Real Estate Assets

9 Months Ended

Sep. 01, 2012

Real Estate Assets

Real Estate Assets

6.Real Estate Assets

Real estate assets consist of:

	Estimated Useful Lives	September 1, 2012			December 3, 2011
Land		$	10,267		$	10,435
Land improvements	10 to 30 years	14,069			14,037
Buildings and improvements	10 to 40 years	117,432			117,120
Tenant improvements	Shorter of useful life or terms of related lease	14,591			14,104
Development costs		23,354			12,464
		179,713			168,160
Accumulated depreciation		(55,572		)	(51,865		)
		$	124,141		$	116,295

Included in real estate assets, net, as of September 1, 2012 and December 3, 2011 was $1,973 and $2,161, 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 and capitalized interest related to real estate assets, net were as follows:

	For the 13 Weeks Ended,				For the 39 Weeks Ended,
	September 1, 2012		August 27, 2011		September 1, 2012		August 27, 2011
Depreciation expense	$	1,269	$	1,307	$	3,839	$	3,983
Capitalized interest	$	227	$	—	$	596	$	—

On July 6, 2012, Griffin Land completed the sale of 93 acres of undeveloped land in the New England Tradeport (“Tradeport”), Griffin Land’s industrial park located in Windsor and East Granby, Connecticut, for cash proceeds of $7,000, before transaction costs.  As required under the terms of the agreements for the sale of this land, Griffin Land will construct a sewer line to service the land that was sold.  As a result of Griffin Land’s continuing involvement with the land sold, this transaction is accounted for under the percentage of completion method.  Accordingly, the revenue and the pretax gain on the sale are being recognized on a pro rata basis in a ratio equal to the percentage of the total costs incurred to the total anticipated costs of sale, including the costs of the required construction of the sewer line. Costs included in determining the percentage of completion are the cost of the land sold, allocated master planning costs of Tradeport, selling and transaction costs and estimated future costs related to the land sold.  Upon completion of the sale, Griffin Land deposited the cash of $6,929 received from the sale at closing into an escrow account, reflected as Proceeds Held in Escrow on Griffin’s consolidated balance sheet as of September 1, 2012, for the potential purchase of a replacement property under a Section 1031 like-kind exchange.  In accordance with the requirements of a Section 1031 like-kind exchange, Griffin Land subsequently identified a parcel of undeveloped land in the Lehigh Valley of Pennsylvania as a replacement property, and on September 21, 2012 entered into a contract to purchase this land (see Note 12).

As of September 1, 2012, approximately 77% of the total costs related to the sale of the 93 acres in Tradeport have been incurred, therefore, from the date of the transaction through September 1, 2012, 77% of the total revenue and pretax gain on the sale have been recognized in Griffin’s consolidated statements of operations.  Griffin’s statements of operations for the thirteen and thirty-nine weeks ended September 1, 2012 include revenue of $5,360 and a pretax gain of $4,624 from this land sale.  The balance of the revenue and the pretax gain on sale will be recognized as the remaining costs, principally the required construction of a sewer line, are incurred, which is expected to take place over the next six months. Included on Griffin’s consolidated balance sheet as of September 1, 2012 is deferred revenue of approximately $1,640 that will be recognized as the construction of a sewer line is completed.  Including the pretax gain on the sale of approximately $4,624 recognized from the date of the land sale through September 1, 2012, the total pretax gain on this transaction is expected to be approximately $6,000 after all revenue is recognized and all costs incurred.  Management has used its best estimates, based on industry knowledge and experience, in projecting the total costs of the required construction of a sewer line, however, increases or decreases in projected future costs from current estimated amounts would reduce or increase the amount of gain to be recognized in future periods.

Real estate assets held for sale consist of:

	Estimated Useful Lives	September 1, 2012		December 3, 2011
Land		$	61	$	1,911
Land improvements	10 to 30 years	—		4
Buildings and improvements	10 to 40 years	—		11,855
Development costs		1,265		1,151
		1,326		14,921
Accumulated depreciation		—		(1,932		)
		$	1,326	$	12,989

The decrease in real estate assets held for sale during the 2012 nine month period principally reflects the sale of the warehouse in Manchester, Connecticut that closed on January 31, 2012 (see Note 2).