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8. DISCONTINUED OPERATIONS
 6 Months Ended
Jun. 30, 2014
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

We apply the provisions of ASC Topic 360, “Property, Plant and Equipment”. ASC Topic 360 requires that long-lived assets that are to be disposed of by sale be measured at the lesser of (1) book value or (2) fair value less cost to sell.  In addition, it requires that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions.

 

 

Discontinued operations relates to properties that were either sold or held for sale as of the period ended June 30, 2014.   Included in discontinued operations are a total of three and 18 properties for 2014 and 2013, respectively. Properties sold in 2014 have been reclassified to discontinued operations for current and prior year reporting periods.  In 2014, we sold one apartment complex (Pecan Pointe) and one commercial property (1010 Common) and have one commercial property held for sale (Sesame Square).  In 2013, we sold 11 apartment complexes (Dorado Ranch, Huntington Ridge, Laguna Vista, Legends of El Paso, Mariposa Villas, Paramount Terrace, River Oaks, Savoy of Garland, Stonebridge at City Park, Verandas at City View and Vistas of Pinnacle Park) and four commercial properties (225 Baronne, Amoco, Ergon and Eton Square).  The gain on sale of the properties is also included in discontinued operations for those years.  The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands):

 

    For the Three Months Ended June 30,     For the Six Months Ended June 30,  
    2014     2013     2014     2013  
Revenues:                        
     Rental and other property revenues   $ (7 )   $ 8,039     $ 1,251     $ 17,103  
      (7 )     8,039       1,251       17,103  
Expenses:                                
     Property operating expenses     221       3,374       1,208       7,891  
     Depreciation     21       1,297       193       2,735  
     General and administrative     140       271       305       540  
          Total operating expenses     382       4,942       1,706       11,166  
                                 
Other income (expense):                                
     Other income     (528 )     20       (491 )     20  
     Mortgage and loan interest     (70 )     (2,047 )     (388 )     (4,326 )
     Deferred borrowing costs amortization     3       (993 )     (278 )     (1,012 )
     Loan charges and prepayment penalties     -       (3,200 )     -       (3,245 )
     Litigation settlement     (205 )     (45 )     (250 )     (90 )
          Total other expenses     (800 )     (6,265 )     (1,407 )     (8,653 )
                                 
Loss from discontinued operations before gain on sale of real estate and tax     (1,189 )     (3,168 )     (1,862 )     (2,716 )
     Gain on sale of real estate from discontinued operations     7,003       18,074       13,057       25,301  
     Income tax expense     (2,035 )     (5,217 )     (3,918 )     (7,905 )
Income from discontinued operations   $ 3,779     $ 9,689     $ 7,277     $ 14,680  

 

Our application of ASC Topic 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2014 as income from discontinued operations.  This does not have an impact on net income available to common shareholders and only impacts the presentation of these properties within the Consolidated Statements of Operations.