Impairment Loss on Real Estate Assets

Piedmont recorded impairment loss on real estate assets for the three and nine months ended September 30, 2016 and 2015, respectively, as follows (in thousands):



	Three Months Ended				Nine Months Ended
	2016		2015		2016		2015
Eastpoint I & II ⁽¹⁾	$	—	$	—	$	—	$	5,354
2 Gatehall Drive ⁽¹⁾	—		34,815		—		34,815
150 West Jefferson⁽¹⁾	—		—		5,972		—
9221 Corporate Boulevard ⁽²⁾	—		—		2,336		—
9200 and 9211 Corporate Boulevard⁽³⁾	22,590		—		22,590		—
Total impairment loss on real estate assets⁽⁴⁾	$	22,590	$	34,815	$	30,898	$	40,169


⁽¹⁾	Piedmont recognized an impairment loss on real estate assets based upon the difference between the carrying value of the asset and the contracted sales price, less estimated selling costs.

⁽²⁾

Piedmont, using a probability-weighted model heavily weighted towards the short-term sale of the 9221 Corporate Boulevard building in Rockville, Maryland, determined that the carrying value would not be recovered from the undiscounted future operating cash flows expected from the use of the asset and its eventual disposition. As a result, Piedmont recognized a loss on impairment of approximately $2.3 million during the nine months ended September 30, 2016 calculated as the difference between the carrying value of the asset and the anticipated contract sales price, less estimated selling costs.

⁽³⁾

Piedmont elected to sell its remaining two assets and exit the Rockville, Maryland sub-market of Washington, D.C, after selling the 9221 Corporate Boulevard building in July 2016 (mentioned above). Upon management's change in its hold period assumption for the assets from a long-term hold to a near-term sale, Piedmont recognized an impairment loss of approximately $22.6 million. The impairment loss was calculated as the difference between the carrying value of the asset and the anticipated contracted sales price, less estimated selling costs. Piedmont reclassified the properties as held for sale, recognized an impairment loss, entered into a binding contract, and subsequently sold the 9200 and 9211 Corporate Boulevard buildings during the three months ended September 30, 2016.


⁽⁴⁾	The fair value measurements used in the evaluation of the non-financial assets above are considered to be Level 1 valuations within the fair value hierarchy as defined by GAAP, as there are direct observations and transactions involving the assets by unrelated, third-party purchasers.