INDUS REALTY TRUST, INC. - Quarter Report: 2013 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED June 1, 2013

 

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD FROM              TO             

 

Commission File No. 1-12879

 

GRIFFIN LAND & NURSERIES, INC.

(Exact name of registrant as specified in its charter)

 

 

Registrant’s Telephone Number including Area Code  (212) 218-7910

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   x  No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  x  No  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of  “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ¨  No x

 

Number of shares of Common Stock outstanding at July 5, 2013:  5,146,366

 

 

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GRIFFIN LAND & NURSERIES, INC.

FORM 10-Q

Index

 

PART I —		FINANCIAL INFORMATION
	ITEM 1	Financial Statements
		Consolidated Balance Sheets (unaudited) June 1, 2013 and December 1, 2012	3
		Consolidated Statements of Operations (unaudited) 13 and 26 Weeks Ended June 1, 2013 and June 2, 2012	4
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) 13 and 26 Weeks Ended June 1, 2013 and June 2, 2012	5
		Consolidated Statements of Changes in Stockholders’ Equity (unaudited) 26 Weeks Ended June 1, 2013 and June 2, 2012	6
		Consolidated Statements of Cash Flows (unaudited) 26 Weeks Ended June 1, 2013 and June 2, 2012	7
		Notes to Consolidated Financial Statements (unaudited)	8-24
	ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25-38
	ITEM 3	Quantitative and Qualitative Disclosures About Market Risk	38
	ITEM 4	Controls and Procedures	39
PART II —		OTHER INFORMATION
	ITEM 1	Not Applicable
	ITEM 1A	Risk Factors	40
	ITEMS 2-5	Not Applicable
	ITEM 6	Exhibits	40-43
		SIGNATURES	44

 

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PART I                  FINANCIAL INFORMATION

 

ITEM 1.                 FINANCIAL STATEMENTS

 

GRIFFIN LAND & NURSERIES, INC.

Consolidated Balance Sheets

(dollars in thousands, except per share data)

(unaudited)

 

		June 1, 2013			December 1, 2012
ASSETS
Current Assets:
Cash and cash equivalents		$	5,184		$	10,181
Accounts receivable, less allowance of $202 and $128		6,749			1,846
Inventories, net		14,396			14,206
Deferred income taxes		542			525
Other current assets		2,338			3,564
Total current assets		29,209			30,322
Real estate assets, net		130,976			123,927
Property and equipment, net		2,060			2,125
Available for sale securities - Investment in Centaur Media plc		2,027			4,226
Deferred income taxes		1,930			2,222
Real estate held for sale, net		1,214			1,186
Proceeds held in escrow		—			6,934
Other assets		8,960			9,172
Total assets		$	176,376		$	180,114
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of long-term debt		$	1,949		$	1,869
Accounts payable and accrued liabilities		4,661			4,904
Deferred revenue		608			3,742
Total current liabilities		7,218			10,515
Long-term debt		56,735			57,692
Other noncurrent liabilities		7,239			7,761
Total liabilities		71,192			75,968
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Common stock, par value $0.01 per share, 10,000,000 shares authorized, 5,534,687 and 5,527,911 shares issued, respectively, and 5,146,366 and 5,139,590 shares outstanding, respectively		55			55
Additional paid-in capital		107,403			107,056
Retained earnings		12,420			11,222
Accumulated other comprehensive loss, net of tax		(1,228		)	(721		)
Treasury stock, at cost, 388,321 shares		(13,466		)	(13,466		)
Total stockholders’ equity		105,184			104,146
Total liabilities and stockholders’ equity		$	176,376		$	180,114

 

 See Notes to Consolidated Financial Statements.

 

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Operations

(dollars in thousands, except per share data)

(unaudited)

 

		For the 13 Weeks Ended,						For the 26 Weeks Ended,
		June 1, 2013			June 2, 2012			June 1, 2013			June 2, 2012
Rental revenue and property sales		$	6,271		$	4,476		$	11,779		$	8,889
Landscape nursery net sales and other revenue		8,972			8,258			9,174			8,458
Total revenue		15,243			12,734			20,953			17,347
Costs related to rental revenue and property sales		3,397			2,929			7,058			5,922
Costs of landscape nursery sales and other revenue		7,652			7,162			7,805			7,335
Total costs of goods sold and costs related to rental revenue and property sales		11,049			10,091			14,863			13,257
Gross profit		4,194			2,643			6,090			4,090
Selling, general and administrative expenses		3,229			2,698			6,094			5,420
Operating profit (loss)		965			(55		)	(4		)	(1,330		)
Gain on sale of investment in Shemin Nurseries Holding Corporation		—			—			3,397			—
Gain on sale of common stock in Centaur Media plc		—			—			504			—
Interest expense		(965		)	(830		)	(1,943		)	(1,705		)
Loss on debt extinguishment		(286		)	—			(286		)	—
Investment income		51			82			51			469
Income (loss) before income tax (provision) benefit		(235		)	(803		)	1,719			(2,566		)
Income tax (provision) benefit		123			391			(521		)	1,029
Income (loss) from continuing operations		(112		)	(412		)	1,198			(1,537		)
Discontinued operation, net of tax:
Income from operations, net of tax		—			—			—			117
Gain on sale of warehouse, net of tax		—			—			—			1,530
Total discontinued operation, net of tax		—			—			—			1,647
Net income (loss)		$	(112	)	$	(412	)	$	1,198		$	110
Basic net income (loss) per common share:
Income (loss) from continuing operations		$	(0.02	)	$	(0.08	)	$	0.23		$	(0.30	)
Income from discontinued operation		—			—			—			0.32
Basic net income (loss) per common share		$	(0.02	)	$	(0.08	)	$	0.23		$	0.02
Diluted net income (loss) per common share:
Income (loss) from continuing operations		$	(0.02	)	$	(0.08	)	$	0.23		$	(0.30	)
Income from discontinued operation		—			—			—			0.32
Diluted net income (loss) per common share		$	(0.02	)	$	(0.08	)	$	0.23		$	0.02

 

See Notes to Consolidated Financial Statements.

 

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Comprehensive Income (Loss)

(dollars in thousands)

(unaudited)

 

		For the 13 Weeks Ended,						For the 26 Weeks Ended,
		June 1, 2013			June 2, 2012			June 1, 2013			June 2, 2012
Net income (loss)		$	(112	)	$	(412	)	$	1,198		$	110
Other comprehensive (loss) income, net of tax:
Reclassifications included in net income (loss)		120			102			(102		)	207
Decrease in fair value of Centaur Media plc		(633		)	(530		)	(672		)	(196		)
Unrealized gain (loss) on cash flow hedges		184			(299		)	267			(555		)
Total other comprehensive loss, net of tax		(329		)	(727		)	(507		)	(544		)
Total comprehensive income (loss)		$	(441	)	$	(1,139	)	$	691		$	(434	)

 

See Notes to Consolidated Financial Statements.

 

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Changes in Stockholders’ Equity

For the Twenty-Six Weeks Ended June 1, 2013 and June 2, 2012

(dollars in thousands)

(unaudited)

 

		Shares of Common Stock Issued		Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balance at December 3, 2011		5,521,170		$	55		$	106,370		$	11,284		$	(978	)	$	(13,426	)	$	103,305
Stock-based compensation expense		—		—			304			—			—			—			304
Exercise of stock options		5,322		—			80			—			—			—			80
Net income		—		—			—			110			—			—			110
Total reclassifications included in net income		—		—			—			—			207			—			207
Other comprehensive loss from cash flow hedging transactions, net of tax		—		—			—			—			(555		)	—			(555		)
Other comprehensive loss from Centaur Media plc, net of tax		—		—			—			—			(196		)	—			(196		)
Balance at June 2, 2012		5,526,492		$	55		$	106,754		$	11,394		$	(1,522	)	$	(13,426	)	$	103,255
Balance at December 1, 2012		5,527,911		$	55		$	107,056		$	11,222		$	(721	)	$	(13,466	)	$	104,146
Stock-based compensation expense		—		—			267			—			—			—			267
Exercise of stock options		6,776		—			80			—			—			—			80
Net income		—		—			—			1,198			—			—			1,198
Total reclassifications included in net income		—		—			—			—			(102		)	—			(102		)
Other comprehensive income from cash flow hedging transactions, net of tax		—		—			—			—			267			—			267
Other comprehensive loss from Centaur Media plc, net of tax		—		—			—			—			(672		)	—			(672		)
Balance at June 1, 2013		5,534,687		$	55		$	107,403		$	12,420		$	(1,228	)	$	(13,466	)	$	105,184

 

See Notes to Consolidated Financial Statements.

 

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GRIFFIN LAND & NURSERIES, INC.

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)

 

		For the 26 Weeks Ended,
		June 1, 2013			June 2, 2012
Operating activities:
Net income		$	1,198		$	110
Adjustments to reconcile net income to net cash used in operating activities:
Gain on sale of investment in Shemin Nurseries Holding Corporation		(3,397		)	—
Depreciation and amortization		3,310			3,078
Gain on sale of property		(2,109		)	(2,886		)
Deferred income taxes		521			(8		)
Gain on sale of common stock in Centaur Media plc		(504		)	—
Loss on debt extinguishment		286			—
Stock-based compensation expense		267			304
Amortization of debt issuance costs		144			148
Provision for bad debts		29			6
Income from equity investments		(4		)	(6		)
Changes in assets and liabilities:
Accounts receivable		(4,932		)	(4,090		)
Inventories		(190		)	224
Other current assets		1,403			2,290
Accounts payable and accrued liabilities		1,006			124
Deferred revenue		(945		)	(751		)
Other noncurrent assets and noncurrent liabilities, net		(319		)	(29		)
Net cash used in operating activities		(4,236		)	(1,486		)
Investing activities:
Additions to real estate assets		(10,051		)	(8,385		)
Proceeds from property sales returned from escrow		6,934			—
Proceeds from the sale of investment in Shemin Nurseries Holding Corporation		3,418			—
Proceeds from the sale of common stock in Centaur Media plc		1,160			—
Additions to property and equipment		(65		)	(115		)
Proceeds from sale of property, net of expenses		—			15,537
Return of capital from Shemin Nurseries Holding Corporation		—			309
Net cash provided by investing activities		1,396			7,346
Financing activities:
Dividends paid to stockholders		(1,028		)	(513		)
Payments of debt		(925		)	(918		)
Debt issuance costs		(214		)	—
Exercise of stock options		80			80
Debt modification costs		(70		)	—
Net cash used in financing activities		(2,157		)	(1,351		)
Net (decrease) increase in cash and cash equivalents		(4,997		)	4,509
Cash and cash equivalents at beginning of period		10,181			7,431
Cash and cash equivalents at end of period		$	5,184		$	11,940

 

See Notes to Consolidated Financial Statements.

 

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GRIFFIN LAND & NURSERIES, INC.

Notes to Consolidated Financial Statements

(dollars in thousands unless otherwise noted, except per share data)

(unaudited)

 

1.     Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements of Griffin Land & Nurseries, Inc. (“Griffin”) include the accounts of Griffin’s real estate division (“Griffin Land”) and Griffin’s wholly-owned subsidiary in the landscape nursery business, Imperial Nurseries, Inc. (“Imperial”), and have been prepared in conformity with the standards of accounting measurement set forth by the Financial Accounting Standards Board (“FASB”) ASC 270, “Interim Reporting.”

 

The accompanying financial statements have been prepared in accordance with the accounting policies stated in Griffin’s audited financial statements for the fiscal year ended December 1, 2012 (“fiscal 2012”) included in Griffin’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission, and 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 December 1, 2012 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, valuation of derivative instruments, the allowance for doubtful accounts receivable, the estimated costs to complete required offsite improvements to land sold and the adequacy of inventory reserves.  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.

 

As of June 1, 2013, Griffin was a party to four 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 assessed 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.

 

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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 change in fair values of Griffin’s interest rate swap agreements are recorded as components of accumulated other comprehensive income in stockholders’ equity to the extent they are effective.  Any ineffective portions of the change in fair value of these instruments would be recorded as interest expense.

 

The results of operations for the thirteen weeks ended June 1, 2013 (the “2013 second quarter”) and the twenty-six weeks ended June 1, 2013 (the “2013 six month period”) are not necessarily indicative of the results to be expected for the full year. The thirteen weeks ended June 2, 2012 is referred to herein as the “2012 second quarter” and the twenty-six weeks ended June 2, 2012 is referred to herein as the “2012 six month period.”

 

Recent Accounting Pronouncements

 

In February 2013, the FASB issued Accounting Standards Update No. 2013-02, “Comprehensive Income,” which amends the presentation of comprehensive income.  This update does not require new disclosures but creates new presentation requirements related to amounts reclassified out of accumulated other comprehensive income.  More specifically, this update requires: (a) disclosure of the changes in the components of accumulated other comprehensive income; (b) disclosure of the effects on the individual line items in net income for each item of accumulated other comprehensive income that is reclassified in its entirety to net income; and (c) cross-references to other disclosures that provide additional details for other comprehensive income items that are not reclassified in their entirety to net income.  For items that are required to be reclassified to net income in their entirety, this new guidance requires an entity to present this information either on the face of the statement where net income is presented or in the footnotes to the financial statements.  For items that are not required to be reclassified in their entirety to net income, this new guidance requires cross-references to other disclosures that provide additional information about those amounts.  This update was required to be adopted by Griffin no later than the 2013 second quarter; however, Griffin adopted the new presentation requirements in the 2013 first quarter.  The adoption of this guidance requires new disclosures related to amounts reclassified out of accumulated other comprehensive income but did not have an impact on Griffin’s financial position or results of operations.

 

2.    Discontinued Operation

 

On January 31, 2012, Griffin Land closed on the sale of its Manchester, Connecticut warehouse to its full building tenant in that building, an affiliate of Raymour & Flanigan (“Raymour”).  Net cash proceeds from the sale, after selling expenses of $438 paid out of proceeds at closing and $25 paid separately, were $15,537, and a pretax gain of $2,886 is included in the results for discontinued operation in the 2012 first quarter.  Upon completion of the sale, Griffin deposited the cash of $15,562 received from the sale at closing into an escrow account for the potential purchase of a replacement property under a Section 1031 like-kind exchange.  Because Griffin Land did not identify a replacement property within the time frame required under the tax rules and regulations governing a Section 1031 like-kind exchange, on March 19, 2012 the cash that was being held in escrow was released to Griffin Land.

 

The operating results of the Manchester warehouse prior to its sale are reflected as a discontinued operation in Griffin’s consolidated statement of operations for the 2012 six month period.  Rental revenue and operating profit from the Manchester warehouse in the 2012 six month period were $273 and $221, respectively.

 

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3.     Industry Segment Information

 

Griffin defines its reportable segments by their products and services, which are comprised of the real estate and landscape nursery segments.  Management operates and receives reporting based upon these segments.  Griffin has no operations outside the United States.  Griffin’s export sales and transactions between segments are not material.

 

		For the 13 Weeks Ended,						For the 26 Weeks Ended,
		June 1, 2013			June 2, 2012			June 1, 2013			June 2, 2012
Total net sales and other revenue:
Rental revenue and property sales		$	6,271		$	4,476		$	11,779		$	8,889
Landscape nursery net sales and other revenue		8,972			8,258			9,174			8,458
		$	15,243		$	12,734		$	20,953		$	17,347
Operating profit (loss):
Real estate		$	2,145		$	912		$	3,211		$	1,640
Landscape nursery		214			36			(409		)	(607		)
Industry segment totals		2,359			948			2,802			1,033
General corporate expense		(1,394		)	(1,003		)	(2,806		)	(2,363		)
Operating profit (loss)		965			(55		)	(4		)	(1,330		)
Gain on sale of investment in Shemin Nurseries Holding Corporation		—			—			3,397			—
Gain on sale of common stock in Centaur Media plc		—			—			504			—
Interest expense		(965		)	(830		)	(1,943		)	(1,705		)
Loss on debt extinguishment		(286		)	—			(286		)	—
Investment income		51			82			51			469
Income (loss) before income tax (provision) benefit		$	(235	)	$	(803	)	$	1,719		$	(2,566	)

 

The above table reflects the net sales and other revenue and operating profit/loss included in continuing operations on Griffin’s consolidated statements of operations.  Operating results of the Manchester, Connecticut warehouse and the gain on the sale of that building are included in the results of the discontinued operation on Griffin’s 2012 six month consolidated statement of operations (see Note 2).

 

Continuing operations of the real estate segment include property sales revenue of $1,590 and $2,474 in the 2013 second quarter and 2013 six month period, respectively, due primarily to the recognition of previously deferred revenue on a land sale that was completed in the 2012 third quarter (see Note 11).  Included in property sales revenue in the 2013 second quarter and six month period is $177 from an amended agreement related to that 2012 land sale.  There was no revenue from property sales in Griffin’s continuing operations in either the 2012 second quarter or 2012 six month period.

 

In fiscal 2009, Imperial shut down operations on its Florida farm and entered into a lease with another grower for that property.  Other revenue of the landscape nursery segment includes revenue from the rental of Imperial’s Florida farm as follows:

 

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		For the 13 Weeks Ended,						For the 26 Weeks Ended,
		June 1, 2013			June 2, 2012			June 1, 2013			June 2, 2012
Rental revenue from Imperial’s Florida farm		$	117		$	117		$	234		$	235

 

Identifiable assets:		June 1, 2013			December 1, 2012
Real estate		$	142,022		$	142,440
Landscape nursery		25,948			20,693
Industry segment totals		167,970			163,133
General corporate		8,406			16,981
Total assets		$	176,376		$	180,114

 

4.     Fair Value

 

Griffin applies the provisions of FASB ASC 820, “Fair Value Measurements and Disclosures” (“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 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.  Griffin’s available-for-sale securities are considered Level 1 within the fair value hierarchy.

 

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 liabilities include Griffin’s four interest rate swap derivatives (see Note 9).  Beginning in the 2013 first quarter, the fair values of Griffin’s interest rate swap derivative instruments were based on discounted cash flow models that incorporate the cash flows of the derivatives as well as the current Overnight Indexed Swap (“OIS”) rate and swap curve along with other market data.  Prior to the beginning of fiscal 2013, the fair values of Griffin’s interest rate swap derivative instruments were based on discounted cash flow models that incorporated the cash flows of the derivatives as well as the current LIBOR rate and swap curve along with other market data.  The change to using the OIS rate from the LIBOR rate is consistent with current industry best practices.  The OIS rate is now considered the best discount rate to utilize since it is the best proxy for the risk-free rate.  These inputs are readily available in public markets or can be derived from information available in

 

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publicly quoted markets, therefore, Griffin has categorized these derivative instruments as Level 2 within the fair value hierarchy.

 

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

During the 2013 six month period, Griffin did not transfer any assets or liabilities in or out of Levels 1 and 2. The following are Griffin’s financial assets and liabilities carried at fair value and measured at fair value on a recurring basis:

 

		June 1, 2013
		Quoted Prices in			Significant			Significant
		Active Markets for			Observable			Unobservable
		Identical Assets			Inputs			Inputs
		(Level 1)			(Level 2)			(Level 3)
Marketable equity securities		$	2,027		$	—		$	—
Interest rate swap liabilities		$	—		$	2,401		$	—

 

		December 1, 2012
		Quoted Prices in			Significant			Significant
		Active Markets for			Observable			Unobservable
		Identical Assets			Inputs			Inputs
		(Level 1)			(Level 2)			(Level 3)
Marketable equity securities		$	4,226		$	—		$	—
Interest rate swap liabilities		$	—		$	3,191		$	—

 

The carrying and estimated fair values of Griffin’s financial instruments are as follows:

 

		Fair Value		June 1, 2013						December 1, 2012
		Hierarchy		Carrying			Estimated			Carrying			Estimated
		Level		Value			Fair Value			Value			Fair Value
Financial assets:
Cash and cash equivalents		1		$	5,184		$	5,184		$	10,181		$	10,181
Available-for-sale securities		1		2,027			2,027			4,226			4,226
Financial liabilities:
Mortgage debt		2		58,582			60,175			59,489			61,781
Interest rate swaps		2		2,401			2,401			3,191			3,191

 

The fair values of the available-for-sale securities are based on quoted market prices.  The fair values of the mortgage debt are estimated based on current rates offered to Griffin for similar debt of the

 

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