Quarterly report pursuant to Section 13 or 15(d)

Assets Held for Sale and Discontinued Operations

v3.5.0.2
Assets Held for Sale and Discontinued Operations
9 Months Ended
Sep. 30, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Assets held for sale and discontinued operations
Assets Held for Sale and Discontinued Operations
In August 2015, the Company’s management and Board of Directors committed to a plan to sell Bixby Commons, Jenks Reasors, Harps at Harbor Point, Starbucks/Verizon and the ground leases for Ruby Tuesday’s and Outback Steakhouse at Pierpont Centre (the “Freestanding Properties”) as part of the Company’s continuous evaluation of strategic alternatives. Accordingly, the Freestanding Properties have been classified as held for sale and the results of their operations have been classified as discontinued operations for all periods presented. Management expects that the sale of the Freestanding Properties will occur within one year and the Company will receive no residual cash flows once the Freestanding Properties are disposed. As of September 30, 2016, the only Freestanding Property remaining available for sale was Ruby Tuesday and Outback Steakhouse at Pierpont Centre.
On June 29, 2016, the Company completed its sale of Starbucks/Verizon for a contract price of approximately $2.1 million, resulting in a gain of approximately $689,000.
As of September 30, 2016 and December 31, 2015, assets held for sale consisted of the following:
 
 
September 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Investment properties, net
 
$
216,792

 
$
1,284,888

Rents and other tenant receivables, net
 

 
38,945

Above market lease intangible, net
 
2,616

 
2,616

Deferred costs and other assets, net
 
146,472

 
366,024

Total assets held for sale
 
$
365,880

 
$
1,692,473

As of September 30, 2016 and December 31, 2015, liabilities associated with assets held for sale consisted of the following:
 
 
September 30, 2016
 
December 31, 2015
 
 
(unaudited)
 
 
Loans payable
 
$
1,350,000

 
$
1,966,806

Below market lease intangible, net
 

 
14,758

Accounts payable, accrued expenses and other liabilities

 
10,754

Total liabilities associated with assets held for sale
$
1,350,000

 
$
1,992,318



The condensed consolidated statements of operations reflect reclassifications of rental revenue, property operating expenses, corporate general and administrative expenses and interest expense from continuing operations to income from discontinued operations for all periods presented. All interest expense disclosed below is directly related to the debt incurred to acquire the Freestanding Properties.
    

The following is a summary of the income from discontinued operations for the three and nine months ended September 30, 2016 and 2015:

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2016
 
2015
 
2016
 
2015
 
 
(unaudited)
Revenues
 
$
53,939

 
$
607,379

 
$
249,439

 
$
1,827,238

Expenses
 
508

 
174,218

 
78,013

 
789,157

Operating income
 
53,431

 
433,161

 
171,426

 
1,038,081

Interest expense
 
14,317

 
215,927

 
55,963

 
689,998

Gain on disposal of properties
 
805

 

 
688,824

 

Income from discontinued operations
 
$
39,919

 
$
217,234

 
$
804,287

 
$
348,083