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Real Estate Dispositions, Held for Sale and Impairment Charges | 6 Months Ended
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Jun. 30, 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 six months ended June 30, 2017, we continued to execute our capital recycling program, whereby we 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 six months ended June 30, 2017, we sold three non-core properties located in Franklin, New Jersey, Hazelwood, Missouri, and Concord Township, Ohio, which are summarized below (dollars in thousands):
Aggregate Square Footage Sold |  | Aggregate Sales Price |  | Aggregate Sales Costs |  | Aggregate Impairment Charge for the Six Months Ended June 30, 2017 |  | Aggregate Gain on Sale of Real Estate, net
507,455 |  |  | $ | 25,802 |  |  | $ | 512 |  |  | $ | 1,308 |  |  | $ | 3,992 |
Our dispositions during the six months ended June 30, 2017 were not classified as discontinued operations because they did not represent a strategic shift in operations, nor will they have a major effect on our operations and financial results. Accordingly, the operating results of these properties 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 and six months ended June 30, 2017, and 2016 (dollars in thousands):
|  | For the three months ended June 30, |  | For the six months ended June 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Operating revenue |  | $ | 803 |  | (1) | $ | 645 |  |  | $ | 1,280 |  | (1) | $ | 1,290 |
Operating expense |  | 75 |  |  | 199 |  |  | 1,491 |  | (3) | 413 |
Other (expense) income, net |  | (1,914 | ) | (2) | (90 | ) |  | 3,830 |  | (4) | (218 | )
Income (loss) from real estate and related assets sold |  | $ | (1,186 | ) |  | $ | 356 |  |  | $ | 3,619 |  |  | $ | 659 |
(1) Includes $0.6 million lease termination revenue from canceling a lease obligation with a tenant that acquired one property from us during the three and six months ended June 30, 2017. This fee is recorded as rental revenue on the condensed consolidated statement of operations. (2) Includes $1.9 million loss on sale, net, from two non-core property sales. (3) Includes $1.3 million impairment charge. (4) Includes a $4.0 million gain on sale, net from our three non-core property sales. Real Estate Held for Sale During the three and six months ended June 30, 2017, we classified one property located in Newburyport, Massachusetts as held for sale. We considered the property to be non-core to our long term strategy. The property is under contract to sell, and we anticipate completing the sale in the third quarter of 2017. This property was previously impaired during the three months ended March 31, 2017, and was further impaired by $0.3 million during the three months ended June 30, 2017 when the property met the held for sale classification, and we adjusted the carrying value to equal the sales price less estimated selling costs. The assets and liabilities of the property classified as held for sale are presented separately in our condensed consolidated balance sheets as of June 30, 2017. Our property classified as held for sale during the three and six months ended June 30, 2017 was not classified as a discontinued operation because the disposition does not represent a strategic shift in our operations, nor will the disposition 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 June 30, |  | For the six months ended June 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Operating revenue |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |
Operating expense |  | 345 |  | (1) | 109 |  |  | 2,924 |  | (3) | 251 |  |
Other income, net |  | — |  |  | 240 |  | (2) | — |  |  | 148 |  | (2)
(Loss) income from real estate and related assets held for sale |  | $ | (345 | ) |  | $ | 131 |  |  | $ | (2,924 | ) |  | $ | (103 | ) |
(1) Includes $0.3 million impairment charge. (2) Includes $0.3 million of legal settlement income. (3) Includes $2.7 million impairment charge. 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):
| June 30, 2017 |  | December 31, 2016
Assets Held for Sale |  |  |
Real estate, at cost | $ | 6,622 |  |  | $ | 11,454 |
Less: accumulated depreciation | 2,414 |  |  | 2,668 |
Total real estate held for sale, net | 4,208 |  |  | 8,786 |
Lease intangibles, net | — |  |  | 200 |
Deferred rent receivable, net | — |  |  | 575 |
Other assets | — |  |  | 1 |
Total Assets Held for Sale | $ | 4,208 |  |  | $ | 9,562 |
Liabilities Held for Sale |  |  |
Deferred rent liability, net | $ | — |  |  | $ | 755 |
Asset retirement obligation | — |  |  | 286 |
Total Liabilities Held for Sale | $ | — |  |  | $ | 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 six months ended June 30, 2017 and identified two held and used assets which were impaired during first quarter 2017, and did not identify any impairment on held and used assets during second quarter 2017. For these properties, during first quarter 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, and accordingly, we recorded an impairment charge of $3.7 million during the three months ended March 31, 2017. During the three months ended June 30, 2017, we sold one of these impaired properties to the tenant for a further loss on sale of $1.8 million. During the second quarter of 2017, we became aware of a decline in the tenant's financial results. The tenant expressed interest in acquiring our property as part of their corporate reorganization. Due to the re-tenanting risk of the property if it were to go vacant and as the location was in a non-core market, we executed a sale with this tenant.We executed a sales contract for the other impaired property, and accordingly classified the property as held for sale during the three months ended June 30, 2017. Prior to the three months ended June 30, 2017, we had received an unsolicited offer to sell this property, and management concluded a sale was the appropriate course of action subsequent to March 31, 2017. As part of our held for sale process, we perform an analysis of all properties classified as held for sale during the three and six months ended June 30, 2017, and compare the fair market value of the asset less selling costs against the carrying value of assets available for sale. We classified one property as held for sale as we executed a purchase and sale agreement and expect the property to sell during the third quarter of 2017. We recorded an additional impairment charge of $0.3 million during the three months ended June 30, 2017 to reduce the carrying value equal to the sales price per the executed purchase and sale agreement, less estimated selling costs. 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, as well as sales prices from an executed purchase and sale agreement. 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 own and lease long-term or sell a particular asset will have an impact on this analysis. We recognized $0.2 million of impairment charges on three properties during the six months ended June 30, 2016. These properties were classified as held for sale during the three and six months ended June 30, 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. 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 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 + Details
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