INCOME PROPERTIES

9 Months Ended

Sep. 30, 2023

INCOME PROPERTIES

INCOME PROPERTIES

NOTE 3. INCOME PROPERTIES

Leasing revenue consists of long-term rental revenue from retail, office, and commercial income properties, which is recognized as earned, using the straight-line method over the life of each lease. Lease payments below include straight-line base rental revenue as well as the non-cash accretion of above and below market lease amortization. The variable lease payments are comprised of percentage rent and reimbursements from tenants for common area maintenance, insurance, real estate taxes, and other operating expenses.

The components of leasing revenue are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Leasing Revenue
Lease Payments	$	19,547	$	13,556	$	55,187	$	38,760
Variable Lease Payments		5,636		4,138		15,186		10,469
Total Leasing Revenue	$	25,183	$	17,694	$	70,373	$	49,229

Minimum future base rental receipts under non-cancelable operating leases, excluding percentage rent and other lease payments that are not fixed and determinable, having remaining terms in excess of one year subsequent to September 30, 2023, are summarized as follows (in thousands):

Year Ending December 31,	Amounts
Remainder of 2023	$	20,578
2024		75,476
2025		70,529
2026		60,705
2027		49,104
2028		35,430
2029 and Thereafter (Cumulative)		58,431
Total	$	370,253

2023 Acquisitions. During the nine months ended September 30, 2023, the Company acquired four buildings within an existing multi-tenant income property, one multi-tenant income property, and one vacant land parcel adjacent to an existing multi-tenant property for an aggregate purchase price of $80.0 million, or a total acquisition cost of $80.3 million, as follows:

● Four properties, totaling 24,100 square feet, within the 28,100 square foot retail portion of Phase II of The Exchange at Gwinnett located in Buford, Georgia (the “Gwinnett Property”), for an aggregate purchase price of $14.6 million, or a total acquisition cost of $14.7 million including capitalized acquisition costs. The four properties are leased to six different tenants with a weighted average remaining lease term of 9.9 years at acquisition. The Company is under contract to acquire the remaining 4,000 square-foot property that makes up the remaining retail portion of Phase II of The Exchange at Gwinnett for a purchase price of $2.3 million. The Company previously purchased the Sprouts-anchored Phase I portion of The Exchange at Gwinnett in December 2021.

● The Plaza at Rockwall, a multi-tenant income property located in Rockwall, Texas for a purchase price of $61.2 million, or a total acquisition cost of $61.3 million including capitalized acquisition costs. The Plaza at Rockwall comprises 446,500 square feet, was 95% occupied at acquisition, and had a weighted average remaining lease term of 4.2 years at acquisition.

● A vacant land parcel adjacent to the previously acquired Collection at Forsyth property, located in the Forsyth County submarket of Atlanta, Georgia, for a purchase price of $4.3 million.

Of the aggregate $80.3 million total acquisition cost, $21.2 million was allocated to land, $53.6 million was allocated to buildings and improvements, and $8.7 million was allocated to intangible assets pertaining to the in-place lease value, leasing costs, and above market lease value and $3.2 million was allocated to intangible liabilities for the below market lease value. The amortization period for the intangible assets and liabilities was 5.6 years at acquisition.

2023 Dispositions. During the nine months ended September 30, 2023, the Company sold three income properties for an aggregate sales price of $22.9 million and aggregate gains on sales of $3.3 million. The sales consisted of (i) an outparcel of the multi-tenant property known as Eastern Commons, located in Henderson, Nevada, for $2.1 million, resulting in a gain of $0.8 million, (ii) an outparcel of the multi-tenant property known as Crossroads Towne Center, located in Chandler, Arizona, for $2.3 million, resulting in a gain of $1.2 million, and (iii) a single tenant office property located in Reston, Virginia leased to General Dynamics for $18.5 million, resulting in a gain of $1.3 million.

On October 12, 2023, as described in Note 24, “Subsequent Events,” the Company sold the Westcliff Shopping Center located in Fort Worth, Texas (the “Westcliff Property”), which was classified as held for sale as of September 30, 2023, for a sales price of $14.8 million. An impairment charge of $0.9 million was recognized on the Westcliff Property during the three months ended September 30, 2023, as described in Note 10, “Provision for Impairment.”

2022 Acquisitions. During the nine months ended September 30, 2022, the Company acquired two multi-tenant income properties for an aggregate purchase price of $119.3 million, or a total acquisition cost of $119.7 million, as follows:

● Price Plaza Shopping Center, a multi-tenant income property located in Katy, Texas for a purchase price of $39.1 million, or a total acquisition cost of $39.2 million including capitalized acquisition costs. Price Plaza Shopping Center comprises 205,813 square feet, was 95% leased at acquisition, and had a weighted average remaining lease term of 5.7 years at acquisition. In connection with the acquisition of Price Plaza Shopping Center, the company assumed a $17.8 million fixed-rate mortgage note, as further discussed in Note 15, “Long-Term Debt.”

● Madison Yards, a multi-tenant grocery-anchored income property located in Atlanta, Georgia for a purchase price of $80.2 million, or a total acquisition cost of $80.5 million including capitalized acquisition costs. Madison Yards comprises 162,500 square feet, was 98% leased at acquisition, and had a weighted average remaining lease term of 10.4 years at acquisition.

Of the aggregate $119.7 million total acquisition cost, $35.4 million was allocated to land, $65.9 million was allocated to buildings and improvements, and $19.7 million was allocated to intangible assets pertaining to the in-place lease value, leasing costs, and above market lease value and $1.3 million was allocated to intangible liabilities for the below market lease value. The amortization period for the intangible assets and liabilities was 9.0 years at acquisition.

2022 Dispositions. During the nine months ended September 30, 2022, the Company sold six income properties, including (i) Party City, a single-tenant income property located in Oceanside, New York for $6.9 million, (ii) the Carpenter Hotel ground lease, a single-tenant income property located in Austin, Texas, which was recorded as a commercial loan investment prior to its disposition, for $17.1 million, (iii) the multi-tenant Westland Gateway Plaza located in Hialeah, Florida, which was recorded as a commercial loan investment prior to its disposition, for $22.2 million, (iv) Chuy’s, a single-tenant property, located in Jacksonville, Florida for $5.8 million, (v) Firebirds, a single-tenant property, located in Jacksonville, Florida for $5.5 million, and (vi) 245 Riverside, a multi-tenant office income property located in Jacksonville, Florida for $23.6 million. The sale of these six properties reflect a total disposition volume of $81.1 million, resulting in aggregate gains of $4.7 million.