DISCONTINUED OPERATIONS

6 Months Ended

Oct. 31, 2015

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

NOTE 7 • DISCONTINUED OPERATIONS

We report in discontinued operations the results of operations and any gain or loss on sale of a property or group of properties that has either been disposed of or is classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. During the first quarter of fiscal year 2016, we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations. Accordingly, 48 office properties, 17 retail properties and 1 healthcare property which were classified as held for sale at July 31, 2015 were also classified as discontinued operations. Of the properties classified as discontinued operations, we sold 39 office properties, 15 retail properties and 1 healthcare property during the second quarter of fiscal year 2016, leaving 9 office properties and 2 retail properties classified as held for sale at October 31, 2015.

The following information shows the effect on net income from the properties classified as discontinued operations for the three and six months ended October 31, 2015 and 2014:

	(in thousands)
	Three Months Ended October 31						Six Months Ended October 31
	2015			2014			2015			2014
REVENUE
Real estate rentals	$	4,776		$	13,531		$	18,390		$	27,093
Tenant reimbursement		1,386			6,165			7,550			12,019
TOTAL REVENUE		6,162			19,696			25,940			39,112
EXPENSES
Depreciation/amortization related to real estate investments		0			3,969			4,239			7,939
Utilities		857			2,069			2,600			3,805
Maintenance		1,204			2,766			4,196			5,544
Real estate taxes		1,166			3,485			4,585			6,999
Insurance		139			277			404			551
Property management expenses		422			876			1,473			1,840
Amortization related to non-real estate investments		273			624			897			1,275
Impairment of real estate investments		0			1,442			440			1,442
TOTAL EXPENSES		4,061			15,508			18,834			29,395
Operating income		2,101			4,188			7,106			9,717
Interest expense(1)		(3,631	)		(4,645	)		(9,396	)		(9,562	)
Loss on extinguishment of debt		(7,120	)		0			(7,120	)		0
Other income		203			0			273			5
(Loss) income from discontinued operations before gain on sale		(8,447	)		(457	)		(9,137	)		160
Gain on sale of discontinued operations		23,910			0			23,910			0
INCOME (LOSS) FROM DISCONTINUED OPERATIONS(2)	$	15,463		$	(457	)	$	14,773		$	160

(1) Includes $1.6 million  and $3.1 million for the three and six months ended October 31, 2015, respectively, of default interest related to a$122.6 million non-recourse loan by one of our subsidiaries, for which we received a default notice from the special servicer on April 14, 2015 due to nonpayment on April 6, 2015.

(2) Discontinued operations include a noncontrolling interest for our Mendota joint venture entity.  Income (loss) from discontinued operations attributable to IRET was $16.5 million and $(327,000) for the three months ended October 31, 2015 and 2014, respectively, and $16.0 million and $386,000 for the six months ended October 31, 2015and 2014, respectively.

The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations to assets and liabilities held for sale that are presented separately on the Condensed Consolidated Balance Sheets:

	(in thousands)
	October 31, 2015		April 30, 2015
Carrying amounts of major classes of assets included as part of discontinued operations
Property owned and intangible assets, net of accumulated depreciation and amortization	$	88,283	$	417,045
Receivable arising from straight-lining of rents		2,398		10,078
Accounts receivable		391		566
Prepaid and other assets		73		699
Tax, insurance and other escrow		0		1,176
Goodwill		0		193
Deferred charges and leasing costs		1,883		9,606
Total major classes of assets of the discontinued operations		93,028		439,363
Other assets included in the disposal group classified as held for sale		22,400		23,740
Total assets of the disposal group classified as held for sale on the balance sheet	$	115,428	$	463,103
Carrying amounts of major classes of liabilities included as part of discontinued operations
Accounts payable and accrued expenses	$	11,320	$	13,952
Mortgages payable		122,610		295,677
Other		0		4
Total major classes of liabilities of the discontinued operations		133,930		309,633
Other liabilities included in the disposal group classified as held for sale		11,635		11,760
Total liabilities of the disposal group classified as held for sale on the balance sheet	$	145,565	$	321,393