RECENT TRANSACTIONS

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

RECENT TRANSACTIONS

RECENT TRANSACTIONS

In November of 2019, the Company entered into a lease agreement related to its property at 100 Fellowship Drive, a 13.5-acre land parcel and 203,257-square-foot build-to-suit medical building with approximately 550 surface parking spaces in The Woodlands, Texas. At lease commencement, the Company derecognized $63.7 million from Developments and recorded a net investment in lease receivable of $75.9 million on the Condensed Consolidated Balance Sheets, recognizing $13.5 million of Selling profit from the sales-type lease on the Condensed Consolidated Statements of Operations.

On March 13, 2020, the Company closed on the sale of this asset for a total sales price of $115.0 million, resulting in a gain of $38.3 million, which is included in Gain (loss) on sale or disposal of real estate and other assets, net on the Condensed Consolidated Statements of Operations. The carrying value of the net investment in lease receivable was approximately $76.1 million at the time of sale. Gain on sale is calculated as the difference between the purchase price of $115.0 million, and the asset’s carrying value, less related transaction costs of approximately $0.2 million. Contemporaneous with the sale, the Company credited to the buyer approximately $0.6 million for operating account funds and the buyer’s assumption of the related liabilities. After the sale, the Company had no continuing involvement in this lease.

After repayment of debt associated with the property, the sale generated approximately $64.2 million in net proceeds, which are presented as cash inflows from operating activities in the Condensed Consolildated Statement of Cash Flows for the three months ended March 31, 2020. The Company intends to use the net proceeds from the sale to strengthen its balance sheet and improve liquidity. As this transaction was completed on a tax-free basis for federal income tax purposes as part of a reverse 1031 exchange involving the Company’s December 2019 purchase of The Woodlands Towers at The Waterway, the net proceeds were held at the escrow agent as of the end of the current quarter and are reflected in Restricted cash on the Company’s Condensed Consolidated Balance Sheets as of March 31, 2020.