Real Estate

The Company's real estate assets were comprised of the following ($ in thousands):



	Net Lease			Operating Properties			Land			Total
As of December 31, 2013
Land and land improvements	$	350,817		$	132,934		$	803,238		$	1,286,989
Buildings and improvements	1,346,071			587,574			—			1,933,645
Less: accumulated depreciation and amortization	(338,640		)	(82,420		)	(3,393		)	(424,453		)
Real estate, net	$	1,358,248		$	638,088		$	799,845		$	2,796,181
Real estate available and held for sale	—			228,328			132,189			360,517
Total real estate	$	1,358,248		$	866,416		$	932,034		$	3,156,698
As of December 31, 2012
Land and land improvements	$	344,239		$	132,028		$	786,114		$	1,262,381
Buildings and improvements	1,282,571			572,453			—			1,855,024
Less: accumulated depreciation and amortization	(310,605		)	(65,409		)	(2,292		)	(378,306		)
Real estate, net	$	1,316,205		$	639,072		$	783,822		$	2,739,099
Real estate available and held for sale	—			454,587			181,278			635,865
Total real estate	$	1,316,205		$	1,093,659		$	965,100		$	3,374,964

Real estate available and held for sale—As of December 31, 2013 and 2012, the Company had $221.0 million and $374.1 million, respectively, of residential properties available for sale in its operating properties portfolio.

During the year ended December 31, 2013, the Company reclassified two land properties with a carrying value of $49.7 million from held for sale to held for investment due to changes in the Company's business plan for the properties. These assets are included in "Real estate, net" on the Company's Consolidated Balance Sheets. There were no operations to reclassify on the Company's Consolidated Statement of Operations as a result of this change. During the same period, the Company reclassified three land assets with a carrying value of $31.8 million and a net lease asset with a carrying value of $9.8 million to held for sale due to executed contracts with third parties. The net lease asset was disposed of for a gain of $3.6 million during the year ended December 31, 2013. The gain was recorded in "Gain from discontinued operations" on the Company's Consolidated Statements of Operations. The results of operations for the net lease assets that were reclassified are included in "Income (loss) from discontinued operations" on the Company's Consolidated Statements of Operations for all periods presented (see table below). The three land properties were sold during the year ended December 31, 2013 for a gain of $0.6 million. These gains were recorded in "Income from residential property" on the Company's Consolidated Statements of Operations.

During the year ended December 31, 2012, the Company had a change in its business plans to sell two commercial operating properties previously considered held for sale. As of December 31, 2012, the carrying amount of these assets was $49.8 million and was recorded in Real Estate, net. The assets were reclassified back to real estate held and used at their carrying value prior to classification as held for sale and adjusted for depreciation expense of $3.3 million during the held for sale period, which was lower than the assets' fair value at the time of the change in plans to sell. In connection with the reclassification of these assets to held and used, the Company reclassified their results of operations for each of the periods presented, as follows:



	For the Years Ended December 31,
	2012			2011
Other income	$	21,148		$	21,663
Real estate expenses	$	(22,603	)	$	(24,297	)

Acquisitions—During the year ended December 31, 2013, the Company acquired a net lease asset, which was leased back to the seller, for a purchase price of $93.6 million, including intangible assets of $36.1 million, intangible liabilities of $11.9 million and acquisition-related costs of $0.2 million. The Company concluded that the transaction was a real estate asset acquisition and capitalized the acquisition-related costs. The intangible assets are included in "Deferred expenses and other assets, net" and the intangible liabilities are included in "Accounts payable, accrued expenses and other liabilities" on the Company's Consolidated Balance Sheets. The lease is classified as an operating lease.

During the year ended December 31, 2013, the Company acquired, via foreclosure, title to a residential operating property and two land properties, each of which previously served as collateral on loans receivable held by the Company. The total fair value of the land properties was $15.6 million. The Company contributed the residential operating property, which had a fair value of $25.5 million, to an entity, of which it owns 63%. Based on the control provisions in the partnership agreement, the Company consolidates the entity and reflects its partner's 37% share of equity in "Noncontrolling interests" on the Company's Consolidated Balance Sheets. The acquisition was accounted for at fair value. No gain or loss was recorded in conjunction with these transactions.

During the year ended December 31, 2012, the Company acquired, via foreclosure, title to properties, which previously served as collateral on loan receivables held by the Company with a total fair value of $269.1 million at the time of foreclosure. These properties included $172.4 million of residential operating properties, $63.4 million of commercial operating properties and $33.3 million of land assets.

During the year ended December 31, 2012, the Company also acquired land and other assets with a fair value of $27.3 million from a third party to form a new venture related to one of the Company's commercial operating properties. The third party contributed land into the venture in a non-cash exchange for a non-controlling interest and the Company continues to consolidate the subsidiary. In conjunction with the formation of this new venture, the venture contributed land with a recorded value of $11.6 million in a non-cash exchange for a 40% noncontrolling equity interest in a separate new venture. The Company did not recognize any gains or losses associated with these transactions.

In addition, during 2012, the Company acquired land and other assets with a fair value of $11.5 million from a third party to form a new strategic venture related to one of the Company's active land development projects. The third party contributed land into the venture in a non-cash exchange for a non-controlling interest and the Company continues to consolidate the subsidiary. The Company did not recognize any gains or losses associated with the transaction. Based upon certain rights held by the minority partner in this land venture that provide it with an option to redeem its interest at fair value after seven years, the Company has reflected the partner's non-controlling interest in this venture as a redeemable non-controlling interest within its Consolidated Balance Sheets. As it is probable that the interest will become redeemable, subsequent changes in fair value are being accreted over the seven year period from the date of issuance to the earliest redemption date using the interest method. As of December 31, 2013 and 2012, the estimated redemption value of the redeemable non-controlling interest was $17.4 million and $17.9 million, respectively.

Dispositions—During the years ended December 31, 2013, 2012, and 2011, the Company sold residential condominiums for total net proceeds of $269.7 million, $319.3 million and $154.0 million, respectively, and recorded income from sales of residential properties totaling $82.6 million, $63.5 million and $5.7 million, respectively.

During the year ended December 31, 2013, the Company sold land for net proceeds of $21.4 million to a newly formed unconsolidated entity in which the Company also received a preferred partnership interest and a 47.5% equity interest. The Company recognized a gain of $3.4 million, reflecting the proportionate share of our sold interest, which was recorded as "Income from sales of residential property" on the Company's Consolidated Statements of Operations. The Company also sold land with a carrying value of $18.9 million for proceeds that approximated carrying value.

During the year ended December 31, 2013, the Company contributed land with carrying value of $24.1 million to a newly formed unconsolidated entity in which the Company received an equity interest of 75.6%. As a result of the transfer, the Company recognized a $7.4 million loss, which was recorded as "Loss on transfer of interest to unconsolidated subsidiary" on the Company's Consolidated Statements of Operations. In addition, during the year ended December 31, 2013, the Company contributed land with a carrying value of $2.8 million to a newly formed unconsolidated entity in which the Company also received a 50.0% equity interest. No gain or loss was recorded in conjunction with the transaction.

Additionally, during the year ended December 31, 2013, the Company sold five net lease assets with a carrying value of $18.7 million resulting in a net gain of $2.2 million. During the same period the Company sold six commercial operating properties with a carrying value of $72.6 million resulting in a net gain of $18.6 million. These gains were recorded as "Gain from discontinued operations" on the Company's Consolidated Statements of Operations. The Company also sold a land asset with a carrying value of $14.8 million resulting in a gain of $0.6 million, which was included in "Income from sales of residential property" on the Company's Consolidated Statements of Operations.

Also, during the year ended December 31, 2013, the Company transferred title of net lease assets with a carrying value of $8.7 million to its tenant for consideration that approximated our carrying value.

During the year ended December 31, 2012, the Company sold a portfolio of 12 net lease assets with an aggregate carrying value of $105.7 million and recorded a gain of $24.9 million resulting from the transaction. Certain of the properties were subject to secured term loans with a remaining principal balance of $50.8 million that were repaid in full at closing (see Note 8). In addition to this portfolio sale, during 2012, the Company sold net lease assets with a carrying value of $9.8 million, resulting in a net gain of $2.4 million. These gains were recorded as "Gain from discontinued operations" on the Company's Consolidated Statements of Operations. During the year ended December 31, 2012, the Company sold commercial operating properties with an aggregate carrying value of $29.3 million and land assets with a carrying value of $72.1 million for proceeds that approximated carrying value.

During the year ended December 31, 2011, the Company sold net lease assets with carrying values of $34.1 million, resulting in a net gain of $3.2 million, which was recorded in "Gain from discontinued operations" on the Company's Consolidated Statements of Operations. During 2011, the Company also sold commercial operating properties with an aggregate carrying value of $17.9 million and land assets with a carrying value of $9.5 million for proceeds that approximated carrying value. In addition, during 2011, the Company realized $22.2 million of a gain previously deferred resulting from the sale of a portfolio of 32 net lease assets in 2010. The gain was recorded in "Gain from discontinued operations" on the Company's Consolidated Statements of Operations during the year ended December 31, 2011.

Discontinued Operations—The following table summarizes income (loss) from discontinued operations for the years ended December 31, 2013, 2012 and 2011, respectively ($ in thousands):



	For the Years Ended December 31,
	2013			2012			2011
Revenues	$	5,545		$	14,132		$	23,090
Total expenses	(3,138		)	(9,037		)	(19,457		)
Impairment of assets	(1,763		)	(22,576		)	(9,147		)
Income (loss) from discontinued operations	$	644		$	(17,481	)	$	(5,514	)

Impairments—During the years ended December 31, 2013, 2012 and 2011 the Company recorded impairments on real estate assets totaling $14.4 million, $35.4 million and $22.4 million, respectively, resulting from changes in local market conditions and business strategy for certain assets. Of these amounts, $1.8 million, $22.6 million and $9.1 million for the years ended December 31, 2013, 2012 and 2011, respectively, have been recorded in "Income (loss) from discontinued operations" on the Company's Consolidated Statements of Operations due to the assets being sold or classified as held for sale as of December 31, 2013 (see above).

Tenant Reimbursements—The Company receives reimbursements from tenants for certain facility operating expenses including common area costs, insurance, utilities and real estate taxes. Tenant expense reimbursements for the years ended December 31, 2013, 2012 and 2011 were $31.8 million, $30.9 million and $29.4 million, respectively, and are included in “Operating lease income” on the Company's Consolidated Statements of Operations.

Future Minimum Operating Lease Payments—Future minimum operating lease payments under non-cancelable leases, excluding customer reimbursements of expenses, in effect at December 31, 2013, are as follows ($ in thousands):



Year	Net Lease Assets		Operating Properties
2014	$	132,996	$	53,283
2015	$	133,272	$	48,851
2016	$	131,738	$	46,476
2017	$	125,142	$	44,516
2018	$	123,464	$	37,979