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 years ended December 31, 2014 or 2013.

During the years ended December 31, 2014, 2013 and 2012 we made improvements totaling $91.6 million, $122.9 million and $134.6 million, respectively, to our properties. Improvements made during the year ended December 31, 2013 include improvements made by SIR to its properties for the period that SIR was our consolidated subsidiary until July 2, 2013.

We committed $88.6 million for expenditures related to 4,792,000 square feet of leases executed during 2014. Committed but unspent tenant related obligations based on existing leases as of December 31, 2014, were $99.9 million.

Property Sales:

During the years ended December 31, 2014, 2013 and 2012 , we sold the following (dollars in thousands):



Asset	Date Sold	Number of Properties	Number of Buildings	Square Footage	Sales Price		Gain (Loss) on Sale
Sales of properties resulting in gains and losses
Suburban properties	December 2013	3	40	1,670,104	$	89,000	$	(25,521	)
Land parcel	June 2013	—	—	—	2,551		1,765
Suburban property	June 2013	1	1	30,105	1,600		317
Land parcel adjacent to CBD property	March 2013	—	—	—	1,806		1,596
Suburban office and industrial properties(1)	January 2013	3	18	1,060,026	10,250		1,277
		7	59	2,760,235	$	105,207	$	(20,566	)

Suburban property	September 2012	1	—	208,850	$	9,900	$	1,689
Suburban property(2)	June 2012	1	—	76,978	1,250		192
Suburban property (3)	April 2012	1	—	12,934	575		158
		3	—	298,762	$	11,725	$	2,039

Sales of properties with previously recorded asset impairment losses:
CBD and suburban properties(4)	June 2014	14	43	2,784,098	$	215,900	$	—

Suburban properties	December 2013	2	2	77,394	$	2,020	$	—
CBD and suburban properties	November 2013	18	21	2,125,278	50,500		—
Suburban property	October 2013	1	2	199,418	4,000		—
Suburban property	October 2013	1	1	665,545	13,900		—
Suburban properties	October 2013	9	41	1,211,536	43,000		—
Suburban property	August 2013	1	3	129,452	4,100		—
Suburban property	June 2013	1	1	143,802	5,250		—
Suburban property	June 2013	1	2	356,045	16,300		—
Suburban property	May 2013	1	1	57,250	4,025		—
Suburban property	April 2013	1	1	618,000	830		—
		36	75	5,583,720	$	143,925	$	—

(1) We provided mortgage financing to the buyer, an unrelated third party, totaling $7.7 million at 6.0% per annum (Note 8).

(2) We provided mortgage financing to the buyer, an unrelated third party, totaling $1.0 million at 5.0% per annum. In September 2013, this mortgage note was prepaid in full (Note 8).

(3) We provided mortgage financing to the buyer, an unrelated third party, totaling $0.4 million at 6.0% per annum (Note 8).

(4) In connection with this transaction, we recognized a loss on asset impairment of $2.2 million and a loss on early extinguishment of debt of $3.3 million for the year ended December 31, 2014. The sales price excludes mortgage debt repayments. These properties were previously classified as held for sale as of December 31, 2013 and are included in income from discontinued operations for all years presented.

We classify all properties that meet the criteria outlined in the Property, Plant and Equipment Topic of the FASB Accounting Standards Codification™, or the Codification, as held for sale, as such on our consolidated balance sheets. 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. During March 2014, the former management team ceased to actively market two CBD properties (two buildings) and 29 suburban properties (65 buildings) with a combined 5,641,450 square feet that we had previously classified as held for sale as of December 31, 2013. These properties were not under agreement for sale when our former Trustees were removed in March 2014. These properties were reclassified to properties held and used in operations because they no longer meet the requirements under GAAP for classification as held for sale. Operating results for these properties were reclassified from discontinued operations to continuing operations for all periods presented herein. In connection with this reclassification, we reversed previously recorded impairment losses totaling $4.8 million, which includes the elimination of estimated costs to sell.

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 (in thousands):



	December 31,
	2013
Real estate properties	$	536,552
Acquired real estate leases	6,937
Rents receivable	14,180
Other assets, net	15,862
Properties held for sale	$	573,531
Mortgage notes payable, net	$	20,018
Assumed real estate lease obligations	2,070
Rent collected in advance	4,043
Security deposits	2,603
Liabilities related to properties held for sale	$	28,734



	Year Ended December 31,
	2014			2013			2012
Rental income	$	14,243		$	55,073		$	69,752
Tenant reimbursements and other income	1,900			6,842			8,156
Total revenues	16,143			61,915			77,908
Operating expenses	7,138			37,027			46,705
Depreciation and amortization	—			12,550			28,008
General and administrative	10			4,268			5,420
Total expenses	7,148			53,845			80,133
Operating income	8,995			8,070			(2,225		)
Interest and other income	2			65			73
Interest expense	(608		)	(1,742		)	(2,189		)
Income from discontinued operations	$	8,389		$	6,393		$	(4,341	)

Lease Payments

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 2015 and 2045. 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.

The future minimum lease payments, excluding tenant reimbursement revenue, scheduled to be received by us during the current terms of our leases as of December 31, 2014 are as follows (in thousands):



2015	$	640,967
2016	576,172
2017	513,445
2018	459,290
2019	392,832
Thereafter	1,404,960
	$	3,987,666

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, 2014, are as follows (in thousands):



2015	$	1,477
2016	1,477
2017	1,477
2018	1,483
2019	1,503
Thereafter	129,994
	$	137,411

The amount of ground lease expense included in operating expenses during the years ended December 31, 2014, 2013 and 2012, totaled $1.8 million, $1.9 million and $1.8 million, respectively.