Real Estate Investments

12 Months Ended

Dec. 31, 2021

Real Estate Investments, Net [Abstract]

There were no real estate assets acquired or liabilities assumed during the year ended December 31, 2021. Also, there were no dispositions of real estate in the three year period ended December 31, 2021. However, the Company is evaluating its options for its 421 W. 54th Street - Hit Factory property, which include marketing the property for sale. As no buyer has been identified for the property, it does not qualify to be classified as held for sale on the consolidated balance sheet as of December 31, 2021. However, during the year ended December 31, 2021, the Company recorded an impairment charge of $1.5 million for this property as it was determined that the carrying value exceeded the Company’s estimate of fair value of the property. The fair value measurement was determined by estimating discounted cash flows using significant unobservable inputs, which were the discount rate (range of 7% to 8%), terminal capitalization rate (range of 7% to 9%), and estimated market rents (range of $40.00 per square foot to $50.00 per square foot).

Prior Year Acquisition

On July 17, 2019, the Company acquired a fee-simple interest in three condominium units located at 196 Orchard Street, New York, NY, 10002 (“196 Orchard Street”). The following table presents the allocation of real estate assets acquired and liabilities assumed during the year ended December 31, 2019.


	Year Ended December 31,
(Dollar amounts in thousands)	2019
Real estate investments, at cost:
Land	55,548
Building and improvements	24,324
Total tangible assets	79,872
Acquired intangibles: (1)
In-place leases	7,852
Above-market lease assets	1,541


Total intangible assets, net	9,393
Total assets acquired, net	89,265
Mortgage notes payable used to acquire real estate investments	(51,000)

Cash paid for acquired real estate investment	$	38,265
Number of properties purchased	1

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(1)Weighted-average remaining amortization periods for in-place leases and market lease and other intangible assets acquired during the year ended December 31, 2019 were 13.4 years and 13.4 years, respectively, as of the acquisition date.

Significant Tenants

As of December 31, 2021 and 2020 there were no tenants whose annualized rental income on a straight-line basis, based on leases commenced, represented greater than 10% of total annualized rental income for all portfolio properties on a straight-line basis.

Intangible Assets and Liabilities

Acquired intangible assets and lease liabilities consisted of the following as of December 31, 2021 and 2020:


	December 31, 2021						December 31, 2020
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets:
In-place leases	$	49,112	$	33,431	$	15,681	$	56,280	$	33,915	$	22,365
Other intangibles	28,322		5,074		23,248		31,448		7,263		24,185
Above-market leases	10,044		6,734		3,310		10,390		6,017		4,373
Acquired intangible assets	$	87,478	$	45,239	$	42,239	$	98,118	$	47,195	$	50,923
Intangible liabilities:
Below-market lease liabilities	$	13,275	$	9,051	$	4,224	$	25,941	$	11,935	$	14,006

The following table discloses the amounts recognized within the consolidated statements of operations and comprehensive loss related to amortization of in-place leases and other intangibles and amortization and accretion of above- and below-market lease assets and liabilities, net, for the periods presented:


	Year Ended December 31,
(In thousands)	2021		2020		2019
In-place leases (1)	$	6,684	$	8,150	$	9,344
Other intangibles	937		1,165		1,165
Total included in depreciation and amortization	$	7,621	$	9,315	$	10,509

Above-market lease intangibles (2)	$	1,062	$	1,219	$	1,602
Below-market lease liabilities (3)	(9,782)		(4,294)		(3,213)
Total included in revenue from tenants	$	(8,720)	$	(3,075)	$	(1,611)

Below-market ground lease, included in property operating expenses (4)	$	49	$	49	$	48

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(1) During the year ended December 31, 2021, in connection with leases that were terminated the Company accelerated the depreciation of approximately $1.1 million of in-place lease intangibles which is included in depreciation and amortization expense in the consolidated statement of operations.

During the year ended December 31, 2020, in connection with leases that were terminated during the year, the Company accelerated the depreciation of approximately $1.3 million of in-place lease intangibles, which is included in depreciation and amortization expense in the consolidated statement of operations.

(2) In connection with the lease terminations in 2020, the Company accelerated the amortization of approximately $0.1 million of above-market lease intangibles during the year ended December 31, 2020 which was included in the revenue from tenants in the consolidated statement of operations.

(3) In connection with the lease terminations in 2021, the Company accelerated the amortization of below-market lease intangibles $7.9 million which are included in revenue from tenants in the consolidated statement of operations for the year ended December 31, 2021. Additionally, in connection the lease terminations in 2020, the Company accelerated the amortization of approximately $1.9 million of below-market lease intangibles during the year ended December 31, 2020.

(4) Upon adoption of ASC 842 effective January 1, 2019, intangible balances related to ground leases were reclassified to be included as part of the Operating lease right-of-use assets presented on the consolidated balance sheet with no change to placement of the amortization expense of such balances. See Note 2 — Summary of Significant Accounting Policies for additional information.

The following table provides the projected amortization expenses and adjustments to revenue from tenants for the next five years as of December 31, 2021:


(In thousands)	2022		2023		2024		2025		2026
In-place leases	$	4,668	$	3,429	$	2,678	$	1,432	$	673
Other intangibles	708		708		708		708		708
Total to be included in depreciation and amortization	$	5,376	$	4,137	$	3,386	$	2,140	$	1,381

Above-market lease assets	$	974	$	825	$	495	$	206	$	138
Below-market lease liabilities	(1,218)		(992)		(962)		(539)		(183)
Total to be included in revenue from tenants	$	(244)	$	(167)	$	(467)	$	(333)	$	(45)

Write-off of Deferred Leasing Commissions

In January 2021, the Company’s former tenant, Knotel, filed for bankruptcy and all leases with the Company were terminated effective January 31, 2021. As a result of these terminations, the Company wrote-off $1.3 million of deferred leasing costs in the first quarter of 2021, which are included in depreciation and amortization expense in our consolidated statement of operations for the year ended December 31, 2021.

Write-off of Tenant Improvements

During the third quarter of 2021, a tenant on the health club business terminated a lease at the Company’s 9 Times Square property. As a result, The Company determined that certain of the improvements no longer had any value in connection with any foreseeable replacement tenant and wrote off approximately $0.3 million which is recorded in depreciation and amortization expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021.