Discontinued Operations

9 Months Ended

Sep. 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 1.6% (for the approximate one-month period owned in 2016) and 15.7%, respectively, of consolidated NOI for the Company for the nine months ended September 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 nine months and quarters ended September 30, 2016 and 2015 (amounts in thousands):

	Nine Months Ended September 30,						Quarter Ended September 30,
	2016			2015			2016			2015
REVENUES
Rental income	$	30,660		$	318,346		$	239		$	108,435
Total revenues	30,660			318,346			239			108,435
EXPENSES (1)
Property and maintenance	7,839			59,139			(84		)	20,437
Real estate taxes and insurance	2,933			37,292			1			12,668
Property management	2			9			—			3
General and administrative	19			31			4			6
Depreciation	—			78,792			—			26,360
Total expenses	10,793			175,263			(79		)	59,474
Operating income	19,867			143,083			318			48,961
Interest and other income	21			1			10			1
Interest (2):
Expense incurred, net	(380		)	(519		)	(6		)	(177		)
Amortization of deferred financing costs	(707		)	(74		)	—			(25		)
Income and other tax (expense) benefit	(1		)	(1		)	—			—
Net gain (loss) on sales of real estate properties	3,161,097			—			(103		)	—
Income from operations attributable to controlling interests – Operating     Partnership	3,179,897			142,490			219			48,760
Income from operations attributable to Noncontrolling Interests – Operating     Partnership	(122,146		)	(5,437		)	(8		)	(1,863		)
Income from operations attributable to controlling interests – Company	$	3,057,751		$	137,053		$	211		$	46,897

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

	Nine Months Ended September 30,						Quarter Ended September 30,
	2016			2015			2016			2015
REVENUES
Rental income	$	282		$	425		$	65		$	87
Total revenues	282			425			65			87
EXPENSES (1)
Property and maintenance	(42		)	(67		)	(37		)	—
Real estate taxes and insurance	(108		)	55			(110		)	2
General and administrative	83			75			17			4
Total expenses	(67		)	63			(130		)	6
Discontinued operating income	349			362			195			81
Interest and other income	23			3			23			—
Other expenses	(280		)	—			—			—
Income and other tax (expense) benefit	(11		)	(15		)	—			—
Discontinued operations	81			350			218			81
Net gain on sales of discontinued operations	43			—			28			—
Discontinued operations, net	$	124		$	350		$	246		$	81

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