Quarterly report pursuant to Section 13 or 15(d)

Realty Income Office Assets, Investments in Real Estate

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Realty Income Office Assets, Investments in Real Estate
 9 Months Ended
Sep. 30, 2021
Realty Income Office Assets  
Entity Information [Line Items]  
Investments in Real Estate
Note 4 – Investments in Real Estate
Realty Income Office Assets acquires land, buildings and improvements necessary for the successful operations of its commercial clients.
A.     Acquisitions during the first Nine Months of 2021 and 2020
There were no acquisitions for the nine months ended September 30, 2021 and 2020.
B.     Properties with Existing Leases
The value of the in-place and above-market leases is recorded to lease intangible assets, net on the combined balance sheets, and the value of the below-market leases is recorded to lease intangible liabilities, net on the combined balance sheets.
The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized to expense for all in-place leases for the nine months ended September 30, 2021 and 2020 were $4.8 million and $6.0 million, respectively.
The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue on the combined statements of operations. The amounts amortized as a net increase to rental revenue for capitalized above-market and below-market leases for the nine months ended
September 30, 2021 and 2020 were $0.8 million and $0.6 million, respectively. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.
The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease intangibles at September 30, 2021 (in thousands):
Net Increase to Rental Revenue
Increase to Amortization Expense
2021 $ 252  $ 1,491 
2022 1,016 5,474
2023 851 3,948
2024 683 2,609
2025 107 1,763
Thereafter 679 5,791
Totals $ 3,588  $ 21,076