Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations

Discontinued Operations

15.   Discontinued Operations

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key factors that we estimate in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates. If a property is classified as held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell.

For the second quarter of 2013, we recorded total provisions for impairment of $2.5 million on one sold property and two properties classified as held for sale in the following industries: one in the automotive service industry, one in the grocery store industry, and one in our other industries. For the first six months of 2013, we recorded total provisions for impairment of $3.0 million on seven sold properties and two properties classified as held for sale in the following industries: one in the automotive parts industry, two in the automotive service industry, two in the child care industry, one in the grocery store industry, one in the pet supplies and services industry, one in the restaurant-casual dining industry, and one in our other industries.  These provisions for impairment are included in income from discontinued operations on our consolidated statement of income for the three and six months ended June 30, 2013.  For the first six months of 2012, we did not record any provisions for impairment.

Operations from 18 investment properties classified as held for sale at June 30, 2013, plus properties previously sold, are reported as discontinued operations. Their respective results of operations have been reclassified as income from discontinued operations on our consolidated statements of income. We do not depreciate properties that are classified as held for sale.

No debt was assumed by buyers of our investment properties, or repaid as a result of our investment property sales, and we do not allocate interest expense to discontinued operations related to real estate held for investment. We allocate interest expense related to borrowings specifically attributable to Crest. The interest expense amounts allocated to Crest are included in income from discontinued operations.

The following is a summary of income from discontinued operations on our consolidated statements of income (dollars in thousands):

	Three months ended						Six months ended
	June 30,						June 30,
Income from discontinued operations	2013			2012			2013			2012
Gain on sales of investment properties	$	5,744		$	3,354		$	44,304		$	3,965
Rental revenue	623			3,029			2,668			6,204
Other revenue	7			6			17			21
Depreciation and amortization	(196		)	(896		)	(520		)	(1,848		)
Property expenses	(36		)	(443		)	(491		)	(1,105		)
Provisions for impairment	(2,496		)	-			(2,952		)	-
Crest’s income from discontinued operations	265			196			536			325
Income from discontinued operations	$	3,911		$	5,246		$	43,562		$	7,562
Per common share, basic and diluted(1)	$	0.02		$	0.04		$	0.24		$	0.06

(1)  The per share amounts for income from discontinued operations above and the income from continuing operations and net income reported on the consolidated statements of income have each been calculated independently.