Real Estate

12 Months Ended

Dec. 31, 2022

The Company’s real estate assets, net as of December 31, 2022 and 2021 consisted of the following, in thousands:


	December 31,
	2022		2021
Land	$	16,816	$	16,816
Buildings and improvements	63,724		59,719
In-place lease value intangible	7,477		7,477
	88,017		84,012
Less accumulated depreciation and amortization	(20,682)		(16,369)
Total real estate assets, net	$	67,335	$	67,643

Depreciation expense (excluding in place intangibles) for the years ended December 31, 2022 and 2021 was $3,566,000 and $3,825,000, respectively.

The Company identifies and records the value of acquired lease intangibles at the property acquisition date. Such intangibles include the value of acquired in-place leases and above and below-market leases. Acquired lease intangibles are amortized over the leases' remaining terms. With respect to all properties owned by the Company, the Company considers all of the in-place leases to be market rate leases.

The amount of total in-place lease intangible asset and the respective accumulated amortization are as follows, in thousands:


	December 31,
	2022		2021
In-place lease value intangible	$	7,477	$	7,477
Less: In-place leases – accumulated amortization	(7,393)		(6,646)
Acquired lease intangible assets, net	$	84	$	831

The remainder of the in-place leases will be amortized in 2023.

Amortization expense for the years ended the years ended December 31, 2022 and 2021 was $747,000 and $1,695,000 respectively.

There were no acquisition fees recorded for the years ended December 31, 2022 and 2021, respectively. Acquisition fees are capitalized and added to the real estate assets, at cost, in the accompanying consolidated balance sheets. Asset management fees incurred were $553,000 and $553,000 for the years ended December 31, 2022 and 2021, respectively. Asset management fees are captioned as such in the accompanying consolidated statements of operations.

The Company owns an 83% tenant in common (“TIC”) interest in an office building located at 3100 Weslayan, Houston, Texas. The property comprises approximately 78,289 rentable square feet and is commonly referred to as Weslayan. The remaining 17% TIC interest is owned by Allen Hartman. The Company is party to a loan agreement where it is jointly and severally liable with Mr. Hartman. The Weslayan property is collateral for the loan. As of December 31, 2022, the loan had an outstanding principal balance of $3,831,000 and a current interest rate of 4.66%. The maturity date of the loan is August 6, 2024. Installments of principal and interest are payable monthly. The Company exercises significant influence as a result of the Weslayan TIC interest, but the Company does not have financial and operating control. Weslayan is accounted for as an equity method investment and presented on the consolidated balance sheets within the "Investment in tenant in common interest, net" line item. The Company recognized equity in net loss of tenant in common interest of $330,000 and $540,000 for December 31, 2022 and 2021 respectively, related to the Weslayan TIC interest.

Hartman vREIT XXI, Inc. 10-K