5. Real Estate Dispositions, Held for Sale, and Impairment Charges

Real Estate Dispositions

On November 6, 2015, we completed the sale of a Columbus, Ohio property for $2.8 million and recognized a gain on sale of $0.4 million. We considered this industrial asset to be non-core to our long term strategy, and we re-deployed the proceeds to pay down outstanding mortgage debt.

On December 4, 2015, we completed the sale of our Birmingham, Alabama and Columbia, Missouri properties for $4.1 million and recognized a gain on sale of $1.1 million. In conjunction with the sale, we negotiated an additional $0.2 million lease termination penalty, which was recognized as rental revenue. We considered these industrial assets to be non-core to our long term strategy, and we re-deployed the proceeds to pay down outstanding mortgage debt.

 

The table below summarizes the components of operating income from real estate and related assets disposed of for the Columbus, Ohio, Birmingham, Alabama, and Columbia, Missouri properties during the years ended December 31, 2015, 2014, and 2013, respectively (dollars in thousands):

 

		For the year ended December 31,
		2015				2014				2013
Operating revenue		$	751	(1)		$	669			$	669
Operating expense			100				203				193
Other expense			(136	)			(160	)			(163	)
Income from real estate and related assets sold		$	515			$	306			$	313

 

(1)	Includes $0.2 million lease termination penalty received in conjunction with the sale of our Birmingham, Alabama and Columbia, Missouri properties.

Real Estate Held for Sale

As of December 31, 2015, we classified one property, located in Dayton, Ohio, as held for sale under the provisions of ASC 360-10, “Property, Plant, and Equipment,” which requires that the assets and liabilities of any such properties, be presented separately in our consolidated balance sheet in the current period presented. We are currently marketing the property for sale and currently anticipate a closing during the quarter ended June 30, 2016. The property was determined to be impaired as of September 30, 2015, with further discussion below.

The table below summarizes the components of income from real estate and related assets held for sale (dollars in thousands):

 

		For the year ended December 31,
		2015				2014				2013
Operating revenue		$	284			$	505			$	275
Operating expense			808	(1)			295				234
Other expense			(57	)			(104	)			(109	)
(Loss) income from real estate and related assets held for sale		$	(581	)		$	106			$	(68	)

 

(1)	$0.6 million of operating expenses relates to the impairment charge recorded in operating expenses during the year ended December 31, 2015.

The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying consolidated balance sheet (dollars in thousands):

 

		December 31, 2015
ASSETS HELD FOR SALE
Real estate, at cost		$	1,899
Less: accumulated depreciation			846
Total real estate held for sale, net			1,053
Other assets			24
TOTAL ASSETS HELD FOR SALE		$	1,077
LIABILITIES HELD FOR SALE
Asset retirement obligation		$	75
Accounts payable and accrued expenses			1
Other liabilities			792
TOTAL LIABILITIES HELD FOR SALE		$	868

 

Impairment Charges

We performed the evaluation and analysis on our portfolio and concluded that our Roseville, Minnesota property was impaired as of March 31, 2014. We determined that the expected undiscounted cash flows based upon a revised estimated holding period of this property was below the current carrying value. Accordingly, we reduced the carrying value of this property to its estimated fair value, less cost to sell, and we recognized an impairment loss of $14.2 million during the year ended December 31, 2014. We used the sales comparison approach, whereby we reviewed sales prices for land and building assets in the Roseville, Minnesota market, to arrive at a fair value for this asset. This property was returned to the lender in a deed in lieu transaction in November 2014.

We performed the evaluation and analysis on our portfolio and determined that our Dayton, Ohio property should be classified as held for sale during the third quarter of 2015. We used the sales comparison approach, whereby we reviewed sales prices for land and building assets in the Dayton, Ohio market, to arrive at a fair value for this asset, which resulted in the determination that the fair value for this particular property was below the carrying value of this property as of September 30, 2015. Accordingly, we reduced the carrying value of this property to its estimated fair value, less cost to sell, and we recognized an impairment loss of $0.6 million during the quarter ended September 30, 2015.

During our assessment of this asset for the year ended December 31, 2015, we determined the carrying value was appropriate, and no further impairment or impairment recapture was necessary. We performed an analysis of our planned real estate dispositions for the year ended December 31, 2015 and determined that these properties should not be classified as discontinued operations as neither constituted a strategic shift in our operations in accordance with ASU 2014-08. We continue to monitor our portfolio for any other indicators of impairment.