Real Estate Assets and Discontinued Operations

12 Months Ended

Dec. 31, 2022

Real Estate Assets And Discontinued Operations

Real Estate Assets And Discontinued Operations

4. Real Estate Assets and Discontinued Operations

Real estate assets consist of:

	Estimated
	Useful Lives	December 31, 2022		December 31, 2021
Land		$	71,148	$	55,104
Land improvements	10 to 30 years		78,974		65,520
Buildings and improvements	10 to 40 years		379,864		295,964
Tenant improvements	Shorter of useful life or terms of related lease		32,753		31,576
Construction in progress			21,419		20,799
Development costs			3,722		3,673
			587,880		472,636
Accumulated depreciation			(98,219)		(84,989)
		$	489,661	$	387,647

Total depreciation expense related to real estate assets was as follows:

	Year Ended December 31,
	2022		2021
Depreciation expense	$	16,214	$	12,944

Acquisitions

On June 8, 2022, INDUS, through a consolidated VIE, purchased an approximately 205,000 square foot, fully leased portfolio in Florida (the “Florida Portfolio”) for $31,652, including transaction costs. The Florida Portfolio is comprised of two buildings in the Palm Beach market totaling approximately 84,000 square feet and an approximately 121,000 square foot property in the Orlando market. For this acquisition, INDUS provided all of the funding to the VIE for the purchase. The acquisition of the Florida Portfolio was made utilizing a Reverse 1031 Like-Kind Exchange under the Code that was entered into at the time the properties were acquired and completed with the sale of the Office/Flex Portfolio (see below).

On January 19, 2022, INDUS closed on the purchase of 782 Paragon Way (“782 Paragon”), an approximately 217,000 square foot, fully leased building in the Charlotte, North Carolina market for $24,026, including transaction costs. 782 Paragon is a replacement property as part of a 1031 Like-Kind Exchange under the Code. INDUS acquired 782 Paragon utilizing $10,091 of proceeds from the sale of the CT Farm (see below) that was completed in December 2021. The balance of the purchase price was paid from the Company’s cash on hand.

On September 7, 2022, the Company closed on the purchase of approximately 8 acres of undeveloped land in Allentown, Pennsylvania for a purchase price of $6,614, including transaction costs. This land has the entitlements to support the construction of an approximately 91,000 square foot building.

On June 16, 2022, as part of the Charlotte Forward Purchase Agreement (see Note 10), the Company closed on the purchase of approximately 32 acres of land in Rock Hill, South Carolina for a purchase price of $1,121, including transaction costs. An approximately 231,000 square foot building is being constructed by the seller on this land and the Company is making progress payments to the seller through the course of construction. As of December 31, 2022, the Company had made payments of $9,800 to the seller, including the purchase of the land. Closing on the Charlotte Forward Purchase Agreement is subject to a number of contingencies including completion of construction. There can be no guarantee that the Charlotte Forward Purchase Agreement will be completed under its current terms, or at all.

The purchase prices for acquisitions for the year ended December 31, 2022 were allocated as follows:

	782 Paragon Way		3312 Shader Road		6600 High Ridge Road		7700 High Ridge Road		Allentown, PA Land		Rock Hill, SC Land		Total
Land	$	1,469	$	2,828	$	1,673	$	2,346	$	6,614	$	1,121	$	16,051
Land improvements		329		213		194		174		—		—		910
Buildings and improvements		22,228		11,179		6,318		5,696		—		—		45,421
Tenant improvements		—		107		44		40		—		—		191
Intangible assets		—		684		421		383		—		—		1,488
Intangible liabilities		—		(186)		—		(462)		—		—		(648)
	$	24,026	$	14,825	$	8,650	$	8,177	$	6,614	$	1,121	$	63,413

On December 10, 2021, INDUS closed on the purchase of two parcels of undeveloped land in Allentown, Pennsylvania for a combined purchase price of $4,229, after transaction and entitlement costs (the “American Parkway Land”). The American Parkway Land totals approximately 23 acres in the Lehigh Valley and INDUS is currently constructing an approximately 206,000 square foot building on this site.

On November 12, 2021, INDUS closed on the purchase of 7770 Palmetto Commerce Parkway, an approximately 196,500 square foot building in Charleston, South Carolina for $28,488, including acquisition costs.

On October 12, 2021, INDUS closed on the purchase of 2345 Township Road, an approximately 128,000 square foot building in Charlotte, North Carolina for $14,935, including acquisition costs.

On August 5, 2021, INDUS closed on the purchase of 2850 Interstate Drive, an approximately 139,500 square foot building in Lakeland, Florida for $17,859, including acquisition costs.

On June 28, 2021, INDUS, through a consolidated VIE, purchased 7800 Tuckaseegee Road (“7800 Tuckaseegee”), an approximately 395,500 square foot building in Charlotte, North Carolina for $42,502, including acquisition costs. On May 12, 2021, INDUS, through a consolidated VIE, purchased 6355 Farm Bureau Road (“6355 Farm Bureau”), an approximately 127,500 square foot building in the Lehigh Valley of Pennsylvania for $11,928, including acquisition costs. For both of these acquisitions, INDUS provided all of the funding to the VIEs for the purchases. The acquisitions of 7800 Tuckaseegee and 6355 Farm Bureau were made utilizing Reverse 1031 Like-Kind Exchanges that were entered into at the time the properties were acquired (see below).

On April 13, 2021, INDUS closed on the purchase of an approximately 14 acre parcel of undeveloped land in Orlando, Florida (the “Landstar Land”) for a purchase price of $5,658, after transaction and entitlement costs. The Landstar Land was a replacement property as part of a 1031 Like-Kind Exchange. INDUS acquired the Landstar Land utilizing $1,993 of proceeds from the sales of one of its office/flex buildings and two smaller land parcels that were completed in 2020 and the balance of the purchase price was paid from the Company’s cash on hand. INDUS constructed, and placed into service in 2022, two buildings totaling approximately 196,000 square feet on the Landstar Land.

The purchase prices for acquisitions for the year ended December 31, 2021 were allocated as follows:

2021	7770 Palmetto		2345 Township		2850 Interstate		7800 Tuckaseegee		6355 Farm Bureau		Landstar Land			American Pkwy Land	Total
Land	$	3,166	$	1,197	$	2,369	$	4,606	$	2,163	$	5,658	$	4,229	$	23,388
Land improvements		4,182		671		2,832		3,526		388		—		—		11,599
Buildings and improvements		20,077		12,337		12,280		33,348		10,036		—		—		88,078
Tenant improvements		113		20		48		200		132		—		—		513
Intangible assets		950		710		558		1,462		918		—		—		4,598
Intangible liabilities		—		—		(228)		(640)		(1,709)		—		—		(2,577)
	$	28,488	$	14,935	$	17,859	$	42,502	$	11,928	$	5,658	$	4,229	$	125,599

The Company allocates the purchase price of acquired real estate based upon the relative fair value of the assets acquired and liabilities assumed, which generally consists of land and improvements, buildings and improvements, and related lease intangibles (see Note 9).  The purchase price is allocated to the fair value of the tangible assets of an acquired property by valuing the property as if it were vacant. Lease intangibles which include acquired above and below market lease intangibles are valued based on the present value of the difference between prevailing market rental rates and the in-place rental rates measured over a period equal to the remaining term of the lease for above market leases or the remaining term of the lease plus the term of any below market fixed rate renewal options for below market leases.

Real estate assets are being depreciated over ten to forty years and intangible assets and intangible liabilities are being amortized over the term of the associated lease. The intangible assets are included in other assets and the intangible liabilities are included in other liabilities on INDUS’ consolidated balance sheet.

Dispositions

On December 29, 2021, INDUS closed on the sale of all of the assets, including approximately 670 acres of land in Granby and East Granby, Connecticut, that were previously leased to a third-party nursery operator (the “CT Farm”) for a purchase price of $10,300, before transaction costs, and recorded a gain of $9,331. The net proceeds of $10,091 were deposited into escrow for the potential acquisition of a replacement property as part of a 1031 Like-Kind Exchange. On January 19, 2022, INDUS closed on 782 Paragon as a replacement property under this 1031 Like-Kind Exchange (see above).

On December 1, 2021, INDUS closed on the sale of 1985 Blue Hills Avenue (“1985 BHA”), an approximately 165,000 square foot industrial/logistics building in Windsor, Connecticut and two adjacent parcels of undeveloped land aggregating approximately 39 acres to the in-place full-building tenant (the “Blue Hills Sale”) for a purchase price of $18,000, before transaction costs, and recorded a gain of $13,271. The proceeds from the Blue Hills Sale were used to complete the Reverse 1031 Like-Kind Exchange on 7800 Tuckaseegee (see above). At the time of closing, INDUS also repaid the mortgage collateralized by 1985 BHA with proceeds from the Blue Hills Sale (see Note 5).

On November 5, 2021, INDUS closed on the sale of all of the assets, including approximately 1,066 acres of land in Quincy, Florida, that were previously leased to a third-party operator for a purchase price of $1,000, before transaction costs, and recorded a gain of $430.

On July 23, 2021, INDUS closed on the sale of approximately 34 acres of undeveloped land in Bloomfield, Connecticut for a purchase price of $600, before transaction costs, and recorded a gain of $504. The proceeds of this sale were used to complete the Reverse Like-Kind Exchange on 6355 Farm Bureau (see above).

In 2021, INDUS recorded an impairment loss of $3,000 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. On November 16, 2021, the Company completed the sale (the “5&7 WSC Sale”), for a price of $5,200, before transaction costs of: (a) 5 and 7 Waterside Crossing (“5&7 WSC”); (b) 21 Griffin Road North, an approximately 48,000 square foot office/flex building; and (c) 25 Griffin Road North, an approximately 8 acre parcel of undeveloped land. INDUS recorded a loss of $158 on the 5&7 WSC Sale. At the time of closing, INDUS also repaid the mortgage collateralized by 5&7 WSC with proceeds from the 5&7 WSC Sale (see Note 5).

Discontinued Operations

In December 2022, INDUS completed the previously announced sale of its Office/Flex Portfolio and fully exited its’ legacy investment in office properties (see Note 1). The purchase price, before transaction costs, was $11,000 and the Company recorded a gain of $2,505 on the sale. The Office/Flex Portfolio was comprised of seven buildings totaling approximately 175,000 square feet located in Bloomfield, Connecticut as well as an approximately 18,000 square foot building that is located adjacent to the Office/Flex Portfolio and was principally used for storage by INDUS’ property management group.

The Office/Flex Portfolio is recorded as a discontinued operation as of December 31, 2022 and for all prior periods presented, the related assets and liabilities are presented as assets and liabilities of discontinued operations on the consolidated balance sheets and the related operating results are presented as income from discontinued operations on the consolidated statements of operations.

In March 2022, the Company also closed its landscaping division which primarily served the Office/Flex Portfolio and recorded a gain on sale of $203 for the year ended December 31, 2022.

Income from discontinued operations in our accompanying consolidated statements of operations is comprised of:

	Year Ended December 31,
	2022		2021
Rental revenue	$	2,003	$	2,112
Expenses:
Operating expenses of rental properties		779		736
Real estate taxes		297		324
Depreciation and amortization expense		236		897
General and administrative expenses		57		—
Total expenses		1,369		1,957
Income from discontinued operations	$	634	$	155

Real estate assets held for sale, net consisted of:

	December 31, 2022		December 31, 2021
Land	$	—	$	31
Land improvements		—		1,840
Buildings and improvements		—		15,396
Tenant improvements		—		3,485
Construction in progress		—		338
		—		21,090
Accumulated depreciation		—		(14,571)
		—		6,519
Other assets		29		1,471
Total assets of discontinued operations	$	29	$	7,990
Accounts payable and accrued liabilities	$	75	$	67
Deferred revenue		—		620
Other liabilities		44		145
Total liabilities of discontinued operations	$	119	$	832

Cash flows from discontinued operations were as follows:

	Year Ended December 31,
	2022		2021
Net cash provided by (used in) operating activities of discontinued operations	$	663	$	(28)
Net cash provided by (used in) investing activities of discontinued operations	$	8,640	$	(791)
Net cash provided by financing activities of discontinued operations	$	—	$	—