3. Real Estate Assets

Real estate assets consist of:


	Estimated
	Useful Lives	May 31, 2017		Nov. 30, 2016
Land		$	16,502	$	17,895
Land improvements	10 to 30 years		26,936		27,592
Buildings and improvements	10 to 40 years		165,937		164,353
Tenant improvements	Shorter of useful life or terms of related lease		24,705		21,925
Machinery and equipment	3 to 20 years		11,022		11,022
Construction in progress			1,962		1,659
Development costs			14,736		14,615
			261,800		259,061
Accumulated depreciation			(90,581)		(86,801)
		$	171,219	$	172,260

Total depreciation expense and capitalized interest related to real estate assets were as follows:


	For the Three Months Ended				For the Six Months Ended
	May 31, 2017		May 31, 2016		May 31, 2017		May 31, 2016
Depreciation expense	$	2,112	$	1,898	$	4,207	$	3,782

Capitalized interest	$	—	$	133	$	—	$	217

On April 28, 2017, Griffin closed on the previously contracted sale of approximately 67 acres (the “2017 Phoenix Crossing Land Sale”) of undeveloped land in Phoenix Crossing, the approximately 268 acre business park master planned by Griffin that straddles the town line between Windsor and Bloomfield, Connecticut. Griffin received cash proceeds of $10,250 before transaction costs and recorded a pretax gain of $7,975 on the 2017 Phoenix Crossing Land Sale. The net cash proceeds of $9,711 from the 2017 Phoenix Crossing Land Sale were placed in escrow for the acquisition of a replacement property as part of a like-kind exchange (“Like-Kind Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, for income tax purposes. Subsequent to May 31, 2017, Griffin completed the Like-Kind Exchange when it closed on the purchase of an approximately 277,000 square foot industrial/warehouse building (the “Building”) in Concord, North Carolina, located in the greater Charlotte area. The Building’s purchase price of $18,600 (before allowances) was paid in cash at closing using the proceeds held in escrow from the 2017 Phoenix Crossing Land Sale with the balance paid from Griffin’s cash on hand (see Note 9).

In fiscal 2013, Griffin completed the sale of approximately 90 acres of undeveloped land in Phoenix Crossing for $8,968 in cash, before transaction costs (the “2013 Phoenix Crossing Land Sale”). Under the terms of the 2013 Phoenix Crossing Land Sale, Griffin was required to complete certain offsite improvements, primarily roadwork. As a result of Griffin's continued involvement with the land sold, the 2013 Phoenix Crossing Land Sale was accounted for under the percentage of completion method. Accordingly, the revenue and pretax gain on the sale were 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 costs of the required roadwork. Costs included in determining the percentage of completion included the cost of the land sold, allocated master planning costs and the cost of road construction. As of May 31, 2017, Griffin had substantially completed the required improvements related to the 2013 Phoenix Crossing Land Sale; accordingly, all of the remaining revenue and pretax gain on the sale have been recognized in Griffin’s consolidated statements of operations. Griffin’s consolidated statements of operations for the 2017 second quarter and 2017 six month period include revenue of $104 and a pretax gain of $66 from the 2013 Phoenix Crossing Land Sale. The consolidated statements of operations for the 2016 second quarter and 2016 six month period reflected a reduction of previously recognized revenue on the 2013 Phoenix Crossing Land Sale that resulted from an increase in the estimated costs to complete the required road improvements made at that time. From the closing of the 2013 Phoenix Crossing Land Sale in fiscal 2013 through May 31, 2017, Griffin’s consolidated statements of operations have reflected total revenue of $8,968 and a total pretax gain of $6,674 from the 2013 Phoenix Crossing Land Sale.

Real estate assets held for sale consist of:


	May 31, 2017		Nov. 30, 2016
Land	$	1,283	$	264
Land improvements		679		—
Development costs		1,074		2,728
		3,036		2,992
Accumulated depreciation		(325)		—
	$	2,711	$	2,992

In the 2017 six month period, $1,713 was reclassified from real estate assets to real estate assets held for sale, related to sales agreements currently under contract (see Note 8). Real estate assets held for sale were reduced in the 2017 six month period by $1,994 related to property sales that closed.