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Real Estate | 9 Months Ended
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Sep. 30, 2021
Real Estate [Abstract] |
Real Estate | REAL ESTATE Acquisitions We acquired the following property during the 2021 Period (the “2021 acquisition”):
Acquisition Date |  | Property |  | Type |  | # of homes (unaudited) |  | Average Occupancy (unaudited) |  | Contract Purchase Price (in thousands)
August 10, 2021 |  | The Oxford |  | Residential |  | 240 |  | 93.5% |  | $ | 48,000 |
______________________________ The results of operations from the acquired operating property are included in the consolidated statements of operations as of its acquisition date and are as follows (in thousands):
|  |  | Three and Nine Months Ended September 30, 2021
Real estate rental revenue |  |  | $ | 488 |
Net loss |  |  | (349) |
We accounted for the 2021 acquisition as an asset acquisition. We measured the value of the acquired physical assets (land and building) and in-place leases (absorption costs) by allocating the total cost of the acquisition on a relative fair value basis. The total cost of the 2021 acquisition was as follows (in thousands):
Contract purchase price |  |  | $ | 48,000 |
Capitalized acquisition costs |  |  | 52 |
Total |  |  | $ | 48,052 |
We have recorded the total cost of the 2021 acquisition as follows (in thousands):
Land |  |  | $ | 4,798 |
Building |  |  | 42,079 |
Absorption costs |  |  | 1,175 |
Total |  |  | $ | 48,052 |
The weighted remaining average life for the absorption costs is 4 months. Development/Redevelopment We have properties under development/redevelopment and held for current or future development. As of September 30, 2021, we have invested $29.4 million, including the cost of acquired land, in a residential development adjacent to Riverside Apartments. In addition, in our residential segment, we continue to capitalize qualifying costs on several other projects with minor development activity necessary to ready each project for its intended use. We placed the remainder of the Trove development costs into service during the first quarter of 2021. Properties Sold and Held for Sale We intend to hold our properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing and owning our properties and to make occasional sales of properties that no longer meet our long-term strategy or return objectives and where market conditions for sale are favorable. The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs or distributed to our shareholders. Depreciation on these properties is discontinued at the time they are classified as held for sale, but operating revenues, operating expenses and interest expense continue to be recognized until the date of sale. We sold the following properties during 2021 and 2020:
Disposition Date |  | Property Name |  | Property Type |  | Rentable Square Feet |  | Contract Sales Price (in thousands) |  | (Loss) Gain on Sale (in thousands)
July 26, 2021 |  | Office Portfolio (1) |  | Office |  | 2,370,000 |  |  | $ | 766,000 |  |  | $ | (11,220) |
September 22, 2021 |  | Retail Portfolio (2) |  | Retail |  | 693,000 |  |  | 168,314 |  |  | 57,661 |
|  |  |  | Total 2021 |  | 3,063,000 |  | $ | 934,314 |  |  | $ | 46,441 |
April 21, 2020 |  | John Marshall II |  | Office |  | 223,000 |  | $ | 57,000 |  |  | $ | (6,855) |
December 2, 2020 |  | Monument II |  | Office |  | 207,000 |  | 53,000 |  |  | (8,595) |
December 17, 2020 |  | 1227 25th Street NW |  | Office |  | 135,000 |  | 53,500 |  |  | 1,125 |
|  |  |  | Total 2020 |  | 565,000 |  | $ | 163,500 |  |  | $ | (14,325) |
______________________________ (1) Consists of twelve office properties: 1901 Pennsylvania Avenue, 515 King Street, 1220 19th Street, 1600 Wilson Boulevard, Silverline Center, Courthouse Square, 2000 M Street, 1140 Connecticut Avenue, Army Navy Club, 1775 Eye Street, Fairgate at Ballston and Arlington Tower. (2) Consists of eight retail properties: Takoma Park, Westminster, Concord Centre, Chevy Chase Metro Plaza, 800 S. Washington Street, Randolph Shopping Center, Montrose Shopping Center and Spring Valley Village. We have fully transferred control of the assets sold in 2020 and 2021 and do not have continuing involvement in their operations. In June 2021, we entered into a purchase and sale agreement with a single buyer to sell the Office Portfolio for a purchase price of $766.0 million. Upon execution of the purchase and sale agreement, the properties in the Office Portfolio met the criteria for classification as held for sale. We closed on the sale of the Office Portfolio on July 26, 2021, recognizing a loss on sale of real estate of $11.2 million. In June 2021, we executed a letter of intent to sell the Retail Portfolio. During the 2021 Quarter, we executed a purchase and sale agreement for the sale of our remaining eight retail properties for a purchase price of $168.3 million and closed on the sale on September 22, 2021, recognizing a gain on real estate of $57.7 million. The dispositions of the Office Portfolio and the Retail Portfolio represent a strategic shift that will have a major effect on our financial results and we have accordingly reported the Office Portfolio and Retail Portfolio as discontinued operations. As of September 30, 2021, we assessed our properties for impairment and did not recognize any impairment charges during the 2021 Quarter. We applied reasonable estimates and judgments in evaluating each of the properties as of September 30, 2021. Should external or internal circumstances change requiring the need to shorten holding periods or adjust future estimated cash flows from our properties, we could be required to record impairment charges in the future. Discontinued Operations The results of the Office Portfolio and Retail Portfolio are classified as discontinued operations and are summarized as follows (amounts in thousands, except for share data):
| Three months ended September 30, |  | Nine months ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Real estate rental revenue | $ | 10,932 |  |  | $ | 29,511 |  |  | $ | 70,519 |  |  | $ | 89,673 |
Expenses |  |  |  |  |  |  |
Property operating and maintenance | (1,870) |  |  | (5,232) |  |  | (11,201) |  |  | (15,433) |
Real estate taxes and insurance | (1,476) |  |  | (4,839) |  |  | (11,136) |  |  | (14,233) |
Property management | (378) |  |  | (947) |  |  | (2,195) |  |  | (2,830) |
Depreciation and amortization | — |  |  | (12,406) |  |  | (22,904) |  |  | (37,106) |
Gain on sale of real estate, net | 46,441 |  |  | — |  |  | 46,441 |  |  | — |
Income from discontinued operations | $ | 53,649 |  |  | $ | 6,087 |  |  | $ | 69,524 |  |  | $ | 20,071 |
Basic net income per share | $ | 0.63 |  |  | $ | 0.07 |  |  | $ | 0.82 |  |  | $ | 0.24 |
Diluted net income per share | $ | 0.63 |  |  | $ | 0.07 |  |  | $ | 0.82 |  |  | $ | 0.24 |
Capital expenditures | $ | 833 |  |  | $ | 4,239 |  |  | $ | 3,316 |  |  | $ | 11,825 |
All assets and liabilities related to the Office Portfolio and Retail Portfolio were sold as of September 30, 2021. As of December 31, 2020, assets and liabilities related to the Office Portfolio and Retail Portfolio were as follows (in thousands):
|  | December 31, 2020
Land |  | $ | 249,869 |
Income producing property |  | 958,704 |
|  | 1,208,573 |
Accumulated depreciation and amortization |  | (414,008) |
Income producing property, net |  | 794,565 |
Development in progress and land held for development |  | 1,122 |
Investment in real estate, net |  | $ | 795,687 |
Cash and cash equivalents |  | 3 |
Restricted cash |  | 10 |
Rents and other receivables |  | 48,532 |
Prepaid expenses and other assets |  | 41,452 |
Total assets |  | $ | 885,684 |
Accounts payable and other liabilities |  | $ | 14,706 |
Advance rents |  | 4,754 |
Tenant security deposits |  | 5,769 |
Liabilities related to properties sold or held for sale |  | $ | 25,229 |

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 + Details
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