Annual report pursuant to Section 13 and 15(d)

Real Estate (Tables)

v3.19.3.a.u2
Real Estate (Tables)
12 Months Ended
Dec. 31, 2019
Real Estate [Abstract]  
Schedule of Real Estate Investment Portfolio

As of December 31, 2019 and 2018, our real estate investment portfolio classified as income producing property that is held and used, at cost, consists of properties as follows (in thousands):
 
December 31,
 
2019
 
2018
Multifamily
$
1,469,011

 
$
919,285

Office
1,329,722

 
1,507,986

Other (1)
160,489

 
154,650

 
$
2,959,222

 
$
2,581,921


______________________________ 
(1)
Consists of the retail properties not classified as discontinued operations: Takoma Park, Westminster, Concord Centre, Chevy Chase Metro Plaza, 800 S. Washington Street, Randolph Shopping Center, Montrose Shopping Center and Spring Valley Village.
Schedule of Costs of Real Estate Portfolio Under Development of Held for Future Development The cost of our real estate portfolio under development or held for future development as of December 31, 2019 and 2018 is as follows (in thousands):
 
December 31,
 
2019
 
2018
Multifamily
$
123,071

 
$
83,945

Office
478

 
478

Other
644

 
2,808

 
$
124,193

 
$
87,231


Schedule of Real Estate Properties Acquired
Properties and land for development acquired during the three years ended December 31, 2019 were as follows:
Acquisition Date
 
Property
 
Type
 
# of units (unaudited)
 
Rentable
Square  Feet
(unaudited)
 
Contract
Purchase  Price
(in thousands)
April 30, 2019
 
Assembly Portfolio - Virginia (1)
 
Multifamily
 
1,685

 
N/A
 
$
379,100

June 27, 2019
 
Assembly Portfolio - Maryland (2)
 
Multifamily
 
428

 
N/A
 
82,070

July 23, 2019
 
Cascade at Landmark
 
Multifamily
 
277

 
N/A
 
69,750

 
 
 
 
 
 
2,390

 
 
 
$
530,920

 
 
 
 
 
 
 
 
 
 
 
January 18, 2018
 
Arlington Tower
 
Office
 
N/A
 
391,000
 
$
250,000

 
 
 
 
 
 
 
 
 
 
 
April 4, 2017
 
Watergate 600
 
Office
 
N/A
 
293,000
 
$
135,000

______________________________ 
(1) 
Consists of Assembly Alexandria, Assembly Manassas, Assembly Dulles, Assembly Leesburg, and Assembly Herndon.
(2)  
Consists of Assembly Germantown and Assembly Watkins Mill. The Assembly Portfolio - Virginia and Assembly Portfolio - Maryland properties are collectively the “Assembly Portfolio.”

Schedule of Revenue and Earnings from Acquired Operating Properties
The revenue and earnings of our acquisitions during their year of acquisition for the three years ended December 31, 2019 are as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Real estate rental revenue
$
27,641

 
$
22,389

 
$
14,518

Net (loss) income
(10,167
)
 
3,623

 
2,226


Schedule of Recorded Cost of Asset Acquisitions
We recorded the total cost of the above acquisitions as follows (in thousands):
 
2019
 
2018
 
2017
Land
$
92,391

 
$
63,970

 
$
45,981

Buildings and improvements
423,663

 
142,900

 
66,241

Tenant origination costs

 
13,625

 
12,084

Leasing commissions/absorption costs
15,474

 
27,465

 
23,161

Net lease intangible assets

 
3,142

 
498

Net lease intangible liabilities

 
(545
)
 
(9,585
)
Deferred tax liability

 

 
(560
)
Total
$
531,528

 
$
250,557

 
$
137,820


Schedule of Components of Fair Value of In-Place Leases
Balances, net of accumulated depreciation or amortization, as appropriate, of the components of the fair value of in-place leases at December 31, 2019 and 2018 were as follows (in thousands):
 
December 31,
 
2019
 
2018
 
Gross Carrying Value
 
Accumulated Amortization
 
Net
 
Gross Carrying Value
 
Accumulated Amortization
 
Net
Tenant origination costs
$
50,155

 
$
33,364

 
$
16,791

 
$
57,897

 
$
36,570

 
$
21,327

Leasing commissions/absorption costs
122,348

 
92,401

 
29,947

 
114,354

 
77,194

 
37,160

Net lease intangible assets
15,183

 
11,964

 
3,219

 
16,353

 
11,947

 
4,406

Net lease intangible liabilities
29,836

 
20,854

 
8,982

 
31,124

 
20,016

 
11,108

Below-market ground lease intangible asset
12,080

 
2,282

 
9,798

 
12,080

 
2,093

 
9,987


Amortization of these combined components during the three years ended December 31, 2019, 2018 and 2017 was as follows (in thousands):
 
Year Ended December 31,
 
2019
 
2018
 
2017
Depreciation and amortization expense
$
27,123

 
$
22,361

 
$
13,996

Real estate rental revenue increase, net
(924
)
 
(1,225
)
 
(776
)
 
$
26,199

 
$
21,136

 
$
13,220



Schedule of Future Amortization of Components of Fair Value of In-Place Leases
Amortization of these combined components over the next five years is projected to be as follows (in thousands):
 
Depreciation and amortization expense
 
Real estate rental revenue, net increase
 
Total
2020
$
9,975

 
$
(406
)
 
$
9,569

2021
8,576

 
(547
)
 
8,029

2022
8,078

 
(736
)
 
7,342

2023
6,032

 
(974
)
 
5,058

2024
5,264

 
(862
)
 
4,402

Thereafter
18,611

 
(2,238
)
 
16,373


Schedule of Properties Held-for-Sale or Sold and Discontinued Operations
We classified as held for sale or sold our interests in the following properties during the three years ended December 31, 2019:
Disposition Date
 
Property
 
Type
 
# of units (unaudited)
 
Rentable
Square Feet
(unaudited)
 
Contract
Sale Price
(in thousands)
 
(Loss) Gain on Sale
(in thousands)
June 26, 2019
 
Quantico Corporate Center (1)
 
Office
 
N/A

 
272,000

 
$
33,000

 
$
(1,046
)
July 23, 2019
 
Shopping Center Portfolio (2)
 
Retail
 
N/A

 
800,000

 
485,250

 
333,023

August 21, 2019
 
Frederick Crossing and Frederick County Square
 
Retail
 
N/A

 
520,000

 
57,500

 
9,507

August 27, 2019
 
Centre at Hagerstown
 
Retail
 
N/A

 
330,000

 
23,500

 
(3,506
)
December 19, 2019
 
1776 G Street
 
Office
 
N/A

 
262,000

 
129,500

 
61,007

N/A
 
John Marshall II
 
Office
 
N/A

 
223,000

 
63,350

 
N/A

 
 
 
 
Total 2019
 
 
 
2,407,000

 
$
792,100

 
$
398,985

 
 
 
 
 
 
 
 
 
 
 
 
 
January 19, 2018
 
Braddock Metro Center
 
Office
 
N/A

 
356,000

 
$
93,000

 
$

June 28, 2018
 
2445 M Street
 
Office
 
N/A

 
292,000

 
101,600

 
2,495

 
 
 
 
Total 2018
 
 
 
648,000

 
$
194,600

 
$
2,495

 
 
 
 
 
 
 
 
 
 
 
 
 
October 23, 2017
 
Walker House Apartments
 
Multifamily
 
212

 
N/A

 
$
32,200

 
$
23,838

 
 
 
 
Total 2017
 
 
 
 
 
$
32,200

 
$
23,838

______________________________ 
(1) 
Consists of 925 and 1000 Corporate Drive.
(2) 
Consists of five retail properties: Gateway Overlook, Wheaton Park, Olney Village Center, Bradlee Shopping Center and Shoppes of Foxchase.

The results of the Retail Portfolio are classified as discontinued operations and are summarized as follows (amounts in thousands, except for share data):
 
2019
 
2018
 
2017
Real estate rental revenue
$
28,200

 
$
45,160

 
$
44,797

Real estate expenses
(6,803
)
 
(10,638
)
 
(10,251
)
Depreciation and amortization
(4,926
)
 
(9,402
)
 
(10,626
)
Interest expense
(313
)
 
(643
)
 
(740
)
Loss on extinguishment of debt
(764
)
 

 

Gain on sale of real estate
339,024

 

 

       Income from discontinued operations
$
354,418

 
$
24,477

 
$
23,180

 
 
 
 
 
 
Basic net income per share
$
4.39

 
$
0.31

 
$
0.30

Diluted net income per share
$
4.39

 
$
0.31

 
$
0.30

 
 
 
 
 
 
Capital expenditures
$
809

 
$
2,138

 
$
1,601


All assets related to the Retail Portfolio were sold as of December 31, 2019. As of December 31, 2018, assets related to the Retail Portfolio were as follows (in thousands):
Land
$
88,087

Income producing property
216,577

 
304,664

Accumulated depreciation and amortization
(101,254
)
Income producing property, net
203,410

Rents and other receivables
9,898

Prepaid expenses and other assets
8,653

Total assets
$
221,961


All liabilities related to the Retail Portfolio were sold as of December 31, 2019. As of December 31, 2018, liabilities related to the Retail Portfolio were as follows (in thousands):
Mortgage notes payable, net
$
11,515

Accounts payable and other liabilities
1,620

Advance rents
1,771

Tenant security deposits
612

Liabilities related to properties sold or held for sale
$
15,518