Quarterly report pursuant to Section 13 or 15(d)

Real estate facilities

v3.22.2
Real estate facilities
6 Months Ended
Jun. 30, 2022
Real Estate [Abstract]  
Real estate facilities Real estate facilities
Activity related to our real estate facilities for the six months ended June 30, 2022 was as follows (in thousands):
  Land Buildings and
Improvements
Accumulated
Depreciation
Total
Balances at December 31, 2021
$ 852,073  $ 2,186,849  $ (1,141,727) $ 1,897,195 
Capital expenditures —  18,651  —  18,651 
Disposals (1)
—  (2,889) 2,889  — 
Depreciation and amortization expense —  —  (43,908) (43,908)
Transfer to properties held for development (2,131) —  —  (2,131)
Transfer to properties held for sale —  (253) —  (253)
Balances at June 30, 2022
$ 849,942  $ 2,202,358  $ (1,182,746) $ 1,869,554 
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(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 June 30, 2022, we have commitments, pursuant to executed leases throughout our portfolio, to spend $7.1 million on leasing transaction costs, which include tenant improvements and lease commissions.
Acquisitions
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 June 30, 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 June 30, 2022, $1.5 million was reclassified from land to property held for development on our consolidated balance sheet and, as of June 30, 2022, $10.7 million of the estimated $17.1 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 $18.6 million. This construction project is scheduled to be completed in the fourth quarter of 2022. As of June 30, 2022, we have contractual construction commitments totaling $3.7 million that will be paid to various contractors as the project is completed.
As of June 30, 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 June 30, 2022, $0.6 million was reclassified from land to property held for development on our consolidated balance sheet and, as of June 30, 2022, $3.4 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 June 30, 2022, we have contractual construction commitments totaling $0.8 million that will be paid to various contractors as the project is completed.
Dispositions

Refer to “Note 12. Merger Events” for information regarding the Merger Agreement the Company entered into on April 24, 2022. Refer to “Note 13. Subsequent Events” for information regarding the Company's asset sales in July 2022.

On June 1, 2022, the Company sold a 93,000 square foot industrial-flex business park located in San Francisco, California, for net sale proceeds of $62.1 million, which resulted in a gain on sale of $55.3 million.

On May 6, 2022, the Company sold a 291,000 square foot office-oriented business park located in Fairfax, Virginia, for net sale proceeds of $35.6 million, which resulted in a gain on sale of $6.5 million.

On 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 June 1, May 6, and March 29, 2022 sales, collectively the "2022 Assets Sold").
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. (The “2021 Asset Sold”).
The Company determined that the 2022 Assets Sold and the 2021 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.