Note 6 - Real Estate and Related Assets

3 Months Ended

Jun. 30, 2012

Note 6 - Real Estate and Related Assets:

Note 6 - Real Estate and Related Assets

NOTE 6 – Real Estate and Related Assets

Real estate assets together with real estate related intangible assets and liabilities as of June 30, 2012 consisted of:

	Cost	Useful Life	Accumulated Depreciation / Amortization	Net Book Value
Land	$ 1,280,000			$ 1,280,000
Buildings	1,130,292	20	$        72,258	1,058,034
Improvements	529,387	7	96,685	432,702
Subtotal real estate assets	2,939,679		168,943	2,770,736
Real estate related intangible assets:
Leases in place value	1,624,052	7	296,610	1,327,442
Unamortized tenant improvement allowances	530,444	12	56,518	473,926
Real estate intangible assets	2,154,496		353,128	1,801,368
Total real estate assets	$ 5,094,175		$      522,071	$ 4,572,104
Below market lease value acquired	$ (769,175)	12	$      (81,954)	$ (687,221)

Depreciation and amortization expense was $101,731 and $203,462 for the three and six months ended June 30, 2012, respectively. $15,970 and $31,939 in capitalized below market rents were amortized as an increase to rental income during the three and six months ended June 30, 2012, respectively.

The Property is 100% leased to the General Services Administration (GSA) of the United States pursuant to a lease dated January 9, 2006.  The initial term of the GSA lease runs from January 18, 2008 until January 18, 2018 with an optional five year renewal period from January 2018 to January 2023.  The base rent during the initial term is $746,464 annually and includes a provision of $123,099 annually for the reimbursement of tenant improvement allowances.  The base rent during the renewal term is $623,365. Although the Company is responsible for Property operating expenses, the lease includes a provision for reimbursement of certain operating expenses that exceed a baseline.  This base is subject to annual adjustment on March 1^st of each year based on the Cost of Living Index (COLI).  The operating expense base was adjusted on March 1, 2012 resulting in an annual increase to the provision for reimbursement in the amount of $6,281.