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Impairment and Disposal of Long-Lived Assets
 6 Months Ended
Jun. 30, 2019
Property, Plant and Equipment [Abstract]  
Impairment and Disposal of Long-Lived Assets 7: Impairment or Disposal of Long-Lived Assets
In 2017, the Company initiated a strategic shift whereby it adopted a plan to divest of its remaining suburban office properties. In the third quarter of 2018, the Company updated its strategy whereby it adopted a plan to divest of all of its remaining office properties. The Company determined that the strategic shift would have a major effect on its operations and financial results. As such, properties sold or those that meet the criteria to be classified as held for sale within the corporate strategy were classified within discontinued operations. Consistent with the held for sale criteria these properties are expected to be sold within one year. As the result of the 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 these properties were reclassified to discontinued operations for all prior periods presented in our Consolidated Statements of Comprehensive Income.
The following table illustrates the number of sold or held for sale properties included in, or excluded from, discontinued operations:
 
 
Held for sale as of June 30, 2019
 
Sold during the six months ended June 30, 2019
 
Sold during the year ended December 31, 2018
 
Total
Properties included in discontinued operations
 
14

 
8

 
37

 
59

Properties included in continuing operations
 
3

 
—

 
2

 
5

Properties sold or classified as held for sale
 
17

 
8

 
39

 
64


In addition, there were four properties comprising 86.0 acres included as held for sale as of June 30, 2019.
The properties held for sale with operating results in discontinued operations as of June 30, 2019 were located in the following reportable segments: two properties in Southeastern PA, one property in Chicago/Minneapolis, eight properties in Philadelphia one property in DC Metro and two in the United Kingdom.
A summary of the results of operations for the properties classified as discontinued operations is as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Revenues
 
$
11,318

 
$
23,085

 
$
25,095

 
$
49,702

Operating expenses
 
(3,452
)
 
(5,253
)
 
(7,787
)
 
(11,952
)
Depreciation and amortization
 
(62
)
 
(3,073
)
 
(2,129
)
 
(8,472
)
Impairment charges - real estate assets
 
(4,018
)
 
—

 
(14,292
)
 
—

Interest and other income (expense)
 
(39
)
 
(29
)
 
(60
)
 
(58
)
Income taxes
 
(261
)
 
(30
)
 
(293
)
 
(55
)
Loss on debt extinguishment
 
(7,618
)
 
—

 
(7,618
)
 
—

Interest expense
 
(466
)
 
(1,748
)
 
(1,174
)
 
(3,717
)
Gain (loss) on property dispositions
 
52,837

 
(240
)
 
72,024

 
89,772

Income from discontinued operations
 
48,239

 
12,712

 
63,766


115,220

Noncontrolling interest - operating partnership
 
(1,114
)
 
(296
)
 
(1,479
)
 
(2,685
)
Noncontrolling interest - consolidated joint venture
 
(120
)
 
(110
)
 
(187
)
 
(187
)
Income from discontinued operations available to common shareholders
 
$
47,005

 
$
12,306

 
$
62,100

 
$
112,348



Interest expense has been allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold and held for sale included in discontinued operations to the sum of total net assets plus consolidated debt.
Capital expenditures on a cash basis related to properties within discontinued operations were $2.1 million and $3.5 million, respectively, for the three and six months ended June 30, 2019, and $11.2 million and $27.4 million, respectively, for the three and six months ended June 30, 2018.
Assets Held for Sale
As of June 30, 2019, 17 properties were classified as held for sale, of which 14 properties met the criteria to be classified within discontinued operations and three properties were classified within continuing operations. In addition, there were four properties comprising 86.0 acres included as held for sale as of June 30, 2019.
The following table illustrates aggregate balance sheet information for all held for sale properties (in thousands):
 
June 30, 2019
 
December 31, 2018
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
 
Included in Continuing Operations
 
Included in Discontinued Operations
 
Total
Land and land improvements
$
3,056

 
$
91,677

 
$
94,733

 
$
1,301

 
$
113,080

 
$
114,381

Buildings and improvements
25,119

 
253,295

 
278,414

 
5,638

 
384,737

 
390,375

Development in progress
—

 
10,269

 
10,269

 
—

 
9,597

 
9,597

Land held for development
21,120

 
—

 
21,120

 
26,253

 
—

 
26,253

Accumulated depreciation
(6,559
)
 
(36,946
)
 
(43,505
)
 
(1,546
)
 
(70,242
)
 
(71,788
)
Deferred financing and leasing costs, net
1,099

 
10,848

 
11,947

 
58

 
13,697

 
13,755

Other assets
1,153

 
12,595

 
13,748

 
164

 
19,470

 
19,634

Total assets held for sale
$
44,988

 
$
341,738

 
$
386,726

 
$
31,868

 
$
470,339

 
$
502,207

 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities held for sale
$
2,941

 
$
16,092

 
$
19,033

 
$
141

 
$
20,990

 
$
21,131



Impairment Charges - Real Estate Assets
The Company recorded $4.0 million and $14.4 million of impairment charges during the three and six months ended June 30, 2019, respectively. These impairment charges were primarily related to an office building held for sale in the Company's DC Metro segment and is primarily included in discontinued operations in the Company's Consolidated Statements of Comprehensive Income.

The Company determined these impairments based on third party offer prices which are Level 2 according to the fair value hierarchy established in ASC 820.

The Company recorded a $26.0 million impairment charge during the three and six months ended June 30, 2018. This charge related to the Camden Waterfront project located in Camden, New Jersey and reported in the Company's Philadelphia reportable segment. The Company determined this impairment based on quoted offer prices on comparable properties, which is a Level 3 fair value calculation.

The Company has applied reasonable estimates and judgments in evaluating each of its properties and land held for development and has determined that there are no additional valuation adjustments necessary at June 30, 2019. Should external or internal circumstances change requiring the need to shorten the holding periods or adjust the estimated future cash flows of the Company’s assets, the Company could be required to record additional impairment charges in the future.