Discontinued Operations, Assets Held-for-Sale and Impairments

The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations:



	Held-for-Sale at September 30, 2014	Sold in 2014	Sold in 2013	Total


Industrial	0	11	6	17
Office	0	0	12	12
Medical Office	1	1	6	8
Retail	0	0	1	1
Total properties included in discontinued operations	1	12	25	38
Properties excluded from discontinued operations	2	11	13	26
Total properties sold or classified as held-for-sale	3	23	38	64

As described in Note 2, we adopted ASU 2014-08 beginning April 1, 2014. Three properties were designated as held-for-sale at March 31, 2014, and met the criteria for discontinued operations that were applicable prior to the adoption of ASU 2014-08. Two of these properties were sold during the three months ended June 30, 2014, while one of these properties continues to be designated as held-for-sale at September 30, 2014. No new properties, whether having been disposed of or designated as held-for-sale, have met the criteria for classification as discontinued operations since the adoption of ASU 2014-08.

For the properties that were classified in discontinued operations prior to the adoption of ASU 2014-08, we allocated interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations includes interest on any secured debt for properties included in discontinued operations and an allocable share of our consolidated unsecured interest expense for unencumbered properties. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.

The following table illustrates the operational results of the buildings reflected in discontinued operations for the three and nine months ended September 30, 2014 and 2013, respectively (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues	$	454		$	11,140		$	2,415		$	39,807
Operating expenses	(297		)	(4,144		)	(1,282		)	(14,983		)
Depreciation and amortization	—			(3,247		)	(205		)	(13,969		)
Operating income	157			3,749			928			10,855
Interest expense	(137		)	(2,251		)	(706		)	(9,310		)
Income before gain on sales	20			1,498			222			1,545
Gain on sale of depreciable properties	564			8,441			22,864			101,052
Income from discontinued operations before income taxes	584			9,939			23,086			102,597
Income tax benefit (expense)	555			—			(2,969		)	—
Income from discontinued operations	$	1,139		$	9,939		$	20,117		$	102,597

The income tax expense or benefit included in discontinued operations during the three and nine months ended September 30, 2014 was triggered by the sale of a property that was partially owned by our taxable REIT subsidiary.

The income tax benefit of $442,000 and income tax expense of $2.6 million from continuing operations for the three and nine months ended September 30, 2014, respectively, as presented in the Consolidated Statements of Operations and Comprehensive Income, was related to the sale of another property that was partially owned by our taxable REIT subsidiary but, due to continuing involvement in managing the property, was not classified as a discontinued operation.

Dividends or distributions on preferred shares or Preferred Units and adjustments for the redemption or repurchase of preferred shares or Preferred Units are allocated entirely to continuing operations for both the General Partner and the Partnership.

Allocation of Noncontrolling Interests - General Partner

The following table illustrates the General Partner's share of the income (loss) attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income or loss between continuing and discontinued operations to the Limited Partner Units, for the three and nine months ended September 30, 2014 and 2013, respectively (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014		2013
Income (loss) from continuing operations attributable to common shareholders	$	60,408	$	(15,874	)	$	188,048	$	(17,741	)
Income from discontinued operations attributable to common shareholders	1,125		9,807			19,856		101,211
Net income (loss) attributable to common shareholders	$	61,533	$	(6,067	)	$	207,904	$	83,470

Allocation of Noncontrolling Interests - Partnership

Substantially all of the income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is attributable to the common unitholders.

Properties Held-for-Sale

At September 30, 2014, one in-service property, which was classified in discontinued operations prior to the adoption of ASU 2014-08, met the criteria for designation as held-for-sale. Additionally, two in-service properties met the criteria for designation as held-for-sale subsequent to the adoption of ASU 2014-08, but did not meet the criteria to be classified within discontinued operations. The following table illustrates aggregate balance sheet information of these properties at September 30, 2014 (in thousands):



	September 30, 2014
	Properties Included in Continuing Operations		Properties Included in Discontinued Operations		Total Held-For-Sale Properties
Real estate investment, net	$	14,940	$	14,643	$	29,583
Other assets	473		5,358		5,831
Total assets held-for-sale	$	15,413	$	20,001	$	35,414

Accrued expenses	$	356	$	262	$	618
Other liabilities	87		—		87
Total liabilities held-for-sale	$	443	$	262	$	705

Impairment Charges

The following table illustrates impairment charges recognized during the three and nine months ended September 30, 2014 and 2013, respectively (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Impairment charges - land	$	5,915	$	—	$	8,438	$	3,777
Impairment charges - building	453		—		453		—
Impairment charges	$	6,368	$	—	$	8,891	$	3,777

During 2014, we refined our strategy for selected parcels of land, whereby we decided that we would dispose of such parcels in the near future as opposed to holding them for development. The change in strategy for this land triggered the requirement to conduct an impairment analysis, which resulted in a determination that these parcels were impaired. We recognized impairment charges of $8.4 million in the nine months ended September 30, 2014, primarily as the result of writing down this land to its fair value. As part of determining the fair value of the non-strategic land in connection with the impairment analysis, we considered comparable transactions and, in certain cases, estimates made by national and local independent real estate brokers who were familiar both with the land parcels subject to evaluation as well as with conditions in the specific markets where the land is located. In all cases, members of our senior management who were responsible for the individual markets where the land is located and members of the Company’s accounting and financial management team reviewed the broker’s estimates for factual accuracy and reasonableness. In all cases, we were ultimately responsible for all valuation estimates made in determining the extent of the impairment. Our valuation estimates primarily relied upon Level 3 inputs, as defined in our Annual Report on Form 10-K for the year ended December 31, 2013.