Note 4. Real Estate Properties

The information presented in this Note 4 excludes information related to SIR and its consolidated subsidiaries, unless the context indicates otherwise.

We did not make any acquisitions during the year ended December 31, 2013.

During the year ended December 31, 2013, we made improvements totaling $122,927 to our properties, including improvements made by SIR to its properties for the period that SIR was our consolidated subsidiary until July 2, 2013.

Property Sales:

During the year ended December 31, 2013, we sold 43 properties (134 buildings) with a combined 8,343,955 square feet and two land parcels for an aggregate sale price of $249,132, excluding closing costs and other adjustments. Details of these completed sales are as follows:

Sales of properties resulting in gains and losses:

•

In January 2013, we sold three suburban office and industrial properties (18 buildings) with a combined 1,060,026 square feet for an aggregate sale price of $10,250, excluding closing costs. In connection with the sale of these properties, we provided mortgage financing to the buyer, an unrelated third party, totaling $7,688 at 6.0% per annum and recognized a gain on sale of $1,277.

•

As a result of an eminent domain taking in March 2013, we sold a land parcel adjacent to one of our CBD properties for $1,806, excluding closing costs, and recognized a gain on sale of $1,596.

•

In June 2013, we sold a suburban property (one building) with 30,105 square feet for $1,600, excluding closing costs, and recognized a gain on sale of $317.

•

Also in June 2013, we sold a parcel of land for $2,551, excluding closing costs, and recognized a gain on sale of $1,765.

•

In December 2013, we sold three suburban properties (40 buildings) with a combined 1,670,104 square feet for an aggregate sale price of $89,000, excluding closing costs and other adjustments, and recognized a loss of $25,521.

Sales of properties with previously recorded asset impairment losses:

•

In April 2013, we sold a suburban property (one building) with 618,000 square feet for $830, excluding closing costs.

•

In May 2013, we sold a suburban property (one building) with 57,250 square feet for $4,025, excluding closing costs.

•

In June 2013, we sold a suburban property (two buildings) with a combined 356,045 square feet for an aggregate sale price of $16,300, excluding closing costs.

•

Also in June 2013, we sold a suburban property (one building) with 143,802 square feet for $5,250, excluding closing costs.

•

In August 2013, we sold a suburban property (three buildings) with a combined 129,452 square feet for an aggregate sale price of $4,100, excluding closing costs.

•

In October 2013, we sold nine suburban properties (41 buildings) with a combined 1,211,536 square feet for an aggregate sale price of $43,000, excluding closing costs.

•

Also in October 2013, we sold a suburban property (one building) with 665,545 square feet for $13,900, excluding closing costs.

•

Also in October 2013, we sold a suburban property (two buildings) with a combined 199,418 square feet for an aggregate sale price of $4,000, excluding closing costs.

•

In November 2013, we sold 18 CBD and suburban properties (21 buildings) with a combined 2,125,278 square feet for an aggregate sale price of $50,500, excluding closing costs.

•

In December 2013, we sold two suburban properties (two buildings) with a combined 77,394 square feet for an aggregate sale price of $2,020, excluding closing costs.

We classify all properties that meet the criteria outlined in the Property, Plant and Equipment Topic of the FASB Accounting Standards Codification^TM, or the Codification, as held for sale, as such on our consolidated balance sheets. As of December 31, 2012, we had one CBD property (one building) and 39 suburban properties (93 buildings) with a combined 6,673,851 square feet held for sale. As of December 31, 2013, we had three CBD properties (four buildings) and 42 suburban properties (106 buildings) with a combined 8,425,548 square feet held for sale. We expect to sell these properties during 2014; however, no assurance can be given that these properties will be sold in that time period or at all, or what the ultimate terms of those sales may be. Results of operations for properties sold or held for sale are included in discontinued operations in our consolidated statements of operations once the criteria for discontinued operations in the Presentation of Financial Statements Topic of the Codification are met. Summarized balance sheet information for all properties classified as held for sale and income statement information for properties held for sale or sold is as follows:

Balance Sheets:

	December 31,

	2013		2012
Real estate properties	$	536,552	$	164,041
Acquired real estate leases		6,937		453
Rents receivable		14,180		2,791
Other assets, net		15,862		4,547


Properties held for sale	$	573,531	$	171,832




Mortgage notes payable, net	$	20,018	$	—
Assumed real estate lease obligations		2,070		21
Rent collected in advance		4,043		854
Security deposits		2,603		1,464


Liabilities related to properties held for sale	$	28,734	$	2,339

Income Statements:

	Year Ended December 31,

	2013			2012			2011
Rental income	$	110,955		$	134,962		$	163,159
Tenant reimbursements and other income		18,453			22,128			27,905


Total revenues		129,408			157,090			191,064


Operating expenses		76,203			87,774			104,449
Depreciation and amortization		28,098			48,533			51,493
General and administrative		7,563			8,675			9,254
Acquisition related costs		—			—			471


Total expenses		111,864			144,982			165,667


Operating income		17,544			12,108			25,397
Interest and other income		65			79			58
Interest expense		(1,742	)		(2,404	)		(3,148	)


Income from discontinued operations	$	15,867		$	9,783		$	22,307

Our real estate properties are generally leased on gross lease, modified gross lease or triple net lease bases pursuant to non-cancelable, fixed term operating leases expiring between 2014 and 2032. Our triple net leases generally require the lessee to pay all property operating costs. Our gross leases and modified gross leases require us to pay all or some property operating expenses and to provide all or some property management services.

We committed $128,486 for expenditures related to 5,152,000 square feet of leases executed during 2013. Committed but unspent tenant related obligations based on existing leases as of December 31, 2013, were $89,986.

The future minimum lease payments scheduled to be received by us during the current terms of our leases as of December 31, 2013 are as follows:


2014	$	589,603
2015		564,468
2016		501,714
2017		441,682
2018		391,015
Thereafter		1,350,719


	$	3,839,201

One of our real estate properties is subject to a ground lease. The land on this property is leased pursuant to a non-cancelable, fixed term operating ground lease that expires in 2098.

The future minimum lease payments scheduled to be paid by us during the current terms of this ground lease under which we are the lessee, as of December 31, 2013, are as follows:


2014	$	1,477
2015		1,477
2016		1,477
2017		1,477
2018		1,483
Thereafter		131,496


	$	138,887

The amount of ground lease expense included in operating expenses during the years ended December 31, 2013, 2012 and 2011, totaled $1,857, $1,828 and $1,850, respectively.