Accounting for the Impairment or Disposal of Long-Lived Assets

12 Months Ended

Dec. 31, 2016

Accounting for the Impairment or Disposal of Long-Lived Assets [Abstract]

Accounting for the Impairment or Disposal of Long-Lived Assets

ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

In November 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell 97 operating properties containing an aggregate of 6.6 million square feet and 159 acres of land for $697.3 million (the "Portfolio Sale"). In December 2013, the Company closed on the first of two planned settlements under this agreement. The proceeds from the first settlement were $367.7 million and included 49 properties totaling approximately 4.0 million square feet of space and 140 acres of land. In January 2014, the Company closed on the remaining settlement for proceeds of $329.6 million which consisted of 23 properties totaling 1.4 million square feet and 19 acres of land in the DC Metro reportable segment, 24 properties and 1.2 million square feet in the New Jersey reportable segment and one property totaling 37,000 square feet in the Company's Southeastern PA reportable segment. All of the operating properties in the Portfolio Sale were considered held for sale as of December 31, 2013.

Prior to the adoption of Accounting Standards Update 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 ("ASU 2014-08") on January 1, 2014, the results of operations for all operating properties sold or held for sale during the reported periods were shown under discontinued operations on the consolidated statements of comprehensive income. Under ASU 2014-08, operating properties that were sold or classified as held for sale before the adoption of ASU 2014-08 continue to be classified as discontinued operations. Accordingly, operating properties previously reported as discontinued operations (including the Portfolio Sale) will continue to be presented as discontinued operations on the consolidated statements of comprehensive income for all periods presented. Under ASU 2014-08, a disposal of a component of an entity or a group of components of an entity is required to be reported 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.

A summary of the results of operations for the properties classified as discontinued operations through the respective disposition dates is as follows (in thousands):

	For the Year Ended
	December 31, 2014
Revenues	$	4,728
Operating expenses	(2,258		)
Interest and other income	37
Interest expense	(557		)
Depreciation and amortization	—
Income before gain on property dispositions	1,950
Gain on property dispositions	46,631
Net income	$	48,581

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 (without continuing involvement) to the sum of total net assets plus consolidated debt.

In October 2016, the Company completed the sale of a portfolio of 108 properties totaling approximately 7.6 million square feet and 26.7 acres of land for $969 million for a net gain of $179.1 million. As this sale did not represent a strategic shift for the Company, it is not classified as discontinued operations

A summary of net income (excluding gain on sale) related to this portfolio is as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Net income	$	48,609		$	58,792		$	51,898
Noncontrolling interest - operating partnership	(1,142		)	(1,370		)	(1,220		)
Income available to common shareholders	$	47,467		$	57,422		$	50,678

Assets Held for Sale

Two parcels of land in the Company's Florida reportable segment totaling 12.5 acres were considered held for sale as of December 31, 2016.

Asset Impairment

The Company disposes of and anticipates the potential disposition of certain properties prior to the end of their remaining useful lives. During the years ended December 31, 2016, 2015 and 2014, the Company recognized impairment losses of $3.9 million, $18.2 million and $0.1 million, respectively. The impairment losses are for operating properties or land parcels and were in the reportable segments and for the amounts as indicated below (in thousands):

	Year Ended December 31,
Reportable Segment	2016		2015		2014
Carolinas/Richmond	$	—	$	13,755	$	—
Minnesota	3,879		—		—
Southeastern PA	—		2,328		106
Other	—		2,161		11
Total	$	3,879	$	18,244	$	117

The Company determined these impairments based on third party offer prices and quoted offer prices for comparable transactions which are Level 2 and Level 3 inputs, respectively, according to the fair value hierarchy established in ASC 820. These measurements have occurred throughout the respective periods as circumstances arise, and the resulting estimates of fair value are not necessarily reflective of measurements at the period’s end. The Company has evaluated each of its properties and land held for development and has determined that there were no additional valuation adjustments necessary at December 31, 2016. The Company applied reasonable estimates and judgments in determining the level of impairments recognized. 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 impairment charges in the future.