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Real Estate Investments | 6 Months Ended
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Jun. 30, 2016
Real Estate [Abstract] |
REAL ESTATE INVESTMENTS | 3. REAL ESTATE INVESTMENTS As of June 30, 2016 and December 31, 2015, the gross carrying value of the Properties were as follows (in thousands):
| June 30, |  |  | December 31, |
| 2016 |  |  | 2015 |
Land | $ | 497,732 |  |  | $ | 513,268 |
Building and improvements (a) |  | 2,760,572 |  |  |  | 2,719,780 |
Tenant improvements (a) |  | 463,101 |  |  |  | 459,952 |
|  | 3,721,405 |  |  |  | 3,693,000 |
Assets held for sale - real estate investments (b) |  | 17,622 |  |  |  | 794,588 |
Total | $ | 3,739,027 |  |  | $ | 4,487,588 |
(a) | The net increase primarily relates to the office component of the FMC Tower at Cira Centre South in Philadelphia, Pennsylvania being placed into service during the three-month period ended June 30, 2016, offset partially by the classification of 1120 Executive Boulevard in Mount Laurel, New Jersey as held for sale as of June 30, 2016.
(b) | Real estate investments related to assets held for sale above represents gross real estate assets and does not include accumulated depreciation or intangible assets on the balance sheets of the properties held for sale.
Dispositions The Company sold the following office properties during the six-month period ended June 30, 2016 (dollars in thousands):
Disposition Date |  | Property/Portfolio Name |  | Location |  | Number of Properties |  | Rentable Square Feet |  |  | Sales Price |  |  | Net Proceeds on Sale |  |  | Gain (Loss) on Sale (a) |  |
May 11, 2016 |  | 196/198 Van Buren Street (Herndon Metro Plaza I&II) |  | Herndon, VA |  | 2 |  |  | 197,225 |  |  | $ | 44,500 |  |  | $ | 43,412 |  |  | $ | (752 | ) | (b)
February 5, 2016 |  | 2970 Market Street (Cira Square) |  | Philadelphia, PA |  | 1 |  |  | 862,692 |  |  |  | 354,000 |  |  |  | 350,150 |  |  |  | 115,828 |  |
February 4, 2016 |  | Och-Ziff Portfolio |  | Various (c) |  | 58 |  |  | 3,924,783 |  |  |  | 398,100 |  |  |  | 353,971 |  |  |  | (372 | ) | (d)
Total Dispositions |  |  |  |  |  | 61 |  |  | 4,984,700 |  |  | $ | 796,600 |  |  | $ | 747,533 |  |  | $ | 114,704 |  |
(a) | Gain/(Loss) on Sale is net of closing and other transaction related costs.
(b) | During the three-month period ended March 31, 2016, the Company recognized an impairment loss totaling approximately $7.4 million on the properties. The loss on sale represents additional closing costs recognized at settlement.
(c) | Exhibit 99.2 to the Company’s Current Report on Form 8-K filed on February 10, 2016 contains a complete list of the 58 properties disposed of in the transactions with Och-Ziff Capital Management. See Note 4, "Investment in Unconsolidated Real Estate Ventures," for further details of the transactions.
(d) | During the three-month period ended December 31, 2015, the Company recognized an impairment loss totaling approximately $45.4 million. The loss on sale represents additional closing costs recognized at settlement.
On January 15, 2016, the Company sold 120 acres of undeveloped land located in Berks County Pennsylvania for a sales price of $0.9 million. The land was classified as held for sale as of December 31, 2015. The carrying value of the land exceeded the fair value less the anticipated costs of sale as of December 31, 2015, therefore the Company recognized an impairment loss of $0.3 million during the three-month period ended December 31, 2015. There was no gain or loss recognized on the sale of the land during the three-month period ended March 31, 2016. The sales of the properties and land referenced above do not represent a strategic shift that has a major effect on the Company's operations and financial results. The operating results of these properties remain classified within continuing operations for all periods presented. Held for Use Impairment During the three-month period ended June 30, 2016, the Company evaluated the recoverability of the carrying value of its properties under the undiscounted cash flow model. Based on the analysis, it was determined that due to the reduction in management’s intended hold period of a property located in the Metropolitan D.C. segment, the Company would not recover the carrying value of that property. Accordingly, the Company recorded an impairment charge on the property of $3.9 million at June 30, 2016, reducing the aggregate carrying value of the property from $37.4 million to its estimated fair value of $33.5 million. The Company measured this impairment based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rate and discount rate of 7.75% and 8.25%, respectively. The results were compared to indicative pricing in the market. The assumptions used to determine fair value are Level 3 inputs in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, "Fair Value Measurements and Disclosures.” During the three-month period ended March, 31, 2016, the Company evaluated the recoverability of the carrying value of its properties under the undiscounted cash flow model. Based on the analysis, it was determined that due to a reduction in management’s intended hold period, the Company would not recover the carrying value of two properties located in its Metropolitan D.C. segment. Accordingly, the Company recorded an impairment charge of $7.4 million at March 31, 2016 reducing the aggregate carrying values of these properties from $51.9 million to their estimated fair values of $44.5 million. The Company measured these impairments based on a discounted cash flow analysis, using a hold period of 10 years and residual capitalization rates and discount rates of 7.0%. The results were compared to indicative pricing in the market. The assumptions used to determine fair value are Level 3 inputs in accordance with the fair value hierarchy established by Accounting Standards Codification (ASC) Topic 820, "Fair Value Measurements and Disclosures.” Held for Sale The following is a summary of properties classified as held for sale but which did not meet the criteria to be classified within discontinued operations at June 30, 2016 (in thousands):
| Held for Sale Properties Included in Continuing Operations |
| June 30, 2016 |
| 1120 Executive Boulevard (a) |  |  | Oakland Lot B (b) |  |  | Total |
ASSETS HELD FOR SALE |  |  |  |  |  |  |  |  |  |  |
Real estate investments: |  |  |  |  |  |  |  |  |  |  |
Operating properties | $ | 13,256 |  |  | $ | 4,366 |  |  | $ | 17,622 |
Accumulated depreciation |  | (6,005 | ) |  |  | (4 | ) |  |  | (6,009 | )
Operating real estate investments, net |  | 7,251 |  |  |  | 4,362 |  |  |  | 11,613 |
Construction-in-progress |  | 675 |  |  |  | - |  |  |  | 675 |
Total real estate investments, net |  | 7,926 |  |  |  | 4,362 |  |  |  | 12,288 |
Other assets |  | 20 |  |  |  | - |  |  |  | 20 |
Total assets held for sale, net | $ | 7,946 |  |  | $ | 4,362 |  |  | $ | 12,308 |
LIABILITIES HELD FOR SALE |  |  |  |  |  |  |  |  |  |  |
Other liabilities | $ | 11 |  |  | $ | - |  |  | $ | 11 |
Total liabilities held for sale | $ | 11 |  |  | $ | - |  |  | $ | 11 |
(a) | On June 1, 2016, the Company entered into an agreement to sell an office property containing 95,183 square feet at 1120 Executive Boulevard located in Mount Laurel, New Jersey. As of June 30, 2016, the Company determined that the sale of the property was probable and classified this property as held for sale in accordance with applicable accounting standards for long lived assets. At such date, the carrying value of the property exceeded the fair value less the anticipated costs of sale. As a result, the Company recognized an impairment loss totaling approximately $1.8 million during the three-month period ended June 30, 2016. The fair value measurement was based on the pricing in the purchase and sale agreement. As significant inputs to the model are unobservable, the Company determined that the value determined for this property falls within Level 3 fair value reporting.
(b) | During the three-month period ended June 30, 2016, the Company determined that the sale of a property located in Oakland, California, known as Oakland Lot B, was probable and classified it as held for sale in accordance with applicable accounting standards for long lived assets. As the fair value less anticipated costs to sell exceeded the carrying value of the property no impairment loss was recorded. The fair value measurement was based on pricing in the purchase and sale agreement. As the sales price is unobservable, the Company determined that the significant inputs used to value this property falls within Level 3 for fair value reporting.
The sales of the property and land referenced above as held for sale do not represent a strategic shift that has a major effect on the Company's operations and financial results. The operating results of these properties remain classified within continuing operations for all periods presented.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 210 -Section S99 -Paragraph 3 -Subparagraph (SX 210.6-06(1)) -URI http://asc.fasb.org/extlink&oid=6488278&loc=d3e604059-122996 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03(a)(1)(d)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 10 -Section S99 -Paragraph 6 -Subparagraph (SX 210.5-04(c)(Schedule III)) -URI http://asc.fasb.org/extlink&oid=27047687&loc=d3e5864-122674 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03(10)(4)) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 235 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-24) -URI http://asc.fasb.org/extlink&oid=34714203&loc=d3e608456-123001 + Details
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