Discontinued Operations and Gain on Disposition of Rental Properties

6 Months Ended

Jul. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Gain on Disposition of Rental Properties

Discontinued Operations and Gain on Disposition of Rental Properties

The Company considers assets held for sale when the transaction has been approved by management and there are no significant contingencies related to the sale that may prevent the transaction from closing. At July 31, 2012, the Company had one property that met the criteria to be classified as held for sale. Southfield, an apartment community in Whitemarsh, Maryland, was sold on August 7, 2012. The assets and liabilities of Southfield are presented in the table below.

	July 31, 2012
	(in thousands)
Assets
Real estate, net	$	18,478
Other assets	356
Total Assets	$	18,834
Liabilities
Mortgage debt and notes payable, nonrecourse	$	14,914
Accounts payable, accrued expenses and other liabilities	178
Total Liabilities	$	15,092

The following table lists rental properties included in discontinued operations:

Property	Location	Square Feet/ Number of Units/ Rooms	Period Disposed	Three Months Ended 7/31/12	Six Months Ended 7/31/12	Three Months Ended 7/31/11	Six Months Ended 7/31/11
Commercial Group:
Quebec Square	Denver, Colorado	739,000 square feet	Q1-2012	—	Yes	Yes	Yes
Ritz-Carlton hotel	Cleveland, Ohio	206 rooms	Q4-2011	—	—	Yes	Yes
250 Huron	Cleveland, Ohio	119,000 square feet	Q4-2011	—	—	Yes	Yes
Waterfront Station – East 4th & West 4th Buildings	Washington, D.C.	631,000 square feet	Q2-2011	—	—	Yes	Yes
Charleston Marriott hotel	Charleston, West Virginia	352 rooms	Q1-2011	—	—	Yes	Yes
Two triple net lease properties	Various	29,800 square feet	Q2-2012	Yes	Yes	Yes	Yes
Residential Group:
Southfield	Whitemarsh, Maryland	212 units	Q3-2012	Yes	Yes	Yes	Yes

The following table summarizes the operating results related to discontinued operations:

	Three Months Ended July 31,						Six Months Ended July 31,
	2012			2011			2012			2011
	(in thousands)
Revenues from real estate operations	$	848		$	11,819		$	2,035		$	26,656
Expenses
Operating expenses	319			6,006			778			14,584
Depreciation and amortization	191			1,636			395			4,380
Impairment of real estate	261			—			261			—
	771			7,642			1,434			18,964
Interest expense	(256		)	(1,470		)	(636		)	(3,605		)
Amortization of mortgage procurement costs	(4		)	(201		)	(8		)	(772		)
Gain on disposition of rental properties	—			111,264			8,879			121,695
Earnings (loss) before income taxes	(183		)	113,770			8,836			125,010
Income tax expense (benefit)	(348		)	12,892			3,212			17,400
Earnings from discontinued operations	165			100,878			5,624			107,610
Noncontrolling interest
Gain on disposition of rental properties	—			81,365			965			81,758
Operating earnings (loss) from rental properties	(3		)	660			5			1,995
	(3		)	82,025			970			83,753
Earnings (loss) from discontinued operations attributable to Forest City Enterprises, Inc.	$	168		$	18,853		$	4,654		$	23,857

The following table summarizes the pre-tax gain (loss) on disposition of rental properties:

	Three Months Ended July 31,					Six Months Ended July 31,
	2012		2011			2012		2011
	(in thousands)
Quebec Square (Specialty Retail Center)	$	—	$	—		$	8,879	$	—
Waterfront Station – East 4th & West 4th Buildings (Office Buildings)	—		111,738			—		111,738
Charleston Marriott (Hotel)	—		(474		)	—		9,957
Total	$	—	$	111,264		$	8,879	$	121,695

Gain on Disposition of Unconsolidated Entities

Upon disposition, investments accounted for on the equity method are not classified as discontinued operations; therefore, gains or losses on the disposition of these properties are reported in continuing operations. The following table summarizes gains and losses on the disposition of unconsolidated entities, which are included in equity in earnings (loss) of unconsolidated entities:

		Three Months Ended July 31,				Six Months Ended July 31,
		2012		2011		2012		2011
		(in thousands)
Village at Gulfstream Park (Specialty Retail Center)	Hallandale Beach, Florida	$	14,479	$	—	$	14,479	$	—
Chagrin Plaza I & II (Office Buildings)	Beachwood, Ohio	1,628		—		1,628		—
Apartment Communities:
Metropolitan Lofts	Los Angeles, California	—		—		—		9,964
Twin Lake Towers	Denver, Colorado	—		—		—		2,603
Total		$	16,107	$	—	$	16,107	$	12,567