Real Estate Assets

9 Months Ended

Aug. 27, 2011

Real Estate Assets

Real Estate Assets

5. Real Estate Assets

On January 8, 2010, Griffin Land closed on the purchase of a 120,000 square foot industrial building in Breinigsville, Pennsylvania.  Griffin Land paid $6.4 million in cash for the building, including approximately $1.0 million paid as a deposit in the 2009 fourth quarter.  The building is located in a major industrial area of Pennsylvania’s Lehigh Valley and was under a full building lease to Olympus Corporation of the Americas (“Olympus”) at the time of the acquisition.  Griffin Land incurred approximately $0.3 million of acquisition costs on the purchase of this building, which are included in selling, general and administrative expenses on Griffin’s consolidated statement of operations in the 2010 nine month period.  Subsequent to the purchase of this building, Griffin Land completed a lease amendment with Olympus that extended the lease term through 2025.  On January 29, 2010, Griffin closed on a $4.3 million nonrecourse mortgage on this building (see Note 8).  This was Griffin Land’s first real estate purchase outside of the Hartford, Connecticut market, where Griffin Land’s core real estate holdings are located.

Based on an independent appraisal of the building acquired, Griffin determined that the fair value of the assets acquired approximated the purchase price.  Of the $6.4 million purchase price, approximately $5.4 million represented the fair value of the real estate held for lease and approximately $1.0 million represented the fair value of the acquired intangible assets, comprised of the value of the in-place lease at the time of purchase and a tenant relationship intangible asset.  The intangible assets are included in other assets on Griffin’s consolidated balance sheets.

On March 17, 2010, Griffin Land closed on the purchase of approximately 51 acres of undeveloped land in Lower Nazareth, Pennsylvania.  Griffin Land paid approximately $1.8 million in cash plus acquisition expenses, including approximately $0.3 million paid as a deposit in the 2009 fourth quarter.  The undeveloped land is located in a major industrial area of Pennsylvania’s Lehigh Valley and has approvals for the development of two industrial buildings totaling approximately 530,000 square feet.

Real estate held for sale or lease consists of:

	Estimated	August 27, 2011
	Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,610	$	10,964		$	12,574
Land improvements	10 to 30 years	638		13,408			14,046
Buildings and improvements	10 to 40 years	—		128,729			128,729
Tenant improvements	Shorter of useful life or terms of related lease	—		14,083			14,083
Development costs		7,100		5,021			12,121
		9,348		172,205			181,553
Accumulated depreciation		—		(52,412		)	(52,412		)
		$	9,348	$	119,793		$	129,141

	Estimated	November 27, 2010
	Useful Lives	Held for Sale		Held for Lease			Total
Land		$	1,625	$	10,953		$	12,578
Land improvements	10 to 30 years	691		13,316			14,007
Buildings and improvements	10 to 40 years	—		128,437			128,437
Tenant improvements	Shorter of useful life or terms of related lease	—		13,922			13,922
Development costs		6,798		4,461			11,259
		9,114		171,089			180,203
Accumulated depreciation		—		(48,165		)	(48,165		)
		$	9,114	$	122,924		$	132,038

Included in real estate held for lease as of August 27, 2011 and November 27, 2010 was $2,230 and $2,458, respectively, reflecting the net book value of Imperial’s Florida farm that was shut down in fiscal 2009 and is being leased to another landscape nursery grower.

Total depreciation expense related to real estate held for sale or lease was $1,395 and $1,451 in the 2011 and 2010 third quarters, respectively, and $4,247 and $4,388 in the 2011 and 2010 nine month periods, respectively.  There was $13 of capitalized interest in the 2011 third quarter and nine month period.  There was no capitalized interest in the 2010 nine month period.