Real Estate Assets, Discontinued Operations and Assets Held for Sale

9 Months Ended

Sep. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Assets Held for Sale

Real Estate Assets, Discontinued Operations and Assets Held-for-Sale

Real Estate Assets

Real estate assets, excluding assets held-for-sale, consisted of the following (in thousands):

	September 30, 2018		December 31, 2017
Buildings and tenant improvements	$	4,778,860	$	4,642,832
Land and improvements	2,164,769		1,950,735
Real estate assets	$	6,943,629	$	6,593,567

Discontinued Operations

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

 

	Held-for-Sale at September 30, 2018	Sold Year-to-Date in 2018	Sold in 2017	Total
Total properties included in discontinued operations	—	—	81	81
Properties excluded from discontinued operations	1	13	17	31
Total properties sold or classified as held-for-sale	1	13	98	112

For the properties that were classified in discontinued operations during the year ended December 31, 2017, 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 was based upon an allocable share of our consolidated unsecured interest expense, as none of the properties included in discontinued operations were encumbered by secured debt. 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. There were no additional properties classified as discontinued operations during the nine months ended September 30, 2018 and, as such, no interest expense was allocated to discontinued operations during that period.

The following table illustrates the operational results of the buildings reflected in discontinued operations (in thousands):  

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Revenues	$	85	$	4,622		$	117		$	86,026
Operating expenses	—		(1,613		)	(9		)	(27,780		)
Depreciation and amortization	—		(37		)	—			(25,886		)
Operating income	85		2,972			108			32,360
Interest expense	—		(409		)	—			(14,613		)
Income before gain on sales and income taxes	85		2,563			108			17,747
Gain on sale of depreciable properties	136		120,179			3,157			1,229,270
Income from discontinued operations before income taxes	221		122,742			3,265			1,247,017
Income tax benefit (expense)	—		876			—			(10,736		)
Income from discontinued operations	$	221	$	123,618		$	3,265		$	1,236,281

The amounts classified in discontinued operations for the three and nine months ended September 30, 2018 were comprised of true-up activity related to 2017 property sales that were classified as discontinued operations.

There were no capital expenditures for properties within discontinued operations for the nine months ended September 30, 2018. Capital expenditures on a cash basis for the nine months ended September 30, 2017 were $20.8 million for properties 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 noncontrolling interests (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Income from continuing operations attributable to common shareholders	$	52,806	$	41,618	$	316,598	$	225,970
Income from discontinued operations attributable to common shareholders	219		123,651		3,235		1,220,042
Net income attributable to common shareholders	$	53,025	$	165,269	$	319,833	$	1,446,012

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.

Assets Held-for-Sale

At September 30, 2018, one in-service property, and 18 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 properties and land held-for-sale (in thousands):

	Held-for-Sale Properties Included in Continuing Operations
	September 30, 2018			December 31, 2017
Land and improvements	$	10,158		$	8,157
Buildings and tenant improvements	51,567			10,505
Accumulated depreciation	(9,982		)	(2,553		)
Deferred leasing and other costs, net	886			862
Other assets	1,024			579
Total assets held-for-sale	$	53,653		$	17,550
Total liabilities related to assets held-for-sale	$	606		$	1,163