Real Estate Properties

3 Months Ended

Mar. 31, 2013

Real Estate Properties

Real Estate Properties

Note 3.  Real Estate Properties

Completed Acquisitions:

During the three months ended March 31, 2013, we acquired five properties with a combined 779,010 square feet for an aggregate purchase price of $158,320, excluding closing costs.  We allocated the purchase prices of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities.  Details of these completed acquisitions are as follows:

												Acquired
		Number								Acquired		Real Estate
		of	Square	Purchase				Buildings and		Real Estate		Lease
Date	Location	Properties	Feet	Price(1)		Land		Improvements		Leases		Obligations
SIR Acquisitions through March 31, 2013:
January 2013	Addison, TX(2)(3)	2	553,799	$	105,000	$	10,125	$	94,875	$	—	$	—
February 2013	Provo, UT(2)	2	125,225	34,720		3,400		25,938		5,382		—
March 2013	San Antonio, TX(2)	1	99,986	18,600		3,197		12,175		3,507		(279		)
		5	779,010	$	158,320	$	16,722	$	132,988	$	8,889	$	(279	)

(1) Purchase price excludes closing costs.

(2) The allocation of purchase price is based on preliminary estimates and may change upon completion of (i) third party appraisals and (ii) our analysis of acquired in place leases and building valuations.

(3) This property was acquired and simultaneously leased back to the seller in a sale/leaseback transaction.  SIR accounted for this transaction as an acquisition of assets.  SIR recognized acquisition costs of $188, which SIR capitalized as part of the transaction.

In addition, during the three months ended March 31, 2013, we also made improvements totaling $18,130 to our properties.

Property Sales:

In January 2013, we sold 18 suburban office and industrial properties with a combined 1,060,026 square feet for $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 $1,260.  As a result of an eminent domain taking in March 2013, we sold a land parcel adjacent to one of our central business district, or CBD, office buildings located in Boston, MA for $1,806, excluding closing costs, and recognized a gain on sale of $1,596.  In April 2013, we sold an industrial property with 618,000 square feet for a total of $830, excluding closing costs.  In addition, as of May 8, 2013, we have five properties with a combined 1,222,642 square feet under agreement to sell for a total of $39,475, excluding closing costs.  We expect to complete the sale of these five properties during 2013; however, no assurance can be given that these properties will be sold in that time period or at all.

As of March 31, 2013, we had 35 office properties and 41 industrial properties with a combined 5,613,825 square feet held for sale.  As of December 31, 2012, we had 37 office properties and 57 industrial properties with a combined 6,673,851 square feet held for sale.  We classify all properties that meet the criteria outlined in the Property, Plant and Equipment Topic of the FASB Accounting Standards CodificationTM, or the Codification, as held for sale in our condensed consolidated balance sheets.  Results of operations for properties sold or held for sale are included in discontinued operations in our condensed 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:

	March 31, 2013		December 31, 2012
Real estate properties	$	152,940	$	164,041
Acquired real estate leases	453		453
Rents receivable	2,624		2,791
Other assets, net	3,484		4,547
Properties held for sale	$	159,501	$	171,832
Assumed real estate lease obligations	$	21	$	21
Rent collected in advance	598		854
Security deposits	1,375		1,464
Liabilities related to properties held for sale	$	1,994	$	2,339

Statements of Operations:

	Three Months Ended March 31,
	2013			2012
Rental income	$	4,807		$	7,868
Operating expenses	(6,035		)	(6,854		)
Depreciation and amortization	—			(3,332		)
General and administrative	(684		)	(774		)
Operating loss	(1,912		)	(3,092		)
Interest and other income	—			3
Loss from discontinued operations	$	(1,912	)	$	(3,089	)