Disposals and Other Significant Transactions

3 Months Ended

Mar. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Disposals and Other Significant Transactions

Disposals and Other Significant Transactions

Summarized information regarding apartment communities sold during the three months ended March 31, 2016 and 2015, is set forth in the table below (dollars in thousands):

	Three Months Ended
	March 31,
	2016			2015
Apartment communities sold	1			6
Apartment homes sold	96			1,100
(Loss) income before income taxes and gain on disposition	$	(36	)	$	278
Gain on disposition of real estate, net of tax (1)	6,187			85,693
Income tax related to gain on disposition of real estate	195			—
Prepayment penalties incurred upon repayment of debt collateralized by apartment communities sold	—			12,135
Mark-to-market adjustment included in prepayment penalties	—			7,705

(1) We report gains on disposition net of incremental direct costs incurred in connection with the transactions, including any prepayment penalties incurred upon repayment of property debt collateralized by the apartment communities being sold.

During the year ended December 31, 2015, we sold 11 apartment communities with 3,855 apartment homes, inclusive of the communities sold during the three months ended March 31, 2015 detailed in the table above. For the three months ended March 31, 2015 these communities generated $4.1 million of income before income taxes and gain on disposition.

In addition to the apartment communities we sold, we are currently marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such apartment communities meet the criteria to be classified as held for sale. As of March 31, 2016, we had no apartment communities classified as held for sale.

Asset Management Business Disposition

In 2012, we sold the Napico portfolio, our legacy asset management business. The transaction was primarily seller-financed, and the associated notes are scheduled to be repaid from the operation and liquidation of the Napico portfolio and are collateralized by the buyer’s interests in the portfolio. 

In accordance with the provisions of GAAP applicable to sales of real estate or interests therein, we have not recognized the sale and are accounting for the transaction under the profit sharing method. Until full payment has been received for the seller-financed notes or we otherwise meet the requirements to recognize a sale or partial sale for accounting purposes, we will continue to recognize the portfolio’s assets and liabilities, each condensed into single line items within other assets and accrued liabilities and other, respectively, in our consolidated balance sheets, for all dates following the transaction. Similarly, we will continue to recognize the portfolio’s results of operations, also condensed into a single line item within our consolidated statements of operations, for periods subsequent to the transaction. In January 2016, we received final payment on the first of the two seller-financed notes and as of March 31, 2016, the buyer is in compliance with the terms of the second seller-financed note.