Real Estate Properties

6 Months Ended

Jun. 30, 2012

Real Estate Properties

Real Estate Properties

Note 3.  Real Estate Properties

In this Note 3, references to we, us, our or CWH refer to CWH and its consolidated subsidiaries other than SIR and its consolidated subsidiaries, unless noted otherwise.

During the six months ended June 30, 2012, we (including SIR) acquired five properties with a combined 2,594,248 square feet for an aggregate purchase price of $405,500, including the assumption of $176,884 of mortgage debt and excluding closing costs.  We (including SIR) also funded $47,932 of improvements to our properties during the six months ended June 30, 2012.  In addition, since June 30, 2012, SIR acquired three properties with a combined 412,271 square feet for an aggregate purchase price of $46,575, excluding closing costs.  As of August 6, 2012, we (including SIR) have also entered into agreements to acquire seven properties with a combined 2,968,822 square feet for an aggregate purchase price of $365,200, including the assumption of approximately $182,600 of mortgage debt and excluding closing costs.  Details of completed acquisitions during 2012 to date are as follows:

Completed Acquisitions:

											Acquired
									Acquired		Real Estate				Premium
		Square	Purchase				Buildings and		Real Estate		Lease		Assumed		on Assumed
Date	Location	Feet	Price(1)		Land		Improvements		Leases		Obligations		Debt		Debt
CWH (excluding SIR) Acquisitions:
January 2012	Chicago, IL	1,009,940	$	150,600	$	30,400	$	115,817	$	22,189	$	5,348	$	147,872	$	12,458
March 2012	Hartford, CT	868,395	101,500		15,930		60,312		25,542		284		—		—
May 2012	Austin, TX	170,052	49,000		7,900		38,533		4,733		30		29,012		2,136
		2,048,387	301,100		54,230		214,662		52,464		5,662		176,884		14,594
SIR Acquisitions:
June 2012	Provo, UT	405,699	85,500		6,700		78,800		—		—		—		—
June 2012	Englewood, CO	140,162	18,900		3,230		11,801		3,869		—		—		—
		545,861	104,400		9,930		90,601		3,869		—		—		—
		2,594,248	$	405,500	$	64,160	$	305,263	$	56,333	$	5,662	$	176,884	$	14,594

(1) Purchase price includes the assumption of mortgage debt, if any, and excludes closing costs.

In July 2012, SIR acquired three properties with a combined 412,271 square feet for an aggregate purchase price of $46,575, excluding closing costs.

During the three months ended March 31, 2012, we completed the purchase price allocation on four properties located in Phoenix, AZ with a combined 1,063,364 square feet.  We acquired these properties in March 2011 for an aggregate purchase price of $136,500, excluding closing costs.  Based upon our evaluation of an appraisal prepared by an independent real estate appraisal firm completed in March 2012, we estimated the fair value of the acquired land and buildings and improvements to be $22,614 and $64,104, respectively.  As a result, we retrospectively adjusted the preliminary purchase price allocation by reallocating $8,371 from land to buildings and improvements.  All other allocation amounts were unchanged.

Our and SIR’s Pending Acquisitions:

In May 2012, we entered into an agreement to acquire an office property located in Columbia, SC with 333,708 square feet.  The purchase price is $60,000, including the assumption of approximately $40,600 of mortgage debt and excluding closing costs.  We currently expect to acquire this property during the third quarter of 2012; however, this acquisition is subject to customary closing conditions, including the assumption of existing mortgage debt, and we can provide no assurance that we will acquire this property in that time period or at all.

Also in May 2012, we entered into an agreement to acquire two office properties located in Indianapolis, IN with a combined 1,058,258 square feet.  The aggregate purchase price is $195,500, including the assumption of approximately $116,000 of mortgage debt and excluding closing costs.  We currently expect to acquire these properties during the third quarter of 2012; however, this acquisition is subject to customary closing conditions, including the assumption of existing mortgage debt, and we can provide no assurance that we will acquire these properties in that time period or at all.

In addition, as of August 6, 2012, SIR has entered into agreements to acquire four properties with a combined 1,576,856 square feet for an aggregate purchase price of $109,700, including the assumption of approximately $26,000 of mortgage debt and excluding closing costs.  We understand that SIR currently expects that it will acquire these properties during the remainder of 2012; however, these acquisitions are subject to SIR’s satisfactory completion of diligence and other customary closing conditions.  Accordingly, we can provide no assurance that SIR will acquire all or any of these properties in that time period or at all.

Property Sales:

In April 2012, we sold an office property located in Salina, NY with 12,934 square feet for $575, excluding closing costs.  In connection with this sale, we provided mortgage financing to the buyer, an unrelated third party, totaling $419 at 6.0% per annum and recognized a gain on sale of $158.  In June 2012, we sold an office property located in Santa Fe, NM with 76,978 square feet for $1,250, excluding closing costs.  We provided mortgage financing to the buyer, an unrelated third party, totaling $1,000 at 5.0% per annum and recognized a gain on sale of $192.

As of June 30, 2012 and December 31, 2011, none of our properties were classified as held for sale.  We classify all properties probable for sale within one year as held for sale in our condensed consolidated balance sheets.  Results of operations for properties sold or held for sale are included in discontinued operations in our condensed consolidated statements of income, if such results are material.  Results of operations for the properties sold during 2012 are not material to our consolidated results of operations and are not included in discontinued operations.  Prior periods have been restated to reflect 12 office properties and one industrial property reclassified to discontinued operations from continuing operations during the third quarter of 2011, which were sold in 2011, and seven office properties and 20 industrial properties reclassified to continuing operations from discontinued operations during the fourth quarter of 2011.  Summarized income statement information for the three and six months ended June 30, 2011, for properties sold in 2011 is as follows:

Income Statement:

	Three Months			Six Months
	Ended			Ended
	June 30, 2011			June 30, 2011
Rental income	$	6,614		$	13,853
Operating expenses	(2,706		)	(6,144		)
Depreciation and amortization	(1,579		)	(3,131		)
General and administrative	(235		)	(489		)
Acquisition related costs	(57		)	(143		)
Operating income	2,037			3,946
Interest income	1			3
Income from discontinued operations	$	2,038		$	3,949