REAL ESTATE SOLD AND HELD FOR SALE DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Real Estate Sold and Held For Sale and Discontinued Operations

REAL ESTATE SOLD AND HELD FOR SALE/DISCONTINUED OPERATIONS

The Company considers a real estate property to be held for sale when it meets the criteria established under ASC 360, Property, Plant and Equipment, including when it is probable that the property will be sold within a year.  Real estate properties held for sale are reported at the lower of the carrying amount or fair value less estimated costs to sell and are not depreciated while they are held for sale. The Company did not classify any properties as held for sale as of June 30, 2020 and December 31, 2019.

In accordance with FASB ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, the Company would report a disposal of a component of an entity or a group of components of an entity in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. In addition, the Company would provide additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. EastGroup performs an analysis of properties sold to determine whether the sales qualify for discontinued operations presentation.

The Company does not consider its sales in 2019 to be disposals of a component of an entity or a group of components of an entity representing a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.

The Company had no sales during the six months ended June 30, 2020.

During the year 2019, EastGroup sold five operating properties: World Houston 5 in Houston; Altamonte Commerce Center in Orlando; Southpointe Distribution Center in Tuscon; and three of its four University Business Center buildings in Santa Barbara. The properties contain a combined 617,000 square feet and were sold for $68.5 million. EastGroup recognized gains on the sales of $41.1 million. The Company also sold (through eminent domain procedures) a small pacel of land (0.2 acres) in San Diego for $185,000 and recognized a gain of $83,000.

Of the above-mentioned 2019 transactions, World Houston 5 and Altamonte Commerce Center were sold during the six months ended June 30, 2019. The properties, which together contain 237,000 square feet and are located in Houston and Orlando, respectively, were sold for an aggregate of $18.7 million, and the Company recognized gains on the sales of $11.4 million during the six months ended June 30, 2019. The sale of Altamonte Commerce Center closed during the three months ended June 30, 2019, resulting in a gain on sale of $9.1 million being recognized in the second quarter of 2019.

The results of operations and gains on sales for the properties sold during the periods presented are reported in continuing operations on the Consolidated Statements of Income and Comprehensive Income. The gains on sales of operating properties are included in Gain on sales of real estate investments, and the gains on sales of land are included in Other.