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Lease Intangibles
 6 Months Ended
Jun. 30, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Lease Intangibles

6. Lease Intangibles

Upon acquisitions of real estate (Note 2), the Company assesses the fair value of acquired assets (including land, buildings and improvements, and identified intangibles such as above- and below-market leases, including below-market options and acquired in-place leases) and assumed liabilities. The lease intangibles are amortized over the remaining terms of the respective leases, including option periods where applicable.

Intangible assets and liabilities are included in other assets and other liabilities (Note 5) on the consolidated balance sheet and summarized as follows (in thousands):

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

 

Gross Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

Amortizable Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-place lease intangible assets

 

$

268,335

 

 

$

(154,313

)

 

$

114,022

 

 

$

249,961

 

 

$

(137,108

)

 

$

112,853

 

Above-market rent

 

 

19,188

 

 

 

(13,959

)

 

 

5,229

 

 

 

17,227

 

 

 

(13,260

)

 

 

3,967

 

 

 

$

287,523

 

 

$

(168,272

)

 

$

119,251

 

 

$

267,188

 

 

$

(150,368

)

 

$

116,820

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortizable Intangible Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Below-market rent

 

$

(165,085

)

 

$

83,757

 

 

$

(81,328

)

 

$

(160,721

)

 

$

78,315

 

 

$

(82,406

)

Above-market ground lease

 

 

(671

)

 

 

180

 

 

 

(491

)

 

 

(671

)

 

 

151

 

 

 

(520

)

 

 

$

(165,756

)

 

$

83,937

 

 

$

(81,819

)

 

$

(161,392

)

 

$

78,466

 

 

$

(82,926

)

 

During the six months ended June 30, 2020, the Company acquired in-place lease intangible assets of $21.0 million, above-market rents of $2.0 million and below-market rents of $4.6 million with weighted-average useful lives of 4.9, 5.8 and 20.2 years, respectively.

 

During the year ended December 31, 2019, the Company acquired in-place lease intangible assets of $36.1 million, above-market rents of $0.6 million, and below-market rents of $10.4 million with weighted-average useful lives of 7.9, 6.7, and 21.7 years, respectively.

Amortization of in-place lease intangible assets is recorded in depreciation and amortization expense and amortization of above-market rent and below-market rent is recorded as a reduction to and increase to rental income, respectively, in the consolidated statements of operations. Amortization of above-market ground leases are recorded as a reduction to rent expense in the consolidated statements of operations.

The scheduled amortization of acquired lease intangible assets and assumed liabilities as of June 30, 2020 is as follows (in thousands):

 

Years Ending December 31,

 

Net Increase in

Lease Revenues

 

 

Increase to

Amortization

 

 

Reduction of

Rent Expense

 

 

Net (Expense) Income

 

2020 (Remainder)

 

$

3,610

 

 

$

(15,678

)

 

$

29

 

 

$

(12,039

)

2021

 

 

7,001

 

 

 

(25,517

)

 

 

58

 

 

 

(18,458

)

2022

 

 

6,302

 

 

 

(18,705

)

 

 

58

 

 

 

(12,345

)

2023

 

 

6,011

 

 

 

(13,923

)

 

 

58

 

 

 

(7,854

)

2024

 

 

5,692

 

 

 

(8,677

)

 

 

58

 

 

 

(2,927

)

Thereafter

 

 

47,483

 

 

 

(31,522

)

 

 

230

 

 

 

16,191

 

Total

 

$

76,099

 

 

$

(114,022

)

 

$

491

 

 

$

(37,432

)