Segments

9 Months Ended

Sep. 30, 2019

Note 10. Segments

Prior to the completion of the Master Trust 2014 Sale in September 2019, management viewed the operations of the Company as two separate segments—Master Trust 2014 and Other Properties—and made operating decisions based on these two reportable segments. Subsequent to the adoption of the Plan of Voluntary Liquidation, the Company no longer makes operating decisions or assesses performance in separate segments as all remaining assets and liabilities are held for sale.

Master Trust 2014 was an asset-backed securitization platform, see Note 7, with specific criteria for operating the Collateral Pool, including restrictions on use of Release Account cash, concentration thresholds which could not be exceeded, and a minimum debt service coverage ratio which had to be met. On September 20, 2019, the Company completed the Master Trust 2014 Sale. Accordingly, as of September 30, 2019, all remaining assets and liabilities are related to the Other Properties segment.

For periods prior to the completion of the Master Trust 2014 Sale, segment results are comprised of revenues, property management and servicing fees, property costs, depreciation and amortization, impairments, and interest expense. General and administrative expenses, asset management fees under the Asset Management Agreement, transaction costs, and income taxes are not allocated to individual segments for purposes of assessing segment performance.

The performance of the reportable segments prior to the Master Trust 2014 Sale was not comparable with the Company's consolidated results, nor necessarily comparable with similar information for any other REITs. Additionally, because of the interrelationship of the segments prior to the Master Trust 2014 Sale, the information presented is not indicative of how the segments would perform if they operated as independent entities.

Segment results for the two and eight months ended August 31, 2019 and the three and nine months ended September 30, 2018 are as follows (in thousands):

	Two Months Ended August 31, 2019									Three Months Ended September 30, 2018
	Master Trust 2014			Other Properties			Total			Master Trust 2014			Other Properties			Total
Segment Results:
Rental income	$	28,783		$	2,464		$	31,247		$	45,317		$	14,970		$	60,287
Interest income on loans receivable		43			497			540			72			1,059			1,131
Other income		265			529			794			785			208			993
Property Management and Servicing Fees ⁽¹⁾		(1,294	)		—			(1,294	)		(1,750	)		—			(1,750	)
Property expenses (including reimbursable)		(1,111	)		(315	)		(1,426	)		(765	)		(1,144	)		(1,909	)
Depreciation and amortization		(10,476	)		(206	)		(10,682	)		(15,782	)		(5,187	)		(20,969	)
Impairments, net of recoveries for loan losses		—			(295	)		(295	)		(4,113	)		(5,230	)		(9,343	)
Interest expense		(17,598	)		(746	)		(18,344	)		(26,551	)		(1,121	)		(27,672	)
Loss on debt extinguishment		(144	)		—			(144	)		—			—			—
Gain (loss) on disposition of assets		256			(35	)		221			1,386			2,824			4,210
Segment (loss) income	$	(1,276	)	$	1,893		$	617		$	(1,401	)	$	6,379		$	4,978
Non-allocated expenses								(2,628	)								(8,552	)
Net loss							$	(2,011	)							$	(3,574	)


	Eight Months Ended August 31, 2019									Nine Months Ended September 30, 2018
	Master Trust 2014			Other Properties			Total			Master Trust 2014			Other Properties			Total
Segment Results:
Rental income	$	118,204		$	14,608		$	132,812		$	134,323		$	45,216		$	179,539
Interest income on loans receivable		179			2,490			2,669			224			1,740			1,964
Other income		949			1,967			2,916			1,623			311			1,934
Property Management and Servicing Fees ⁽¹⁾		(5,070	)		—			(5,070	)		(5,164	)		—			(5,164	)
Property expenses (including reimbursable)		(3,541	)		(1,346	)		(4,887	)		(2,998	)		(2,575	)		(5,573	)
Depreciation and amortization		(42,386	)		(4,992	)		(47,378	)		(46,805	)		(16,266	)		(63,071	)
Impairments, net of recoveries for loan losses		(5,959	)		1,090			(4,869	)		(9,118	)		(6,297	)		(15,415	)
Interest expense		(70,628	)		(7,626	)		(78,254	)		(80,348	)		(3,079	)		(83,427	)
Loss on debt extinguishment		(144	)		(21,267	)		(21,411	)		(363	)		—			(363	)
Gain (loss) on disposition of assets		1,626			114			1,740			(757	)		8,221			7,464
Segment (loss) income	$	(6,770	)	$	(14,962	)	$	(21,732	)	$	(9,383	)	$	27,271		$	17,888
Non-allocated expenses								(35,115	)								(28,062	)
Net loss							$	(56,847	)							$	(10,174	)

⁽¹⁾	Property Management and Servicing Fees are included in related party fees in the consolidated statements of operations and comprehensive loss. Asset Management Fees, the other component of related party fees, are included in non-allocated expenses.

Dispositions by reportable segment are as follows (dollars in thousands):

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
	Properties		Gross Proceeds		Properties		Gross Proceeds
Master Trust 2014 ⁽¹⁾		784	$	2,416,445		29	$	31,796
Other Properties ⁽²⁾		87		112,805		10		44,022
Total		871	$	2,529,250		39	$	75,818

⁽¹⁾

^{Includes 769 owned and financed properties disposed on September 20, 2019 in the Master Trust 2014 Sale. See Note 7 for further discussion.}

⁽²⁾

^{Includes 83 properties disposed during the nine months ended September 30, 2019, which relieved Shopko CMBS debt in lieu of generating cash proceeds. See Note 7 for further discussion.}