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Discontinued Operations
 12 Months Ended
Dec. 31, 2017
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
Discontinued Operations
On November 13, 2017, the Company entered into the Cole Capital Purchase and Sale Agreement to sell all of the issued and outstanding shares of common stock of CCA and certain of CCA’s subsidiaries to the Cole Purchaser for approximately $120.0 million paid in cash at closing, subject to customary adjustments to reflect the operation of CCA and such subsidiaries prior to closing. The sale closed on February 1, 2018. At closing, the Company entered into a services agreement (the “Services Agreement”) with the Cole Purchaser pursuant to which the Company will continue to provide certain services to the Cole Purchaser and the Cole REITs, including operational real estate support, over the next year. Under the terms of the Services Agreement, the Company will be entitled to receive reimbursement for certain of the services provided. The Company could also receive additional fees over the next six years if future revenues of Cole Capital exceed a specified dollar threshold (the “Net Revenue Payments”), up to an aggregate of $80.0 million in Net Revenue Payments.
The following is a summary of the assets and liabilities related to discontinued operations and real estate assets held for sale as of December 31, 2017 and December 31, 2016 (in thousands):
 
 
December 31, 2017
 
December 31, 2016
Carrying amount of major classes of assets included in discontinued operations:
 
 
 
 
Cash
 
$
2,198

 
$
2,973

Intangible assets, net (1)
 
9,892

 
24,383

Other assets, net (2)
 
6,975

 
16,626

Goodwill (3)
 
124,812

 
124,812

Due from Cole REITs, net
 
1,284

 
5,445

Loss recognized on classification as held for sale (4)
 
(19,509
)
 
—

Assets related to discontinued operations, net
 
125,652

 
174,239

 
 
 
 
 
Real estate assets held for sale, net (5)
 
38,347

 
38,928

Assets related to discontinued operations and real estate assets held for sale, net
 
$
163,999

 
$
213,167

 
 
 
 
 
Carrying amount of major classes of liabilities included in discontinued operations:
 
 
 
 
Accounts payable and accrued expenses
 
$
14,269

 
$
11,276

Other liabilities
 
1,512

 
68

Due to Cole REITs
 
100

 
—

Liabilities related to discontinued operations
 
$
15,881

 
$
11,344

___________________________________
(1)
The intangible assets consisted of management and advisory contracts that the Company had with certain Cole REITs. Accumulated amortization was $44.1 million and $29.6 million as of December 31, 2017 and December 31, 2016, respectively.
(2)
Includes program development costs of $3.3 million and $3.2 million as of December 31, 2017 and December 31, 2016, respectively, which were net of reserves of $7.6 million and $31.7 million, respectively.
(3)
The Company performed the annual goodwill test using the $120.0 million cash proceeds provided for under the Cole Capital Purchase and Sale Agreement, plus the estimated fair value of the Net Revenue Payments and determined the carrying amount exceeded the estimated fair value. As such, no goodwill impairment was recorded during the year ended December 31, 2017.
(4)
The Company recognized a loss of $20.0 million on classification of the discontinued operations as held for sale, of which $0.5 million represents estimated costs to sell that were subsequently accrued in accounts payable and accrued expenses as of December 31, 2017. In determining the loss recognized on classification as held for sale, the Company elected to account for the future Net Revenue Payments as a gain contingency. Under this approach, the Company will not recognize any Net Revenue Payments until realized.
(5)
Real estate assets held for sale are not included in assets related to discontinued operations.






The following is a summary of the financial information and cash flows for discontinued operations for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
Revenues:
 
2017
 
2016
 
2015
Offering-related fees and reimbursements
 
$
16,096

 
$
36,526

 
$
24,412

Transaction service fees and reimbursements
 
13,929

 
12,533

 
25,256

Management fees and reimbursements
 
76,214

 
68,686

 
58,793

Total revenues
 
$
106,239

 
$
117,745

 
$
108,461

Operating expenses:
 
 
 
 
 

Cole Capital reallowed fees and commissions
 
9,879

 
23,174

 
16,195

Transaction costs
 
3,802

 
—

 
—

General and administrative
 
63,783

 
82,558

 
79,602

Amortization of intangible assets
 
14,490

 
26,148

 
25,884

Goodwill and intangible asset impairments
 
—

 
120,931

 
213,339

Total operating expenses
 
91,954

 
252,811

 
335,020

Operating income (loss)
 
14,285

 
(135,066
)
 
(226,559
)
Other income (expense), net
 
464

 
292

 
1,167

Loss recognized on classification as held for sale
 
(20,027
)
 
—

 
—

Loss before taxes
 
(5,278
)
 
(134,774
)
 
(225,392
)
(Provision for) benefit from income taxes
 
(13,839
)
 
10,837

 
40,892

Loss from discontinued operations
 
$
(19,117
)
 
$
(123,937
)
 
$
(184,500
)

 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Cash flows related to discontinued operations:
 
 
 
 
 
 
Cash flows from operating activities
 
$
33,232

 
$
35,251

 
$
31,431

Cash flows from investing activities
 
$
—

 
$
—

 
$
—


Income Taxes
Cole Capital’s business, substantially all of which was conducted through a TRS, recognized a provision of $13.8 million for the year ended December 31, 2017, and a benefit of $10.8 million and $40.9 million for the years ended December 31, 2016 and 2015, respectively.
The following table presents the reconciliation of the provision for (benefit from) income taxes with the amount computed by applying the statutory federal income tax rate to loss before income taxes for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Loss before taxes
 
$
(5,278
)
 
$
(134,774
)
 
$
(225,392
)
Less: Income from non-taxable entities
 
(9,523
)
 
(9,008
)
 
(8,440
)
Loss attributable to taxable subsidiaries before income taxes
 
$
(14,801
)
 
$
(143,782
)
 
$
(233,832
)
 
 
 
 
 
 
 
Federal provision at statutory rate (35%)
 
(5,180
)
 
(50,324
)
 
(81,841
)
Impairment of goodwill
 
—

 
42,327

 
48,880

Nondeductible portion of transaction costs and loss recognized on classification as held for sale
 
8,283

 
—

 
—

Impact of change in federal tax rate
 
3,481

 
—

 
—

Impact of valuation allowance
 
6,165

 
—

 
—

State income taxes and other
 
1,090

 
(2,840
)
 
(7,931
)
Total provision for (benefit from) income taxes - Cole Capital
 
$
13,839

 
$
(10,837
)
 
$
(40,892
)

The following table presents the components of the provision for (benefit from) income taxes for the years ended December 31, 2017, 2016 and 2015 (in thousands):
 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Current
 
 
 
 
 
 
Federal
 
$
(120
)
 
$
2,244

 
$
9,058

State
 
602

 
(2,762
)
 
2,110

Total current provision for (benefit from) income taxes
 
482

 
(518
)
 
11,168

Deferred
 
 
 
 
 
 
Federal
 
12,016

 
(9,021
)
 
(45,255
)
State
 
1,341

 
(1,298
)
 
(6,805
)
Total deferred provision for (benefit from) income taxes
 
13,357

 
(10,319
)
 
(52,060
)
Total provision for (benefit from) income taxes - Cole Capital
 
$
13,839

 
$
(10,837
)
 
$
(40,892
)

The components of the net deferred tax assets (liabilities) as of December 31, 2017 and 2016 which are included in assets or liabilities related to discontinued operations, net in the accompanying consolidated balance sheets, are as follows (in thousands):
 
 
December 31, 2017
 
December 31, 2016
 
Intangible assets
 
$
(1,590
)
 
$
(7,858
)
 
Accrued compensation
 
1,253

 
6,163

 
Fixed assets
 
(1,568
)
 
(3,155
)
 
Product development costs
 
1,680

 
11,668

 
Equity-based compensation
 
4,772

 
4,249

 
Other
 
555

 
1,227

 
Total net deferred tax asset
 
5,102

 
12,294

 
Less: valuation allowance
 
(6,165
)
 
—

 
Net deferred tax (liability) asset
 
$
(1,063
)
 
$
12,294