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DISCONTINUED OPERATIONS | 9 Months Ended
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Jan. 31, 2016
DISCONTINUED OPERATIONS [Abstract] |
DISCONTINUED OPERATIONS | NOTE 7 • DISCONTINUED OPERATIONS We report in discontinued operations the results of operations and any gain or loss on sale of a property or group of properties that has either been disposed of or is classified as held for sale and for which the disposition represents a strategic shift that has or will have a major effect on our operations and financial results. During the first quarter of fiscal year 2016, we determined that our strategic plan to exit the office and retail segments met the criteria for discontinued operations. Accordingly, 48 office properties, 17 retail properties and 1 healthcare property were classified as held for sale and discontinued operations at July 31, 2015. We sold these properties during the second and third quarters of fiscal year 2016. The following information shows the effect on net income and the gains or losses from the sales of properties classified as discontinued operations for the three and nine months ended January 31, 2016 and 2015:
|  | (in thousands) |
|  | Three Months Ended January 31 |  |  | Nine Months Ended January 31 |
|  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
REVENUE |  |  |  |  |  |  |  |  |  |  |  |
Real estate rentals |  | $ | 3,576 |  |  | $ | 13,687 |  |  | $ | 21,966 |  |  | $ | 40,780 |
Tenant reimbursement |  |  | 718 |  |  |  | 6,290 |  |  |  | 8,268 |  |  |  | 18,309 |
TOTAL REVENUE |  |  | 4,294 |  |  |  | 19,977 |  |  |  | 30,234 |  |  |  | 59,089 |
EXPENSES |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation/amortization related to real estate investments |  |  | 0 |  |  |  | 4,207 |  |  |  | 4,239 |  |  |  | 12,146 |
Utilities |  |  | 416 |  |  |  | 1,803 |  |  |  | 3,016 |  |  |  | 5,608 |
Maintenance |  |  | 588 |  |  |  | 2,766 |  |  |  | 4,784 |  |  |  | 8,310 |
Real estate taxes |  |  | 756 |  |  |  | 3,532 |  |  |  | 5,341 |  |  |  | 10,531 |
Insurance |  |  | 58 |  |  |  | 264 |  |  |  | 462 |  |  |  | 815 |
Property management expenses |  |  | 468 |  |  |  | 921 |  |  |  | 1,941 |  |  |  | 2,761 |
Other property expenses |  |  | 0 |  |  |  | 30 |  |  |  | 0 |  |  |  | 30 |
Amortization related to non-real estate investments |  |  | 105 |  |  |  | 706 |  |  |  | 1,002 |  |  |  | 1,981 |
Impairment of real estate investments |  |  | 0 |  |  |  | 0 |  |  |  | 440 |  |  |  | 1,442 |
TOTAL EXPENSES |  |  | 2,391 |  |  |  | 14,229 |  |  |  | 21,225 |  |  |  | 43,624 |
Operating income |  |  | 1,903 |  |  |  | 5,748 |  |  |  | 9,009 |  |  |  | 15,465 |
Interest expense(1) |  |  | (3,436 | ) |  |  | (4,586 | ) |  |  | (12,832 | ) |  |  | (14,148 | )
Gain on extinguishment of debt(1) |  |  | 36,456 |  |  |  | 0 |  |  |  | 29,336 |  |  |  | 0 |
Other income |  |  | 154 |  |  |  | 0 |  |  |  | 427 |  |  |  | 5 |
Income from discontinued operations before gain on sale |  |  | 35,077 |  |  |  | 1,162 |  |  |  | 25,940 |  |  |  | 1,322 |
Gain on sale of discontinued operations |  |  | 331 |  |  |  | 0 |  |  |  | 24,241 |  |  |  | 0 |
INCOME FROM DISCONTINUED OPERATIONS(2) |  | $ | 35,408 |  |  | $ | 1,162 |  |  | $ | 50,181 |  |  | $ | 1,322 |
(1) | Interest expense includes $1.6 million and $4.7 million for the three and nine months ended January 31, 2016, respectively, of default interest related to a $122.6 million non-recourse loan by one of our subsidiaries. Gain on extinguishment of debt in the three and nine months ended January 31, 2016, respectively, includes $36.5 million of gain on extinguishment of debt recognized in connection with our transfer of ownership to the mortgage lender of the nine properties serving as collateral for the $122.6 million non-recourse loan and the removal of the debt obligation and accrued interest from our balance sheet.
(2) | Discontinued operations for the nine months ended January 31, 2016 and 2015 includes a noncontrolling interest for our Mendota joint venture entity. Income from discontinued operations attributable to us was $51.4 million and $1.7 million for the nine months ended January 31, 2016 and 2015, respectively.
The following information reconciles the carrying amounts of major classes of assets and liabilities of the discontinued operations to assets and liabilities held for sale that are presented separately on the Condensed Consolidated Balance Sheets:
|  | (in thousands) |
|  | January 31, 2016 |  |  | April 30, 2015 |
Carrying amounts of major classes of assets included as part of discontinued operations |  |  |  |  |  |
Property owned and intangible assets, net of accumulated depreciation and amortization |  | $ | 0 |  |  | $ | 417,045 |
Receivable arising from straight-lining of rents |  |  | 0 |  |  |  | 10,078 |
Accounts receivable |  |  | 0 |  |  |  | 566 |
Prepaid and other assets |  |  | 0 |  |  |  | 699 |
Tax, insurance and other escrow |  |  | 0 |  |  |  | 1,176 |
Goodwill |  |  | 0 |  |  |  | 193 |
Deferred charges and leasing costs |  |  | 0 |  |  |  | 9,606 |
Total major classes of assets of the discontinued operations |  |  | 0 |  |  |  | 439,363 |
Other assets included in the disposal group classified as held for sale |  |  | 22,064 |  |  |  | 23,740 |
Total assets of the disposal group classified as held for sale on the balance sheet |  | $ | 22,064 |  |  | $ | 463,103 |
Carrying amounts of major classes of liabilities included as part of discontinued operations |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 0 |  |  | $ | 13,952 |
Mortgages payable |  |  | 0 |  |  |  | 295,677 |
Other |  |  | 0 |  |  |  | 4 |
Total major classes of liabilities of the discontinued operations |  |  | 0 |  |  |  | 309,633 |
Other liabilities included in the disposal group classified as held for sale |  |  | 11,449 |  |  |  | 11,760 |
Total liabilities of the disposal group classified as held for sale on the balance sheet |  | $ | 11,449 |  |  | $ | 321,393 |

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