Discontinued Operations and Assets Held for Sale

6 Months Ended

Jun. 30, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets Held for Sale

Discontinued Operations and Assets Held for Sale

The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations:

	Held for Sale at June 30, 2014	Sold in 2014	Sold in 2013	Total
Industrial	0	11	6	17
Office	0	0	12	12
Medical Office	1	1	6	8
Retail	0	0	1	1
Total properties included in discontinued operations	1	12	25	38
Properties excluded from discontinued operations	1	9	13	23
Total properties sold or classified as held-for-sale	2	21	38	61

As described in Note 2, we adopted ASU 2014-08 beginning April 1, 2014. Three properties were designated as held-for-sale at March 31, 2014, and met the criteria for discontinued operations that were applicable prior to the adoption of ASU 2014-08. Two of these properties were sold during the three months ended June 30, 2014, while one of these properties continues to be designated as held-for-sale at June 30, 2014. No new properties, whether having been disposed of or designated as held-for-sale, have met the criteria for classification as discontinued operations since the adoption of ASU 2014-08.

For the properties that were classified in discontinued operations prior to the adoption of ASU 2014-08, we allocated interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any secured debt for properties included in discontinued operations and an allocable share of our consolidated unsecured interest expense for unencumbered properties. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.

The following table illustrates the operational results of the buildings reflected in discontinued operations for the three and six months ended June 30,2014 and 2013, respectively (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues	$	593		$	12,263		$	1,961		$	28,667
Operating expenses	(72		)	(4,852		)	(985		)	(10,839		)
Depreciation and amortization	—			(3,937		)	(205		)	(10,723		)
Operating income	521			3,474			771			7,105
Interest expense	(194		)	(3,346		)	(576		)	(7,463		)
Income (loss) before gain on sales	327			128			195			(358		)
Gain on sale of depreciable properties	2,851			83,657			22,603			92,611
Income from discontinued operations before income taxes	3,178			83,785			22,798			92,253
Income tax expense	(546		)	—			(3,523		)	—
Income from discontinued operations	$	2,632		$	83,785		$	19,275		$	92,253

The income tax expense included in discontinued operations during the three and six months ended June 30, 2014 was triggered by the sale of a property that was partially owned by our taxable REIT subsidiary.

The income tax expense from continuing operations of $364,000 and $3.0 million for the three and six months ended June 30,2014, as presented in the Consolidated Statements of Operations and Comprehensive Income, was related to the sale of another property that was partially owned by our taxable REIT subsidiary but, due to continuing involvement in managing the property, was not classified as a discontinued operation.

Dividends or distributions on preferred shares or Preferred Units and adjustments for the redemption or repurchase of preferred shares or Preferred Units are allocated entirely to continuing operations for both the General Partner and the Partnership.

Allocation of Noncontrolling Interests - General Partner

The following table illustrates the General Partner's share of the income (loss) attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income or loss between continuing and discontinued operations to the Limited Partner Units, for the three and six months ended June 30,2014 and 2013, respectively (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2014		2013			2014		2013
Income (loss) from continuing operations attributable to common shareholders	$	125,090	$	(21,166	)	$	127,350	$	(1,461	)
Income from discontinued operations attributable to common shareholders	2,598		82,660			19,021		90,998
Net income attributable to common shareholders	$	127,688	$	61,494		$	146,371	$	89,537

Allocation of Noncontrolling Interests - Partnership

Substantially all of the income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is attributable to the common unitholders.

Properties Held for Sale

At June 30, 2014, one in-service property, which was classified in discontinued operations prior to the adoption of ASU 2014-08, met the criteria for designation as held-for-sale. Additionally, one in-service property met the criteria for designation as held-for-sale subsequent to the adoption of ASU 2014-08, but does not meet the criteria to be classified within discontinued operations. The following table illustrates aggregate balance sheet information of these properties at June 30, 2014 (in thousands):

	June 30, 2014
	Properties Included in Continuing Operations		Properties Included in Discontinued Operations		Total Held-For-Sale Properties
Real estate investment, net	$	9,436	$	14,643	$	24,079
Other assets	534		5,167		5,701
Total assets held-for-sale	$	9,970	$	19,810	$	29,780
Accrued expenses	$	188	$	175	$	363
Other liabilities	175		—		175
Total liabilities held-for-sale	$	363	$	175	$	538