INVESTMENTS IN REAL ESTATE

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

INVESTMENTS IN REAL ESTATE

3. INVESTMENTS IN REAL ESTATE

Investments in real estate consist of the following:

	December 31,
	2021		2020
	(in thousands)
Land	$	141,236	$	139,397
Land improvements	2,644		2,611
Buildings and improvements	454,431		450,741
Furniture, fixtures, and equipment	4,398		4,969
Tenant improvements	29,733		31,414
Work in progress	10,260		8,073
Investments in real estate	642,702		637,205
Accumulated depreciation	(144,718)		(131,165)
Net investments in real estate	$	497,984	$	506,040

For the years ended December 31, 2021 and 2020, the Company recorded depreciation expense of $16.9 million and $17.7 million, respectively.

2021 Transactions—During the year ended December 31, 2021, the Company acquired a 100% fee-simple interest in the following property from an unrelated third-party. The purchase was accounted for as an asset acquisition.

	Asset	Date of		Purchase
Property	Type	Acquisition	Square Feet	Price (1)
				(in thousands)
1037 North Sycamore, Los Angeles, CA	Office	July 13, 2021	4,900	$	2,900

(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $33,000, which are not included in the purchase price above.

There were no dispositions during the year ended December 31, 2021.

2020 Transactions—During the year ended December 31, 2020, the Company acquired a 100% fee-simple interest in the following property from an unrelated third-party. The purchase was accounted for as an asset acquisition.

	Asset	Date of		Purchase
Property	Type	Acquisition	Square Feet	Price (1)
				(in thousands)
1021 East 7th Street, Austin, TX	Office	November 30, 2020	11,180	$	6,079

(1)Transaction costs that were capitalized as a component of the assets acquired and liabilities assumed in connection with the acquisition of this property totaled $51,000, which are not included in the purchase price above.

There were no dispositions during the year ended December 31, 2020.

The results of operations of the properties the Company acquired have been included in the consolidated statements of operations from the date of acquisition. The purchase price of the acquisitions completed during the years ended December 31, 2021 and 2020 were less than 10% of the Company’s total assets as of the respective most recent annual consolidated financial statements filed at or prior to the date of acquisition. The following table summarizes the purchase price allocation of the aforementioned acquisitions during the years ended December 31, 2021 and 2020.

	Year Ended December 31,
	2021		2020
	(in thousands)
Land	$	1,839	$	4,976
Land improvements	33		9
Buildings and improvements	1,061		534
Tenant improvements	—		190
Acquired in-place leases (1)	—		408
Acquired above-market leases (2)	—		18
Acquired below-market leases (3)	—		(5)
Net assets acquired	$	2,933	$	6,130

(1)Acquired in-place leases have a weighted average amortization period of 3 years for the 2020 acquisition.

(2)Acquired above-market leases have a weighted average amortization period of 3 years for the 2020 acquisition.

(3)Acquired below-market leases have a weighted average amortization period of 3 years for the 2020 acquisition.

Property Concentrations—Kaiser Foundation Health Plan, Incorporated (“Kaiser”), which occupied space in one of the Company’s Oakland, California properties accounted for 30.9% of its annualized rental income for the year ended December 31, 2021.