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Property Dispositions and Discontinued Operations
 3 Months Ended
Mar. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]  
Property Dispositions and Discontinued Operations
Property Dispositions and Discontinued Operations
 
From time to time, we may decide to sell a property. We may make a decision to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet and, for those properties sold or classified as held-for-sale prior to January 1, 2014, the current and prior period results of operations of the property have been reclassified as discontinued operations under current accounting guidance (Note 2).

Property Dispositions Included in Continuing Operations

The results of operations for properties that have been classified as held-for-sale or have been sold after December 31, 2013, excluding the properties that were classified as held-for-sale in the CPA®:16 Merger, and properties that were classified as direct financing leases, and with which we have no continuing involvement, are included within continuing operations in the consolidated financial statements. Total revenues and net income from the operations of these properties were $0.3 million and $0.4 million for the three months ended March 31, 2014, respectively, and $0.3 million and $0.3 million for the three months ended March 31, 2013, respectively.

2014 — During the three months ended March 31, 2014, we entered into contracts to sell two properties for a total of $17.4 million. At March 31, 2014, one of these properties was classified as Assets held for sale and the other was classified as Net investments in direct financing leases in the consolidated balance sheet (Note 5). We completed the sale of one of these properties in April 2014. There can be no assurance that the remaining property will be sold at the contracted price, or at all.

In February 2014, a domestic vacant property was foreclosed upon and sold for $4.6 million. The proceeds from the sale were used to partially repay a mortgage loan encumbering this property and another property with an outstanding balance of $6.0 million at the time to the sale. The remaining principal balance was transferred to the other property. In connection with the sale, we recognized a gain on the sale of $0.1 million, which was reflected in Other income and (expenses) in the consolidated statement of income.

2013 — Subsequent to the three months ended March 31, 2013, we sold our investment in a direct financing lease. The results of operations for this investment is included within continuing operations in the consolidated financial statements for the three months ended March 31, 2013.
   
Property Dispositions Included in Discontinued Operations

The results of operations for properties that have been classified as held-for-sale or have been sold prior to January 1, 2014 and the properties that were acquired as held-for-sale in the CPA®:16 Merger, and with which we have no continuing involvement, are reflected in the consolidated financial statements as discontinued operations and are summarized as follows (in thousands, net of tax):
 
Three Months Ended March 31,
 
2014

2013
Revenues
$
6,036


$
7,609

Expenses
(1,477
)

(6,146
)
(Loss) gain on extinguishment of debt
(1,520
)

70

Gain (loss) on sale of real estate
3,096


(931
)
Impairment charges
—


(3,279
)
Income (loss) from discontinued operations
$
6,135


$
(2,677
)

 
2014 — At December 31, 2013, we had nine properties classified as held for sale, six of which were sold during three months ended March 31, 2014 and three of which remain as held for sale at March 31, 2014. The properties were sold for a total of $34.4 million, net of selling costs, and we recognized a net gain on these sales of $3.0 million, excluding impairment charges totaling $3.1 million previously recognized during 2013. We used a portion of the proceeds to repay a related mortgage loan obligation of $4.2 million and recognized a loss on extinguishment of debt of $0.4 million.

In connection with the CPA®:16 Merger in January 2014, we acquired nine properties that were classified as Assets held for sale with a total fair value of $133.0 million. We sold three of these properties during the three months ended March 31, 2014 for a total of $92.8 million, net of selling costs and including a seller financing of $15.0 million, and recognized a net gain on these sales of $0.1 million. We used a portion of the proceeds to repay the related mortgage loan obligations totaling $9.6 million and recognized a loss on extinguishment of debt of $1.2 million.

2013 — During the three months ended March 31, 2013, we sold two domestic properties, which we acquired in the CPA®:15 Merger, for $11.0 million, net of selling costs, and recognized a net loss on these sales of $0.3 million, excluding an impairment charge of $0.2 million previously recognized during 2012. We used a portion of the proceeds to repay an outstanding mortgage obligation of $5.7 million and recognized a gain on extinguishment of debt of $0.1 million. In connection with those sales that are deemed businesses, we allocated goodwill for our Real Estate Ownership segment totaling $0.7 million to the cost basis of the properties based on the relative fair value at the time of sale.

In February 2013, we entered into a contract to sell a domestic property for $3.1 million. We completed the sale of this property in June 2013.

We sold or classified as held-for-sale 25 additional properties during 2013 subsequent to March 31, 2013. The results of operations for these properties are included in Loss from discontinued operations, net of tax in the consolidated financial statements for the three months ended March 31, 2013.