Assets Held for Sale and Discontinued Operations
We report as discontinued operations apartment communities that meet the definition of a component of an entity and have been sold or meet the criteria to be classified as held for sale. We include all results of these discontinued operations, less applicable income taxes, in a separate component of income on the consolidated statements of operations under the heading “income from discontinued operations, net.” This treatment resulted in the retrospective adjustment of the 2012 and 2011 statements of operations and the 2012 balance sheets.
We are currently marketing for sale certain apartment communities that are inconsistent with our long-term investment strategy. At the end of each reporting period, we evaluate whether such apartment communities meet the criteria to be classified as held for sale, including whether we expect to sell such apartment communities within 12 months. Additionally, certain apartment communities that do not meet all of the criteria to be classified as held for sale at the balance sheet date may nevertheless be sold and included in discontinued operations in the subsequent 12 months; thus the number of apartment communities that may be sold during the subsequent 12 months could exceed the number classified as held for sale. At December 31, 2013, we had no apartment communities classified as held for sale. At December 31, 2012, after adjustments to classify as held for sale apartment communities that were sold during the year ended December 31, 2013, we had 29 apartment communities with an aggregate of 6,953 apartment homes classified as held for sale. Amounts classified as held for sale in the accompanying consolidated balance sheets as of December 31, 2012, are as follows (in thousands):
|
| | | |
| December 31,
2012 |
Real estate, net | $ | 279,653 |
|
Other assets | 10,093 |
|
Assets held for sale | $ | 289,746 |
|
| |
Non-recourse property debt | $ | 278,538 |
|
Other liabilities | 2,900 |
|
Liabilities related to assets held for sale | $ | 281,438 |
|
During the years ended December 31, 2013, 2012 and 2011, we sold 29, 75 and 67 consolidated apartment communities with an aggregate of 6,953, 11,232 and 10,912 apartment homes, respectively. For each of the periods presented, discontinued operations includes the results of operations for the periods prior to the date of disposition for all apartment communities sold as of December 31, 2013.
The following is a summary of the components of income from discontinued operations and the related amounts of income from discontinued operations attributable to Aimco, the Aimco Operating Partnership and noncontrolling interests for the years ended December 31, 2013, 2012 and 2011 (in thousands):
|
| | | | | | | | | | | |
| 2013 | | 2012 | | 2011 |
Rental and other property revenues | $ | 62,152 |
| | $ | 140,634 |
| | $ | 226,623 |
|
Property operating expenses | (30,695 | ) | | (62,781 | ) | | (111,549 | ) |
Depreciation and amortization | (16,372 | ) | | (41,577 | ) | | (72,099 | ) |
Recovery of (provision for) real estate impairment losses | 16 |
| | (17,452 | ) | | (20,246 | ) |
Operating income | 15,101 |
| | 18,824 |
| | 22,729 |
|
Interest income | 343 |
| | 568 |
| | 1,561 |
|
Interest expense | (13,346 | ) | | (29,972 | ) | | (49,030 | ) |
Income (loss) before gain on dispositions of real estate and income tax | 2,098 |
| | (10,580 | ) | | (24,740 | ) |
Gain on dispositions of real estate | 212,459 |
| | 234,530 |
| | 108,203 |
|
Income tax expense | (11,328 | ) | | (9,833 | ) | | (5,390 | ) |
Income from discontinued operations, net | $ | 203,229 |
| | $ | 214,117 |
| | $ | 78,073 |
|
Income from discontinued operations attributable to noncontrolling interests in consolidated real estate partnerships | (31,842 | ) | | (41,633 | ) | | (32,231 | ) |
Income from discontinued operations attributable to the Aimco Operating Partnership | $ | 171,387 |
| | $ | 172,484 |
| | 45,842 |
|
Income from discontinued operations attributable to noncontrolling interests in Aimco Operating Partnership | (9,248 | ) | | (10,238 | ) | | (3,147 | ) |
Income from discontinued operations attributable to Aimco | $ | 162,139 |
| | $ | 162,246 |
| | $ | 42,695 |
|
Gain on dispositions of real estate is reported net of incremental direct costs incurred in connection with the transactions, including any prepayment penalties incurred upon repayment of property debt collateralized by the apartment communities being sold. Such prepayment penalties totaled $16.5 million, $16.5 million and $14.9 million for the years ended December 31, 2013, 2012 and 2011, respectively. We classify interest expense related to property debt within discontinued operations when the related real estate asset is sold or classified as held for sale.
