Segment Reporting

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

The Company has organized its operations into two segments for management and internal financial reporting purposes, REI and Cole Capital, as further discussed below.

REI – Through its REI segment, the Company owns and actively manages a diversified portfolio of retail, restaurant, office and industrial real estate properties subject to long-term net leases with creditworthy tenants. As of June 30, 2017, the Company owned 4,108 properties comprising 92.1 million square feet of retail and commercial space located in 49 states, Puerto Rico and Canada, which includes properties owned through consolidated joint ventures. The rentable space at these properties was 97.6% leased with a weighted-average remaining lease term of 9.5 years. In addition, as of June 30, 2017, the Company owned eight commercial mortgage-backed securities (“CMBS”) and eight mortgage notes receivable.

Cole Capital – Through its Cole Capital segment, the Company is responsible for managing the day-to-day affairs of Cole Credit Property Trust IV, Inc. (“CCPT IV”); Cole Real Estate Income Strategy (Daily NAV), Inc. (“INAV”); Cole Office & Industrial REIT (CCIT II), Inc. (“CCIT II”); Cole Office & Industrial REIT (CCIT III), Inc. (“CCIT III”); Cole Credit Property Trust V, Inc. (“CCPT V”); and other real estate offerings in registration (collectively with CCPT IV, INAV, CCIT II, CCIT III and CCPT V, the “Cole REITs”), raising capital for those Cole REITs still in offering, identifying and making acquisitions and investments on the Cole REITs’ behalf and recommending to the respective board of directors of each of the Cole REITs an approach for providing investors with liquidity. Cole Capital serves as the dealer manager and distributes shares of common stock for certain Cole REITs, 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 Cole REITs’ offerings and the investment, management, financing and disposition of their respective assets, as applicable. Cole Capital also develops new REIT offerings and assists in obtaining regulatory approvals from the SEC, the Financial Industry Regulatory Authority, Inc. and various blue sky jurisdictions for such offerings. See Note 17 –Related Party Transactions and Arrangements for further discussion on the Cole REITs.

The Company allocates certain operating expenses, such as legal 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 segment (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
REI segment:
Revenues:
Rental income	$	286,291		$	311,352		$	580,030		$	625,323
Direct financing lease income	403			535			836			1,104
Operating expense reimbursements	21,551			26,646			48,277			49,893
Total real estate investment revenues	308,245			338,533			629,143			676,320
Operating expenses:
Acquisition-related	720			27			1,337			244
Litigation and other non-routine costs, net of insurance recoveries	14,411			2,917			27,286			(2,258		)
Property operating	31,627			38,199			65,643			73,012
General and administrative	14,294			13,701			26,854			25,929
Depreciation and amortization	179,433			190,236			357,730			386,227
Impairment of real estate	17,769			8,825			24,494			169,342
Total operating expenses	258,254			253,905			503,344			652,496
Operating income	49,991			84,628			125,799			23,824
Other (expense) income:
Interest expense	(73,621		)	(82,468		)	(147,364		)	(162,894		)
Gain on extinguishment and forgiveness of debt, net	9,005			252			8,935			252
Other income, net	1,759			1,216			2,429			1,784
Equity in income and gain on disposition of unconsolidated entities	513			70			431			10,474
Gain (loss) on derivative instruments, net	592			(177		)	1,416			(1,263		)
Total other expenses, net	(61,752		)	(81,107		)	(134,153		)	(151,647		)
(Loss) income before taxes and real estate dispositions	(11,761		)	3,521			(8,354		)	(127,823		)
Gain on disposition of real estate and held for sale assets, net	42,639			437			55,120			17,612
Income (loss) before taxes	30,878			3,958			46,766			(110,211		)
Provision for income taxes	(1,146		)	(1,791		)	(4,254		)	(3,156		)
Net income (loss)	$	29,732		$	2,167		$	42,512		$	(113,367	)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Cole Capital segment:
Revenues:
Offering-related fees and reimbursements	$	4,523		$	10,914		$	8,839		$	23,305
Transaction service fees and reimbursements	5,062			4,476			9,159			6,860
Management fees and reimbursements	19,100			17,096			37,818			33,554
Total Cole Capital revenues	28,685			32,486			55,816			63,719
Operating expenses:
Cole Capital reallowed fees and commissions	2,874			6,975			5,534			15,043
Acquisition-related	36			14			36			39
General and administrative	15,117			19,393			31,705			36,565
Depreciation and amortization	4,855			7,109			9,710			15,426
Total operating expenses	22,882			33,491			46,985			67,073
Operating income (loss)	5,803			(1,005		)	8,831			(3,354		)
Total other income, net	76			—			204			494
Income (loss) before taxes	5,879			(1,005		)	9,035			(2,860		)
(Provision for) benefit from income taxes	(1,425		)	2,071			(2,571		)	3,380
Net income	$	4,454		$	1,066		$	6,464		$	520
Total Company:
Total revenues	$	336,930		$	371,019		$	684,959		$	740,039
Total operating expenses	$	(281,136	)	$	(287,396	)	$	(550,329	)	$	(719,569	)
Total other expense, net	$	(61,676	)	$	(81,107	)	$	(133,949	)	$	(151,153	)
Net income (loss)	$	34,186		$	3,233		$	48,976		$	(112,847	)

	Total Assets
	June 30, 2017		December 31, 2016
REI segment	$	14,790,320	$	15,337,623
Cole Capital segment	257,720		249,951
Total Company	$	15,048,040	$	15,587,574