Segment Reporting

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting

Note 6 — Segment Reporting

The Company operates under two segments, REI and Cole Capital.

REI – Through its REI segment, the Company acquires, owns and operates primarily single-tenant, freestanding commercial real estate properties primarily subject to net leases with high credit quality tenants. As of September 30, 2014, the Company owned 4,714 properties comprising 113.8 million square feet of single- and multi-tenant retail and commercial space located in 49 states and Canada, which include properties owned through consolidated joint ventures. The rentable space at these properties was 99.2% leased with a weighted average remaining lease term of 11.50 years. In addition, as of September 30, 2014, the Company owned 10 commercial mortgage-backed securities (“CMBS”), 14 loans held for investment and, through the Unconsolidated Joint Ventures, had interests in six properties comprising 1.6 million rentable square feet of commercial and retail space.

Cole Capital – Cole Capital is contractually responsible for managing the Managed REITs’ affairs on a day-to-day basis, identifying and making acquisitions and investments on the Managed REITs’ behalf and recommending to each of the Managed REIT’s respective board of directors an approach for providing investors with liquidity. Cole Capital serves as the dealer manager and distributes shares of common stock for certain Managed REITs and advises them regarding offerings, manages relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to the offerings. Cole Capital receives compensation and reimbursement for services relating to the Managed REITs’ offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital also develops new REIT offerings, including obtaining regulatory approvals from the SEC, the Financial Industry Regulatory Authority, Inc. (“FINRA”) and various blue sky jurisdictions for such offerings.

On September 30, 2014, the Company entered into a definitive equity purchase agreement (the “Purchase Agreement”), to sell Cole Capital to RCAP, and, in conjunction with the sale agreement, entered into sub-advisory agreements to provide acquisition and property management services to Cole Capital subsequent to the closing of the transaction. These agreements were subsequently terminated by RCAP on November 3, 2014 as a result of the Audit Committee investigation into the Company. On December 4, 2014, a settlement agreement was reached as discussed within Note 24 — Subsequent Events.

The Company allocates certain operating expenses, such as audit and legal fees, board of director fees, employee related costs and benefits and general overhead expenses between its operating segments. The following tables present a summary of the comparative financial results and total assets for each business segment (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013 (As Restated)¹			2014			2013 (As Restated)¹
REI:
Rental income	$	365,712		$	89,729		$	924,646		$	183,251
Direct financing lease income		625			1,201			2,812			1,201
Operating expense reimbursements		30,984			4,325			81,716			8,516
Total real estate investment revenues		397,321			95,255			1,009,174			192,968
Acquisition related		13,998			26,948			34,616			74,541
Merger and other non-routine transactions		7,613			4,301			173,406			133,734
Property operating		40,977			5,430			110,018			11,065
Management fees to affiliate		—			—			13,888			12,493
General and administrative		14,942			9,866			68,580			23,921
Depreciation and amortization		240,073			62,136			625,521			122,484
Impairment of real estate		2,299			2,074			3,855			2,074
Total operating expenses		319,902			110,755			1,029,884			380,312
Operating income (loss)		77,419			(15,500	)		(20,710	)		(187,344	)
Interest expense, net		(101,643	)		(27,189	)		(326,491	)		(45,414	)
Extinguishment of debt, net		(5,396	)		—			(21,264	)		—
Other income, net		8,508			136			16,799			2,658
Loss on derivative instruments, net		(17,484	)		(38,651	)		(10,398	)		(69,830	)
Loss on disposition of property		(256,894	)		—			(275,768	)		—
Gain (loss) on sale of investments		6,357			(2,246	)		6,357			(1,795	)
Total other expenses, net		(366,552	)		(67,950	)		(610,765	)		(114,381	)
Net loss from continuing operations		(289,133	)		(83,450	)		(631,475	)		(301,725	)
Discontinued operations:
Income from operations of held for sale assets		—			96			—			159
Net income from discontinued operations		—			96			—			159
Net loss	$	(289,133	)	$	(83,354	)	$	(631,475	)	$	(301,566	)
Cole Capital:
Dealer manager and distribution fees, selling commissions and offering reimbursements	$	21,535		$	—		$	73,957		$	—
Transaction service fees		22,972			—			41,942			—
Management fees and reimbursements		15,290			—			35,377			—
Total Cole Capital revenues		59,797			—			151,276			—
Cole Capital reallowed fees and commissions		15,398			—			56,902			—
General and administrative expenses		17,265			—			60,131			—
Merger and other non-routine transactions		19			—			1,946			—
Depreciation and amortization		25,077			—			64,210			—
Total operating expenses		57,759			—			183,189			—
Total other income		(952	)		—			12,903			—
Net loss from continuing operations		1,086			—			(19,010	)		—
Discontinued operations:
Income from operations of held for sale assets		—			—			—			—
Net loss	$	1,086		$	—		$	(19,010	)	$	—
Total Company:
Total revenues	$	457,118		$	95,255		$	1,160,450		$	192,968
Total operating expenses	$	377,661		$	110,755		$	1,213,073		$	380,312
Total other expense	$	(367,504	)	$	(67,950	)	$	(597,862	)	$	(114,381	)
Loss from continuing operations	$	(288,047	)	$	(83,450	)	$	(650,485	)	$	(301,725	)
Income (loss) from discontinued operations	$	—		$	96		$	—		$	159
Net loss	$	(288,047	)	$	(83,354	)	$	(650,485	)	$	(301,566	)

(1) For discussion of the restatement adjustments, see Note 2 — Restatement of Previously Issued Consolidated Financial Statements.

	Total Assets
	September 30, 2014		December 31, 2013
REI	$	21,834,806	$	7,809,083
Cole Capital		1,032,777		—
Total Company	$	22,867,583	$	7,809,083