INDUS REALTY TRUST, INC. [INDT] Filings

10-Q 1 indt-20220930x10q.htm 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2022

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number 1-12879

INDUS REALTY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland			06-0868496
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

641 Lexington Avenue, New York, New York			10022
(Address of principal executive offices)			(Zip Code)

Registrant’s Telephone Number, Including Area Code (212) 218-7910

______________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	INDT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding at November 3, 2022: 10,192,416

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INDUS REALTY TRUST, INC.

FORM 10-Q

Index


PART I -		FINANCIAL INFORMATION

	ITEM 1	Financial Statements

		Consolidated Balance Sheets (unaudited) as of September 30, 2022 and December 31, 2021	3

		Consolidated Statements of Operations (unaudited) for the Three Months and Nine Months Ended September 30, 2022 and 2021	4

		Consolidated Statements of Comprehensive Income (unaudited) for the Three Months and Nine Months Ended September 30, 2022 and 2021	5

		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the Three Months and Nine Months Ended September 30, 2022 and 2021	6

		Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2022 and 2021	7

		Notes to Consolidated Financial Statements (unaudited)	8

	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	33

	ITEM 4	Controls and Procedures	33

PART II -		OTHER INFORMATION

	ITEM 1	Legal Proceedings	34

	ITEM 1A	Risk Factors	34

	ITEM 2	Not Applicable

	ITEM 3-5	Not Applicable

	ITEM 6	Exhibits	34

		SIGNATURES	39

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INDUS REALTY TRUST, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)


	September 30, 2022	December 31, 2021
ASSETS
Real estate assets at cost, net	$ 479,561	$ 387,647
Cash and cash equivalents	25,741	150,263
Restricted cash	267	10,644
Interest rate swap assets	7,573	188
Assets of discontinued operations	9,585	7,990
Other assets	45,054	33,914
Total assets	$ 567,781	$ 590,646

LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage loans and construction loan, net of debt issuance costs	$ 80,172	$ 169,818
Delayed draw term loan, net of debt issuance costs	58,639	—
Deferred revenue	7,377	7,365
Accounts payable and accrued liabilities	11,608	9,671
Interest rate swap liabilities	—	3,995
Dividends payable	1,631	1,629
Liabilities of discontinued operations	859	832
Other liabilities	10,099	11,259
Total liabilities	170,385	204,569

Stockholders' Equity
Common stock, par value $0.01 per share, 50,000,000 shares authorized, 10,192,416 and 10,183,730 shares issued and outstanding, respectively	102	102
Additional paid-in capital	400,963	399,754
Accumulated deficit	(11,554)	(10,869)
Accumulated other comprehensive income (loss)	7,885	(2,910)
Total stockholders' equity	397,396	386,077
Total liabilities and stockholders' equity	$ 567,781	$ 590,646

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Operations

(dollars and share count in thousands, except per share data)

(unaudited)



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Rental revenue	$	13,044	$	10,243	$	36,291	$	29,076

Expenses:
Operating expenses of rental properties		1,194		1,040		3,533		3,409
Real estate taxes		1,659		1,601		4,643		4,341
Depreciation and amortization expense		4,823		3,739		13,301		10,048
General and administrative expenses		2,906		2,283		8,238		7,977
Total expenses		10,582		8,663		29,715		25,775

Other income (expense):
Interest expense		(1,507)		(1,700)		(3,178)		(5,160)
Impairment of real estate assets		—		(3,000)		—		(3,000)
Change in fair value of financial instruments		—		(2,027)		—		(2,746)
Gain on sales of real estate assets		—		1,450		—		1,792
Investment and other income		90		119		195		241
Losses on early extinguishment of debt		(189)		—		(653)		—
Other expense		(26)		—		(32)		—
		(1,632)		(5,158)		(3,668)		(8,873)

Income (loss) from continuing operations before income taxes		830		(3,578)		2,908		(5,572)
Income tax (provision) benefit		—		(24)		585		(24)
Income (loss) from continuing operations		830		(3,602)		3,493		(5,596)

Discontinued operations:
Income from discontinued operations		286		55		511		130
Gain on sale of equipment		—		—		203		—
		286		55		714		130

Net income (loss)	$	1,116	$	(3,547)	$	4,207	$	(5,466)

Income (loss) per Common Share-Basic:
Income (loss) from continuing operations	$	0.08	$	(0.47)	$	0.34	$	(0.78)
Income from discontinued operations	$	0.03	$	0.01	$	0.07	$	0.02
Net income (loss) per common share	$	0.11	$	(0.46)	$	0.41	$	(0.76)

Income (loss) per Common Share-Diluted:
Income (loss) from continuing operations	$	0.08	$	(0.47)	$	0.34	$	(0.78)
Income from discontinued operations	$	0.03	$	0.01	$	0.07	$	0.02
Net income (loss) per common share	$	0.11	$	(0.46)	$	0.41	$	(0.76)


Weighted average shares outstanding - basic		10,192		7,724		10,188		7,231
Weighted average shares outstanding - diluted		10,292		7,724		10,365		7,231

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Net income (loss)	$	1,116	$	(3,547)	$	4,207	$	(5,466)

Other comprehensive income (loss):
Reclassifications included in net income (loss)		46		510		(403)		1,504
Unrealized gain on cash flow hedges		7,387		114		11,198		2,083
Total other comprehensive income		7,433		624		10,795		3,587
Total comprehensive income (loss)	$	8,549	$	(2,923)	$	15,002	$	(1,879)

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(dollars in thousands)

(unaudited)


For the Three Months Ended September 30, 2022 and 2021

	Shares of			Additional				Accumulated Other
	Common Stock	Common		Paid-in		Accumulated		Comprehensive
	Issued	Stock		Capital		Deficit		Income (Loss)		Total
Balance at June 30, 2022	10,192,316	$	102	$	400,556	$	(11,039)	$	452	$	390,071
Stock-based compensation expense	—		—		404		—		—		404
Exercise of stock options	100		—		3		—		—		3
Common stock dividend, $0.16 per share	—		—		—		(1,631)		—		(1,631)
Net income	—		—		—		1,116		—		1,116
Total other comprehensive income, net of tax	—		—		—		—		7,433		7,433
Balance at September 30, 2022	10,192,416	$	102	$	400,963	$	(11,554)	$	7,885	$	397,396


Balance at June 30, 2021	7,721,671	$	77	$	233,907	$	(24,144)	$	(4,892)	$	204,948
Stock-based compensation expense	—		—		305		—		—		305
Exercise of stock options	9,052		—		239		—		—		239
Reclassification of warrants	—		—		12,192		—		—		12,192
Common stock dividend, $0.15 per share	—		—		—		(1,159)		—		(1,159)
Net loss	—		—		—		(3,547)		—		(3,547)
Total other comprehensive income, net of tax	—		—		—		—		624		624
Balance at September 30, 2021	7,730,723	$	77	$	246,643	$	(28,850)	$	(4,268)	$	213,602


For the Nine Months Ended September 30, 2022 and 2021

	Shares of			Additional				Accumulated Other
	Common Stock	Common		Paid-in		Accumulated		Comprehensive
	Issued	Stock		Capital		Deficit		Income (Loss)		Total
Balance at December 31, 2021	10,183,730	$	102	$	399,754	$	(10,869)	$	(2,910)	$	386,077
Equity awards issued	3,371		—		—		—		—		—
Stock-based compensation expense	—		—		1,085		—		—		1,085
Shares acquired to satisfy employee tax withholding requirements on stock awards	(285)		—		(23)		—		—		(23)
Exercise of stock options	5,600		—		147		—		—		147
Common stock dividends, $0.48 per share	—		—		—		(4,892)		—		(4,892)
Net income	—		—		—		4,207		—		4,207
Total other comprehensive income, net of tax	—		—		—		—		10,795		10,795
Balance at September 30, 2022	10,192,416	$	102	$	400,963	$	(11,554)	$	7,885	$	397,396


Balance at December 31, 2020	5,663,040	$	57	$	116,732	$	(9,817)	$	(7,855)	$	99,117
Stock-based compensation expense	—		—		810		—		—		810
Exercise of stock options	15,422		—		407		—		—		407
Sale of common stock, net	1,927,049		19		108,657		—		—		108,676
Special dividend	125,212		1		7,845		(11,250)		—		(3,404)
Reclassification of warrants	—		—		12,192		—		—		12,192
Common stock dividends, $0.30 per share	—		—		—		(2,317)		—		(2,317)
Net loss	—		—		—		(5,466)		—		(5,466)
Total other comprehensive income, net of tax	—		—		—		—		3,587		3,587
Balance at September 30, 2021	7,730,723	$	77	$	246,643	$	(28,850)	$	(4,268)	$	213,602

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)



	For the Nine Months Ended
	September 30, 2022		September 30, 2021
Net income (loss)	$	4,207	$	(5,466)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		13,537		10,702
Noncash rental revenue including straight-line rents		(3,424)		(1,610)
Amortization of terminated swap agreements and related income tax benefit		(1,812)		—
Stock-based compensation expense		1,085		810
Amortization of debt issuance costs		719		819
Losses on early extinguishment of debt		653		—
Gain on sales of equipment		(203)		—
Change in fair value of financial instruments		—		2,746
Gain on sales of real estate assets		—		(1,792)
Noncash impairment charge		—		3,000
Changes in assets and liabilities:
Other assets		(2,765)		(5,110)
Accounts payable and accrued liabilities		1,822		(331)
Deferred revenue		1,692		1,371
Other liabilities		(1,470)		553
Net cash provided by operating activities		14,041		5,692

Investing activities:
Acquisitions of land and buildings		(63,413)		(77,954)
Additions to real estate assets		(43,322)		(33,692)
Deposits on building and land acquisitions		(5,288)		(6,455)
Deferred leasing costs and other		(1,493)		(2,490)
Proceeds from sale of equipment, net of expenses		250		—
Proceeds from sales of real estate assets, net of expenses		—		9,982
Net cash used in investing activities		(113,266)		(110,609)

Financing activities:
Principal payments on mortgage loans and construction loan		(90,720)		(3,826)
Proceeds from delayed draw term loan and construction loan		60,069		14,662
Dividends paid to stockholders		(4,890)		(5,721)
Payment of debt issuance costs		(1,507)		(1,863)
Proceeds from termination of interest rate swap agreements		1,227		—
Proceeds from exercise of stock options		147		407
Proceeds from sale of common stock		—		108,676
Net cash (used in) provided by financing activities		(35,674)		112,335
Net (decrease) increase in cash and cash equivalents and restricted cash		(134,899)		7,418
Cash and cash equivalents and restricted cash at beginning of period		160,907		30,675
Cash and cash equivalents and restricted cash at end of period	$	26,008	$	38,093

See Notes to Consolidated Financial Statements.

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INDUS REALTY TRUST, INC.

Notes to Consolidated Financial Statements

(dollars in thousands unless otherwise noted, except per share data)

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

INDUS Realty Trust, Inc., a Maryland corporation, (“INDUS” or the “Company”) is a real estate business that has elected to be taxed as a real estate investment trust (“REIT”) as defined in the Internal Revenue Service Code of 1986, as amended (the “Code”) and is principally engaged in developing, acquiring, managing and leasing high-quality industrial and logistics properties in select supply-constrained and high growth markets in the United States. The Company conducts substantially all of its business through its operating partnership, INDUS RT, LP, a Maryland limited partnership (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. As used herein, the “Company” refers to INDUS Realty Trust, Inc. and its consolidated subsidiaries and partnerships, including the Operating Partnership, except where context otherwise requires.

As of September 30, 2022, INDUS owned 42 industrial/logistics properties aggregating approximately 6.1 million square feet located in Connecticut, Pennsylvania, North Carolina, South Carolina and Florida. INDUS seeks to add to its property portfolio through the acquisition and development of land or the acquisition of modern, market-appropriate logistics buildings in the regions it targets, all of which can serve multiple drivers of demand in the modern supply chain. INDUS also owns undeveloped land parcels, much of which is not consistent with the Company’s core industrial and logistics strategy, and, as such, the Company sells certain parcels periodically over time.

The results of operations for the three months and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. Certain amounts from the prior year periods have been reclassified to conform to the current presentation.

INDUS’ consolidated financial statements reflect its accounts and its consolidated subsidiaries. INDUS consolidates the subsidiaries it controls through (i) voting rights or similar rights or (ii) by means other than voting rights if INDUS is the primary beneficiary of a variable interest entity (“VIE”). There have been no VIEs in which INDUS is not a primary beneficiary.

These financial statements have been prepared in conformity with the standards of accounting measurement set forth by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and in accordance with the accounting policies stated in INDUS’ audited consolidated financial statements for the year ended December 31, 2021 included in INDUS’ Annual Report on Form 10-K, filed with the SEC on March 11, 2022. These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements appearing in that report. All adjustments, comprising only normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of results for the interim periods, have been reflected and all intercompany transactions have been eliminated.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The actual results experienced by INDUS may differ materially and adversely from INDUS’ estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

There are various accounting updates recently issued which represent technical corrections to the accounting literature or apply to specific industries. INDUS does not expect the application of any of these updates to have an impact on its consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

INDUS considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. INDUS’ restricted cash primarily consists of reserves for real estate taxes as required by certain mortgage note obligations as well as proceeds from property sales held by a qualified intermediary to be used for a tax deferred Section 1031 Like-Kind Exchange (“1031 Like-Kind Exchange”) under the Code.

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The following table presents a reconciliation of cash, cash equivalents and restricted cash:


	September 30, 2022		December 31, 2021
Cash and cash equivalents	$	25,741	$	150,263
Restricted cash		267		10,644
Total cash, cash equivalents and restricted cash	$	26,008	$	160,907

Discontinued Operations

Operating results and the gain or loss on sale for a component or groups of components, whose disposition represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, are presented as discontinued operations in the consolidated statements of operations and the assets and liabilities of the component to be disposed of are classified as held for sale. In March 2022, INDUS commenced the sale process to fully exit its legacy investment in its remaining office/flex properties (“Office/Flex Portfolio”). The Office/Flex Portfolio is comprised of seven buildings totaling approximately 175,000 square feet located in Bloomfield, Connecticut. Additionally, INDUS intends to sell an approximately 18,000 square foot storage building that had been used in the operations of the Office/Flex Portfolio and is located within the same business park. In March 2022, the Company closed its Landscaping Division which primarily served the Office/Flex Portfolio and recorded a gain on sale of $203 for the nine months ended September 30, 2022. The disposition of the Office/Flex Portfolio represents a strategic shift and following the sale, the Company will be positioned as a pure-play industrial/logistics real estate business with a modern portfolio located in select high-growth markets. The Office/Flex Portfolio is recorded as a discontinued operation as of September 30, 2022 and for all prior periods presented, the related assets and liabilities are presented as assets and liabilities of discontinued operations on the consolidated balance sheets and the related operating results are presented as income (loss) from discontinued operations on the consolidated statements of operations. In September 2022, the Company signed a definitive agreement for the sale of the Office/Flex Portfolio at a gross purchase price of $11,000 and expects to close the transaction in the fourth quarter of 2022 (see Note 4).

Reclassifications

Reclassifications were made related to discontinued operations as discussed in Discontinued Operations above. These reclassifications did not affect the Company's total financial position, results of operations or cash flows.

2. Sales of Common Stock

Public Offering

On February 2, 2021, INDUS filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the SEC. Under the Universal Shelf, the Company could offer and sell up to $500,000 of a variety of securities including the Company’s common stock (“Common Stock”), preferred stock, warrants, depositary shares, units or any combination of such securities. Under the Universal Shelf, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced.

On March 5, 2021, under its Universal Shelf, INDUS completed an underwritten public offering of 1,750,000 shares of its Common Stock at a price to the underwriters of $56.85 per share. On March 15, 2021, the underwriters exercised their option to purchase an additional 177,049 shares of Common Stock from INDUS at the same price. INDUS received net proceeds of $108,676, after expenses, from the aggregate of 1,927,049 shares issued on March 5, 2021, and March 15, 2021. The Company has used the proceeds from the issuance of its Common Stock to finance its acquisition and development pipeline and for other corporate purposes.

On July 9, 2021, INDUS and INDUS RT, LP filed an updated universal shelf registration statement on Form S-3 (the “Updated Universal Shelf”) with the SEC. Under the Updated Universal Shelf, the Company may offer and sell up to $500,000 of a variety of securities including Common Stock, preferred stock, debt securities, warrants, depositary shares, rights or units, INDUS RT, LP’s debt securities or guarantees thereof by the Company, or any combination of such securities during the three year period that commenced on August 10, 2021. Under the Updated Universal Shelf, which adds debt securities of the Company and of INDUS RT, LP that the Universal Shelf did not include, the Company may periodically offer one or more types of securities in amounts, at prices and on terms announced. When INDUS obtains additional capital by issuing equity, the interests of its existing stockholders will be diluted. If the Company incurs additional indebtedness, that indebtedness may impose financial and other

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covenants that may significantly restrict INDUS’s operations. Effective September 1, 2021, the Company’s Board of Directors approved the establishment of an “at the market” equity issuance program (“ATM Program”), pursuant to which the Company may offer and sell Common Stock with an aggregate gross sales price of up to $100,000. There have not been any issuances of Common Stock under the ATM Program.

3. Fair Value

INDUS applies the provisions of ASC 820, “Fair Value Measurement,” which establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs, when measuring fair value. The categorization of an asset or liability within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value, as follows:

Level 1 applies to assets or liabilities for which there are quoted market prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities in active markets; quoted prices for assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 2 assets and liabilities include INDUS’ interest rate swap agreements (see Note 5). These inputs are readily available in public markets or can be derived from information available in publicly quoted markets, therefore, INDUS has categorized these derivative instruments as Level 2 within the fair value hierarchy.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The following are INDUS’ financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:


	September 30, 2022
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap assets	$	—	$	7,573	$	—
Interest rate swap liabilities	$	—	$	—	$	—


	December 31, 2021
	Quoted Prices in		Significant		Significant
	Active Markets for		Observable		Unobservable
	Identical Assets		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)
Interest rate swap asset	$	—	$	188	$	—
Interest rate swap liabilities	$	—	$	3,995	$	—

The amounts included in the consolidated financial statements for cash and cash equivalents, leasing receivables from tenants, accounts payable and accrued liabilities and interest rate swap assets and liabilities approximate their fair values because of the short-term maturities of these instruments. The fair values of the interest rate swaps (used for purposes other than trading) are determined based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current Overnight Index Swap Rate and swap curve along with other market data, taking into account current interest rates and the credit worthiness of the counterparty for assets and the credit worthiness of INDUS for liabilities.

The fair values of the mortgage loans, delayed draw term loan and construction loan, net of debt issuance costs, are estimated based on current rates offered to INDUS for similar debt of the same remaining maturities and, additionally, INDUS considers its credit worthiness in determining the fair value of its mortgage loans. At September 30, 2022 and December 31, 2021,

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the carrying values of the mortgage loans, delayed draw term loan and construction loan were $138,811 and $169,818, respectively, and the fair values of the mortgage loans, delayed draw term loan and construction loan were $136,669 and $180,731, respectively.

4. Real Estate Assets and Discontinued Operations

Real estate assets consist of:


	Estimated
	Useful Lives	September 30, 2022		December 31, 2021
Land		$	71,155	$	55,104
Land improvements	10 to 30 years		72,198		65,520
Buildings and improvements	10 to 40 years		349,962		295,964
Tenant improvements	Shorter of useful life or terms of related lease		30,249		31,576
Construction in progress			45,992		20,799
Development costs			3,831		3,673
			573,387		472,636
Accumulated depreciation			(93,826)		(84,989)
		$	479,561	$	387,647

Total depreciation expense related to real estate assets was as follows:



	For the Three Months Ended				For the Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Depreciation expense	$	4,187	$	3,126	$	11,577	$	8,571

On June 8, 2022, INDUS closed on the purchase of an approximately 205,000 square foot, fully leased portfolio in Florida for $31,652, including transaction costs. This portfolio is comprised of two buildings in the Palm Beach market totaling approximately 84,000 square feet and an approximately 121,000 square foot property in the Orlando market.

On January 19, 2022, INDUS closed on the purchase of 782 Paragon Way, an approximately 217,000 square foot, fully leased building in the Charlotte, North Carolina market for $24,026, including transaction costs.

The purchase prices for acquisitions for the nine month period ended September 30, 2022 were allocated as follows:


	782 Paragon Way		3312 Shader Road		6600 High Ridge Road		7700 High Ridge Road		Rock Hill, SC Land		Allentown, PA Land		Total
Land	$	1,469	$	2,828	$	1,673	$	2,346	$	1,121	$	6,614	$	16,051
Land improvements