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, 2014
Land and land improvements	$	311,890		$	146,417		$	868,650		$	1,326,957
Buildings and improvements	1,240,593			578,013			—			1,818,606
Less: accumulated depreciation and amortization	(364,323		)	(96,159		)	(8,367		)	(468,849		)
Real estate, net	1,188,160			628,271			860,283			2,676,714
Real estate available and held for sale	4,521			162,782			118,679			285,982
Total real estate	$	1,192,681		$	791,053		$	978,962		$	2,962,696
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

Real Estate Available and Held for Sale—As of December 31, 2014 and 2013 the Company had $155.8 million and $221.0 million, respectively, of residential properties available for sale in its operating properties portfolio.

During the year ended December 31, 2014, the Company reclassified land with a carrying value of $6.5 million from held for sale to held for investment due to a change in the Company's strategy and its plan to re-entitle the property. The asset is included in "Real estate, net" on the Company's Consolidated Balance Sheets. There were no operations to reclassify on the Company's Consolidated Statements of Operations as a result of this change. During the same period, the Company reclassified units with a carrying value of $56.7 million to held for sale due to the conversion of hotel rooms to residential units to be sold. The Company also reclassified net lease assets with a carrying value of $4.0 million to held for sale due to executed contracts with third parties.

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 in "Discontinued Operations" 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 sales of real estate" on the Company's Consolidated Statements of Operations.

Acquisitions—The following acquisitions of real estate were reflected in the Company's Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012 ($ in thousands):



	For the Years Ended December 31,
	2014(1)		2013(2)(3)		2012(4)
Acquisitions of real estate assets	$	4,666	$	102,364	$	9,750

Explanatory Notes:

_______________________________________________________________________________


(1)	During the year ended December 31, 2014, the Company purchased two condominium units for $3.0 million and one land parcel for $1.7 million.

(2)

During the year ended December 31, 2013, the Company acquired a net lease asset 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, which was leased back to the seller. The Company concluded that the transaction was a real estate asset acquisition and capitalized the acquisition-related costs. The intangible assets were included in "Deferred expenses and other assets, net" and the intangible liabilities were included in "Accounts payable, accrued expenses and other liabilities" on the Company's Consolidated Balance Sheets. The lease was classified as an operating lease. During the year ended December 31, 2014, the net lease asset was sold to its Net Lease Venture for net proceeds of $93.7 million, which approximated carrying value.


(3)	During the year ended December 31, 2013, the Company paid $8.8 million to redeem a noncontrolling member's interest.


(4)	During the year ended December 31, 2012, the Company acquired approximately 900 parking spaces adjacent to an owned property for $9.8 million.

During the year ended December 31, 2014, the Company acquired, via deed-in-lieu, title to three commercial operating properties and a land asset, which had a total fair value of $77.9 million and previously served as collateral for loans receivable held by the Company. No gain or loss was recorded in connection with these transactions. The following unaudited table summarizes the Company's pro forma revenues and net income for the years ended December 31, 2014 and 2013, as if the acquisition of these properties acquired during the year ended December 31, 2014 was completed on January 1, 2013 ($ in thousands):



	For the Years Ended December 31,
	2014			2013
Pro forma total revenues	$	466,327		$	399,885
Pro forma net income (loss)	(245		)	(112,355		)

From the date of acquisition in May 2014 through December 31, 2014, $8.3 million in total revenues and $2.9 million in net loss associated with the properties were included in the Company’s Consolidated Statements of Operations. The pro forma revenues and net income are presented for informational purposes only and may not be indicative of what the actual results of operations of the Company would have been assuming the transaction occurred on January 1, 2013, nor do they purport to represent the Company’s results of operations for future periods.

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 for 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 connection with this transaction.

Dispositions—During the years ended December 31, 2014, 2013 and 2012, the Company sold residential condominiums for total net proceeds of $236.2 million, $269.7 million and $319.3 million, respectively, and recorded income from sales of real estate totaling $79.1 million, $82.6 million and $63.5 million, respectively. During the year ended December 31, 2014, the Company sold residential lots from three of our master planned community properties for proceeds of $15.2 million which had associated cost of sales of $12.8 million. During the same period, the Company also sold properties with a carrying value of $6.8 million for proceeds that approximated carrying value.

During the year ended December 31, 2014, the Company sold net lease assets with a carrying value of $8.0 million resulting in a net gain of $5.7 million. The Company also sold a commercial operating property with a carrying value of $29.4 million resulting in a gain of $4.6 million. These gains were recorded as "Income from sales of real estate" in the Company's Consolidated Statements of Operations. Additionally, during the same period, the Company sold a net lease asset for net proceeds of $7.8 million. The Company recorded an impairment loss of $3.0 million in connection with the sale.

During the year ended December 31, 2014, the Company sold its 72% interest in a previously consolidated entity, which owned a net lease asset subject to a non-recourse mortgage of $26.0 million at the time of sale, to its Net Lease Venture for net proceeds of $10.1 million that approximated carrying value. During the same period, the Company contributed land with a carrying value of $9.5 million to a newly formed unconsolidated entity. See Note 6.

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 the sold interest, which was recorded as "Income from sales of real estate" in 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" in the Company's Consolidated Statements of Operations. The Company also sold other land assets with a carrying value of $14.8 million resulting in a gain of $0.6 million. 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.

Discontinued Operations—The Company has elected to early adopt ASU 2014-08 beginning with disposals and classifications of assets as held for sale that occurred after December 31, 2013. During the year ended December 31, 2014, there were no disposals or assets classified as held for sale which were individually significant or represented a strategic shift that has (or will have) a major effect on the Company's operations and financial results.

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



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

Impairments—During the year ended December 31, 2014, the Company recorded impairments on real estate assets totaling $34.6 million, of which $15.6 million resulted from changes in business strategies for a residential property and a land asset, $15.4 million resulted from continued unfavorable local market conditions for two real estate properties and $3.6 million resulted from the sale of net lease assets. During the years ended December 31, 2013 and 2012, the Company recorded impairments on real estate assets totaling $14.4 million and $35.4 million, respectively, resulting from changes in local market conditions and business strategy for certain assets. Of these amounts, $1.8 million and $22.6 million for the years ended December 31, 2013 and 2012, 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 were $30.0 million, $31.8 million and $30.9 million for the years ended December 31, 2014, 2013 and 2012, respectively. These amounts 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, 2014, are as follows ($ in thousands):



Year	Net Lease Assets		Operating Properties
2015	$	126,316	$	52,823
2016	125,653		51,437
2017	120,918		49,592
2018	118,384		44,288
2019	116,348		38,707