Discontinued Operations

12 Months Ended

Dec. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations On November 13, 2017, the Company entered into a purchase and sale agreement (as amended by that certain First Amendment to the Purchase and Sale Agreement, dated as of February 1, 2018, the “Cole Capital Purchase and Sale Agreement”). On February 1, 2018, the Company completed the sale of its investment management segment, Cole Capital, under the terms of the Cole Capital Purchase and Sale Agreement. Substantially all of the Cole Capital segment operations were conducted through Cole Capital Advisors, Inc. (“CCA”), an Arizona corporation and a wholly owned subsidiary of the OP. The OP sold all of the issued and outstanding shares of common stock of CCA and certain of CCA’s subsidiaries to the Cole Purchaser, an affiliate of CIM Group, LLC for approximately $120.0 million paid in cash at closing. The Company could also earn up to an aggregate of $80.0 million of Net Revenue Payments in each calendar year through December 31, 2023 if future revenues of Cole Capital exceed a specified dollar threshold in a calendar year. There were no Net Revenue Payments received or earned since the sale. Substantially all of the Cole Capital segment financial results are reflected in the financial statements as discontinued operations. There were no discontinued operations or cash flows for the years ended December 31, 2020 or 2019. There were also no assets and liabilities related to discontinued operations as of December 31, 2020, 2019 or 2018.

The following is a summary of the financial information for discontinued operations for the year ended December 31, 2018 (in thousands):

	2018
Revenues:
Offering-related fees and reimbursements	$	1,027
Transaction service fees and reimbursements	334
Management fees and reimbursements	6,452
Total revenues	7,813
Operating expenses:
Cole Capital reallowed fees and commissions	602
Transaction costs (1)	(654)
General and administrative	4,450
Total operating expenses	4,398
Loss on disposition and assets held for sale	(1,815)
Income before taxes	1,600
Benefit from income taxes	2,095
Income from discontinued operations, net of income taxes	$	3,695

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(1)The negative balance for the year ended December 31, 2018 is a result of estimated costs accrued in prior periods that exceeded actual expenses incurred.

The following is a summary of cash flows related to discontinued operations for the year ended December 31, 2018 (in thousands):

	2018
Cash flows related to discontinued operations:
Cash flows used in operating activities	$	(10,468)
Cash flows from investing activities	$	122,915

Income Taxes

Cole Capital’s business, substantially all of which was conducted through a TRS, recognized a tax benefit of $2.1 million for the year ended December 31, 2018. There were no related benefits or provisions for the years ended December 31, 2020 or 2019.

The following table presents the reconciliation of the (benefit from) provision for income taxes with the amount computed by applying the statutory federal income tax rate to income (loss) before income taxes for the year ended December 31, 2018 (in thousands):

	2018
Income before taxes	$	1,600
Less: Income from non-taxable entities	(685)
Income attributable to taxable subsidiaries before income taxes	$	915
Federal benefit from income taxes at statutory rate	192
Nondeductible portion of transaction costs and loss recognized on classification as held for sale	(719)
Impact of valuation allowance	(1,158)
State income taxes and other	(410)
Total benefit from income taxes - Cole Capital	$	(2,095)

The following table presents the components of the benefit from income taxes for the year ended December 31, 2018 (in thousands):

	2018
Current
Federal	$	(74)
State	(166)
Total current benefit from income taxes	(240)
Deferred
Federal	(1,756)
State	(99)
Total deferred benefit from income taxes	(1,855)
Total benefit from income taxes - Cole Capital	$	(2,095)