Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets

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Real Estate and Intangible Assets
 9 Months Ended
Sep. 30, 2024
Real Estate [Abstract]  
Real Estate and Intangible Assets Real Estate and Intangible Assets
Real Estate

The following table sets forth the components of our investments in real estate as of September 30, 2024 and December 31, 2023, respectively, excluding real estate held for sale (dollars in thousands):
September 30, 2024 December 31, 2023
Real estate:
Land (1) $ 139,916  $ 143,442 
Building and improvements 1,019,056  1,020,661 
Tenant improvements 55,316  57,261 
Accumulated depreciation (313,730) (299,662)
Real estate, net $ 900,558  $ 921,702 
(1)This amount includes $2,711 of land value subject to land lease agreements which we may purchase at our option for a nominal fee.

Real estate depreciation expense on building and tenant improvements was $9.8 million and $29.8 million for the three and nine months ended September 30, 2024, respectively. Real estate depreciation expense on building and tenant improvements was $8.9 million and $31.2 million for the three and nine months ended September 30, 2023, respectively.

Acquisitions

We acquired six industrial properties during the nine months ended September 30, 2024, and acquired three industrial properties during the nine months ended September 30, 2023. The acquisitions are summarized below (dollars in thousands):

Nine Months Ended Square Footage Lease Term Purchase Price Capitalized Acquisition Expenses
September 30, 2024 (1) 192,227  21.0 years $ 22,122  $ 435 
September 30, 2023 (2) 183,803  18.7 years $ 17,539  $ 349 
(1)On May 7, 2024, we acquired a five-property, 142,125 square foot portfolio in Warfordsburg, Pennsylvania for $12.0 million. The property is fully leased to one tenant and had 25.1 years of remaining lease term at the time we acquired the property. On August 29, 2024, we acquired a 50,102 square foot property in Midland, Texas for $10.2 million. The property is fully leased to one tenant and had 15.0 years of remaining lease term at the time we acquired the property.
(2)On April 14, 2023, we acquired a 76,089 square foot property in Riverdale, Illinois for $5.4 million. The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property. On July 10, 2023, we
acquired a 7,714 square foot property in Dallas-Fort Worth, Texas for $3.0 million. The property is fully leased to one tenant and had 9.9 years of remaining lease term at the time we acquired the property. On July 28, 2023, we acquired a 100,000 square foot property in Dallas-Fort Worth, Texas for $9.2 million. The property is fully leased to one tenant and had 20.0 years of remaining lease term at the time we acquired the property.

We determined the fair value of assets acquired and liabilities assumed related to the properties acquired during the nine months ended September 30, 2024 and 2023 as follows (dollars in thousands):

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
Acquired assets and liabilities Purchase price Purchase price
Land $ 1,694  $ 2,714 
Building 15,665  11,423 
Tenant Improvements 374  692 
In-place Leases 1,616  1,001 
Leasing Costs 2,265  1,270 
Customer Relationships 418  439 
Above Market Leases 90  (1) — 
Total Purchase Price $ 22,122  $ 17,539 
(1)This amount includes $90 of loans receivable included in Other assets on the condensed consolidated balance sheets.
Future Lease Payments

Future operating lease payments from tenants under non-cancelable leases, excluding tenant reimbursement of expenses, for the three months ending December 31, 2024 and each of the five succeeding fiscal years and thereafter is as follows (dollars in thousands):

Year Tenant Lease Payments
Three Months Ending December 31, 2024 $ 29,904 
2025 120,765 
2026 116,612 
2027 102,150 
2028 89,696 
2029 81,671 
Thereafter 387,395 

In accordance with the lease terms, substantially all operating expenses are required to be paid by the tenant directly, or reimbursed to us from the tenant; however, we would be required to pay operating expenses on the respective properties in the event the tenants fail to pay them.

Lease Revenue Reconciliation

The table below sets forth the allocation of lease revenue between fixed contractual payments and variable lease payments for the three and nine months ended September 30, 2024 and 2023, respectively (dollars in thousands):

For the three months ended September 30,
Lease revenue reconciliation 2024 2023 $ Change % Change
Fixed lease payments $ 34,663  $ 31,945  $ 2,718  8.5  %
Variable lease payments 4,572  4,519  53  1.2  %
$ 39,235  $ 36,464  $ 2,771  7.6  %
For the nine months ended September 30,
Lease revenue reconciliation 2024 2023 $ Change % Change
Fixed lease payments $ 99,536  $ 98,465  $ 1,071  1.1  %
Variable lease payments 12,477  13,210  (733) (5.5) %
$ 112,013  $ 111,675  $ 338  0.3  %

Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of September 30, 2024 and December 31, 2023, respectively, excluding real estate held for sale (dollars in thousands):

September 30, 2024 December 31, 2023
Lease Intangibles Accumulated Amortization Lease Intangibles Accumulated Amortization
In-place leases $ 96,824  $ (64,278) $ 98,615  $ (63,269)
Leasing costs 89,565  (48,303) 84,844  (46,096)
Customer relationships 60,884  (36,890) 63,185  (36,231)
$ 247,273  $ (149,471) $ 246,644  $ (145,596)
Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion Deferred Rent Receivable/(Liability) Accumulated (Amortization)/Accretion
Above market leases $ 12,747  $ (10,488) $ 13,431  $ (10,675)
Below market leases and deferred revenue (56,616) 33,017  (59,411) 30,087 

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $3.6 million and $12.9 million for the three and nine months ended September 30, 2024, respectively, and $3.6 million and $12.9 million for the three and nine months ended September 30, 2023, respectively, and is included in depreciation and amortization expense in the condensed consolidated statements of operations and comprehensive income.

Total amortization related to above-market lease values was $0.1 million and $0.4 million for the three and nine months ended September 30, 2024, respectively, and $0.1 million and $0.4 million for the three and nine months ended September 30, 2023, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income. Total amortization related to below-market lease values was $1.7 million and $5.5 million for the three and nine months ended September 30, 2024, respectively, and $1.8 million and $6.2 million for the three and nine months ended September 30, 2023, respectively, and is included in lease revenue in the condensed consolidated statements of operations and comprehensive income.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the nine months ended September 30, 2024 and 2023, were as follows:

Intangible Assets & Liabilities September 30, 2024 September 30, 2023
In-place leases 21.3 18.0
Leasing costs 21.3 18.0
Customer relationships 25.1 22.7
Above market leases 25.1 0.0
All intangible assets & liabilities 22.2 19.6