3. Real Estate Assets

Real estate assets consist of:


	Estimated
	Useful Lives	Nov. 30, 2019		Nov. 30, 2018
Land		$	30,750	$	21,961
Land improvements	10 to 30 years		40,992		38,280
Buildings and improvements	10 to 40 years		220,086		204,258
Tenant improvements	Shorter of useful life or terms of related lease		30,318		29,163
Machinery and equipment	3 to 20 years		7,557		10,958
Construction in progress			3,542		562
Development costs			10,404		13,443
			343,649		318,625
Accumulated depreciation			(105,035)		(105,004)
		$	238,614	$	213,621

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


	For the Fiscal Years Ended
	Nov. 30, 2019		Nov. 30, 2018		Nov. 30, 2017
Depreciation expense	$	10,416	$	9,853	$	8,831

Capitalized interest	$	351	$	352	$	103

In fiscal 2019, Griffin recorded an impairment loss of $3,100 to reduce the carrying value of the real estate assets of the approved but unbuilt residential development (“Meadowood’) in Simsbury, Connecticut to their estimated fair value of approximately $5,400. Subsequent to the end of fiscal 2019, Griffin entered into an option agreement for the potential sale of Meadowood (see Note 11). There were no impairment losses recognized in fiscal 2018 or fiscal 2017.

On October 25, 2019, Griffin, through two consolidated VIEs, purchased 7466 Chancellor for $10,168, including acquisition costs. Griffin provided all of the funding to the two VIEs to purchase 7466 Chancellor. Griffin determined that the fair value of the assets acquired approximated the purchase price. Of the $10,168 purchase price, $9,353 represented the fair value of real estate assets and $815 represented the fair value of the acquired intangible assets, comprised of the values of the in-place lease at the time of acquisition and the associated tenant relationship (see Notes 2 and 9). The intangible assets are included in other assets on Griffin’s consolidated balance sheet. The fair value of the real estate assets primarily reflects the building and land improvements that are being depreciated principally over forty years and building and tenant improvements that are being depreciated over a period of five to twenty years. The intangible assets are being amortized over a period of five to ten years.

The acquisition of 7466 Chancellor was made utilizing a Reverse 1031 Like-Kind Exchange that was entered into at closing. As such, as of November 30, 2019, 7466 Chancellor is in the possession of a qualified intermediary engaged to execute the Reverse 1031 Like-Kind Exchange until the sale transaction and the Reverse 1031 Like-Kind Exchange are completed. Griffin retains essentially all of the legal and economic benefits and obligations related to 7466 Chancellor prior to the completion of the Reverse 1031 Like-Kind Exchange. Accordingly, 7466 Chancellor is included in Griffin’s consolidated financial statements as a consolidated VIE until legal title is transferred to Griffin upon completion of the Reverse 1031 Like-Kind Exchange.

On May 3, 2019, Griffin closed on the sale of approximately 280 acres (the “Simsbury Land Sale”) of undeveloped land in Simsbury, Connecticut. Griffin received cash proceeds of $7,700, before transaction costs, and recorded a pretax gain of $7,349 on the Simsbury Land Sale. The buyer plans to use the land to generate solar electricity. The net cash proceeds, after transaction costs, of $7,627 from the Simsbury Land Sale were deposited into escrow and subsequently used for the acquisition (see below) of replacement properties in a like-kind exchange (“1031 Like-Kind Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, for income tax purposes.

On July 16, 2019, Griffin closed on the purchase of approximately 36 acres of undeveloped land in Charlotte, North Carolina for $4,725, before transaction costs, and on July 18, 2019, Griffin closed on the purchase of an adjacent approximately 8 acres of undeveloped land for $855, before transaction costs, resulting in a combined land parcel of approximately 44 acres (the “Charlotte Land”). Both land purchases were replacement properties under the 1031 Like-Kind Exchange for the Simsbury Land Sale. Griffin plans to construct three industrial/warehouse buildings aggregating approximately 520,000 square feet on the Charlotte Land.

On October 24, 2019, Griffin closed on the purchase of approximately 14 acres (the “Lehigh Valley Land”) of undeveloped land in the Lehigh Valley of Pennsylvania for $1,850, before transaction costs. The Lehigh Valley Land purchase was also a replacement property under a 1031 Like-Kind Exchange for the Simsbury Land Sale. Griffin plans to construct an approximately 100,000 square foot industrial/warehouse building on the Lehigh Valley Land.

On December 26, 2018, Griffin closed on the sale of development rights for approximately 116 acres (the “East Windsor Land”) of undeveloped land in East Windsor, Connecticut. Griffin received cash proceeds of $866, before transaction costs, and recorded a pretax gain of $52 on the sale of the development rights. On April 1, 2019, Griffin closed on the sale of the East Windsor Land for $700, before transaction costs, and recorded a pretax gain of $42 on the sale of the land. The gain on the development rights and the gain on the subsequent sale of the land were not significant as the cost basis of the East Windsor Land was relatively high. In fiscal 2019, there was also $562 of revenue from several smaller property sales that resulted in a pretax gain of $386.

Real estate assets held for sale consist of:


	Nov. 30, 2019		Nov. 30, 2018
Land	$	323	$	1,645
Land improvements		388		—
Buildings and improvements		417		—
Development costs		1,009		1,007
	$	2,137	$	2,652

In fiscal 2019, real estate assets held for sale, net, was reduced by $515 reflecting; (a) a reduction of $1,741 for property sales that closed; partially offset by (b) an increase of $1,226 from real estate assets, net, being transferred into real estate assets held for sale, net, as a result of entering into agreements to sell such real estate. Included in real estate assets transferred into real estate assets held for sale, net, in fiscal 2019 was approximately seven acres of undeveloped land in Windsor (see Note 10).

Also included in real estate assets held for sale, net, on November 30, 2019 were the assets of Griffin’s nursery farm in Quincy, Florida (the “Florida Farm”) and an approximately 7,200 square foot restaurant building (the “Restaurant Building”) in Griffin Center in Windsor, Connecticut as Griffin had entered into agreements to sell these properties in fiscal 2019. Subsequent to November 30, 2019, Griffin was notified by the buyers of both the Florida Farm and the Restaurant Building that they would not go forward with the respective purchase agreements. The potential buyer of the Restaurant Building did, however, enter into a lease of that building subsequent to November 30, 2019 with an option to purchase the building at a later date. Griffin expects to reclassify these properties from real estate assets held for sale, net, to real estate assets, net, in the first quarter of fiscal 2020.