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Lease Intangibles
 12 Months Ended
Dec. 31, 2021
Goodwill And Intangible Assets Disclosure [Abstract]  
Lease Intangibles

7. Lease Intangibles

 

Upon acquisitions of real estate, the Company assesses the relative fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.

Intangible assets and liabilities are included in Other assets and Accounts payable and other liabilities (Note 6) on the consolidated balance sheets and summarized as follows (in thousands):

 

 

 

December 31, 2021

 

 

December 31, 2020

 

 

 

Gross Carrying
Amount

 

 

Accumulated
Amortization

 

 

Net Carrying
Amount

 

 

Gross Carrying
Amount

 

 

Accumulated
Amortization

 

 

Net Carrying
Amount

 

Amortizable Intangible Assets

 

 

 

 

 

 

 

 

 

 

(As Restated)

 

 

(As Restated)

 

 

(As Restated)

 

In-place lease intangible assets

 

$

290,819

 

 

$

(189,981

)

 

$

100,838

 

 

$

265,063

 

 

$

(168,891

)

 

$

96,172

 

Above-market rent

 

 

24,191

 

 

 

(16,111

)

 

 

8,080

 

 

 

19,010

 

 

 

(14,756

)

 

$

4,254

 

 

 

$

315,010

 

 

$

(206,092

)

 

$

108,918

 

 

$

284,073

 

 

$

(183,647

)

 

$

100,426

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable Intangible Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Below-market rent

 

$

(171,245

)

 

$

94,871

 

 

$

(76,374

)

 

$

(162,238

)

 

$

86,266

 

 

 

(75,972

)

Above-market ground lease

 

 

(671

)

 

 

267

 

 

 

(404

)

 

 

(671

)

 

 

209

 

 

 

(462

)

 

 

$

(171,916

)

 

$

95,138

 

 

$

(76,778

)

 

$

(162,909

)

 

$

86,475

 

 

$

(76,434

)

 

During the year ended December 31, 2021, the Company:

•
acquired in-place lease intangible assets of $34.7 million, above-market rents of $5.3 million, and below-market rents of $16.3 million with weighted-average useful lives of 5.8, 5.4, and 27.7 years, respectively (Note 3); and
•
derecognized in-place lease intangible assets of $2.2 million and below-market rent of $4.4 million, of which the Company's share was $1.7 million and $3.0 million, respectively, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $1.6 million and below-market rents of $3.6 million, of which the Company's share was $1.1 million and $3.1 million, respectively, related to tenant non-renewals and early tenant lease terminations.

 

During the year ended December 31, 2020, the Company:

•
acquired in-place lease intangible assets of $21.0 million, above-market rents of $2.0 million, and below-market rents of $4.6 million with weighted-average useful lives of 4.9, 5.8, and 20.2 years, respectively (Note 3); and
•
derecognized in-place lease intangible assets of $1.5 million, of which the Company's share was $0.4 million, related to disposed properties (Note 3). In addition, the Company recorded accelerated amortization related to in-place lease intangible assets of $3.7 million and below-market rents of $1.9 million, of which the Company's share was $2.2 million and $1.1 million, respectively, related to tenant non-renewals and early tenant lease terminations.

Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of operations.

The scheduled amortization of acquired lease intangible assets and assumed liabilities as of December 31, 2021 is as follows (in thousands):

 

Years Ending December 31,

 

Net Increase in
Lease Revenues

 

 

Increase to
Amortization

 

 

Reduction of
Rent Expense

 

 

Net (Expense) Income

 

2022

 

$

5,215

 

 

$

(26,371

)

 

$

58

 

 

$

(21,098

)

2023

 

 

4,768

 

 

 

(19,902

)

 

 

58

 

 

 

(15,076

)

2024

 

 

4,700

 

 

 

(14,046

)

 

 

58

 

 

 

(9,288

)

2025

 

 

4,287

 

 

 

(9,804

)

 

 

58

 

 

 

(5,459

)

2026

 

 

3,992

 

 

 

(7,433

)

 

 

58

 

 

 

(3,383

)

Thereafter

 

 

45,332

 

 

 

(23,282

)

 

 

114

 

 

 

22,164

 

Total

 

$

68,294

 

 

$

(100,838

)

 

$

404

 

 

$

(32,140

)