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Real Estate Assets, Discontinued Operations and Assets Held for Sale
 9 Months Ended
Sep. 30, 2017
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations and Assets Held for Sale Real Estate Assets, Discontinued Operations and Assets Held for Sale
Real Estate Assets
Real estate assets, excluding assets held for sale, consisted of the following (in thousands):
 
September 30, 2017
 
December 31, 2016
Buildings and tenant improvements
$
4,315,394

 
$
3,752,423

Land and improvements
1,776,467

 
1,392,382

Real estate assets
$
6,091,861

 
$
5,144,805


Discontinued Operations
All of the properties included in discontinued operations are medical office properties. Because of the size of the Medical Office Portfolio Disposition, and the fact that it represented our exit from the medical office product type, we determined that the disposition represented a strategic shift that would have a major effect on our operations and financial results. As such, the consolidated in-service properties in this portfolio met the criteria to be classified within discontinued operations. As the result of its classification within discontinued operations, the in-service assets and liabilities of this portfolio are required to be presented as held for sale for all prior periods presented in our Consolidated Balance Sheets. Operating results pertaining to the properties classified within discontinued operations were reclassified to discontinued operations for all prior periods presented in our Consolidated Statements of Operations and Comprehensive Income.
The following table illustrates the number of sold or held-for-sale properties included in, or excluded from, discontinued operations in this report:
 
 
Held-for-Sale at September 30, 2017
 
Sold Year-to-Date in 2017
 
Sold in 2016
 
Total
 
 
 
 
 
 
 
 
Total properties included in discontinued operations
1
 
80
 
—
 
81
Properties excluded from discontinued operations
1
 
15
 
32
 
48
Total properties sold or classified as held-for-sale
2
 
95
 
32
 
129

    
Properties sold in 2017 but excluded from discontinued operations included four properties under development, which were disposed as part of the Medical Office Portfolio Disposition, as these properties did not meet the criteria to be included in discontinued operations.
For the properties that were classified in discontinued operations, we allocated interest expense to discontinued operations and have included such interest expense in computing income from discontinued operations. Interest expense allocable to discontinued operations was based upon an allocable share of our consolidated unsecured interest expense, as none of the properties included in discontinued operations were encumbered by secured debt. The allocation of unsecured interest expense to discontinued operations was based upon the gross book value of the unencumbered real estate assets included in discontinued operations as it related to the total gross book value of our unencumbered real estate assets.





The following table illustrates the operational results of the buildings reflected in discontinued operations (in thousands):  
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Revenues
$
4,622

 
$
44,906

 
$
86,026

 
$
129,087

Operating expenses
(1,613
)
 
(14,466
)
 
(27,780
)
 
(41,602
)
Depreciation and amortization
(37
)
 
(18,868
)
 
(25,886
)
 
(56,158
)
Operating income
2,972

 
11,572

 
32,360

 
31,327

Interest expense
(409
)
 
(7,323
)
 
(14,613
)
 
(22,265
)
Income before gain on sales
2,563

 
4,249

 
17,747

 
9,062

Gain on sale of depreciable properties
120,179

 
319

 
1,229,270

 
485

Income from discontinued operations before income taxes
122,742

 
4,568

 
1,247,017

 
9,547

Income tax benefit (expense)
876

 
—

 
(10,736
)
 
—

Income from discontinued operations
$
123,618

 
$
4,568

 
$
1,236,281

 
$
9,547


Capital expenditures on a cash basis for the nine months ended September 30, 2017 and 2016 were $20.8 million and $62.4 million, respectively, related to properties within discontinued operations.
Allocation of Noncontrolling Interests - General Partner
The following table illustrates the General Partner's share of the income attributable to common shareholders from continuing operations and discontinued operations, reduced by the allocation of income between continuing and discontinued operations to the noncontrolling interests (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Income from continuing operations attributable to common shareholders
$
41,618

 
$
107,491

 
$
225,970

 
$
254,936

Income from discontinued operations attributable to common shareholders
123,651

 
4,523

 
1,220,042

 
9,452

Net income attributable to common shareholders
$
165,269

 
$
112,014

 
$
1,446,012

 
$
264,388


Allocation of Noncontrolling Interests - Partnership
Substantially all of the income from discontinued operations for all periods presented in the Partnership's Consolidated Statements of Operations and Comprehensive Income is attributable to the common unitholders.
Assets Held for Sale
At September 30, 2017, two in-service properties were classified as held for sale, one of which was a medical office property that met the criteria to be classified within discontinued operations. Also at September 30, 2017, 12 acres of undeveloped land to be sold as part of the Medical Office Portfolio Disposition, was classified as held for sale and classified within continuing operations.
The following table illustrates aggregate balance sheet information for all held-for-sale properties (in thousands):

 
Held-for-Sale Properties
 
September 30, 2017
 
December 31, 2016
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
Land and improvements
$
8,157

 
$
13,562

 
$
21,719

 
$
3,631

 
$
118,882

 
$
122,513

Buildings and tenant improvements
10,505

 
40,851

 
51,356

 
37,495

 
1,218,468

 
1,255,963

Undeveloped land
4,909

 
—

 
4,909

 
22,657

 
—

 
22,657

Accumulated depreciation
(2,553
)
 
(19,183
)
 
(21,736
)
 
(18,581
)
 
(240,685
)
 
(259,266
)
Deferred leasing and other costs, net
862

 
2,121

 
2,983

 
3,091

 
83,522

 
86,613

Other assets
591

 
3,782

 
4,373

 
3,334

 
92,444

 
95,778

Total assets held-for-sale
$
22,471

 
$
41,133

 
$
63,604

 
$
51,627

 
$
1,272,631

 
$
1,324,258

 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities held-for-sale
$
1,169

 
$
1,484

 
$
2,653

 
$
1,661

 
$
54,630

 
$
56,291