Property Dispositions

9 Months Ended

Sep. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Property Dispositions

Property Dispositions

From time to time, we may decide to sell a property. We have an active capital recycling program, with a goal of extending the average lease term through reinvestment, improving portfolio credit quality through dispositions and acquisitions of assets, increasing the asset criticality factor in our portfolio, and/or executing strategic dispositions of assets. We may decide to dispose of a property due to vacancy, 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.

Property Dispositions

The results of operations for properties that have been sold or classified as held for sale are included in the consolidated financial statements and are summarized as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues	$	6,964		$	8,483		$	21,562		$	24,793
Expenses	(5,714		)	(7,653		)	(18,746		)	(23,081		)
Gain on sale of real estate, net of tax	82,287			—			132,702			2,197
Impairment charges	(29,183		)	—			(29,183		)	—
Loss on extinguishment of debt	(8,218		)	—			(15,807		)	—
Income from properties sold or classified as held for sale, net of income taxes	$	46,136		$	830		$	90,528		$	3,909

2016 — During the three months ended September 30, 2016, we sold 22 self-storage properties for total proceeds of $151.3 million, net of closing costs, and recognized a gain on sale of $82.3 million. The proceeds from the sale were used to repay a non-recourse mortgage loan encumbering the properties with an outstanding principal balance of $41.8 million, and as a result, we recorded a loss on extinguishment of debt of $8.2 million.

During the nine months endedSeptember 30, 2016, we sold 34 self-storage properties for total proceeds of $259.1 million, net of closing costs and recognized a gain on the sale of these assets of $132.7 million in the aggregate. Proceeds from the sales were used to repay non-recourse mortgage loans encumbering the properties with outstanding principal balances aggregating $84.7 million, and as a result, we recorded a loss on extinguishment of debt of $15.8 million.

During the three months ended September 30, 2016, we entered into an agreement with a tenant that occupies the majority of the square footage in a domestic office building to terminate their lease contingent upon selling the property to a third party. At September 30, 2016, the land and building related to this property were classified as held for sale as the sale is considered probable of closing, and an impairment of $29.2 million was recognized during each of the three and nine months ended September 30, 2016 (Note 4, Note 8) related to the carrying value of the land and building.

2015 — In connection with the partial sale of our investment in I Shops LLC in 2014, we deferred 15% of the gain due to our then-existing purchase option to acquire a 15% equity interest in the parent company that owns I Shops LLC. Upon expiration of the purchase option on January 31, 2015, we recognized the previously deferred gain of $2.2 million during the nine months endedSeptember 30, 2015.