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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

OR

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

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

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.

3

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.

4

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.

5

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.

6

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.

7

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.

8

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

9

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,

10

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