Real Estate

12 Months Ended

Dec. 31, 2022

Acquisitions

During 2021, the Company acquired three office properties. The following table summarizes these transactions and the resulting purchase price allocations ($ in thousands):


	300 Colorado (1)		Heights Union		725 Ponce
Gross Purchase Price	$	162,500	$	144,800	$	300,200
Acquisition Date	December 2021		October 2021		July 2021
Square Feet	369,000		294,000		372,000
Market	Austin		Tampa		Atlanta
Purchase Price Allocation
Tangible assets
Operating properties	$	297,259	$	133,489	$	292,946




	297,259		133,489		292,946

Intangible assets

In-place leases	13,974		5,894		12,788
Below market ground lease	840		—		—
Above market leases	21		1,322		1,770
	14,835		7,216		14,558

Intangible liabilities
Below market leases	(10,369)		(2,501)		(6,739)
	(10,369)		(2,501)		(6,739)

Total net assets (2)	$	301,725	$	138,204	$	300,765

(1) Purchase price represents cost of acquiring partners' 50% interest in 300 Colorado Project LP, resulting in consolidation of this previously unconsolidated property (see note 6 for more information on this transaction).

(2) Represents amounts, including acquisition costs, assigned to the net assets consolidated in the balance sheet upon acquisition.

During 2021, the Company acquired two land parcels. The following table summarizes these transactions ($ in thousands):


	Market	Acres	Gross Purchase Price
887 West Peachtree	Atlanta	0.7	$	10,000
3354/3356 Peachtree	Atlanta	0.2	$	8,000

Dispositions

During 2021, the Company sold three office properties. The following table summarizes these transactions ($ in thousands):


Property	Location	Date	Square Feet	Sales Price		Gain on Sale, Net
816 Congress	Austin	December 2021	435,000	$	174,000	$	77,200
One South at the Plaza	Charlotte	July 2021	891,000	$	271,500	$	12,700
Burnett Plaza	Fort Worth	April 2021	1,000,000	$	137,500	$	200

The Company sold the properties noted above as part of its ongoing investment strategy, using these proceeds to fund new investment activity. The Company recorded a gain of $90.1 million from the 2021 sales.

In July 2021, the Company sold 0.7 acres of land in Phoenix, adjacent to our 100 Mill development, to a hotel developer for $6.4 million. Net proceeds approximated our book value.

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.