REAL ESTATE INVESTMENTS

9 Months Ended

Jul. 31, 2016

REAL ESTATE INVESTMENTS [Abstract]

REAL ESTATE INVESTMENTS

(2) REAL ESTATE INVESTMENTS

In July 2016, the Company purchased for $45.3 million, a 72,000 square foot grocery anchored shopping center located in Stamford, CT ("Newfield Green").  The Company funded the purchase with a combination of available cash, borrowings on its Unsecured Revolving Credit Facility (the "Facility") (see note 3) and with proceeds generated by placing a non-recourse first mortgage on the property (see note 3).

Upon the acquisition of real property, the fair value of the real estate purchased is allocated to the acquired tangible assets (consisting of land, buildings and building improvements), and identified intangible assets and liabilities (consisting of above-market and below-market leases and in-place leases), in accordance with ASC Topic 805, "Business Combinations". The Company utilizes methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The fair value of the tangible assets of an acquired property considers the value of the property "as-if-vacant". The fair value reflects the depreciated replacement cost of the asset. In allocating purchase price to identified intangible assets and liabilities of an acquired property, the values of above-market and below-market leases are estimated based on the differences between (i) contractual rentals and the estimated market rents over the applicable lease term discounted back to the date of acquisition utilizing a discount rate adjusted for the credit risk associated with the respective tenants and (ii) the estimated cost of acquiring such leases giving effect to the Company's history of providing tenant improvements and paying leasing commissions, offset by a vacancy period during which such space would be leased. The aggregate value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property "as-if-vacant," determined as set forth above.

The Company is currently in the process of analyzing the fair value of in-place leases for the Newfield Green property acquired in July 2016 and consequently, no value has yet been assigned to the leases.  Accordingly, the purchase price allocation is preliminary and may be subject to change.

For the nine month periods ended July 31, 2016 and 2015, the net amortization of above-market and below-market leases were approximately $142,000 and $577,000, respectively.  All amounts are included in base rents in the accompanying consolidated statements of income.