Real Estate Facilities |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Real Estate Facilities [Abstract] | |
| Real Estate Facilities | 3. Real estate facilities Activity related to our real estate facilities for the nine months ended September 30, 2021 was as follows (in thousands): Buildings and Accumulated Land Improvements Depreciation Total Balances at December 31, 2020 (1)$ 843,765 $ 2,080,895 $ (1,101,739) $ 1,822,921 Acquisition of real estate facility 20,308 100,893 — 121,201 Capital expenditures — 26,121 — 26,121 Disposals (2) — (7,349) 7,349 —Depreciation and amortization expense — — (67,182) (67,182)Transfer from property held for development 989 8,063 — 9,052 Transfer to properties held for sale — (1,528) 3,625 2,097 Balances at September 30, 2021$ 865,062 $ 2,207,095 $ (1,157,947) $ 1,914,210 ____________________________(1)Land, building and improvements, and accumulated depreciation totaling $30.9 million, $166.5 million, and $127.4 million, respectively, were reclassified as of December 31, 2020 to “properties held for sale, net” representing a 772,000 square foot industrial-flex business park located in Irving, Texas, a 371,000 square foot industrial-flex business park located in San Diego, California, a 244,000 square foot office business park located in Herndon, Virginia, a 198,000 square foot office-oriented flex business park located in Chantilly, Virginia, a 53,000 square foot industrial building located in Beltsville, Maryland, and a 22,000 square foot single-tenant industrial-flex building located in Irving, Texas.(2)Disposals primarily represent the book value of tenant improvements that have been removed upon the customer vacating their space. We have a 95.0% interest in a joint venture that owns Highgate at The Mile, a 395-unit multifamily apartment complex on a five-acre parcel within the Company’s 44.5 acre office and multifamily park located in Tysons, Virginia (“The Mile”). The remaining 5.0% interest in the joint venture is held by the JV Partner. We consolidate the joint venture that owns Highgate at The Mile and as such, the consolidated real estate assets and activities related to this joint venture are included in the table above. As of September 30, 2021, we have commitments, pursuant to executed leases throughout our portfolio, to spend $10.5 million on transaction costs, which include tenant improvements and lease commissions. The purchase price of acquired properties is allocated to land, buildings and improvements (including tenant improvements, and intangible assets and intangible liabilities (see Note 2), based upon the relative fair value of each component, which are evaluated independently. The Company must make significant assumptions in determining the fair value of assets acquired and liabilities assumed, which can affect the recognition and timing of revenue and depreciation and amortization expense. The fair value of land is estimated based upon, among other considerations, comparable sales of land within the same region. The fair value of buildings and improvements is determined using a combination of the income and replacement cost approaches which both utilize available market information relevant to the acquired property. The fair value of other acquired assets including tenant improvements and unamortized lease commissions are determined using the replacement cost approach. The amount recorded to acquired in-place lease intangible is also determined utilizing the income approach using market assumptions which are based on management’s assessment of current market conditions and the estimated lease-up periods for the respective spaces. Transaction costs related to asset acquisitions are capitalized. On September 1, 2021, the Company acquired a multi-tenant industrial business park comprising approximately 718,000 rentable square feet in Grapevine, Texas, for a total purchase price of $123.3 million, inclusive of capitalized transaction costs. On January 10, 2020, the Company acquired a multi-tenant industrial business park comprising approximately 73,000 rentable square feet in La Mirada, California, for a total purchase price of $13.5 million, inclusive of capitalized transaction costs. The following table summarizes assets acquired and liabilities assumed for the nine months ended September 30, 2021 and 2020 (in thousands): 2021 2020Land$ 20,308 $ 11,123 Buildings and improvements 100,893 2,153 Other assets (above-market in-place rents) — —Accrued and other liabilities (below-market in-place rents) (1,156) —Other assets (in-place lease value) 3,223 237 Total purchase price 123,268 13,513 Net operating assets acquired and liabilities assumed (1,097) (90)Total cash paid$ 122,171 $ 13,423 During the nine months ended September 30, 2021, we completed the development of an 83,000 square foot shallow-bay industrial building at our Freeport Business Park in Irving, Texas, for total development costs of $8.1 million. The total developed asset value, inclusive of land costs, of $9.1 million was placed into service on March 1, 2021 and accordingly was reflected under real estate facilities, at cost on our consolidated balance sheets at September 30, 2021. Properties Sold On September 17, 2021, the Company sold a 22,000 square foot industrial-flex building located in Irving, Texas, for net sale proceeds of $3.4 million, which resulted in a gain on sale of $2.9 million. On July 16, 2021, the Company sold a 244,000 square foot office business park located in Herndon, Virginia, for net sale proceeds of $40.5 million, which resulted in a gain on sale of $27.0 million. On June 17, 2021, the Company sold a 198,000 square foot office-oriented flex business park located in Chantilly, Virginia, for net sale proceeds of $32.6 million, which resulted in a gain on sale of $19.2 million. During 2021, the Company reclassified such assets as properties held for sale, net, in the consolidated balance sheet as of December 31, 2020. On September 16, 2020, the Company sold two industrial buildings totaling 40,000 square feet located in Redmond, Washington, which were subject to an eminent domain process for net sale proceeds of $11.4 million, which resulted in a gain of $7.7 million. On January 7, 2020, the Company sold an 113,000 square foot office building located at Metro Park North in Rockville, Maryland, for net sale proceeds of $29.3 million, which resulted in a gain on sale of $19.6 million. Subsequent to September 30, 2021, the Company sold a 371,000 square foot industrial-flex business park located in San Diego, California, for a gross sales price of $315.4 million, and net sale proceeds, after payment of transaction costs, were $311.1 million. The Company determined that these sales did not meet the criteria for discontinued operations presentation, as the sale of such assets did not represent a strategic shift that will have a major effect on our operations and financial results. |