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Real Estate Dispositions, Held for Sale and Impairment Charges | 3 Months Ended
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Mar. 31, 2017
Real Estate [Abstract] |
Real Estate Dispositions, Held for Sale and Impairment Charges | Real Estate Dispositions, Held for Sale and Impairment Charges Real Estate Dispositions During the three months ended March 31, 2017, we continued to execute our capital recycling program, whereby we opportunistically sold properties outside of our core markets and redeployed proceeds to fund property acquisitions in our target secondary growth markets, as well as repay outstanding debt. During the three months ended March 31, 2017, we sold one non-core property, which is summarized below (dollars in thousands):
Square Footage Sold |  | Sales Price |  | Sales Costs |  | Gain on Sale of Real Estate
183,000 |  |  | $ | 12,800 |  |  | $ | 402 |  |  | $ | 5,906 |
Our disposition during the three months ended March 31, 2017 was not classified as a discontinued operation because it did not represent a strategic shift in operations, nor will it have a major effect on our operations and financial results. Accordingly, the operating results of this property are included within continuing operations for all periods reported. The table below summarizes the components of operating income from the real estate and related assets disposed of during the three months ended March 31, 2017, and 2016, respectively (dollars in thousands):
|  | For the three months ended March 31,
|  | 2017 |  | 2016
Operating revenue |  | $ | 87 |  |  | $ | 247 |
Operating expense |  | — |  |  | 54 |
Other income (expense) |  | 5,781 |  | (1) | (93 | )
Income from real estate and related assets sold |  | $ | 5,868 |  |  | $ | 100 |
(1) Includes a $5.9 million gain on sale of our Franklin, New Jersey property. Real Estate Held for Sale During the three months ended March 31, 2017, we had one property classified as held for sale. We considered the property classified as held for sale during the three months ended March 31, 2017 to be non-core to our long term strategy. The one property classified as held for sale during the three months ended March 31, 2017 was sold subsequent to the end of the quarter, and we recognized a loss of $0.1 million. The assets and liabilities of the one property classified as held for sale are presented separately in our condensed consolidated balance sheet as of March 31, 2017. Our assets classified as held for sale during the three months ended March 31, 2017 were not classified as discontinued operations because they do not represent a strategic shift in our operations, nor will they have a major effect on our operations and financial results. The table below summarizes the components of income from real estate and related assets held for sale (dollars in thousands):
|  | For the three months ended March 31,
|  | 2017 |  | 2016
Operating revenue |  | $ | 51 |  |  | $ | 59 |
Operating expense |  | 1 |  |  | 47 |
Other expense |  | (28 | ) |  | (36 | )
Income (loss) from real estate and related assets held for sale |  | $ | 22 |  |  | $ | (24 | )
The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying condensed consolidated balance sheet (dollars in thousands):
| March 31, 2017 |  | December 31, 2016
Assets Held for Sale |  |  |
Real estate, at cost | $ | 3,106 |  |  | $ | 11,454 |
Less: accumulated depreciation | 859 |  |  | 2,668 |
Total real estate held for sale, net | 2,247 |  |  | 8,786 |
Lease intangibles, net | 34 |  |  | 200 |
Deferred rent receivable, net | 78 |  |  | 575 |
Other assets | — |  |  | 1 |
Total Assets Held for Sale | $ | 2,359 |  |  | $ | 9,562 |
Liabilities Held for Sale |  |  |
Deferred rent liability, net | $ | 239 |  |  | $ | 755 |
Asset retirement obligation | 93 |  |  | 286 |
Total Liabilities Held for Sale | $ | 332 |  |  | $ | 1,041 |
Impairment Charges We performed an evaluation and analysis of our entire portfolio to determine if any of our held and used assets were impaired during the three months ended March 31, 2017 and identified two held and used assets which potentially were impaired during March 2017. For these properties, during March 2017, we received unsolicited interest from potential buyers, and as a result, we included a sale scenario and shortened our hold period when comparing the undiscounted cash flows against the respective carrying values. Based upon our analysis, we concluded that the undiscounted cash flows for these properties were below their respective carrying values indicating that these assets were impaired as of March 31, 2017. Therefore we recorded $3.7 million in impairment charges to adjust the carrying value for both assets to fair market value. We evaluated both properties for held for sale classification, and concluded that these assets did not qualify, and both properties were classified as held and used assets as of March 31, 2017. Fair market value for these assets was calculated using Level 3 inputs, which were determined using comparable asset sale data from the respective asset locations. We continue to evaluate our properties on a quarterly basis for changes that could create the need to record impairment. Future impairment losses may result, and could be significant, should market conditions deteriorate in the markets in which we hold our assets or we are unable to secure leases at terms that are favorable to us, which could impact the estimated cash flow of our properties over the period in which we plan to hold our properties. Additionally, changes in management's decisions to either long-term own and lease or sell a particular asset will have an impact on this analysis. As part of our held for sale process, we perform an analysis of all properties classified as held for sale during the three months ended March 31, 2017, and compare the fair market value of the asset less selling costs against the carrying value of assets available for sale. We did not record any impairment related to our held for sale assets during the three months ended March 31, 2017. We recognized $0.4 million of impairment charges on one property during the three months ended March 31, 2016. This property was classified as held for sale during the three months ended March 31, 2016, and through our held for sale analysis, we concluded that the fair market value less selling costs was below the carrying value of this property. This property was sold in May 2016. The fair values for the above held for sale property was calculated using Level 3 inputs which were calculated using an estimated sales price, less estimated costs to sell. The estimated sales price was determined using an executed purchase and sale agreement.

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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 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 6 -Subparagraph a -Article 5 + Details
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