Real estate facilities
|3 Months Ended|
Mar. 31, 2022
|Real Estate [Abstract]|
|Real estate facilities||Real estate facilities
Activity related to our real estate facilities for the three months ended March 31, 2022 was as follows (in thousands):
(1)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 March 31, 2022, we have commitments, pursuant to executed leases throughout our portfolio, to spend $11.4 million on leasing transaction costs, which include tenant improvements and lease commissions.
We account for acquisitions as asset acquisitions. 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.
As of March 31, 2022, we were in the process of developing an approximately 83,000 square foot multi-tenant industrial building at our 212 Business Park located in Kent, Washington. During the quarter ended March 31, 2022, $1.5 million was reclassified from land to property held for development on our consolidated balance sheet and, as of March 31, 2022, $5.5 million of the estimated $16.0 million total development costs had been incurred. The total investment, inclusive of land and development costs, for the 212 Business Park development is projected to be $17.5 million. This construction project is scheduled to be completed in the fourth quarter of 2022. As of March 31, 2022, we have contractual construction commitments totaling $10.5 million that will be paid to various contractors as the project is completed.
As of March 31, 2022, we were in the process of developing an approximately 17,000 square foot multi-tenant industrial building at our Boca Commerce Park, located in Boca Raton, Florida. During the quarter ended March 31, 2022, $0.6 million was reclassified from land to property held for development on our consolidated balance sheet and, as of March 31, 2022, $2.3 million of the estimated $4.2 million total development costs had been incurred. The total investment, inclusive of land and development costs, for the Boca Commerce Park development is projected to be $4.8 million. This construction project is scheduled to be completed in the fourth quarter of 2022. As of March 31, 2022, we have contractual construction commitments totaling $1.9 million that will be paid to various contractors as the project is completed.
Refer to “Note 12. Subsequent Events” for information regarding the Merger Agreement the Company entered into on April 24, 2022.
In March 29, 2022, the Company sold a 702,000 square foot industrial-flex business park located in Irving, Texas, for net sale proceeds of $91.9 million, which resulted in a gain on sale of $57.0 million. (the "2022 Asset Sold"). There were no asset sales during the three months ended March 31, 2021.
The Company determined that the 2022 Asset Sold 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.
The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef