Income Properties

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Income Properties

NOTE 2. INCOME PROPERTIES

2015 Activity. During the year ended December 31, 2015, the Company acquired four income properties, two single-tenant, one multi-tenant, and one vacant outparcel adjacent to one of our multi-tenant properties, at an aggregate acquisition cost of approximately $76.5 million, for an aggregate purchase price of approximately $76.4 million. Based on the finalization of independent third-party purchase price allocation valuations completed during 2015, of the total acquisition cost, approximately $17.1 million was allocated to land, approximately $78.9 million was allocated to buildings and improvements, approximately $12.1 million was allocated to intangible assets pertaining to the in-place lease value and above-market lease value, and approximately $31.6 million was allocated to intangible liabilities pertaining to the below-market lease value. The weighted average amortization period for the intangible assets and liabilities was approximately 15.7 years at the time of acquisition.

The income properties acquired during the year ended December 31, 2015 include the following:

· On November 18, 2015, the Company acquired an approximately 450,000 square-foot, Class A single-tenant office complex in Raleigh, North Carolina at a purchase price of $42.3 million. The three building property is situated on approximately 40 acres and is 100% leased to Wells Fargo Bank N.A. (“Wells Fargo”) under a triple-net lease with a remaining term of approximately 9 years. The rent on the lease with Wells Fargo is below-market resulting in an intangible liability of approximately $31.6 million as part of the allocation of the purchase price.

· On July 16, 2015, the Company acquired 245 Riverside Avenue, a 5-story, 136,856 square-foot, multi-tenant office building situated on 3.4 acres in Jacksonville, Florida at a purchase price of $25.1 million. The property is 99% leased with a tenant roster including Raymond James, Northwestern Mutual, Dixon Hughes Goodman, and Jacobs Engineering Group.  

· On May 28, 2015, the Company acquired a 0.71 acre vacant outparcel located adjacent to our The Grove at Winter Park property in Winter Park, Florida at a purchase price of $409,000.

· On May 18, 2015, the Company acquired a 23,329 square-foot property situated on 2.46 acres in Glendale, Arizona at a purchase price of approximately $8.6 million. The property is leased to The Container Store with a term of approximately 15 years having commenced in February 2015, with rent increases every 5 years. In a separate transaction, the Company’s approximately $6.2 million first mortgage loan to the developer of the property, which would have matured in November 2015, was paid off by the borrower at par.

NOTE 2. INCOME PROPERTIES (continued)

Assuming the 2015 acquisitions occurred on January 1, 2015, 2014, and 2013, respectively, our pro-forma results would have approximated the following:

	Year ended December 31,
	2015		2014		2013
Total Revenues (1)	$	50.5	$	46.3	$	36.3
Net Income (1)	$	10.1	$	8.7	$	6.0
Diluted EPS	$	1.72	$	1.51	$	1.05
(1) In Millions

Six single-tenant income properties were sold during the year ended December 31, 2015 as follows:  

· On December 22, 2015, the Company sold its interest in a 10,908 square-foot building, located in Melbourne, Florida, which was under lease to Holiday CVS L.L.C., a wholly-owned subsidiary of CVS Health (“CVS”), with a remaining lease term of 10.3 years, for a sales price of approximately $3.2 million, generating a pre-tax gain of approximately $785,000, or approximately $0.08 per share, after tax.

· On November 20, 2015, the Company sold its interest in a 13,813 square-foot building, located in Vero Beach, Florida, which was under lease to CVS, with a remaining lease term of 8.3 years, for a sales price of approximately $5.4 million, generating a pre-tax gain of approximately $950,000, or approximately $0.10 per share, after tax.

· On September 28, 2015, the Company sold its interest in a 13,824 square-foot building, located in Clermont, Florida, which was under lease CVS, with a remaining lease term of 7.1 years, for a sales price of $4.2 million, generating a pre-tax gain of approximately $1.6 million, or approximately $0.17 per share, after tax.

· On September 30, 2015, the Company sold its interest in an 11,900 square-foot building, located in Sanford, Florida, which was under lease to CVS, with a remaining lease term of 5.1 years, for a sales price of approximately $5.2 million, generating a pre-tax gain of approximately $2.2 million, or approximately $0.23 per share, after tax.

· On April 17, 2015, the Company sold its interest in two 13,813 square-foot buildings, located in Sanford and Sebastian, Florida, which were both under lease to CVS, but had been vacated by the tenant in a previous year, with a weighted average remaining lease term of 8.7 years, for a sales price of $6.4 million, generating a pre-tax loss of approximately $497,000, or approximately $0.05 per share, after tax.  

2014 Activity. During the year ended December 31, 2014, the Company acquired four income properties, two single-tenant and two multi-tenant, at an aggregate acquisition cost of approximately $42.2 million. During the first quarter of 2015 independent third-party purchase price allocation valuations were completed on three of the four income properties acquired during the year ended December 31, 2014. As a result of the valuations, of the total acquisition cost, approximately $17.4 million was allocated to land, approximately $20.5 million was allocated to buildings and improvements, and approximately $4.3 million was allocated to intangible assets and liabilities pertaining to the in-place lease value and the above/below market lease value. The weighted average amortization period for the $4.3 million allocated to intangible assets and liabilities was approximately 9.1 years at the time of acquisition.  One income property was disposed of during the year ended December 31, 2014. On November 17, 2014, the Company sold its interest in a 14,560 square-foot building, located in Apopka, Florida for approximately $3.3 million, which was leased to Walgreens.

2013 Activity. During the year ended December 31, 2013, the Company acquired nine single-tenant income properties at a total acquisition cost of approximately $39.5 million. Of the total acquisition cost, approximately $13.2 million was allocated to land, approximately $23.4 million was allocated to buildings and improvements, and approximately $2.9 million was allocated to intangible assets pertaining to the in-place lease value. The weighted average amortization period for the $2.9 million allocated to intangible assets was approximately 10.5 years at the time of acquisition.

During the year ended December 31, 2013, the Company sold its interest in five single-tenant income properties for a combined gain of approximately $1,216,000. Upon consummation of the sales, the properties’ operating results were included within the discontinued operations for each period presented.