Discontinued Operations

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

11. Individually Significant Dispositions and Discontinued Operations

In April 2014, the FASB issued new guidance for reporting discontinued operations. Only disposals representing a strategic shift in operations that has a major effect on a company’s operations and financial results will be presented as discontinued operations. Companies are required to expand their disclosures about discontinued operations to provide more information on the assets, liabilities, income and expenses of the discontinued operations. Companies are also required to disclose the pre-tax income attributable to a disposal of a significant part of a company that does not qualify for discontinued operations reporting. Application of this guidance is prospective from the date of adoption and early adoption was permitted, but only for disposals (or classifications as held for sale) that had not been reported in financial statements previously issued. The new standard was effective January 1, 2015, but the Company early adopted it as allowed effective January 1, 2014. Adoption of this standard resulted in and will likely continue to result in substantially fewer of the Company's dispositions meeting the discontinued operations qualifications.

Individually Significant Dispositions

The Company concluded that the Starwood Transaction does not qualify for discontinued operations reporting as it does not represent a strategic shift that will have a major effect on the Company’s operations and financial results. The Company has been investing only in its six core coastal markets (Boston, New York, Washington D.C., Southern California, San Francisco and Seattle) and has not been acquiring or developing any new assets in its other markets. Over the past several years, the Company has been repositioning its portfolio by selling non-core assets and reducing its exposure to non-core markets. However, the Company concluded that the Starwood Transaction does qualify as an individually significant component of the Company as the amount received upon disposal will exceed 10% of total assets and NOI (see definition in Note 17) of the Starwood portfolio represents approximately 16.4%, 16.1% and 16.4%, respectively, of consolidated NOI for the Company for the years ended December 31, 2015, 2014 and 2013. In addition, the Starwood Transaction meets the held for sale criteria at December 31, 2015 and is classified as held for sale in the accompanying consolidated balance sheets at December 31, 2015 (see Note 4 for further discussion). In accordance with this classification, the Company ceased depreciation on all assets in the Starwood portfolio as of November 1, 2015. As a result, the following table summarizes the results of operations attributable to the Starwood Transaction for the years ended December 31, 2015, 2014 and 2013 (amounts in thousands):

	Year Ended December 31,
	2015			2014			2013
REVENUES
Rental income	$	427,433		$	401,134		$	373,899
Total revenues	427,433			401,134			373,899
EXPENSES (1)
Property and maintenance	78,189			76,579			75,848
Real estate taxes and insurance	48,403			46,416			44,035
Property management	11			11			11
Depreciation	87,616			104,104			105,015
General and administrative	38			24			22
Total expenses	214,257			227,134			224,931
Operating income	213,176			174,000			148,968
Interest and other income	1			1			2
Other expenses	(35		)	(1		)	—
Interest (2):
Expense incurred, net	(680		)	(701		)	(754		)
Amortization of deferred financing costs	(559		)	(98		)	(98		)
Income and other tax (expense) benefit	(1		)	(3		)	(2		)
Income from operations	211,902			173,198			148,116
Income from operations attributable to Noncontrolling Interests – Partially Owned Properties	—			(14		)	(52		)
Income from operations attributable to controlling interests – Operating Partnership	211,902			173,184			148,064
Income from operations attributable to Noncontrolling Interests – Operating Partnership	(8,083		)	(6,598		)	(5,692		)
Income from operations attributable to controlling interests – Company	$	203,819		$	166,586		$	142,372

(1) Includes expenses paid in the current period for properties held for sale.

(2) Includes only interest expense specific to secured mortgage notes payable for properties held for sale which was repaid or will be repaid at or before closing.

Discontinued Operations

The Company has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of and all properties held for sale, if any, for properties sold in 2013 and prior years. The amounts included in discontinued operations for the years ended December 31, 2015 and 2014 represent trailing activity for properties sold in 2013 and prior years. None of the properties sold during the years ended December 31, 2015 and 2014 met the new criteria for reporting discontinued operations.

The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Company owned such assets for properties sold in 2013 and prior years during each of the years ended December 31, 2015, 2014 and 2013 (amounts in thousands).

	Year Ended December 31,
	2015			2014			2013
REVENUES
Rental income	$	499		$	1,309		$	121,942
Total revenues	499			1,309			121,942
EXPENSES (1)
Property and maintenance	(60		)	(141		)	36,792
Real estate taxes and insurance	65			267			11,903
Property management	—			—			1
Depreciation	—			—			34,380
General and administrative	85			89			85
Total expenses	90			215			83,161
Discontinued operating income	409			1,094			38,781
Interest and other income	3			317			217
Other expenses	—			—			(3		)
Interest (2):
Expense incurred, net	—			—			(1,296		)
Amortization of deferred financing costs	—			—			(228		)
Income and other tax (expense) benefit	(15		)	(8		)	(449		)
Discontinued operations	397			1,403			37,022
Net gain on sales of discontinued operations	—			179			2,036,505
Discontinued operations, net	$	397		$	1,582		$	2,073,527

(1) Includes expenses paid in the current period for properties sold in prior periods related to the Company’s period of ownership.

(2) Includes only interest expense specific to secured mortgage notes payable for properties sold.