Investment Properties (Tables)
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12 Months Ended |
Dec. 31, 2013
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Pro Forma Condensed Consolidated and Combined Financial Information |
Unaudited pro forma consolidated and combined financial information
is presented below for all 2012 and 2013 acquisitions, including
the PSF Entities and excluding Bixby Commons, Starbucks/Verizon and
Jenks Reasors. The unaudited pro forma information presented below
illustrates the Company’s pro forma financial results
assuming the acquisitions had been consummated as of the beginning
of the earliest period presented. The pro forma results include
adjustments for depreciation and amortization associated with
acquired tangible and intangible assets, straight-line rent
adjustments and interest expense related to debt incurred.
Unaudited pro forma financial information has not been presented
for Bixby Commons, Starbucks/Verizon and Jenks Reasors as the
Company’s management has determined that their inclusion
would not be meaningful due to limited or no unrelated third party
operating history.
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Years Ended
December 31, |
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2013 |
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2012 |
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Rental revenue
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$ |
11,090,428 |
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$ |
10,432,841 |
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Net loss
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$ |
(7,045,145 |
) |
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$ |
(3,190,041 |
) |
Basic and diluted loss per share
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$ |
(1.52 |
) |
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$ |
(0.97 |
) |
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Investment Properties |
Investment properties consist of the following:
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December 31, |
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2013 |
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2012 |
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Land
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$ |
26,828,228 |
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$ |
9,681,750 |
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Buildings and improvements
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80,003,805 |
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36,955,471 |
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Investment properties at cost
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106,832,033 |
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46,637,221 |
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Less accumulated depreciation and amortization
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(5,059,698 |
) |
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(3,291,556 |
) |
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Investment properties, net
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$ |
101,772,335 |
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$ |
43,345,665 |
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Real Estate [Member]
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Summary of Consideration Paid and Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed |
The following summarizes the consideration paid and the preliminary
estimated fair values of assets acquired and liabilities assumed in
conjunction with the acquisitions described above, along with a
description of the methods used to determine fair value. In
determining fair values, the Company considered many factors
including, but not limited to, cash flows, market cap rates,
location, occupancy rates, appraisals, other acquisitions and
management’s knowledge of the current acquisition market for
similar properties.
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2013 |
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Acquisitions |
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Food Lions |
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Total |
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Preliminary estimated fair value of assets acquired and liabilities
assumed:
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Investment property (a)
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$ |
48,576,763 |
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$ |
10,910,964 |
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$ |
59,487,727 |
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Lease intangibles and other assets (b)
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6,720,126 |
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4,392,812 |
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11,112,938 |
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Above market leases (c)
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674,184 |
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704,710 |
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1,378,894 |
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Below market leases (c)
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(876,736 |
) |
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(161,950 |
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(1,038,686 |
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Preliminary fair value of net assets acquired
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$ |
55,094,337 |
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$ |
15,846,536 |
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$ |
70,940,873 |
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Purchase consideration:
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Consideration paid with cash and debt
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$ |
54,149,066 |
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$ |
15,846,536 |
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$ |
69,995,602 |
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Consideration paid with common units
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945,271 |
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— |
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945,271 |
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Total consideration (d)
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$ |
55,094,337 |
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$ |
15,846,536 |
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$ |
70,940,873 |
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a. |
Represents the preliminary estimated
fair value of the net investment properties acquired which includes
land, buildings, site improvements and tenant improvements. The
fair value was estimated using following approaches: |
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i. |
the market approach valuation
methodology for land by considering similar transactions in the
markets; |
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ii. |
a combination of the cost approach
and income approach valuation methodologies for buildings,
including replacement cost evaluations, “go dark”
analyses and residual calculations incorporating the land values;
and |
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iii. |
the cost approach valuation
methodology for site and tenant improvements, including replacement
costs and prevailing quoted market rates. |
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b. |
Represents the preliminary estimated
fair value of lease intangibles and other assets. Lease intangibles
include leasing commissions, in place leases, legal and marketing
fees and tenant relationships associated with replacing existing
leases. The income approach was used to determine the fair value of
these intangible assets which included estimated market rates and
expenses. It was determined that carrying value approximated fair
value for other asset amounts. |
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c. |
Represents the preliminary estimated
fair value of above/below market leases. The income approach was
used to determine the fair value of above/below market leases using
market rental rates for similar properties. |
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d. |
Represents the components of purchase
consideration paid. |
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Business Acquisition [Member]
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Summary of Consideration Paid and Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed |
The following summarizes the consideration paid and the fair values
of assets acquired and liabilities assumed in conjunction with the
acquisitions described above, along with a description of the
methods used to determine fair value. In determining fair values,
we considered many factors including, but not limited to, cash
flows, market cap rates, location, occupancy rates, appraisals,
other acquisitions and our knowledge of the current acquisition
market for similar properties.
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2012
Acquisitions |
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Fair value of assets acquired and liabilities assumed:
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Investment property (a)
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$ |
10,063,832 |
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Lease intangibles and other assets (b)
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1,780,277 |
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Accounts payable, accrued expenses and other liabilities (c)
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(60,352 |
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Below market leases (d)
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(494,109 |
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Fair value of net assets acquired
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$ |
11,289,648 |
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Purchase consideration:
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Consideration paid with cash and debt
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$ |
10,795,530 |
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Consideration paid with common units
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494,118 |
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Total consideration (e)
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$ |
11,289,648 |
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a. |
Represents the fair value of the net
investment properties acquired which includes land, buildings, site
improvements and tenant improvements. The fair value was determined
using following approaches: |
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i. |
the market approach valuation
methodology for land by considering similar transactions in the
markets; |
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ii. |
a combination of the cost approach
and income approach valuation methodologies for buildings,
including replacement cost evaluations, “go dark”
analyses and residual calculations incorporating the land values;
and |
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iii. |
the cost approach valuation
methodology for site and tenant improvements, including replacement
costs and prevailing quoted market rates. |
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b. |
Represents the fair value of lease
intangibles and other assets. Lease intangibles include leasing
commissions, in place leases and legal and marketing fees
associated with replacing existing leases. The income approach was
used to determine the fair value of these intangible assets which
included estimated market rates and expenses. It was determined
that carrying value approximated fair value for other asset
amounts. |
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c. |
Represents the fair value of accounts
payable, accrued expenses and other liabilities. It was determined
that carrying value approximated fair value for all amounts in
these categories. |
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d. |
Represents the fair value of below
market leases. The income approach was used to determine the fair
value of above/below market leases using market rental rates for
similar properties. |
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e. |
Represents the components of purchase
consideration paid. |
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Pro Forma Condensed Consolidated and Combined Financial Information |
The following unaudited pro forma condensed consolidated and
combined financial information is presented to illustrate the
estimated impact on the results of operations of the Company
assuming the formation transactions discussed above occurred on
January 1, 2012.
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Year Ended December 31,
2012 |
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WHLR and Subsidiaries (1)
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PSF Entities (2)
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Consolidated |
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Total Revenues
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$ |
2,433,979 |
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$ |
2,883,035 |
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$ |
5,317,014 |
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Total Operating Expenses
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2,673,523 |
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2,154,303 |
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4,827,826 |
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Net Operating Income (Loss)
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(239,544 |
) |
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728,732 |
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489,188 |
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Interest Expense
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(966,113 |
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(784,930 |
) |
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(1,751,043 |
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Net Loss
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$ |
(1,205,657 |
) |
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$ |
(56,198 |
) |
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$ |
(1,261,855 |
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(1) |
Includes the operations of the PSF
Entities for the period from November 16, 2012 (date of
formation transactions) through December 31, 2012. |
(2) |
Represents the estimated operations
of the PSF Entities for the period from January 1, 2012 until
November 16, 2012. |
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PSF Entities [Member]
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Summary of Consideration Paid and Preliminary Estimated Fair Values of Assets Acquired and Liabilities Assumed |
The following summarizes the consideration paid and the preliminary
fair values of assets acquired and liabilities assumed in
conjunction with the Trust acquiring the PSF Entities, along with a
description of the methods used to determine fair value. In
determining fair values, management considered many factors
including, but not limited to, cash flows, market cap rates,
location, occupancy rates, appraisals, other acquisitions and our
knowledge of the current acquisition market for similar
properties.
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Estimated fair value of assets acquired and liabilities
assumed:
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Investment property (a)
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$ |
20,769,328 |
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Tenant and other receivables and other assets (b)
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1,209,811 |
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Other lease intangibles (c)
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3,250,840 |
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Mortgage debt (d)
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(14,004,098 |
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Accounts payable, accrued expenses and other liabilities (e)
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(211,997 |
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Above/(below) market leases (f)
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(3,220,166 |
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Fair value of net assets acquired
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$ |
7,793,718 |
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Less estimated purchase consideration:
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Estimated consideration paid with common units
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$ |
4,813,848 |
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Estimated consideration paid with cash
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2,979,870 |
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Total estimated consideration (g)
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$ |
7,793,718 |
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a. |
Represents the fair value of the net
investment properties acquired which includes land, buildings, site
improvements, tenant improvements and in place leases. The fair
value was determined using following approaches: |
|
i. |
the market approach valuation
methodology for land by considering similar transactions in the
markets; |
|
ii. |
a combination of the cost approach
and income approach valuation methodologies for buildings,
including replacement cost evaluations, “go dark”
analyses and residual calculations incorporating the land
values; |
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iii. |
the cost approach valuation
methodology for site and tenant improvements, including replacement
costs and prevailing quoted market rates; and |
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iv. |
the income approach valuation
methodology for in place leases which considered estimated market
rental rates, expenses reimbursements and time required to replace
leases. |
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b. |
Represents the fair value of tenant
and other receivables and other current assets. It was determined
that carrying value approximated fair value for all amounts in
these categories. |
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c. |
Represents the fair value of other
lease intangibles which includes leasing commissions and legal and
marketing fees associated with replacing existing leases. The
income approach was used to determine the fair value of these
intangible assets which included estimated market rates and
expenses. |
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d. |
Represents the fair value of
mortgages payable which was calculated by performing a discounted
cash flow analysis on debt service using current prevailing market
interest on comparable debt. |
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e. |
Represents the fair value of accounts
payable, accrued expenses and other liabilities. It was determined
that carrying value approximated fair value for all amounts in
these categories. |
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f. |
Represents the fair value of
above/(below) market leases. The income approach was used to
determine the fair value of above/(below) market leases using
market rental rates for similar properties. |
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g. |
Represents the components of purchase
consideration to be paid. |
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