Real Estate Assets

12 Months Ended

Nov. 30, 2020

Real Estate Assets

Real Estate Assets

4. Real Estate Assets

Real estate assets consist of:

	Estimated
	Useful Lives	Nov. 30, 2020		Nov. 30, 2019
Land		$	33,137	$	30,750
Land improvements	10 to 30 years		45,733		40,992
Buildings and improvements	10 to 40 years		233,019		220,086
Tenant improvements	Shorter of useful life or terms of related lease		34,585		30,318
Machinery and equipment	3 to 20 years		10,958		7,557
Construction in progress			3,613		3,542
Development costs			5,106		10,404
			366,151		343,649
Accumulated depreciation			(123,276)		(105,035)
		$	242,875	$	238,614

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

	For the Fiscal Years Ended
	Nov. 30, 2020		Nov. 30, 2019		Nov. 30, 2018
Depreciation expense	$	11,889	$	10,416	$	9,853
Capitalized interest	$	114	$	351	$	352

In fiscal 2020, based on a third-party valuation, INDUS recorded an impairment loss of $2,085 to reduce the carrying value of 5 and 7 Waterside Crossing, the Company’s two multi-story office buildings in Griffin Center in Windsor, Connecticut aggregating approximately 161,000 square feet. In fourth quarter of fiscal 2020, the Company entered into an Agreement to Purchase and Sell 5 and 7 Waterside Crossing (the “Waterside Sale Agreement”) to sell these buildings for a purchase price of $6,250. The Waterside Sale Agreement was subsequently terminated by the buyer.

In fiscal 2019, INDUS recorded an impairment loss of $3,100 to reduce the carrying value of the approved but unbuilt residential development (“Meadowood’) in Simsbury, Connecticut to its estimated fair value of approximately $5,400. On February 3, 2020, INDUS entered into an option agreement for the potential sale of Meadowood (see Note 11). There were no impairment losses recognized in the fiscal year ended November 30, 2018 (“fiscal 2018”).

On March 9, 2020, INDUS, through a consolidated VIE, purchased 170 Sunport Lane (“170 Sunport”), an approximately 68,000 square foot industrial/logistics building in Orlando, Florida, for $5,749, including acquisition costs. INDUS provided all of the funding to the VIE to purchase 170 Sunport and determined that the fair value of the assets acquired approximated the purchase price, which was allocated to the real estate assets on a relative fair value basis. Of the $5,749 purchase price, $5,678 represented the relative fair value of real estate assets and $71 represented the relative fair value of the acquired intangible assets, comprised of the value of leases in-place. The intangible asset is included in other assets on INDUS’s consolidated balance sheet. The real estate assets primarily reflect the building and land improvements that are being depreciated principally over forty years and building and land improvements that are being depreciated over a period of eight years. The intangible assets are being amortized over the term of the leases.

On February 18, 2020, INDUS, through a consolidated VIE, purchased 3320 Maggie Boulevard (“3320 Maggie”), an approximately 108,000 square foot industrial/logistics building in Orlando, Florida, for $7,921, including acquisition costs. INDUS provided all of the funding to the VIE to purchase 3320 Maggie and determined that the fair value of the assets acquired approximated the purchase price, which was allocated to the real estate assets on a relative

fair value basis. Of the $7,921 purchase price, $7,941 represented the relative fair value of real estate assets, $770 represented the relative fair value of the acquired intangible asset, comprised of the value of the lease in-place, and $790 represented the relative fair value of the acquired intangible liability, comprised of the value of the below market lease at the time of acquisition (see Note 10). The intangible asset is included in other assets and the intangible liability is included in other liabilities on INDUS’s consolidated balance sheet. The real estate assets primarily reflect 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 seven years. The intangible asset and intangible liability are being amortized over the term of the lease.

The acquisitions of 170 Sunport and 3320 Maggie were each made utilizing a “Reverse 1031 Like-Kind Exchange. As the Company did not complete the sale transactions contemplated under the Reverse 1031 Like-Kind Exchanges within the required time, the legal titles of 170 Sunport and 3320 Maggie were transferred from the qualified intermediary to INDUS. As discussed in Note 1, INDUS retained essentially all of the legal and economic benefits and obligations and key decision-making rights related to 170 Sunport and 3320 Maggie from the respective dates they were acquired. The two VIEs that owned legal title to 170 Sunport and 3320 Maggie were included in INDUS’s consolidated financial statements as consolidated variable interest entities from the dates they were acquired through the expiration of the Reverse 1031 Like-Kind Exchanges.

On November 17, 2020, INDUS closed on the sale (the “55 GRS Sale”) of 55 Griffin Road South (“55 GRS”), its approximately 40,000 square foot office/flex building in Griffin Center South in Bloomfield, Connecticut. INDUS received cash proceeds of $1,400, before transaction costs and reimbursements, and recorded a pretax gain of $982 on the 55 GRS Sale. The net cash proceeds of $1,409 from the 55 GRS Sale were deposited into escrow for the potential acquisition of a replacement property as part of a Section 1031 Like-Kind Exchange (“1031 Like-Kind Exchange”) under the Code.

In fiscal 2020, $587 of proceeds from two smaller land sales were also deposited into escrow for the potential acquisition of a replacement property as part of a 1031 Like-Kind Exchange. If a replacement property is not purchased with the proceeds from these sales within the time frame required under IRC regulations regarding 1031 Like-Kind Exchanges, the proceeds placed in escrow would be returned to INDUS.

Real estate assets held for sale, net consist of:

	Nov. 30, 2020		Nov. 30, 2019
Land	$	505	$	323
Land improvements		269		388
Buildings and improvements		—		417
Development costs		6,028		1,009
	$	6,802	$	2,137

In fiscal 2020, real estate assets held for sale, net, increased by $4,665 reflecting: (a) an increase of $6,385 from real estate assets transferred into real estate assets held for sale as a result of entering into agreements to sell such real estate; partially offset by (b) a decrease of $1,084 from real estate assets held for sale being transferred back into real estate assets, as a result of the termination of agreements to sell such real estate assets; and (c) a reduction of $636 for sales of real estate assets that closed. The real estate assets held for sale that were returned to real estate assets in fiscal 2020 were INDUS’s farm in Quincy, Florida and the small restaurant building in Griffin Center in Windsor, Connecticut.