Real Estate

12 Months Ended

Dec. 31, 2020

Acquisitions

During 2020, the Company acquired The RailYard in Charlotte for $201.3 million, including acquisition costs. The Company accounted for this transaction as an acquisition of an asset and the following table summarizes the allocation of the purchase price of this property (in thousands):


	The RailYard
Tangible assets:
Operating properties	$	201,153




Tangible assets	201,153

Intangible assets:

In-place leases	8,850
Above market leases	439
Intangible assets	9,289

Intangible liabilities:
Below market leases	(9,129)
Intangible liabilities	(9,129)

Total net assets acquired	$	201,313

During 2020, the Company also acquired a 1,550 space parking garage in Charlotte for $85.3 million, including acquisition costs. This property is included in real estate assets on the consolidated balance sheet and in the Company's Charlotte/Office operating segment.

Additionally, the Company completed multiple land acquisitions in the South End submarket of Charlotte during the fourth quarter of 2020. The Company acquired 3.4 and 2.4 acres of land to be used for future development for a gross purchase price of $28.1 million and $18.8 million, respectively.

During 2019, the Company acquired 1200 Peachtree as discussed in note 4 and acquired its partner's interest in Terminus Office Holdings LLC as discussed in note 8. The Company accounted for these transactions as an acquisition of assets and the following table summarizes the allocation of the purchase price of these properties (in thousands):


	1200 Peachtree		Terminus
Tangible assets:
Building and improvements	$	62,836	$	410,826
Land and improvements	19,495		49,345




Tangible assets	82,331		460,171

Intangible assets:

In-place leases	9,969		24,674
Above market leases	—		7,193
Intangible assets	9,969		31,867

Intangible liabilities:
Below market leases	—		(4,745)
Intangible liabilities	—		(4,745)

Total net assets acquired	$	92,300	$	487,293

Dispositions

The Company had two dispositions of consolidated operating properties during the year ended December 31, 2020 and had no dispositions during the year ended December 31, 2019. The Company sold the following properties in 2020 ($ in thousands):

Property

Property Type

Location

Square Feet

Sales Price

Hearst Tower

Office

Charlotte, NC

966,000

455,500

Woodcrest

Office

Cherry Hill, NJ

386,000

25,300

The Company sold the properties noted above as part of its ongoing investment strategy, using these proceeds to fund new investment activity. The gain of $90.3 million from the sale of these properties is net of $459,000 of state income tax.

During February 2019, the Company sold air rights that cover eight acres in Downtown Atlanta for a gross sales price of $13.3 million and recorded a gain of $13.1 million.

The Company's Burnett Plaza property was classified as held for sale as of December 31, 2020 and the Company's Woodcrest and Hearst Tower properties were classified as held for sale as of December 31, 2019. The major classes of assets and liabilities of these properties held for sale were as follows (in thousands):


	December 31,
Real estate assets and other assets held for sale	2020		2019
Operating properties, net of accumulated depreciation of $8,123 and $44,478 in 2020 and 2019, respectively	$	106,864	$	340,171
Notes and accounts receivable	439		5,520
Deferred rents receivable	2,480		5,745
Intangible assets, net of accumulated amortization of $6,065 and $16,615 in 2020 and 2019, respectively	15,830		8,657
Other assets	133		489
Total real estate assets and other assets held for sale	$	125,746	$	360,582

Liabilities of real estate assets held for sale
Accounts payable and accrued expenses	$	7,399	$	12,497
Deferred income	44		2,638
Intangible liabilities, net of accumulated amortization of $1,205 and $7,771 in 2020 and 2019, respectively	3,014		5,471
Other liabilities	2,149		625
Total liabilities of real estate assets held for sale	$	12,606	$	21,231

Impairment

The Company tests for impairment whenever changes in circumstances indicate a building’s carrying value may not be recoverable. The test is conducted using undiscounted cash flows for the shorter of the building’s estimated hold period or its remaining useful life. When testing for recoverability of buildings held for investment, projected cash flows are used over its expected hold period. If the expected hold period includes some likelihood of shorter-term hold period from a potential sale, the probability of a sale is layered into the analysis. If any building's held for investment analysis were to fail the impairment test, its book value would be written down to its then current estimated fair value, before any selling expense, and that building would continue to depreciate over its remaining useful life. None of the Company’s buildings were impaired during any periods presented while under the held for investments classification.

During the fourth quarter of 2020, the Company decided to accept an offer, with conditions, on Burnett Plaza. Based on the status of this offer as of December 31, 2020, the Company concluded the sale was probable within one year and, therefore, transferred the assets and liabilities of the building to held for sale. Because the carrying value of the building exceeded the expected net sale proceeds (including selling costs), the Company recorded a $14.8 million impairment charge in the accompanying statement of operations. The net proceeds were based on the third-party offer to purchase (a Level 2 input under authoritative guidance for fair value measurements).

The Company may record additional impairment charges if operating results of individual buildings are materially different from our forecasts, the economy and the office industry weakens, or we shorten our contemplated holding period for additional buildings.