Discontinued Operations

6 Months Ended

Jun. 30, 2016

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 coastal, high barrier to entry 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 assets located in low barrier to entry markets and reducing its exposure to these 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 exceeded 10% of total assets and the NOI (see definition in Note 13) of the Starwood Portfolio represents approximately 2.3% (for the approximate one-month period owned in 2016) and 15.8%, respectively, of consolidated NOI for the Company for the six months ended June 30, 2016 and 2015. In addition, the Starwood Transaction met the held for sale criteria at December 31, 2015 and was 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 six months and quarters ended June 30, 2016 and 2015 (amounts in thousands):

	Six Months Ended June 30,						Quarter Ended June 30,
	2016			2015			2016			2015
REVENUES
Rental income	$	30,421		$	209,911		$	304		$	106,202
Total revenues	30,421			209,911			304			106,202
EXPENSES (1)
Property and maintenance	7,923			38,702			33			19,616
Real estate taxes and insurance	2,932			24,624			60			12,477
Property management	2			6			—			3
General and administrative	15			25			14			24
Depreciation	—			52,432			—			26,238
Total expenses	10,872			115,789			107			58,358
Operating income	19,549			94,122			197			47,844
Interest and other income	11			—			9			—
Interest (2):
Expense incurred, net	(374		)	(342		)	(46		)	(178		)
Amortization of deferred financing costs	(707		)	(49		)	—			(25		)
Income and other tax (expense) benefit	(1		)	(1		)	(1		)	(1		)
Net gain (loss) on sales of real estate properties	3,161,200			—			(21		)	—
Income from operations attributable to controlling interests – Operating     Partnership	3,179,678			93,730			138			47,640
Income from operations attributable to Noncontrolling Interests – Operating     Partnership	(122,138		)	(3,574		)	(6		)	(1,820		)
Income from operations attributable to controlling interests – Company	$	3,057,540		$	90,156		$	132		$	45,820

(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 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 six months and quarters ended June 30, 2016 and 2015 represent trailing activity for properties sold in 2013 and prior years. None of the properties sold during the six months and quarters ended June 30, 2016 and 2015 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 the six months and quarters ended June 30, 2016 and 2015 (amounts in thousands).

	Six Months Ended June 30,						Quarter Ended June 30,
	2016			2015			2016			2015
REVENUES
Rental income	$	217		$	338		$	99		$	177
Total revenues	217			338			99			177
EXPENSES (1)
Property and maintenance	(5		)	(67		)	(2		)	—
Real estate taxes and insurance	2			53			1			1
General and administrative	66			71			62			65
Total expenses	63			57			61			66
Discontinued operating income	154			281			38			111
Interest and other income	—			3			—			3
Other expenses	(280		)	—			—			—
Income and other tax (expense) benefit	(11		)	(15		)	(3		)	—
Discontinued operations	(137		)	269			35			114
Net gain on sales of discontinued operations	15			—			—			—
Discontinued operations, net	$	(122	)	$	269		$	35		$	114

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