Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Dispositions and Real Estate Assets Held for Sale

Operating Property Dispositions

The following table summarizes the operating properties sold during the years ended December 31, 2016, 2015 and 2014:

Location	Month of Disposition	Number of Buildings	Rentable Square Feet (unaudited)	Sales Price (in millions) (1)
2016 Dispositions
Torrey Santa Fe Properties (2)	January	4	465,812	$	262.3
4930, 4939 & 4955 Directors Place, San Diego, CA (3)	July	2	136,908	49.0
Total 2016 Dispositions		6	602,720	$	311.3
2015 Dispositions
15050 NE 36th Street, Redmond, WA	April	1	122,103	$	51.2
San Diego Properties - Tranches 1 and 2 (4)	April/July	9	924,291	258.0
Total 2015 Dispositions		10	1,046,394	$	309.2
2014 Dispositions(5)
San Diego Properties, San Diego, CA (6)	January	12	1,049,035	$	294.7
9785 & 9791 Towne Centre Drive, San Diego, CA	June	2	126,000	29.5
111 Pacifica, Irvine, CA	September	1	67,496	15.1
4040 Civic Center Drive, San Rafael, CA	October	1	130,237	34.9
999 Town & Country Road, Orange, CA	December	1	98,551	25.3
Total 2014 Dispositions		17	1,471,319	$	399.5

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(1) Represents gross sales price before the impact of broker commissions and closing costs.

(2) The Torrey Santa Fe Properties include the following properties: 7525 Torrey Santa Fe, 7535 Torrey Santa Fe, 7545 Torrey Santa Fe and 7555 Torrey Santa Fe. These properties were classified as held for sale at December 31, 2015.

(3) Includes two operating properties totaling 136,908 rentable square feet and a 7.0 acre undeveloped land parcel.

(4) The San Diego Properties - Tranche 1 includes the following properties: 10770 Wateridge Circle, 6200 Greenwich Drive and 6220 Greenwich Drive. The San Diego Properties - Tranche 2 includes the following properties: 6260 Sequence Drive, 6290, Sequence Drive, 6310 Sequence Drive, 6340 Sequence Drive, 6350 Sequence Drive and 4921 Directors Place.

(5) The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” for additional information). As a result, results of operations for properties disposed of subsequent of January 1, 2015 are presented in continuing operations because they did not represent strategic shifts. Properties disposed of prior to January 1, 2015 are presented in discontinued operations.

(6) The San Diego Properties included the following properties: 10020 Pacific Mesa Boulevard, 6055 Lusk Avenue, 5010 and 5005 Wateridge Vista Drive, 15435 and 15445 Innovation Drive, and 15051, 15073, 15231, 15253, 15333 and 15378 Avenue of Science. These properties were held for sale as of December 31, 2013.

The operations of the six properties sold during the year ended December 31, 2016 and ten properties sold during the year ended December 31, 2015 are presented in continuing operations for the years ended December 31, 2016 and December 31, 2015, respectively. For the year ended December 31, 2014, discontinued operations includes the income and gains on all of the properties sold in 2014 (see Note 2 “Basis of Presentation and Significant Accounting Policies” and Note 21 “Discontinued Operations” for additional information).

The total gains on sales of the six properties sold during the year ended December 31, 2016 was $164.3 million. The total gains on sales of the ten properties sold during the year ended December 31, 2015 was $110.0 million. The total gains on sales of the 17 properties sold during the year ended December 31, 2014 was $121.9 million.

Operating Properties Held for Sale

As of December 31, 2016 and 2015, the properties listed below were classified as held for sale.

Properties	Submarket	Property Type	Number of Buildings	Rentable Square Feet (unaudited)
2016 Held for Sale
5717 Pacific Center Drive (1)	Sorrento Mesa	Office	1	67,995
2015 Held for Sale
Torrey Santa Fe Properties (2)(3)	Del Mar	Office	4	465,812

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(1) In January 2017, the Company completed the sale of this property for a total sales price of $12.1 million.

(2) The Torrey Santa Fe Properties include the following properties: 7525 Torrey Santa Fe, 7535 Torrey Santa Fe, 7545 Torrey Santa Fe, and 7555 Torrey Santa Fe.

(3) In January 2016, the Company completed the sale of these properties for a total sales price of $262.3 million.

The major classes of assets and liabilities of the properties held for sale as of December 31, 2016 and 2015 were as follows:

	December 31, 2016			December 31, 2015
Real estate assets and other assets held for sale	(in thousands)
Land and improvements	$	2,693		$	10,534
Buildings and improvements	10,500			144,716
Undeveloped land and construction in progress	—			4,824
Total real estate held for sale	13,193			160,074
Accumulated depreciation and amortization	(3,900		)	(46,191		)
Total real estate held for sale, net	9,293			113,883
Deferred rent receivables, net	—			2,500
Deferred leasing costs and acquisition-related intangible assets, net	—			1,115
Prepaid expenses and other assets, net	124			168
Real estate and other assets held for sale, net	$	9,417		$	117,666
Liabilities and deferred revenue of real estate assets held for sale
Secured debt	$	—		$	561
Accounts payable, accrued expenses and other liabilities	56			2,497
Deferred revenue and acquisition-related intangible liabilities, net	—			2,899
Rents received in advance and tenant security deposits	—			1,586
Liabilities and deferred revenue of real estate assets held for sale	$	56		$	7,543

Land Dispositions

The following table summarizes the land dispositions completed during the years ended December 31, 2016, 2015 and 2014:

Properties	Submarket	Month of Disposition	Gross Site Acreage (unaudited)	Sales Price(1) (in millions)
2016 Land Dispositions
Carlsbad Oaks - Lot 7 (2)	Carlsbad	January	7.6	$	4.5
Carlsbad Oaks - Lots 4 & 5	Carlsbad	June	11.2	6.0
Carlsbad Oaks - Lot 8	Carlsbad	June	13.2	8.9
Total 2016 Land Dispositions (3)(4)			32.0	$	19.4
2015 Land Disposition
17150 Von Karman (4)	Irvine	January	8.5	$	26.0
2014 Land Disposition
10850 Via Frontera (4)	Rancho Bernardo	April	21.0	$	33.1

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(1) Represents gross sales price before the impact of commissions and closing costs.

(2) This land parcel was classified as held for sale as of December 31, 2015.

(3) In connection with these land dispositions, $2.3 million of secured debt was assumed by the buyers. See Note 9 “Secured and Unsecured Debt of the Operating Partnership” for additional information.

(4) The 2016 land dispositions resulted in a net loss on sales of $0.3 million and the 2015 and 2014 land dispositions resulted in gain on sales of $17.3 million and $3.5 million, respectively.

Land Held for Sale

We did not have any land classified as held for sale as of December 31, 2016. As of December 31, 2015, the following land parcel was classified as held for sale:

Properties	Submarket	Gross Site Acreage (unaudited)	Sales Price (in millions)
2015 Held for Sale
Carlsbad Oaks - Lot 7 (1)	Carlsbad	7.6	$	4.5

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(1) During the year ended December 31, 2015, the Company recognized a loss relating to selling costs of approximately $0.2 million.

Restricted Cash Related to Dispositions

As of December 31, 2016 approximately $48.4 million of net proceeds related to the land and operating property dispositions during the year ended December 31, 2016 were temporarily being held at a qualified intermediary, at our direction, for the purpose of facilitating Section 1031 Exchanges. The cash proceeds were included in restricted cash on the consolidated balance sheet at December 31, 2016. During January 2017, the Section 1031 Exchange was successfully completed and the cash proceeds were released from the qualified intermediary. We did not have any restricted cash related to dispositions or Section 1031 Exchanges as of December 31, 2015.

Discontinued Operations

For the year ended December 31, 2014, discontinued operations included the results of all properties sold in 2014, except for the operations deemed immaterial related to a June 2014 office property disposition. The following table summarizes the revenue and expense components that comprise income from discontinued operations for the year ended December 31, 2014:

	2014
	(in thousands)
Revenues:
Rental income	$	7,206
Tenant reimbursements	278
Other property income	13
Total revenues	7,497
Expenses:
Property expenses	2,171
Real estate taxes	692
Depreciation and amortization	2,061
Total expenses	4,924
Income from discontinued operations before net gain on dispositions of discontinued operations	2,573
Net gain on dispositions of discontinued operations	121,922
Total income from discontinued operations	$	124,495