Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Feb. 28, 2019 | Mar. 29, 2019 | |
Document and Entity Information | ||
Entity Registrant Name | GRIFFIN INDUSTRIAL REALTY, INC. | |
Entity Central Index Key | 0001037390 | |
Document Type | 10-Q | |
Document Period End Date | Feb. 28, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --11-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 5,065,173 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 28, 2019 | Nov. 30, 2018 |
ASSETS | ||
Real estate assets at cost, net | $ 213,936 | $ 213,621 |
Cash and cash equivalents | 7,745 | 8,592 |
Short-term investments | 15,000 | 17,000 |
Deferred income taxes | 2,146 | 1,556 |
Real estate assets held for sale | 1,858 | 2,652 |
Other assets | 18,166 | 20,048 |
Total assets | 258,851 | 263,469 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Mortgage and construction loans, net of debt issuance costs | 144,304 | 145,052 |
Deferred revenue | 9,683 | 10,599 |
Accounts payable and accrued liabilities | 4,363 | 3,333 |
Dividend payable | 2,279 | |
Other liabilities | 7,627 | 7,378 |
Total liabilities | 165,977 | 168,641 |
Commitments and Contingencies (Note 8) | ||
Stockholders' Equity | ||
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 5,635,706 and 5,541,029 shares issued, respectively, and 5,065,173 and 5,000,535 shares outstanding, respectively | 56 | 56 |
Additional paid-in capital | 112,161 | 112,071 |
Retained earnings (deficit) | (797) | (211) |
Accumulated other comprehensive income (loss), net of tax | 937 | 2,395 |
Treasury stock, at cost, 570,533 and 540,494 shares, respectively | (19,483) | (19,483) |
Total stockholders' equity | 92,874 | 94,828 |
Total liabilities and stockholders' equity | $ 258,851 | $ 263,469 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 28, 2019 | Nov. 30, 2018 |
Consolidated Balance Sheets | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 5,635,706 | 5,635,706 |
Common stock, shares outstanding | 5,065,173 | 5,065,173 |
Treasury stock, shares | 570,533 | 570,533 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Consolidated Statements of Operations | ||
Rental revenue | $ 8,437 | $ 8,180 |
Revenue from property sales | 866 | 125 |
Total revenue | 9,303 | 8,305 |
Operating expenses of rental properties | 2,665 | 2,677 |
Depreciation and amortization expense | 2,942 | 2,818 |
General and administrative expenses | 2,090 | 2,137 |
Costs related to property sales | 814 | 89 |
Total expenses | 8,511 | 7,721 |
Operating income | 792 | 584 |
Interest expense | (1,650) | (1,532) |
Investment income | 92 | 15 |
Loss before income tax benefit (provision) | (766) | (933) |
Income tax provision | 180 | (790) |
Net loss | $ (586) | $ (1,723) |
Basic net loss per common share: | ||
Basic net loss per common share (in dollars per share) | $ (0.12) | $ (0.34) |
Diluted net loss per common share: | ||
Diluted net loss per common share (in dollars per share) | $ (0.12) | $ (0.34) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Consolidated Statements of Comprehensive Income (Loss) | ||
Net loss | $ (586) | $ (1,723) |
Other comprehensive (loss) income, net of tax: | ||
Reclassifications included in net loss | 42 | 192 |
Unrealized (loss) gain on cash flow hedges | (1,500) | 1,949 |
Total other comprehensive (loss) income, net of tax | (1,458) | 2,141 |
Total comprehensive (loss) income | $ (2,044) | $ 418 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Total |
Balance at beginning of period at Nov. 30, 2017 | $ 55 | $ 108,770 | $ 2,806 | $ (284) | $ (18,294) | $ 93,053 |
Balance (in shares) at Nov. 30, 2017 | 5,541,029 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 90 | $ 90 | ||||
Exercise of stock options, including shares tendered related to stock options exercised and tax witholdings | 186 | (186) | ||||
Exercise of stock options, including and shares tendered related to stock options exercised and tax witholdings (in shares) | 5,471 | 5,471 | ||||
Net loss | (1,723) | $ (1,723) | ||||
Total other comprehensive income, net of tax | 2,141 | 2,141 | ||||
Balance at end of period at Feb. 28, 2018 | $ 55 | 109,046 | 1,998 | 1,821 | (18,480) | 94,440 |
Balance (in shares) at Feb. 28, 2018 | 5,546,500 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Adoption of ASU | ASU 2016-09 | 879 | 879 | ||||
Adoption of ASU | ASU 2018-02 | 36 | (36) | ||||
Balance at beginning of period at Nov. 30, 2018 | $ 56 | 112,071 | (211) | 2,395 | (19,483) | 94,828 |
Balance (in shares) at Nov. 30, 2018 | 5,635,706 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation expense | 90 | 90 | ||||
Net loss | (586) | (586) | ||||
Total other comprehensive income, net of tax | (1,458) | (1,458) | ||||
Balance at end of period at Feb. 28, 2019 | $ 56 | $ 112,161 | $ (797) | $ 937 | $ (19,483) | $ 92,874 |
Balance (in shares) at Feb. 28, 2019 | 5,635,706 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Operating activities: | ||
Net loss | $ (586) | $ (1,723) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,942 | 2,818 |
Deferred income taxes | (180) | 790 |
Stock-based compensation expense | 90 | 90 |
Amortization of debt issuance costs | 74 | 70 |
Gain on sales of properties | (52) | (36) |
Amortization of terminated swap agreement | 31 | 58 |
Changes in assets and liabilities: | ||
Other assets | (60) | 318 |
Accounts payable and accrued liabilities | 122 | (249) |
Deferred revenue | (916) | (809) |
Other liabilities | 22 | 67 |
Net cash provided by operating activities | 1,487 | 1,394 |
Investing activities: | ||
Short-term investments, net | 2,000 | |
Additions to real estate assets | (1,923) | (2,270) |
Proceeds from sales of properties, net of expenses | 866 | 103 |
Deferred leasing costs and other | (190) | (101) |
Proceeds property sale returned from escrow | 91 | |
Net cash used in investing activities | 753 | (2,177) |
Financing activities: | ||
Dividends paid to stockholders | (2,279) | (2,000) |
Principal payments on mortgage loans | (949) | (12,639) |
Proceeds from mortgage and construction loans | 141 | 18,781 |
Payment of debt issuance costs | (167) | |
Net cash provided by financing activities | (3,087) | 3,975 |
Net (decrease) increase in cash and cash equivalents | (847) | 3,192 |
Cash and cash equivalents at beginning of period | 8,592 | 30,068 |
Cash and cash equivalents at end of period | $ 7,745 | $ 33,260 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Feb. 28, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Basis of Presentation Griffin Industrial Realty, Inc. ("Griffin") is a real estate business principally engaged in developing, managing and leasing industrial/warehouse properties and, to a lesser extent, office/flex properties. Griffin also seeks to add to its industrial/warehouse property portfolio through the acquisition and development of land or the purchase of buildings in select markets targeted by Griffin. Periodically, Griffin may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not consistent with Griffin's core development and leasing strategy. 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 Griffin’s audited consolidated financial statements for the fiscal year ended November 30, 2018 (“fiscal 2018”) included in Griffin’s Annual Report on Form 10-K/A (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on April 5, 2019. 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 consolidated balance sheet data as of November 30, 2018 was derived from Griffin’s audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in accordance with 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. Griffin regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations and the valuation of derivative instruments. Griffin bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Griffin may differ materially and adversely from Griffin’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Griffin considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. At February 28, 2019 and November 30, 2018, $6,814 and $4,980, respectively, of the cash and cash equivalents included on Griffin’s consolidated balance sheet were held in cash equivalents. Griffin’s short-term investments are comprised of repurchase agreements with Webster Bank, N.A. (“Webster Bank”) that are collateralized with securities issued by the United States Government or its sponsored agencies and are accounted for as held-to-maturity securities under FASB ASC 320, “Investments – Debt and Equity Securities” (“ASC 320”). The repurchase agreements are carried at their resell amounts, which approximates fair value due to their short-term nature. Interest on repurchase agreements is reflected as interest receivable that is included in other assets. As of February 28, 2019, Griffin was a party to several interest rate swap agreements to hedge its interest rate exposures. Griffin does not use derivatives for speculative purposes. Griffin applies FASB ASC 815-10, “Derivatives and Hedging,” (“ASC 815-10”) as amended, which establishes accounting and reporting standards for derivative instruments and hedging activities. ASC 815-10 requires Griffin to recognize all derivatives as either assets or liabilities on its consolidated balance sheet and measure those instruments at fair value. The changes in the fair values of the interest rate swap agreements are measured in accordance with ASC 815-10 and reflected in the carrying values of the interest rate swap agreements on Griffin’s consolidated balance sheet. The estimated fair values are based primarily on projected future swap rates. Griffin applies cash flow hedge accounting to its interest rate swap agreements that are designated as hedges of the variability of future cash flows from floating rate liabilities based on the benchmark interest rates. The changes in the fair values of Griffin’s interest rate swap agreements are recorded as components of Accumulated Other Comprehensive Income (“AOCI”) in stockholders’ equity to the extent they are effective. Any ineffective portions of the changes in the fair values of these instruments would be recorded as interest expense or interest income. The results of operations for the three months ended February 28, 2019 (the “2019 first quarter”) are not necessarily indicative of the results to be expected for the full year. The three months ended February 28, 2018 are referred to herein as the “2018 first quarter.” Recent Accounting Pronouncements Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU” or “Update”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 is not applicable to rental revenue from leases. ASU No. 2014-09 supersedes most current revenue recognition guidance, including industry specific guidance, and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Additionally, ASU No. 2014-09 requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. ASU No. 2014-09 permits the use of either the retrospective or cumulative effect transition method. Griffin has concluded that it has two material revenue streams: (i) rental revenue; and (ii) revenue from property sales. As noted above, rental revenue is not subject to ASU No. 2014-09 because it is subject to the guidance of FASB ASC Topic 840, Leases. Revenue from property sales was evaluated based on the criteria established under ASU No. 2014-09, which served as the basis for the accounting analysis and documentation as it relates to the impact of ASU No. 2014-09. Griffin determined that there was no change in the recognition of revenue from property sales upon adoption of ASU No. 2014-09. In cases where there are no further performance obligations, Griffin recognizes revenue from property sales at the time of closing. Griffin adopted the modified retrospective method for ASU No. 2014-09 when it became effective for Griffin on December 1, 2018. As there was no change to its recognition of revenue, Griffin did not record a cumulative effect adjustment to its consolidated balance sheet at the time of adoption. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which relates to the accounting for employee share-based payments. ASU No. 2016-09 addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. ASU No. 2016-09 became effective for Griffin in the 2018 first quarter. Griffin recorded a deferred tax asset of $879 with a corresponding increase in retained earnings upon adoption. The adoption of ASU No. 2016-09 did not affect the classification of any current awards and did not have a retrospective impact on Griffin’s cash flows as no tax benefits from stock options were recognized in the periods presented. As part of the adoption of ASU No. 2016-09, Griffin is continuing its policy of estimating the forfeiture rate of options. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which is intended to eliminate the stranded tax effects within AOCI resulting from the Tax Cuts and Jobs Act (“TCJA”) that was enacted on December 22, 2017. The effective date of ASU No. 2018-02 is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted for public entities for which financial statements have not yet been released. Griffin elected to early adopt and apply the provisions of ASU No. 2018-02 in the 2018 first quarter. This adoption resulted in a one-time reclassification of the effect of re-measuring Griffin’s net deferred tax assets related to interest rate swap agreements within AOCI and retained earnings resulting from the reduction in the U.S. federal statutory tax rate from 35% to 21%. The reclassification resulted in a decrease to AOCI and an increase to retained earnings of $36, with no net impact to total stockholders’ equity. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. The accounting applied by lessors under ASU No. 2016-02 is largely unchanged from that applied under current U.S. GAAP. Leases will be either classified as finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU No. 2016-02 also requires significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” which provides narrow amendments to clarify how to apply certain aspects of the new lease standard and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides an alternative transition method that permits an entity to use the effective date of ASU No. 2016-02 as the date of initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current U.S. GAAP under FASB ASC Topic 840, “Leases.” In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842): Narrow Scope Improvements for Lessors,” which provides clarification on implementation issues associated with adopting ASU No. 2016-02. In March 2019, the FASB issued ASU No. 2019-01, “Leases (Topic 842): Codification Improvements,” which clarifies the determination of fair value of an underlying asset by lessors that are not manufacturers or dealers, presentation on the statement of cash flows for sales-type and direct financing leases and transition issues related to Topic 250, Accounting Changes and Error Corrections. ASU No. 2016-02, ASU No. 2018-10, ASU No. 2018-11, ASU No. 2018-20 and ASU No. 2019-01 will become effective for Griffin in fiscal 2020 using a modified retrospective approach for leases in effect as of and after the date of adoption. Early adoption and practical expedients to measure the effect of adoption are allowed. Griffin is evaluating the impact that the application of ASU No. 2016-02 will have on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which is intended to improve the financial reporting for hedging relationships to better represent the economic results of a company’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. ASU No. 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting, amend the presentation and disclosure requirements and change how entities assess effectiveness. ASU No. 2017-12 will become effective for Griffin in fiscal 2020. Griffin does not expect the application of ASU No. 2017-12 to have an impact on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018-07 simplifies the accounting for nonemployee share-based payments by aligning it more closely with the accounting for employee awards. ASU No. 2018-07 will become effective for Griffin in fiscal 2020. Early adoption is permitted, but no earlier than Griffin’s adoption of Topic 606 (see above). Griffin does not expect the application of ASU No. 2018-07 to have an impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 removes, modifies and adds certain disclosure requirements in FASB ASC 820, “Fair Value Measurement” (“ASC 820”). The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively in the year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU No. 2018-13 will become effective for Griffin in fiscal 2021. Early adoption is permitted upon issuance for any removed or modified disclosures. Griffin does not expect the application of ASU No. 2018-13 to have an impact on its consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.” ASU No. 2018-16 permits the use of the OIS Rate based on the Secured Overnight Financing Rate as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate (“LIBOR”) and the OIS Rate based on the Federal Funds Effective Rate. For entities that have not already adopted ASU No. 2017-12 (see above), the amendments in ASU No. 2018-16 are required to be adopted concurrently with the amendments in ASU No. 2017-12. Griffin intends to adopt ASU No. 2018-16 when ASU No. 2017-12 becomes effective. Griffin does not expect the application of ASU No. 2018-16 to have an impact on its consolidated financial statements. There are various other Updates recently issued which represent technical corrections to the accounting literature or apply to specific industries. Griffin does not expect the application of any of these other Updates to have an impact on its consolidated financial statements. |
Fair Value
Fair Value | 3 Months Ended |
Feb. 28, 2019 | |
Fair Value | |
Fair Value | 2. Fair Value Griffin applies the provisions of ASC 820, 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. An asset’s or liability’s categorization 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 Griffin’s interest rate swap agreements (see Note 4). These inputs are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, Griffin has categorized these derivative instruments as Level 2 within the fair value hierarchy. Level 2 assets also include Griffin’s short-term investments in repurchase agreements with Webster Bank (see Note 1). The repurchase agreements are carried at their resell amounts, which approximates fair value due to their short-term nature. 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. During the 2019 first quarter, Griffin did not transfer any assets or liabilities into or out of Levels 1 or 2. The following are Griffin’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis: February 28, 2019 Quoted Prices in Significant Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Interest rate swap assets $ — $ 1,484 $ — Interest rate swap liabilities $ — $ 282 $ — November 30, 2018 Quoted Prices in Significant Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Interest rate swap assets $ — $ 3,157 $ — Interest rate swap liabilities $ — $ 56 $ — The carrying and estimated fair values of Griffin’s financial instruments are as follows: Fair Value February 28, 2019 November 30, 2018 Hierarchy Carrying Estimated Carrying Estimated Level Value Fair Value Value Fair Value Financial assets: Cash and cash equivalents 1 $ 7,745 $ 7,745 $ 8,592 $ 8,592 Short-term investments 2 $ 15,000 $ 15,000 $ 17,000 $ 17,000 Interest rate swap assets 2 $ 1,484 $ 1,484 $ 3,157 $ 3,157 Financial liabilities: Mortgage and construction loans, net of debt issuance costs 2 $ 144,304 $ 143,968 $ 145,052 $ 144,712 Interest rate swap liabilities 2 $ 282 $ 282 $ 56 $ 56 The amounts included in the consolidated financial statements for cash and cash equivalents, short-term investments, leasing receivables from tenants and accounts payable and accrued liabilities approximate their fair values because of the short-term maturities of these instruments. The fair values of the mortgage and construction loans, net of debt issuance costs, are estimated based on current rates offered to Griffin for similar debt of the same remaining maturities and, additionally, Griffin considers its credit worthiness in determining the fair value of its mortgage and construction loans. 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 Griffin for liabilities. |
Real Estate Assets
Real Estate Assets | 3 Months Ended |
Feb. 28, 2019 | |
Real Estate Assets | |
Real Estate Assets | 3. Real Estate Assets Real estate assets consist of: Estimated Useful Lives Feb. 28, 2019 Nov. 30, 2018 Land $ 21,961 $ 21,961 Land improvements 10 to 30 years 38,291 38,280 Buildings and improvements 10 to 40 years 204,288 204,258 Tenant improvements Shorter of useful life or terms of related lease 29,161 29,163 Machinery and equipment 3 to 20 years 10,958 10,958 Construction in progress 3,388 562 Development costs 13,484 13,443 321,531 318,625 Accumulated depreciation $ 213,936 $ 213,621 Total depreciation expense and capitalized interest related to real estate assets were as follows: For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Depreciation expense $ 2,591 $ 2,402 Capitalized interest $ 42 $ 38 Real estate assets held for sale consist of: Feb. 28, 2019 Nov. 30, 2018 Land $ 851 $ 1,645 Development costs 1,007 1,007 $ 1,858 $ 2,652 The decrease in real estate assets held for sale in the 2019 first quarter reflected $809 related to a property sale that closed partially offset by $15 that was reclassified from real estate assets to real estate assets held for sale related to that sale. |
Mortgage Loans
Mortgage Loans | 3 Months Ended |
Feb. 28, 2019 | |
Mortgage and Construction Loans | |
Mortgage and Construction Loans | 4. Mortgage and Construction Loans Griffin’s mortgage and construction loans consist of: Feb. 28, 2019 Nov. 30, 2018 3.91%, due January 27, 2020 * $ 3,311 $ 3,345 4.72%, due October 3, 2022 * 4,248 4,273 4.39%, due January 2, 2025 * 19,534 19,674 4.17%, due May 1, 2026 * 13,397 13,487 3.79%, November 17, 2026 * 25,229 25,402 4.39%, due August 1, 2027 * 10,222 10,284 3.97%, due September 1, 2027 11,843 11,898 4.57%, due February 1, 2028 * 18,383 18,482 5.09%, due July 1, 2029 6,062 6,172 5.09%, due July 1, 2029 4,247 4,324 4.33%, due August 1, 2030 16,894 16,978 Nonrecourse mortgage loans 133,370 134,319 Debt issuance costs (1,669) (1,723) Nonrecourse mortgage loans, net of debt issuance costs 131,701 132,596 4.51% construction loan 12,983 12,842 Debt issuance costs (380) (386) Construction loan, net of debt issuance costs 12,603 12,456 Mortgage and construction loans, net of debt issuance costs $ 144,304 $ 145,052 *Variable rate loans. Griffin has entered into interest rate swap agreements to effectively fix the interest rates on these loans to the rates reflected above. Griffin’s weighted average interest rate on its mortgage loans, including the effect of its interest rate swap agreements, was 4.31% as of February 28, 2019 and November 30, 2018. As of February 28, 2019, Griffin was a party to several interest rate swap agreements related to its variable rate nonrecourse mortgage loans on certain of its real estate assets. Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 2). No ineffectiveness on the cash flow hedges was recognized as of February 28, 2019 and none is anticipated over the term of the agreements. Amounts in AOCI will be reclassified into interest expense over the term of the swap agreements to achieve fixed interest rates on each variable rate mortgage. None of the interest rate swap agreements contain any credit risk related contingent features. In the 2019 first quarter, Griffin recognized a loss, included in other comprehensive income, before taxes of $1,868 on its interest rate swap agreements. In the 2018 first quarter, Griffin recognized a gain, included in other comprehensive income, before taxes of $2,746 on its interest rate swap agreements. As of February 28, 2019, $194 was expected to be reclassified over the next twelve months to AOCI from interest expense. As of February 28, 2019, the net fair value of Griffin’s interest rate swap agreements was $1,202, with $1,484 included in other assets and $282 included in other liabilities on Griffin’s consolidated balance sheet. On March 29, 2018, a subsidiary of Griffin closed on a $13,800 construction to permanent mortgage loan (the “State Farm Loan”) with State Farm Life Insurance Company (“State Farm”), that provided a significant portion of the funds for the construction of an approximately 234,000 square foot build-to-suit industrial/warehouse building (“220 Tradeport”) in New England Tradeport (“NE Tradeport”), Griffin’s industrial park located in Windsor and East Granby, Connecticut. In the fiscal 2017 fourth quarter, Griffin entered into a long-term lease with one tenant for the entire building. In the fiscal 2018 fourth quarter, 220 Tradeport was completed and the lease commenced. Subsequent to the 2019 first quarter, rental payments from the tenants began. Griffin intends to convert the State Farm Loan to a fifteen year nonrecourse permanent mortgage loan and draw down the remaining funds available under the State Farm Loan, which is expected to take place in fiscal 2019. Under the terms of the State Farm Loan, the interest rate on the loan is 4.51% during both the construction phase and for the term of the permanent mortgage. Monthly principal payments, which begin after conversion to a nonrecourse permanent mortgage loan, will be based on a twenty-five year amortization schedule. The State Farm Loan may be increased up to $14,288 if certain additional improvements are made to 220 Tradeport. On January 30, 2018, a subsidiary of Griffin closed on a nonrecourse mortgage loan (the “2018 People’s Mortgage”) with People’s United Bank, N.A. (“People’s Bank”) for $18,781. The 2018 People’s Mortgage refinanced an existing mortgage loan with People’s Bank that was due on March 1, 2027 and was collateralized by two industrial/warehouse buildings in NE Tradeport. The 2018 People’s Mortgage is collateralized by the same two buildings aggregating approximately 275,000 square feet along with 330 Stone Road, an approximately 137,000 square foot industrial/warehouse building in NE Tradeport that was completed and placed in service near the end of fiscal 2017. Griffin received proceeds of $7,000 (before transaction costs), net of $11,781 used to refinance the existing mortgage loan with People’s Bank. The 2018 People’s Mortgage has a ten year term with monthly principal payments based on a twenty-five year amortization schedule. The interest rate for the 2018 People’s Mortgage is a floating rate of the one month LIBOR rate plus 1.95%. At the time the 2018 People’s Mortgage closed, Griffin entered into an interest rate swap agreement with People’s Bank that, combined with an existing interest rate swap agreement with People’s Bank, effectively fixes the interest rate of the 2018 People’s Mortgage at 4.57% over the mortgage loan’s ten year term. Under the terms of the 2018 People’s Mortgage, Griffin entered into a master lease for 759 Rainbow Road (“759 Rainbow”), one of the buildings that collateralizes the 2018 People’s Mortgage. The master lease would only become effective if the full building tenant in 759 Rainbow does not renew its lease when it is scheduled to expire in fiscal 2022. The master lease would be in effect until either the space is re-leased to a new tenant or the maturity date of the 2018 People’s Mortgage. |
Revolving Credit Agreement
Revolving Credit Agreement | 3 Months Ended |
Feb. 28, 2019 | |
Revolving Credit Agreement | |
Revolving Credit Agreement | 5. Revolving Credit Agreement Griffin has a $15,000 revolving credit line (the “Webster Credit Line”) with Webster Bank that is scheduled to expire on July 31, 2019. Interest on borrowings under the Webster Credit Line are at the one month LIBOR rate plus 2.75%. The Webster Credit Line is collateralized by Griffin’s properties in Griffin Center South in Bloomfield, Connecticut, aggregating approximately 235,000 square feet, and an approximately 48,000 square foot single-story office building in Griffin Center in Windsor, Connecticut. There have been no borrowings under the Webster Credit Line since its inception in fiscal 2013. As of February 28, 2019, the Webster Credit Line secured certain unused standby letters of credit aggregating $1,068 that are related to Griffin's development activities. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Feb. 28, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 6. Stockholders’ Equity Per Share Results Basic and diluted per share results were based on the following: For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Net loss $ (586) $ (1,723) Weighted average shares outstanding for computation of basic per share results 5,065,000 Incremental shares from assumed exercise of Griffin stock options (a) — — Adjusted weighted average shares for computation of diluted per share results 5,065,000 5,001,000 (a) Incremental shares from the assumed exercise of Griffin stock options are not included in periods where the inclusion of such shares would be anti-dilutive. The incremental shares from the assumed exercise of stock options for the 2019 first quarter and 2018 first quarter would have been 21,000 and 39,000, respectively. Universal Shelf Filing/At-the-Market Equity Offering Program On April 11, 2018, Griffin filed a universal shelf registration statement on Form S-3 (the “Universal Shelf”) with the SEC. Under the Universal Shelf, Griffin may offer and sell up to $50,000 of a variety of securities including common stock, preferred stock, warrants, depositary shares, debt securities, units or any combination of such securities during the three year period that commenced upon the Universal Shelf becoming effective on April 25, 2018. Under the Universal Shelf, Griffin may periodically offer one or more types of securities in amounts, at prices and on terms announced, if and when the securities are ever offered. On May 10, 2018, Griffin filed a prospectus supplement with the SEC under which it may issue and sell, from time to time, up to an aggregate of $30,000 of its common stock (“Common Stock”) under an “at-the-market” equity offering program (the “ATM Program”) through Robert W. Baird & Co. Incorporated (“Baird”), as sales agent. Under a sales agreement with Baird, Griffin will set the parameters for the sales of its Common Stock under the ATM Program, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number of shares that may be sold in any one trading day and any minimum price below which sales of shares may not be made. Sales of Common Stock, if any, under the ATM Program would be made in offerings as defined in Rule 415 of the Securities Act of 1933, as amended. In addition, with the prior consent of Griffin, Baird may also sell shares in privately negotiated transactions. Griffin expects to use net proceeds, if any, from the ATM Program for acquisitions of target properties consistent with Griffin’s investment strategies, repayment of debt and general corporate purposes. If Griffin obtains additional capital by issuing equity, the interests of its existing stockholders will be diluted. If Griffin incurs additional indebtedness, that indebtedness may impose financial and other covenants that may significantly restrict Griffin’s operations. Griffin currently does not expect to issue Common Stock under the ATM Program or issue other securities under the Universal Shelf in the near term. Griffin Stock Option Plan Stock options are granted by Griffin under the Griffin Industrial Realty, Inc. 2009 Stock Option Plan (the “2009 Stock Option Plan”). Options granted under the 2009 Stock Option Plan may be either incentive stock options or non-qualified stock options issued at an exercise price not less than fair market value on the date approved by Griffin’s Compensation Committee. Vesting of all of Griffin's stock options is solely based upon service requirements and does not contain market or performance conditions. Stock options issued expire ten years from the grant date. In accordance with the 2009 Stock Option Plan, stock options issued to non-employee directors upon their initial election to the board of directors are fully exercisable immediately upon the date of the option grant. Stock options issued to non-employee directors upon their re-election to the board of directors vest on the second anniversary from the date of grant. Stock options issued to employees vest in equal installments on the third, fourth and fifth anniversaries from the date of grant. None of the stock options outstanding at February 28, 2019 may be exercised as stock appreciation rights. There were no options granted in the 2019 and 2018 first quarters. Number of option holders at February 28, 2019 27 Compensation expense and related tax benefits for stock options were as follows: For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Compensation expense $ 90 $ 90 Related tax benefit $ 13 $ 13 As of February 28, 2019, the unrecognized compensation expense related to nonvested stock options that will be recognized during future periods is as follows: Balance of Fiscal 2019 $ 176 Fiscal 2020 $ 125 Fiscal 2021 $ 32 A summary of the activity under the 2009 Griffin Stock Option Plan is as follows: For the Three Months Ended February 28, 2019 February 28, 2018 Number of Weighted Avg. Number of Weighted Avg. Shares Exercise Price Shares Exercise Price Outstanding at beginning of period 224,001 $ 28.20 333,762 $ 29.22 Exercised — $ — (5,471) $ 34.04 Forfeited (1,749) $ 34.30 (19,779) $ 33.95 Outstanding at end of period 222,252 $ 28.15 308,512 $ 28.83 Weighted Avg. Remaining Range of Exercise Prices for Outstanding at Weighted Avg. Contractual Life Total Intrinsic Vested and Nonvested Options February 28, 2019 Exercise Price (in years) Value $23.00 - $28.00 115,137 $ 26.76 7.0 $ 838 $28.00 - $32.00 100,050 $ 29.14 3.1 490 $32.00 - $39.00 7,065 $ 36.78 7.7 4 222,252 $ 28.15 5.2 $ 1,332 Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss), net of tax, comprised of unrealized gains on cash flow hedges is as follows: For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Balance at beginning of period $ 2,395 $ (284) Other comprehensive (loss) income before reclassifications (1,500) 1,949 Amounts reclassified 42 192 Adoption of ASU No. 2018-02 - reclassification of deferred taxes to retained earnings — (36) Net activity for other comprehensive income (1,458) 2,105 Balance at end of period $ 937 $ 1,821 Changes in accumulated other comprehensive income (loss) are as follows: For the Three Months Ended February 28, 2019 February 28, 2018 Tax Tax (Expense) Net-of (Expense) Net-of Pre-Tax Benefit Tax Pre-Tax Benefit Tax Reclassification included in net loss: Loss on cash flow hedges (interest expense) $ 55 $ (13) $ 42 $ 244 $ (52) $ 192 Change in other comprehensive (loss) income: (Decrease) increase in fair value adjustments on Griffin’s cash flow hedges (1,923) 423 (1,500) 2,502 (553) 1,949 Other comprehensive (loss) income $ (1,868) $ 410 $ (1,458) $ 2,746 $ (605) $ 2,141 Stock Repurchases In the 2018 first quarter, Griffin received 5,000 shares of its Common Stock from an employee as consideration for the exercise price in connection with his exercise of an option to acquire 5,471 shares of Griffin’s Common Stock under Griffin’s 2009 Stock Option Plan. The shares received were recorded as treasury stock, which resulted in an increase in treasury stock of $186. See Supplemental Cash Flow Information in Note 7 for information on Common Stock received in connection with the exercise of stock options. Cash Dividend Griffin did not declare a cash dividend in the 2019 or 2018 first quarters. During the 2019 first quarter, Griffin paid $2,279 for the cash dividend declared in the 2018 fourth quarter. During the 2018 first quarter, Griffin paid $2,000 for the cash dividend declared in the 2017 fourth quarter. |
Supplemental Financial Statemen
Supplemental Financial Statement Information | 3 Months Ended |
Feb. 28, 2019 | |
Supplemental Financial Statement Information | |
Supplemental Financial Statement Information | 7. Supplemental Financial Statement Information Investments As of February 28, 2019, Griffin held $15,000 of repurchase agreements accounted for as held-to-maturity securities under ASC 320 and classified as short-term investments on its consolidated balance sheet. The repurchase agreements are with Webster Bank and are collateralized by securities issued by the United States Government or its sponsored agencies. The repurchase agreements are carried at their resell amounts, which approximates fair value due to their short-term nature. As of February 28, 2019, Griffin’s repurchase agreements had a weighted average maturity of less than 90 days with no maturities longer than six months. Other Assets Griffin's other assets are comprised of the following: Feb. 28, 2019 Nov. 30, 2018 Deferred rent receivable $ 5,863 $ 5,602 Deferred leasing costs, net 4,180 4,355 Prepaid expenses 2,293 2,780 Interest rate swap assets 1,484 3,157 Intangible assets, net 1,325 1,399 Deposits 1,163 1,072 Mortgage escrows 603 452 Lease receivables from tenants 485 407 Registration statement costs 281 281 Furniture, fixtures and equipment, net 235 245 Deferred financing costs related to the Webster Credit Line 20 33 Other 234 265 Total other assets $ 18,166 $ 20,048 Accounts Payable and Accrued Liabilities Griffin's accounts payable and accrued liabilities are comprised of the following: Feb. 28, 2019 Nov. 30, 2018 Accrued construction costs and retainage $ 1,830 $ 832 Trade payables 1,121 380 Accrued interest payable 523 555 Accrued salaries, wages and other compensation 217 931 Accrued lease commissions 46 136 Other 626 499 Total accounts payable and accrued liabilities $ 4,363 $ 3,333 Other Liabilities Griffin's other liabilities are comprised of the following: Feb. 28, 2019 Nov. 30, 2018 Deferred compensation plan $ 5,265 $ 5,145 Prepaid rent from tenants 997 1,134 Security deposits of tenants 548 533 Land sale deposits 285 260 Interest rate swap liabilities 282 56 Conditional asset retirement obligations 171 171 Other 79 79 Total other liabilities $ 7,627 $ 7,378 Supplemental Cash Flow Information In the 2018 first quarter, Griffin received 5,000 shares of its Common Stock from an employee as consideration for the exercise price in connection with his exercise of an option to acquire 5,471 shares of Griffin’s Common Stock under Griffin’s 2009 Stock Option Plan. The shares received were recorded as treasury stock, which resulted in an increase in treasury stock of $186 (see Note 6), and did not affect Griffin’s cash. Accounts payable and accrued liabilities related to additions to real estate assets increased by $998 and decreased by $47 in the 2019 first quarter and 2018 first quarter, respectively. Interest payments were as follows: For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 $ 1,619 $ 1,433 Income Taxes Griffin’s income tax benefit was $180 in the 2019 first quarter as compared to an income tax provision of $790 in the 2018 first quarter. The 2019 first quarter income tax benefit is related to the 2019 first quarter pretax loss of $766, reflecting an effective tax rate of 23.5%. The income tax provision in the 2018 first quarter includes a charge of $1,001 for the re-measurement of Griffin’s deferred tax assets and liabilities as a result of the reduction in the U.S. federal corporate statutory rate from 35% to 21% under the Tax Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017 and became effective for Griffin in the 2018 first quarter. As Griffin had net deferred tax assets when the TCJA became effective for Griffin, the re-measurement of its deferred tax assets and liabilities resulted in the charge that is included in Griffin’s 2018 first quarter income tax provision. Partially offsetting the charge for the re-measurement of deferred tax assets and liabilities in the 2018 first quarter was an income tax benefit of $211 based on the 2018 first quarter pretax loss of $933, reflecting an effective tax rate of 22.6%. Griffin’s federal income tax returns for fiscal 2016 and fiscal 2017 are open to examination by the Internal Revenue Service. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Feb. 28, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 8. Commitments and Contingencies As of February 28, 2019, Griffin had committed purchase obligations of approximately $14,249, principally related to the completion of construction of two industrial/warehouse buildings totaling approximately 283,000 square feet in Concord, North Carolina, as well as improvements at other Griffin properties. On January 25, 2016, Griffin entered into an Option Purchase Agreement, which was subsequently amended on January 22, 2019 (as amended, the “Simsbury Option Agreement”). Under the terms of the Simsbury Option Agreement, Griffin granted the buyer an exclusive option to purchase approximately 280 acres of undeveloped land in Simsbury, Connecticut for approximately $7,700. Through November 30, 2018, the buyer paid $260 of option fees to extend its option period through January 25, 2019. In fiscal 2018, the buyer received approval from Connecticut’s regulatory authority for the buyer’s planned use of the land, which is to generate solar electricity. Subsequent litigation challenging the approval was settled thereby allowing the buyer to use the land to be purchased as planned. On January 24, 2019, the buyer exercised its option to purchase the land under the Simsbury Option Agreement. As per the terms of the Simsbury Option Agreement, closing on the land sale is required to take place within 90 days from the date the buyer exercised its option to purchase the land. There is no guarantee that the sale of land as contemplated under the Simsbury Option Agreement will be completed under its current terms, or at all. On January 11, 2018, Griffin entered into an agreement to purchase an approximately 14 acre parcel of undeveloped land in the Lehigh Valley of Pennsylvania (the “Lehigh Valley Land”). Subsequently, the agreement was amended to reduce the purchase price from $3,600 in cash to $3,100 in cash and extend the due diligence period. If the transaction closes, Griffin plans to construct an approximately 156,000 square foot industrial/warehouse building on the Lehigh Valley Land. The closing of this purchase, anticipated to take place in fiscal 2019, is subject to several conditions, including obtaining all governmental approvals for Griffin’s development plans for the Lehigh Valley Land. There is no guarantee that this transaction will be completed under its current terms, or at all. On June 26, 2018, Griffin entered into an agreement for the purchase of approximately 36 acres of undeveloped land in Mecklenburg County, North Carolina in the greater Charlotte area (the “Mecklenburg Land”) for approximately $4,700 in cash. On December 5, 2018, Griffin entered into an agreement for the purchase of approximately 9 acres of undeveloped land (the “Additional Mecklenburg Land”) that is adjacent to the Mecklenburg Land for approximately $900 in cash. If acquired, the Additional Mecklenburg Land would be combined with the Mecklenburg Land, enabling Griffin to construct more industrial/warehouse space than could be constructed on the Mecklenburg Land only. Griffin plans to construct approximately 500,000 square feet of industrial/warehouse space on the Mecklenburg Land and Additional Mecklenburg Land combined parcels. Closings on the purchases of the Mecklenburg Land and the Additional Mecklenburg Land are subject to several conditions, including obtaining all governmental approvals for Griffin’s development plans. Griffin would only complete the purchase of the Additional Mecklenburg Land if the Mecklenburg Land is acquired. The closings on the purchases of the Mecklenburg Land and the Additional Mecklenburg Land are not anticipated to take place until the third quarter of fiscal 2019. There is no guarantee that purchases of the Mecklenburg Land and the Additional Mecklenburg Land will be completed under their current terms, or at all. From time to time, Griffin is involved, as a defendant, in various litigation matters arising in the ordinary course of business. In the opinion of management, based on the advice of legal counsel, the ultimate liability, if any, with respect to these matters is not expected to be material, individually or in the aggregate, to Griffin's consolidated financial position, results of operations or cash flows. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Feb. 28, 2019 | |
Subsequent Events. | |
Subsequent Events | 9. Subsequent Events In accordance with FASB ASC 855, “Subsequent Events,” Griffin has evaluated all events or transactions occurring after February 28, 2019, the balance sheet date, and noted that there have been no such events or transactions which would require recognition or disclosure in the consolidated financial statements as of and for the period ended February 28, 2019, other than the disclosures herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Feb. 28, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation Griffin Industrial Realty, Inc. ("Griffin") is a real estate business principally engaged in developing, managing and leasing industrial/warehouse properties and, to a lesser extent, office/flex properties. Griffin also seeks to add to its industrial/warehouse property portfolio through the acquisition and development of land or the purchase of buildings in select markets targeted by Griffin. Periodically, Griffin may sell certain portions of its undeveloped land that it has owned for an extended time period and the use of which is not consistent with Griffin's core development and leasing strategy. 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 Griffin’s audited consolidated financial statements for the fiscal year ended November 30, 2018 (“fiscal 2018”) included in Griffin’s Annual Report on Form 10-K/A (“Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on April 5, 2019. 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 consolidated balance sheet data as of November 30, 2018 was derived from Griffin’s audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in accordance with 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. Griffin regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation expense, deferred income tax asset valuations and the valuation of derivative instruments. Griffin bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by Griffin may differ materially and adversely from Griffin’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
Fiscal Year | The results of operations for the three months ended February 28, 2019 (the “2019 first quarter”) are not necessarily indicative of the results to be expected for the full year. The three months ended February 28, 2018 are referred to herein as the “2018 first quarter.” |
Investments | Griffin considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. At February 28, 2019 and November 30, 2018, $6,814 and $4,980, respectively, of the cash and cash equivalents included on Griffin’s consolidated balance sheet were held in cash equivalents. Griffin’s short-term investments are comprised of repurchase agreements with Webster Bank, N.A. (“Webster Bank”) that are collateralized with securities issued by the United States Government or its sponsored agencies and are accounted for as held-to-maturity securities under FASB ASC 320, “Investments – Debt and Equity Securities” (“ASC 320”). The repurchase agreements are carried at their resell amounts, which approximates fair value due to their short-term nature. Interest on repurchase agreements is reflected as interest receivable that is included in other assets. |
Interest Rate Swap Agreements | Griffin considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. At February 28, 2019 and November 30, 2018, $6,814 and $4,980, respectively, of the cash and cash equivalents included on Griffin’s consolidated balance sheet were held in cash equivalents. Griffin’s short-term investments are comprised of repurchase agreements with Webster Bank, N.A. (“Webster Bank”) that are collateralized with securities issued by the United States Government or its sponsored agencies and are accounted for as held-to-maturity securities under FASB ASC 320, “Investments – Debt and Equity Securities” (“ASC 320”). The repurchase agreements are carried at their resell amounts, which approximates fair value due to their short-term nature. Interest on repurchase agreements is reflected as interest receivable that is included in other assets. As of February 28, 2019, Griffin was a party to several interest rate swap agreements to hedge its interest rate exposures. Griffin does not use derivatives for speculative purposes. Griffin applies FASB ASC 815-10, “Derivatives and Hedging,” (“ASC 815-10”) as amended, which establishes accounting and reporting standards for derivative instruments and hedging activities. ASC 815-10 requires Griffin to recognize all derivatives as either assets or liabilities on its consolidated balance sheet and measure those instruments at fair value. The changes in the fair values of the interest rate swap agreements are measured in accordance with ASC 815-10 and reflected in the carrying values of the interest rate swap agreements on Griffin’s consolidated balance sheet. The estimated fair values are based primarily on projected future swap rates. Griffin applies cash flow hedge accounting to its interest rate swap agreements that are designated as hedges of the variability of future cash flows from floating rate liabilities based on the benchmark interest rates. The changes in the fair values of Griffin’s interest rate swap agreements are recorded as components of Accumulated Other Comprehensive Income (“AOCI”) in stockholders’ equity to the extent they are effective. Any ineffective portions of the changes in the fair values of these instruments would be recorded as interest expense or interest income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Adopted In May 2014, the FASB issued Accounting Standards Update (“ASU” or “Update”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU No. 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 is not applicable to rental revenue from leases. ASU No. 2014-09 supersedes most current revenue recognition guidance, including industry specific guidance, and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Additionally, ASU No. 2014-09 requires improved disclosures to help users of financial statements better understand the nature, amount, timing and uncertainty of revenue that is recognized. ASU No. 2014-09 permits the use of either the retrospective or cumulative effect transition method. Griffin has concluded that it has two material revenue streams: (i) rental revenue; and (ii) revenue from property sales. As noted above, rental revenue is not subject to ASU No. 2014-09 because it is subject to the guidance of FASB ASC Topic 840, Leases. Revenue from property sales was evaluated based on the criteria established under ASU No. 2014-09, which served as the basis for the accounting analysis and documentation as it relates to the impact of ASU No. 2014-09. Griffin determined that there was no change in the recognition of revenue from property sales upon adoption of ASU No. 2014-09. In cases where there are no further performance obligations, Griffin recognizes revenue from property sales at the time of closing. Griffin adopted the modified retrospective method for ASU No. 2014-09 when it became effective for Griffin on December 1, 2018. As there was no change to its recognition of revenue, Griffin did not record a cumulative effect adjustment to its consolidated balance sheet at the time of adoption. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting,” which relates to the accounting for employee share-based payments. ASU No. 2016-09 addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. ASU No. 2016-09 became effective for Griffin in the 2018 first quarter. Griffin recorded a deferred tax asset of $879 with a corresponding increase in retained earnings upon adoption. The adoption of ASU No. 2016-09 did not affect the classification of any current awards and did not have a retrospective impact on Griffin’s cash flows as no tax benefits from stock options were recognized in the periods presented. As part of the adoption of ASU No. 2016-09, Griffin is continuing its policy of estimating the forfeiture rate of options. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which is intended to eliminate the stranded tax effects within AOCI resulting from the Tax Cuts and Jobs Act (“TCJA”) that was enacted on December 22, 2017. The effective date of ASU No. 2018-02 is for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted for public entities for which financial statements have not yet been released. Griffin elected to early adopt and apply the provisions of ASU No. 2018-02 in the 2018 first quarter. This adoption resulted in a one-time reclassification of the effect of re-measuring Griffin’s net deferred tax assets related to interest rate swap agreements within AOCI and retained earnings resulting from the reduction in the U.S. federal statutory tax rate from 35% to 21%. The reclassification resulted in a decrease to AOCI and an increase to retained earnings of $36, with no net impact to total stockholders’ equity. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, “Leases,” which establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. The accounting applied by lessors under ASU No. 2016-02 is largely unchanged from that applied under current U.S. GAAP. Leases will be either classified as finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU No. 2016-02 also requires significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” which provides narrow amendments to clarify how to apply certain aspects of the new lease standard and ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” which provides an alternative transition method that permits an entity to use the effective date of ASU No. 2016-02 as the date of initial application through the recognition of a cumulative effect adjustment to the opening balance of retained earnings upon adoption. An entity’s reporting for the comparative periods presented in the financial statements in which it adopts the new lease standard will continue to be in accordance with current U.S. GAAP under FASB ASC Topic 840, “Leases.” In December 2018, the FASB issued ASU No. 2018-20, “Leases (Topic 842): Narrow Scope Improvements for Lessors,” which provides clarification on implementation issues associated with adopting ASU No. 2016-02. In March 2019, the FASB issued ASU No. 2019-01, “Leases (Topic 842): Codification Improvements,” which clarifies the determination of fair value of an underlying asset by lessors that are not manufacturers or dealers, presentation on the statement of cash flows for sales-type and direct financing leases and transition issues related to Topic 250, Accounting Changes and Error Corrections. ASU No. 2016-02, ASU No. 2018-10, ASU No. 2018-11, ASU No. 2018-20 and ASU No. 2019-01 will become effective for Griffin in fiscal 2020 using a modified retrospective approach for leases in effect as of and after the date of adoption. Early adoption and practical expedients to measure the effect of adoption are allowed. Griffin is evaluating the impact that the application of ASU No. 2016-02 will have on its consolidated financial statements. In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” which is intended to improve the financial reporting for hedging relationships to better represent the economic results of a company’s risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. ASU No. 2017-12 will make more financial and nonfinancial hedging strategies eligible for hedge accounting, amend the presentation and disclosure requirements and change how entities assess effectiveness. ASU No. 2017-12 will become effective for Griffin in fiscal 2020. Griffin does not expect the application of ASU No. 2017-12 to have an impact on its consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,” to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018-07 simplifies the accounting for nonemployee share-based payments by aligning it more closely with the accounting for employee awards. ASU No. 2018-07 will become effective for Griffin in fiscal 2020. Early adoption is permitted, but no earlier than Griffin’s adoption of Topic 606 (see above). Griffin does not expect the application of ASU No. 2018-07 to have an impact on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 removes, modifies and adds certain disclosure requirements in FASB ASC 820, “Fair Value Measurement” (“ASC 820”). The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively in the year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU No. 2018-13 will become effective for Griffin in fiscal 2021. Early adoption is permitted upon issuance for any removed or modified disclosures. Griffin does not expect the application of ASU No. 2018-13 to have an impact on its consolidated financial statements. In October 2018, the FASB issued ASU No. 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.” ASU No. 2018-16 permits the use of the OIS Rate based on the Secured Overnight Financing Rate as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate (“LIBOR”) and the OIS Rate based on the Federal Funds Effective Rate. For entities that have not already adopted ASU No. 2017-12 (see above), the amendments in ASU No. 2018-16 are required to be adopted concurrently with the amendments in ASU No. 2017-12. Griffin intends to adopt ASU No. 2018-16 when ASU No. 2017-12 becomes effective. Griffin does not expect the application of ASU No. 2018-16 to have an impact on its consolidated financial statements. There are various other Updates recently issued which represent technical corrections to the accounting literature or apply to specific industries. Griffin does not expect the application of any of these other Updates to have an impact on its consolidated financial statements. |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Feb. 28, 2019 | |
Fair Value | |
Schedule of financial assets and liabilities carried at fair value and measured at fair value on a recurring basis: | February 28, 2019 Quoted Prices in Significant Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Interest rate swap assets $ — $ 1,484 $ — Interest rate swap liabilities $ — $ 282 $ — November 30, 2018 Quoted Prices in Significant Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs (Level 1) (Level 2) (Level 3) Interest rate swap assets $ — $ 3,157 $ — Interest rate swap liabilities $ — $ 56 $ — |
Schedule of carrying and estimated fair values of financial instruments | Fair Value February 28, 2019 November 30, 2018 Hierarchy Carrying Estimated Carrying Estimated Level Value Fair Value Value Fair Value Financial assets: Cash and cash equivalents 1 $ 7,745 $ 7,745 $ 8,592 $ 8,592 Short-term investments 2 $ 15,000 $ 15,000 $ 17,000 $ 17,000 Interest rate swap assets 2 $ 1,484 $ 1,484 $ 3,157 $ 3,157 Financial liabilities: Mortgage and construction loans, net of debt issuance costs 2 $ 144,304 $ 143,968 $ 145,052 $ 144,712 Interest rate swap liabilities 2 $ 282 $ 282 $ 56 $ 56 |
Real Estate Assets (Tables)
Real Estate Assets (Tables) | 3 Months Ended |
Feb. 28, 2019 | |
Real Estate Assets | |
Schedule of real estate assets, excluding those held for sale | Estimated Useful Lives Feb. 28, 2019 Nov. 30, 2018 Land $ 21,961 $ 21,961 Land improvements 10 to 30 years 38,291 38,280 Buildings and improvements 10 to 40 years 204,288 204,258 Tenant improvements Shorter of useful life or terms of related lease 29,161 29,163 Machinery and equipment 3 to 20 years 10,958 10,958 Construction in progress 3,388 562 Development costs 13,484 13,443 321,531 318,625 Accumulated depreciation $ 213,936 $ 213,621 |
Schedule of total depreciation expense and capitalized interest related to real estate assets | For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Depreciation expense $ 2,591 $ 2,402 Capitalized interest $ 42 $ 38 |
Schedule of real estate held for sale | Feb. 28, 2019 Nov. 30, 2018 Land $ 851 $ 1,645 Development costs 1,007 1,007 $ 1,858 $ 2,652 |
Mortgage Loans (Tables)
Mortgage Loans (Tables) | 3 Months Ended |
Feb. 28, 2019 | |
Mortgage and Construction Loans | |
Schedule of mortgage and construction loans | Feb. 28, 2019 Nov. 30, 2018 3.91%, due January 27, 2020 * $ 3,311 $ 3,345 4.72%, due October 3, 2022 * 4,248 4,273 4.39%, due January 2, 2025 * 19,534 19,674 4.17%, due May 1, 2026 * 13,397 13,487 3.79%, November 17, 2026 * 25,229 25,402 4.39%, due August 1, 2027 * 10,222 10,284 3.97%, due September 1, 2027 11,843 11,898 4.57%, due February 1, 2028 * 18,383 18,482 5.09%, due July 1, 2029 6,062 6,172 5.09%, due July 1, 2029 4,247 4,324 4.33%, due August 1, 2030 16,894 16,978 Nonrecourse mortgage loans 133,370 134,319 Debt issuance costs (1,669) (1,723) Nonrecourse mortgage loans, net of debt issuance costs 131,701 132,596 4.51% construction loan 12,983 12,842 Debt issuance costs (380) (386) Construction loan, net of debt issuance costs 12,603 12,456 Mortgage and construction loans, net of debt issuance costs $ 144,304 $ 145,052 *Variable rate loans. Griffin has entered into interest rate swap agreements to effectively fix the interest rates on these loans to the rates reflected above. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Feb. 28, 2019 | |
Stockholders' Equity | |
Schedule of basic and diluted per share results | For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Net loss $ (586) $ (1,723) Weighted average shares outstanding for computation of basic per share results 5,065,000 Incremental shares from assumed exercise of Griffin stock options (a) — — Adjusted weighted average shares for computation of diluted per share results 5,065,000 5,001,000 (a) Incremental shares from the assumed exercise of Griffin stock options are not included in periods where the inclusion of such shares would be anti-dilutive. The incremental shares from the assumed exercise of stock options for the 2019 first quarter and 2018 first quarter would have been 21,000 and 39,000, respectively. |
Schedule of option holders | Number of option holders at February 28, 2019 27 |
Schedule of compensation expense and related tax benefits for stock options | For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Compensation expense $ 90 $ 90 Related tax benefit $ 13 $ 13 |
Schedule of unrecognized compensation expense related to nonvested stock options | Balance of Fiscal 2019 $ 176 Fiscal 2020 $ 125 Fiscal 2021 $ 32 |
Summary of the activity under the Griffin Stock Option Plan | For the Three Months Ended February 28, 2019 February 28, 2018 Number of Weighted Avg. Number of Weighted Avg. Shares Exercise Price Shares Exercise Price Outstanding at beginning of period 224,001 $ 28.20 333,762 $ 29.22 Exercised — $ — (5,471) $ 34.04 Forfeited (1,749) $ 34.30 (19,779) $ 33.95 Outstanding at end of period 222,252 $ 28.15 308,512 $ 28.83 |
Schedule of options by range of exercise prices | Weighted Avg. Remaining Range of Exercise Prices for Outstanding at Weighted Avg. Contractual Life Total Intrinsic Vested and Nonvested Options February 28, 2019 Exercise Price (in years) Value $23.00 - $28.00 115,137 $ 26.76 7.0 $ 838 $28.00 - $32.00 100,050 $ 29.14 3.1 490 $32.00 - $39.00 7,065 $ 36.78 7.7 4 222,252 $ 28.15 5.2 $ 1,332 |
Schedule of accumulated other comprehensive income (loss) | For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 Balance at beginning of period $ 2,395 $ (284) Other comprehensive (loss) income before reclassifications (1,500) 1,949 Amounts reclassified 42 192 Adoption of ASU No. 2018-02 - reclassification of deferred taxes to retained earnings — (36) Net activity for other comprehensive income (1,458) 2,105 Balance at end of period $ 937 $ 1,821 |
Schedule of components of accumulated other comprehensive income (loss) | For the Three Months Ended February 28, 2019 February 28, 2018 Tax Tax (Expense) Net-of (Expense) Net-of Pre-Tax Benefit Tax Pre-Tax Benefit Tax Reclassification included in net loss: Loss on cash flow hedges (interest expense) $ 55 $ (13) $ 42 $ 244 $ (52) $ 192 Change in other comprehensive (loss) income: (Decrease) increase in fair value adjustments on Griffin’s cash flow hedges (1,923) 423 (1,500) 2,502 (553) 1,949 Other comprehensive (loss) income $ (1,868) $ 410 $ (1,458) $ 2,746 $ (605) $ 2,141 |
Supplemental Financial Statem_2
Supplemental Financial Statement Information (Tables) | 3 Months Ended |
Feb. 28, 2019 | |
Supplemental Financial Statement Information | |
Schedule of other assets | Feb. 28, 2019 Nov. 30, 2018 Deferred rent receivable $ 5,863 $ 5,602 Deferred leasing costs, net 4,180 4,355 Prepaid expenses 2,293 2,780 Interest rate swap assets 1,484 3,157 Intangible assets, net 1,325 1,399 Deposits 1,163 1,072 Mortgage escrows 603 452 Lease receivables from tenants 485 407 Registration statement costs 281 281 Furniture, fixtures and equipment, net 235 245 Deferred financing costs related to the Webster Credit Line 20 33 Other 234 265 Total other assets $ 18,166 $ 20,048 |
Schedule of accounts payable and accrued liabilities | Feb. 28, 2019 Nov. 30, 2018 Accrued construction costs and retainage $ 1,830 $ 832 Trade payables 1,121 380 Accrued interest payable 523 555 Accrued salaries, wages and other compensation 217 931 Accrued lease commissions 46 136 Other 626 499 Total accounts payable and accrued liabilities $ 4,363 $ 3,333 |
Schedule of other liabilities | Feb. 28, 2019 Nov. 30, 2018 Deferred compensation plan $ 5,265 $ 5,145 Prepaid rent from tenants 997 1,134 Security deposits of tenants 548 533 Land sale deposits 285 260 Interest rate swap liabilities 282 56 Conditional asset retirement obligations 171 171 Other 79 79 Total other liabilities $ 7,627 $ 7,378 |
Schedule of interest payments | For the Three Months Ended Feb. 28, 2019 Feb. 28, 2018 $ 1,619 $ 1,433 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 | Feb. 28, 2018 | Nov. 30, 2017 | Feb. 28, 2019 | Nov. 30, 2018 |
Cash and Cash Equivalents | ||||||
Cash equivalents | $ 6,814 | $ 4,980 | ||||
Recent Adopted Accounting Pronouncements | ||||||
Corporate statutory income tax rate | 21.00% | 35.00% | ||||
ASU 2016-09 | ||||||
Deferred Tax Assets | ||||||
Deferred tax asset | $ 879 | |||||
ASU 2018-02 | ||||||
Recent Adopted Accounting Pronouncements | ||||||
Corporate statutory income tax rate | 21.00% | 35.00% | ||||
Reclassification resulted in a decrease to AOCI and an increase to retained earnings | $ 36 |
Fair Value (Details)
Fair Value (Details) - USD ($) $ in Thousands | Feb. 28, 2019 | Nov. 30, 2018 |
Financial assets and liabilities carried at fair value and measured at fair value on a recurring basis: | ||
Assets, transfers from Level 1 to Level 2 | $ 0 | |
Liabilities, transfers from Level 1 to Level 2 | 0 | |
Assets, transfers from Level 2 to Level 1 | 0 | |
Liabilities, transfers from Level 2 to Level 1 | 0 | |
Interest rate swap liabilities | 282 | $ 56 |
Recurring basis | Level 2 | ||
Financial assets and liabilities carried at fair value and measured at fair value on a recurring basis: | ||
Interest rate swap assets | 1,484 | 3,157 |
Interest rate swap liabilities | $ 282 | $ 56 |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 28, 2019 | Nov. 30, 2018 |
Financial assets: | ||
Short-term investments | $ 15,000 | $ 17,000 |
Financial liabilities: | ||
Interest rate swaps | 282 | 56 |
Carrying Value | Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 7,745 | 8,592 |
Carrying Value | Level 2 | ||
Financial assets: | ||
Short-term investments | 15,000 | 17,000 |
Interest rate swap assets | 1,484 | 3,157 |
Financial liabilities: | ||
Mortgage and construction loans, net of debt issuance costs | 144,304 | 145,052 |
Interest rate swaps | 282 | 56 |
Estimated Fair Value | Level 1 | ||
Financial assets: | ||
Cash and cash equivalents | 7,745 | 8,592 |
Estimated Fair Value | Level 2 | ||
Financial assets: | ||
Short-term investments | 15,000 | 17,000 |
Interest rate swap assets | 1,484 | 3,157 |
Financial liabilities: | ||
Mortgage and construction loans, net of debt issuance costs | 143,968 | 144,712 |
Interest rate swaps | $ 282 | $ 56 |
Real Estate Assets (Details)
Real Estate Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | Nov. 30, 2018 | |
Real Estate Assets | |||
Land | $ 21,961 | $ 21,961 | |
Land improvements | 38,291 | 38,280 | |
Buildings and improvements | 204,288 | 204,258 | |
Tenant improvements | 29,161 | 29,163 | |
Machinery and equipment | 10,958 | 10,958 | |
Construction in progress | 3,388 | 562 | |
Development costs | 13,484 | 13,443 | |
Real estate assets, gross | 321,531 | 318,625 | |
Accumulated depreciation | (107,595) | (105,004) | |
Real estate assets, net | 213,936 | 213,621 | |
Real Estate Held-for-sale | 1,858 | 2,652 | |
Depreciation expense | 2,591 | $ 2,402 | |
Capitalized interest | 42 | 38 | |
Real estate assets | |||
Cash paid for building | 1,923 | $ 2,270 | |
Value of real estate assets reclassified out of held for sale due to sale | 809 | ||
Value of real estate assets reclassified as held for sale | 15 | ||
Real estate assets held for sale | |||
Real Estate Assets | |||
Land | 851 | 1,645 | |
Development costs | 1,007 | 1,007 | |
Real Estate Held-for-sale | $ 1,858 | $ 2,652 | |
Land improvements | Minimum | |||
Real Estate Assets | |||
Estimated Useful Lives | 10 years | 10 years | |
Land improvements | Maximum | |||
Real Estate Assets | |||
Estimated Useful Lives | 30 years | 30 years | |
Buildings and improvements | Minimum | |||
Real Estate Assets | |||
Estimated Useful Lives | 10 years | 10 years | |
Buildings and improvements | Maximum | |||
Real Estate Assets | |||
Estimated Useful Lives | 40 years | 40 years | |
Machinery and equipment. | Minimum | |||
Real Estate Assets | |||
Estimated Useful Lives | 3 years | 3 years | |
Machinery and equipment. | Maximum | |||
Real Estate Assets | |||
Estimated Useful Lives | 20 years | 20 years |
Mortgage Loan (Details)
Mortgage Loan (Details) $ in Thousands | Mar. 29, 2018USD ($)ft² | Jan. 30, 2018USD ($)ft²building | Feb. 28, 2019USD ($)item | Feb. 28, 2018USD ($) | Nov. 30, 2018USD ($) |
Long-Term Debt | |||||
Loans, net of debt issuance costs | $ 144,304 | $ 145,052 | |||
Debt disclosures | |||||
Construction loan with State Farm Life Insurance Company | $ 13,800 | ||||
Area Of Building | ft² | 234,000 | ||||
Term of debt | 15 years | ||||
Amortization period of debt | 25 years | ||||
Ineffectiveness on cash flow hedges | 0 | ||||
Anticipated ineffectiveness on cash flow hedges | 0 | ||||
Net fair value of interest rate swap agreements | 1,202 | ||||
Deferred tax asset | 2,146 | 1,556 | |||
Number of buildings used as collateral | building | 2 | ||||
Proceeds from issuance of debt | 141 | $ 18,781 | |||
Interest rate | 4.51% | ||||
Payment on secured debt | 949 | 12,639 | |||
Other assets | |||||
Debt disclosures | |||||
Net fair value of interest rate swap agreements | 1,484 | ||||
Other liabilities | |||||
Debt disclosures | |||||
Net fair value of interest rate swap agreements | $ 282 | ||||
Maximum | |||||
Debt disclosures | |||||
Construction loan with State Farm Life Insurance Company | $ 14,288 | ||||
Interest rate swap agreement | |||||
Debt disclosures | |||||
Number of agreements containing credit risk related contingent features | item | 0 | ||||
Recognized net losses (included in other comprehensive loss), before taxes, on interest rate swap agreements | $ 1,868 | $ 2,746 | |||
Loss expected to be reclassified over next twelve months from accumulated other comprehensive loss to interest expense | 194 | ||||
Nonrecourse mortgage loans | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | 133,370 | 134,319 | |||
Debt issuance costs, net | (1,669) | (1,723) | |||
Loans, net of debt issuance costs | $ 131,701 | $ 132,596 | |||
Weighted average interest rate | 4.31% | 4.31% | |||
Construction loan | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 12,983 | $ 12,842 | |||
Debt issuance costs, net | (380) | (386) | |||
Loans, net of debt issuance costs | $ 12,603 | 12,456 | |||
Interest rate (as a percent) | 4.51% | ||||
3.91%, due January 27, 2020 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 3,311 | 3,345 | |||
Interest rate (as a percent) | 3.91% | ||||
4.72%, due October 3, 2022 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 4,248 | 4,273 | |||
Interest rate (as a percent) | 4.72% | ||||
4.39%, due January 2, 2025 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 19,534 | 19,674 | |||
Interest rate (as a percent) | 4.39% | ||||
4.17%, due May 1, 2026 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 13,397 | 13,487 | |||
Interest rate (as a percent) | 4.17% | ||||
3.79%, November 17, 2026 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 25,229 | 25,402 | |||
Interest rate (as a percent) | 3.79% | ||||
4.39%, due August 1, 2027 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 10,222 | 10,284 | |||
Interest rate (as a percent) | 4.39% | ||||
3.97%, due September 1, 2027 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 11,843 | 11,898 | |||
Interest rate (as a percent) | 3.97% | ||||
4.57%, due February 1, 2028 | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 18,383 | 18,482 | |||
Interest rate (as a percent) | 4.57% | ||||
5.09%, due July 1, 2029 GCD mortgage loan | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 6,062 | 6,172 | |||
Interest rate (as a percent) | 5.09% | ||||
5.09%, due July 1, 2029 TD mortgage Loan | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 4,247 | 4,324 | |||
Interest rate (as a percent) | 5.09% | ||||
4.33%, due August 1, 2030 mortgage loan | |||||
Long-Term Debt | |||||
Loans, prior to debt issuance costs | $ 16,894 | $ 16,978 | |||
Interest rate (as a percent) | 4.33% | ||||
2018 PUB Mortgage | |||||
Debt disclosures | |||||
Term of debt | 10 years | ||||
Amortization period of debt | 25 years | ||||
Area of collateralized properties (in square feet) | ft² | 275,000 | ||||
Proceeds from issuance of debt | $ 7,000 | ||||
Debt amount refinanced | $ 11,781,000 | ||||
2018 PUB Mortgage | Interest rate swap agreement | |||||
Debt disclosures | |||||
Fixed interest rate pursuant to interest rate swap agreement (as a percent) | 4.57% | ||||
2018 PUB Mortgage | LIBOR | |||||
Debt disclosures | |||||
Variable interest rate margin (as a percent) | 1.95% | ||||
2018 PUB Mortgage | NE Tradeport | |||||
Debt disclosures | |||||
Area of collateralized properties completed (in square feet) | ft² | 137,000 | ||||
2017 PUB Mortgage | |||||
Debt disclosures | |||||
New mortgage | $ 18,781 |
Revolving Credit Agreement (Det
Revolving Credit Agreement (Details) - Webster Credit Line $ in Thousands | 3 Months Ended | 75 Months Ended |
Feb. 28, 2019USD ($)ft² | Feb. 28, 2019USD ($)ft² | |
Revolving credit agreement | ||
Maximum borrowing capacity | $ 15,000 | $ 15,000 |
Proceeds from Lines of Credit | 0 | |
Standby letters of credit aggregate amount | $ 1,068 | $ 1,068 |
Griffin Center South, Bloomfield, CT | ||
Revolving credit agreement | ||
Area of collateralized properties (in square feet) | ft² | 235,000 | 235,000 |
Single-story office building in Griffin Center | ||
Revolving credit agreement | ||
Area of collateralized properties (in square feet) | ft² | 48,000 | 48,000 |
LIBOR | ||
Revolving credit agreement | ||
Variable interest rate margin (as a percent) | 2.75% |
Stockholders' Equity - Per Shar
Stockholders' Equity - Per Share Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Earnings per share: | ||
Net loss | $ (586) | $ (1,723) |
Weighted average shares outstanding for computation of basic per share results | 5,065,000 | 5,001,000 |
Adjusted weighted average shares for computation of diluted per share results | 5,065,000 | 5,001,000 |
Incremental shares from assumed exercise of stock options excluded due to anti-dilutive effect | 21,000 | 39,000 |
Stockholders' Equity - At-the-M
Stockholders' Equity - At-the-Market Equity Offering Program (Details) - USD ($) | Apr. 11, 2018 | May 10, 2018 |
At-the-Market Equity Offering Program | ||
Maximum offering from universal shelf registration | $ 50,000 | |
Offering period | P3Y | |
Baird | ATM Program | ||
At-the-Market Equity Offering Program | ||
Authorized to issue common stock | $ 30,000 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Grants, Activity And Expense (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Feb. 28, 2019USD ($)individual$ / sharesshares | Feb. 28, 2018USD ($)$ / sharesshares | |
2009 Stock Option Plan | ||
Granted (in shares) | 0 | 0 |
Other Disclosures | ||
Number of option holders | individual | 27 | |
Compensation expense for stock options | ||
Compensation expense (benefit) | $ | $ 90 | $ 90 |
Related tax benefit (expense) | $ | 13 | $ 13 |
Unrecognized compensation expense related to non-vested stock options that will be recognized during future periods | ||
Balance of Fiscal 2018 | $ | 176 | |
Fiscal 2019 | $ | 125 | |
Fiscal 2020 | $ | $ 32 | |
Activity under the 2009 Stock Option Plan | ||
Granted (in shares) | 0 | 0 |
2009 Stock Option Plan | ||
2009 Stock Option Plan | ||
Expiration term | 10 years | |
Number of options that may be exercised as stock appreciation rights | 0 | |
Activity under the 2009 Stock Option Plan | ||
Outstanding at beginning of period (in shares) | 224,001 | 333,762 |
Exercised (in shares) | (5,471) | |
Forfeited (in shares) | (1,749) | (19,779) |
Outstanding at end of period (in shares) | 222,252 | 308,512 |
Weighted Avg. Exercise Price | ||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 28.20 | $ 29.22 |
Exercised (in dollars per share) | $ / shares | 34.04 | |
Forfeited (in dollars per share) | $ / shares | 34.30 | 33.95 |
Outstanding at end of period (in dollars per share) | $ / shares | $ 28.15 | $ 28.83 |
Stockholders' Equity - Range Of
Stockholders' Equity - Range Of Exercise Prices (Details) - 2009 Stock Option Plan $ / shares in Units, $ in Thousands | 3 Months Ended |
Feb. 28, 2019USD ($)$ / sharesshares | |
2009 Stock Option Plan | |
Outstanding at ending of the year (in shares) | shares | 222,252 |
Weighted Avg. Exercise Price (in dollars per share) | $ 28.15 |
Weighted Avg. Remaining Contractual Life | 5 years 2 months 12 days |
Total Intrinsic Value | $ | $ 1,332 |
$23.00-$28.00 | |
2009 Stock Option Plan | |
Exercise prices, low end of range (in dollars per share) | $ 23 |
Exercise prices, high end of range (in dollars per share) | $ 28 |
Outstanding at ending of the year (in shares) | shares | 115,137 |
Weighted Avg. Exercise Price (in dollars per share) | $ 26.76 |
Weighted Avg. Remaining Contractual Life | 7 years |
Total Intrinsic Value | $ | $ 838 |
$28.00-$32.00 | |
2009 Stock Option Plan | |
Exercise prices, low end of range (in dollars per share) | $ 28 |
Exercise prices, high end of range (in dollars per share) | $ 32 |
Outstanding at ending of the year (in shares) | shares | 100,050 |
Weighted Avg. Exercise Price (in dollars per share) | $ 29.14 |
Weighted Avg. Remaining Contractual Life | 3 years 1 month 6 days |
Total Intrinsic Value | $ | $ 490 |
$32.00-$39.00 | |
2009 Stock Option Plan | |
Exercise prices, low end of range (in dollars per share) | $ 32 |
Exercise prices, high end of range (in dollars per share) | $ 39 |
Outstanding at ending of the year (in shares) | shares | 7,065 |
Weighted Avg. Exercise Price (in dollars per share) | $ 36.78 |
Weighted Avg. Remaining Contractual Life | 7 years 8 months 12 days |
Total Intrinsic Value | $ | $ 4 |
Stockholders' Equity - Accumula
Stockholders' Equity - Accumulated Other Comprehensive Income Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Change in accumulated other comprehensive loss, net of tax | ||
Balance at the beginning of the year | $ 2,395 | |
Reclassifications included in net loss | 42 | $ 192 |
Balance at the end of the year | 937 | |
Unrealized Gain (Loss) on Cash Flow Hedges | ||
Change in accumulated other comprehensive loss, net of tax | ||
Balance at the beginning of the year | 2,395 | (284) |
Other comprehensive income before reclassifications | (1,500) | 1,949 |
Reclassifications included in net loss | 42 | 192 |
Adoption of ASU 2018-02 - reclassification of deferred taxes to retained earnings | (36) | |
Net activity for other comprehensive income | (1,458) | 2,105 |
Balance at the end of the year | $ 937 | $ 1,821 |
Stockholders' Equity - AOCI T2
Stockholders' Equity - AOCI T2 rows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Accumulated Other Comprehensive Income (Loss) | ||
Reclassifications, net of tax | $ 42 | $ 192 |
Total other comprehensive (loss) income, net of tax | (1,458) | 2,141 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Income (Loss) | ||
Total other comprehensive (loss) income, before tax | (1,868) | 2,746 |
Total other comprehensive income (loss), tax | 410 | (605) |
Total other comprehensive (loss) income, net of tax | (1,458) | 2,141 |
Unrealized Gain (Loss) on Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) | ||
Reclassifications, net of tax | 42 | 192 |
Other changes, before reclassifications, before tax | (1,923) | 2,502 |
Other changes, before reclassifications, tax (expense) benefit | 423 | (553) |
Total other changes before reclassifications, net of tax | (1,500) | 1,949 |
Unrealized Gain (Loss) on Cash Flow Hedges | Interest Expense [Member] | ||
Accumulated Other Comprehensive Income (Loss) | ||
Reclassifications, before tax | 55 | 244 |
Reclassifications, tax (expense) benefit | (13) | (52) |
Reclassifications, net of tax | $ 42 | $ 192 |
Stockholders' Equity - Stock Re
Stockholders' Equity - Stock Repurchases, Cash Dividend (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Stock Repurchases | ||
Treasury shares | 5,000 | |
Exercise of an option to acquire shares of common stock | 5,471 | |
Treasury stock | $ 186 | |
Cash Dividends | ||
Cash dividends declared (in dollars per share) | $ 0 | $ 0 |
Cash dividend paid | $ 2,279 | $ 2,000 |
2009 Stock Option Plan | ||
Stock Repurchases | ||
Treasury shares | 5,000 | |
Exercise of an option to acquire shares of common stock | 5,471 | |
Treasury stock | $ 186 |
Supplemental Financial Statem_3
Supplemental Financial Statement Information - AFS Securities (Details) $ in Thousands | Feb. 28, 2019USD ($) |
Investments - Held-to-maturity Securities | |
Repurchase agreements | $ 15,000 |
Supplemental Financial Statem_4
Supplemental Financial Statement Information - Other And Intangible Assets (Details) - USD ($) $ in Thousands | Feb. 28, 2019 | Nov. 30, 2018 |
Other Assets | ||
Deferred rent receivable | $ 5,863 | $ 5,602 |
Deferred leasing costs, net | 4,180 | 4,355 |
Prepaid expenses | 2,293 | 2,780 |
Interest rate swap asset | 1,484 | 3,157 |
Intangible assets, net | 1,325 | 1,399 |
Deposits | 1,163 | 1,072 |
Mortgage escrows | 603 | 452 |
Leasing receivables from tenants | 485 | 407 |
Registration statement costs | 281 | 281 |
Furniture, fixtures and equipment, net | 235 | 245 |
Deferred financing costs related to the Webster Credit Line | 20 | 33 |
Other | 234 | 265 |
Total other assets | $ 18,166 | $ 20,048 |
Supplemental Financial Statem_5
Supplemental Financial Statement Information - Liabilities (Details) - USD ($) $ in Thousands | Feb. 28, 2019 | Nov. 30, 2018 |
Accounts Payable and Accrued Liabilities | ||
Accrued construction costs and retainage | $ 1,830 | $ 832 |
Trade payables | 1,121 | 380 |
Accrued interest payable | 523 | 555 |
Accrued salaries, wages and other compensation | 217 | 931 |
Accrued lease commissions | 46 | 136 |
Other | 626 | 499 |
Total accounts payable and accrued liabilities | 4,363 | 3,333 |
Other Liabilities | ||
Deferred compensation plan | 5,265 | 5,145 |
Prepaid rent from tenants | 997 | 1,134 |
Security deposits of tenants | 548 | 533 |
Land sale deposit | 285 | 260 |
Interest rate swap liabilities | 282 | 56 |
Conditional asset retirement obligations | 171 | 171 |
Other | 79 | 79 |
Total other liabilities | $ 7,627 | $ 7,378 |
Supplemental Financial Statem_6
Supplemental Financial Statement Information - Cash flow, etc. (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Feb. 28, 2019 | Feb. 28, 2018 | |
Supplemental Cash Flow Information | ||
Treasury shares | 5,000 | |
Treasury stock | $ 186 | |
Exercise of an option to acquire shares of common stock | 5,471 | |
Increase (decrease) in accounts payable and accrued liabilities related to additions to real estate assets | $ 998 | $ 47 |
Interest paid | ||
Interest payments | 1,619 | 1,433 |
Income Taxes | ||
Income Tax Expense (Benefit) | (180) | 790 |
Pretax loss | $ 766 | $ 933 |
Effective income tax rate (as a percent) | 23.50% | 22.60% |
Impact of lower statutory rate applied to deferred tax assets and deferred tax liabilities resulted for the re-measurement of deferred tax assets and liabilities | $ 1,001 | |
Offsetting the net charge for the re-measurement of Griffin’s deferred tax assets and liabilities is an income tax benefit | $ 211 | |
2009 Stock Option Plan | ||
Supplemental Cash Flow Information | ||
Treasury shares | 5,000 | |
Treasury stock | $ 186 | |
Exercise of an option to acquire shares of common stock | 5,471 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Dec. 18, 2018ft² | Mar. 29, 2018ft² | Jan. 11, 2018USD ($)aft² | Feb. 28, 2019USD ($)ft²building | Nov. 30, 2018USD ($) | Dec. 05, 2018USD ($)a | Jun. 26, 2018USD ($)a | Jan. 25, 2016USD ($)a |
Purchase and sale obligations | ||||||||
Area Of Building | ft² | 234,000 | |||||||
Number of Buildings | building | 2 | |||||||
Agreement to sell | ||||||||
Purchase and sale obligations | ||||||||
Purchase obligations | $ 7,700 | |||||||
Number of acres | a | 280 | |||||||
Agreement Extension Fee | $ 260 | |||||||
Purchase agreement | ||||||||
Purchase and sale obligations | ||||||||
Purchase obligations | $ 3,600 | $ 900 | $ 4,700 | |||||
Area Of Building | ft² | 500,000 | 156,000 | ||||||
Number of acres | a | 14 | 9 | 36 | |||||
Amended purchase agreement | ||||||||
Purchase and sale obligations | ||||||||
Purchase obligations | $ 3,100 | |||||||
Obligations For Investments In Real Estate Assets | ||||||||
Purchase and sale obligations | ||||||||
Purchase obligations | $ 14,249 | |||||||
Area Of Building | ft² | 283,000 |