Months Ended

Jun. 30, 2020

INTANGIBLE ASSETS AND LIABILITIES

INTANGIBLE ASSETS AND LIABILITIES

NOTE 10. INTANGIBLE LEASE ASSETS AND LIABILITIES

Intangible lease assets and liabilities consist of the value of above-market and below-market leases, the value of in-place leases, and the value of leasing costs, based in each case on their fair values.

Intangible lease assets and liabilities consisted of the following as of June 30, 2020 and December 31, 2019:

	As of
	June 30, 2020		December 31, 2019
Intangible Lease Assets:
Value of In-Place Leases	$	43,898,967	$	42,584,264
Value of Above Market In-Place Leases		10,588,409		7,119,316
Value of Intangible Leasing Costs		14,577,445		14,645,780
Sub-total Intangible Lease Assets		69,064,821		64,349,360
Accumulated Amortization		(14,328,878)		(15,327,182)
Sub-total Intangible Lease Assets—Net		54,735,943		49,022,178
Intangible Lease Liabilities (included in accrued and other liabilities):
Value of Below Market In-Place Leases		(37,675,639)		(36,507,336)
Sub-total Intangible Lease Liabilities		(37,675,639)		(36,507,336)
Accumulated Amortization		11,499,468		10,309,088
Sub-total Intangible Lease Liabilities—Net		(26,176,171)		(26,198,248)
Total Intangible Assets and Liabilities—Net	$	28,559,772	$	22,823,930

During the six months ended June 30, 2020, the value of in-place leases increased by approximately $1.3 million, the value of above-market in-place leases increased by approximately $3.5 million, the value of intangible leasing costs decreased by approximately $68,000, and the value of below-market in-place leases decreased by approximately $1.2 million due to the acquisition of two multi-tenant income properties completed during the first quarter of 2020, such increases reflect acquisitions, net of the disposition of four single-tenant income properties and one multi-tenant income property during the second quarter of 2020, and two single-tenant income properties which were classified as held for sale

as of June 30, 2020. Net amortization increased by approximately $2.2 million, for a net increase during the six months ended June 30, 2020 of approximately $5.7 million.

As of June 30, 2020 and December 31, 2019, approximately $21 and $22.2 million, respectively, of the total below market in-place lease value is related to Wells Fargo Raleigh which was acquired on November 18, 2015.

The following table reflects the amortization of intangible assets and liabilities during the three and six months ended June 30, 2020 and 2019:

	Three Months Ended				Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	($000's)		($000's)		($000's)		($000's)
Depreciation and Amortization Expense	$	2,136	$	1,559	$	4,017	$	2,686
Increase to Income Properties Revenue		(444)		(623)		(918)		(1,204)
Net Amortization of Intangible Assets and Liabilities	$	1,692	$	936	$	3,099	$	1,482

The estimated future amortization expense (income) related to net intangible assets and liabilities is as follows:

			Future Accretion		Net Future
	Future		to Income		Amortization of
	Amortization		Property		Intangible Assets
Year Ending December 31,	Amount		Revenue		and Liabilities
Remainder of 2020	$	3,651,725	$	(873,687)	$	2,778,038
2021		6,769,579		(1,841,373)		4,928,206
2022		6,362,262		(1,912,533)		4,449,729
2023		6,238,903		(1,889,287)		4,349,616
2024		6,203,350		(1,685,744)		4,517,606
2025 and thereafter		16,731,349		(9,194,772)		7,536,577
Total	$	45,957,168	$	(17,397,396)	$	28,559,772