Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations

Discontinued Operations

14.   Discontinued Operations

We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key factors that we estimate in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates. If a property is classified as held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell.

For the first three months of 2013, we recorded total provisions for impairment of $456,000 on four sold properties and one property classified as held for sale in the following industries: one in the automotive parts industry, two in the child care industry, one in the pet supplies and services industry, and one in the restaurant-casual industry.  These provisions for impairment are included in income from discontinued operations on our consolidated statement of income for the three months ended March 31, 2013.  For the first three months of 2012, we did not record any provisions for impairment.

Operations from 16 investment properties classified as held for sale at March 31, 2013, plus properties previously sold, are reported as discontinued operations. Their respective results of operations have been reclassified as income from discontinued operations on our consolidated statements of income. We do not depreciate properties that are classified as held for sale.

No debt was assumed by buyers of our investment properties, or repaid as a result of our investment property sales, and we do not allocate interest expense to discontinued operations related to real estate held for investment. We allocate interest expense related to borrowings specifically attributable to Crest. The interest expense amounts allocated to Crest are included in income from discontinued operations.

The following is a summary of income from discontinued operations on our consolidated statements of income (dollars in thousands):

	Three months ended
	March 31,
Income from discontinued operations	2013		2012
Gain on sales of investment properties	$	38,559	$	611
Rental revenue	1,489		2,615
Other revenue	11		14
Depreciation and amortization	(96)		(724)
Property expenses	(298)		(429)
Provisions for impairment	(456)		--
Crest’s income from discontinued operations	271		129
Income from discontinued operations	$	39,480	$	2,216
Per common share, basic and diluted (1)	$	0.23	$	0.02

(1) The per share amounts for income from discontinued operations above and the income from continuing operations and net income reported on the consolidated statements of income have each been calculated independently.