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Dispositions and Discontinued Operations
 12 Months Ended
Dec. 31, 2014
Dispositions and Discontinued Operations  
Dispositions and Discontinued Operations

10.     Dispositions and Discontinued Operations

 

Dispositions of Property

 

The Company sold an office property located in Colorado Springs, Colorado on December 3, 2014 at a $0.9 million gain.  The disposal of the property does not represent a strategic shift that has a major effect on the Company’s operations and financial results. Accordingly, the property remains classified within continuing operations for all periods presented.

 

All property dispositions prior to 2014 have been classified as discontinued operations.  The Company sold an office property located in Richardson, Texas on October 29, 2013 at a $2.2 million gain.

 

During the three months ended September 30, 2012, the Company reached a decision to classify its office property located in Southfield, Michigan as an asset held for sale.  In evaluating the Southfield, Michigan property, management considered various subjective factors, including the time, cost and likelihood of successfully leasing the property, the effect of the property’s results on its unencumbered asset value, which is part of the leverage ratio used to calculate interest rates in the 2012 Credit Facility and future capital costs to upgrade and reposition the multi-tenant property and to lease up the building, recent leasing and economic activity in the local area, and offers to purchase the property.  The Company concluded that selling the property was the more prudent decision and outweighed the potential future benefit of continuing to hold the property.  The property was expected to sell within one year at a loss, which was recorded as a provision for loss on a property held for sale of $14.3 million net of applicable income taxes and was classified as an asset held for sale of $0.7 million at September 30, 2012.  The Company estimated the fair value of the property, less estimated costs to sell using the offers to purchase the property made by third parties (Level 3 inputs, as there is no active market). The Company sold the property on December 21, 2012 for $0.3 million resulting in a total loss of $14.8 million.

 

The Company reports the results of operations of its properties classified as discontinued operations in its consolidated statements of income, which includes rental income, rental operating expenses, real estate taxes and insurance, depreciation and amortization.

 

The operating results for discontinued operations are summarized below.

 

 

 

For the Year Ended

 

 

 

December 31,

 

(in thousands)

 

2013

 

2012

 

Rental revenue

 

$
991

 

$
2,334

 

Rental operating expenses

 

—

 
(1,089

)

Real estate taxes and insurance

 

—

 
(340

)

Depreciation and amortization

 
(616

)
(1,396

)

Net income (loss) from discontinued operations

 

$
375

 

$
(491

)