Discontinued Operations and Assets Held for Sale

6 Months Ended

Jun. 30, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets Held for Sale

Discontinued Operations and Assets Held-for-Sale

Discontinued Operations

Beginning with our adoption of ASU 2014-08 on April 1, 2014, discontinued operations presentation applies only to disposals representing a strategic shift that has (or will have) a major effect on an entity’s operations and financial results (e.g., a disposal of a major geographical area, a major line of business, a major equity method investment or other major parts of an entity).

On April 1, 2015, we completed the Suburban Office Portfolio Sale that had been under agreement for sale since late January 2015. Because of the size of this disposition, and the fact that it represented our exit from the office product type in four geographic markets, we determined that the disposition represented a strategic shift that would have a major effect on our operations and financial results. As such, the in-service properties in this portfolio met the criteria to be classified within discontinued operations. As the result of its classification within discontinued operations, the in-service assets and liabilities of this portfolio are required to be presented as held-for-sale for all prior periods presented in our Consolidated Balance Sheets.

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, 2015	Sold through June 30, 2015	Sold in 2014	Total
Industrial	0	5	11	16
Medical Office	0	1	1	2
Office	0	56	0	56
Total properties included in discontinued operations	0	62	12	74
Properties excluded from discontinued operations	9	62	17	88
Total properties sold or classified as held-for-sale	9	124	29	162

For the properties that were classified in discontinued operations, 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 six months endedJune 30, 2015 and 2014, respectively (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenues	$	49		$	29,331		$	32,164		$	59,403
Operating expenses	(13		)	(11,101		)	(12,399		)	(23,504		)
Depreciation and amortization	—			(9,141		)	(3,517		)	(19,107		)
Operating income	36			9,089			16,248			16,792
Interest expense	—			(3,618		)	(6,053		)	(7,399		)
Income before gain on sales	36			5,471			10,195			9,393
Gain on sale of depreciable properties	399,354			2,851			417,729			22,603
Income from discontinued operations before income taxes	399,390			8,322			427,924			31,996
Income tax expense	(3,220		)	(546		)	(3,220		)	(3,523		)
Income from discontinued operations	$	396,170		$	7,776		$	424,704		$	28,473

Capital expenditures on a cash basis for the six months endedJune 30, 2015 and 2014 were $7.4 million and $9.9 million, respectively, related to properties classified within discontinued operations.

Allocation of Noncontrolling Interests - General Partner

The following table illustrates the General Partner's share of the income attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income between continuing and discontinued operations to the Limited Partner Units, for the six months endedJune 30, 2015 and 2014, respectively (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Income from continuing operations attributable to common shareholders	$	57,333	$	120,013	$	94,382	$	118,272
Income from discontinued operations attributable to common shareholders	392,047		7,675		420,242		28,099
Net income attributable to common shareholders	$	449,380	$	127,688	$	514,624	$	146,371

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, 2015, nine in-service properties and 29 acres of undeveloped land were classified as held-for-sale but did not meet the criteria to be classified within discontinued operations. The following table illustrates aggregate balance sheet information for all held-for-sale properties at June 30, 2015 and December 31, 2014 (in thousands):

	June 30, 2015			December 31, 2014
	Properties Included in Continuing Operations			Properties Included in Continuing Operations			Properties Included in Discontinued Operations			Total  Held-For-Sale Properties
Land and improvements	$	13,443		$	21,347		$	126,921		$	148,268
Buildings and tenant improvements	94,443			36,925			721,398			758,323
Undeveloped land	2,696			12,443			—			12,443
Accumulated depreciation	(46,891		)	(23,071		)	(247,269		)	(270,340		)
Deferred leasing and other costs, net	4,393			3,480			44,840			48,320
Other assets	4,300			562			27,475			28,037
Total assets held-for-sale	$	72,384		$	51,686		$	673,365		$	725,051
Secured debt	$	—		$	—		$	40,764		$	40,764
Accrued expenses	1,885			233			5,180			5,413
Other liabilities	1,857			434			12,481			12,915
Total liabilities held-for-sale	$	3,742		$	667		$	58,425		$	59,092