CORPORATE PROPERTY ASSOCIATES 16 GLOBAL INC

CIK:0001250873|SEC Filings

Discontinued Operations

9 Months Ended

Sep. 30, 2013

Disposal Groups Including Discontinued Operations

Note 13. Discontinued Operations

From time to time, we may decide to sell a property. We may make a decision to dispose of a property when it is vacant as a result of tenants vacating space, tenants electing not to renew their leases, tenant insolvency, or lease rejection in the bankruptcy process. In such cases, we assess whether we can obtain the highest value from the property by selling it, as opposed to re-leasing it. We may also sell a property when we receive an unsolicited offer or negotiate a price for an investment that is consistent with our strategy for that investment. When it is appropriate to do so, we classify the property as an asset held for sale on our consolidated balance sheet and the current and prior period results of operations of the property are reclassified as discontinued operations.

The results of operations for properties that are held for sale or have been sold and with which we have no continuing involvement are reflected in the consolidated financial statements as discontinued operations and are summarized as follows (in thousands, net of tax):


		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
Revenues		$	4,017	$	3,708	$	18,024	$	12,358
Expenses			(908)		(2,489)		(4,034)		(13,622)
Gain on deconsolidation of a subsidiary			-		-		4,699		-
Gain (loss) on sale of real estate			2,374		-		(2,925)		(2,189)
Loss on extinguishment of debt			-		-		-		(342)
Impairment charges			-		(6,461)		(12,349)		(6,946)
Allowance for credit losses			-		-		(5,732)		-
	Income (loss) from discontinued operations	$	5,483	$	(5,242)	$	(2,317)	$	(10,741)

2013 — During the three months ended September 30, 2013, we sold ten properties for an aggregate of $16.4 million, net of selling costs, and recognized a net gain on the sales totaling $2.4 million, excluding an impairment charge of $0.8 million previously recognized during the fourth quarter of 2012.

During the three months ended June 30, 2013, we sold seven properties for an aggregate of $3.2 million, net of selling costs, and recognized a net loss on the sales totaling $8.0 million and lease termination income of $8.1 million, excluding an impairment charge of $2.1 million previously recognized during the fourth quarter of 2012.

In March 2013, a tenant in one of our domestic properties filed for bankruptcy and ceased paying rent to us. As a result, we suspended debt service payments on the related non-recourse mortgage loan. In April 2013, the bankruptcy court appointed a receiver to take possession of the property, and we no longer had control over the activities that most significantly impacted the economic performance of the property. In June 2013, the property was sold in a foreclosure auction, at which point we deconsolidated the investment with carrying values for its net investment in properties, non-recourse debt, and accrued interest of $8.7 million, $13.0 million, and $0.4 million, respectively, and recognized a gain on the deconsolidation of $4.7 million, excluding an impairment charge of $9.3 million recognized during the first quarter of 2013.

During the three months ended September 30, 2013, we entered into contracts to sell nine domestic properties for $51.4 million. We recognized impairment charges of $3.0 million, inclusive of amounts attributable to noncontrolling interests of $0.9 million, and allowances for credit losses totaling $5.7 million, inclusive of amounts attributable to noncontrolling interests of $1.7 million, on several of these properties during the second quarter of 2013. At September 30, 2013, these properties were classified as Assets held for sale in the consolidated balance sheets. We completed the sales of the properties in October 2013.

During the three months ended March 31, 2013, we sold four domestic properties for an aggregate of $27.9 million, net of selling costs, and recognized a net gain on the sales totaling $2.7 million, excluding an impairment charge of $1.2 million previously recognized during the fourth quarter of 2012.

2012 — During the three months ended June 30, 2012, we sold three domestic properties for an aggregate of $6.8 million, net of selling costs, and recognized a net gain on the sales totaling less than $0.1 million, a loss on the extinguishment of debt of $0.4 million, and lease termination income of $0.5 million, excluding impairment charges of $0.5 million recognized during the first quarter of 2012.

During the three months ended March 31, 2012, we sold five domestic properties for an aggregate of $11.8 million, net of selling costs, and recognized a net loss on the sales totaling $2.2 million and lease termination income of $0.8 million.

We sold three additional properties during 2012 subsequent to September 30, 2012. We recognized impairment charges totaling $6.5 million on several of these properties during both the three and nine months ended September 30, 2012. The results of operations for these properties are included in Income (loss) from discontinued operations, net of tax in the consolidated financial statements for the three and nine months ended September 30, 2012.

Consolidated Statements Of Cash Flows Supplemental (Narratives) (Details) (USD $)	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Supplemental non-cash investing and financing activities
Distributions payable	$ 34,706,000	$ 34,706,000	$ 33,800,000
Distribution payment date	Oct. 15, 2013
Gain on deconsolidation of a subsidiary		4,699,000
Reclassfication from direct finanacing lease	(600,000)	(600,000)
Issuance Of Shares To Affiliate In Satisfaction Of Fees Due		9,800,000	9,500,000
PRACS
Supplemental non-cash investing and financing activities
Gain on deconsolidation of a subsidiary		4,700,000
Foreclosed property, value	8,700,000	8,700,000
Foreclosed property, related debt		13,000,000
Accrued interest	400,000	400,000
Briggs
Supplemental non-cash investing and financing activities
Gain on deconsolidation of a subsidiary		1,600,000
Foreclosed property, value	2,400,000	2,400,000
Foreclosed property, related debt		3,700,000
Accrued interest	$ 300,000	$ 300,000

Statement of Financial Position (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Investments in real estate
Real estate, at cost (inclusive of amounts attributable to consolidated variable interest entities (VIEs) of $538,958 and $528,858, respectively)	$ 2,186,902	$ 2,243,470
Operating real estate, at cost (inclusive of amounts attributable to consolidated VIEs of $29,219 and $29,219, respectively)	85,841	85,565
Accumulated depreciation (inclusive of amounts attributable to consolidated VIEs of $79,940 and $68,529, respectively)	(297,318)	(258,655)
Net investments in properties	1,975,425	2,070,380
Net investments in direct financing leases (inclusive of amounts attributable to consolidated VIEs of $47,750 and $48,363, respectively)	425,922	467,831
Equity investments in real estate	223,526	227,675
Assets held for sale	49,814
Net investments in real estate	2,674,687	2,765,886
Notes receivable (inclusive of amounts attributable to consolidated VIEs of $33,848 and $33,558, respectively)	43,728	43,394
Cash and cash equivalents (inclusive of amounts attributable to consolidated VIEs of $13,567 and $10,993, respectively)	70,126	66,405
In-place lease intangible assets, net (inclusive of amounts attributable to consolidated VIEs of $39,304 and $40,931, respectively)	224,513	260,120
Other intangible assets, net (inclusive of amounts attributable to consolidated VIEs of $20,320 and $21,251, respectively)	159,820	182,972
Funds in escrow (inclusive of amounts attributable to consolidated VIEs of $3,070 and $3,268, respectively)	27,014	23,274
Other assets, net (inclusive of amounts attributable to consolidated VIEs of $6,178 and $5,225, respectively)	68,964	64,741
Total assets	3,268,852	3,406,792
Liabilities
Non-recourse debt (inclusive of amounts attributable to consolidated VIEs of $487,603 and $485,951, respectively)	1,615,241	1,644,180
Line of credit	75,000	143,000
Accounts payable accrued expenses and other liabilities (inclusive of amounts attributable to consolidated VIEs of $13,613 and $12,409, respectively)	44,944	40,931
Prepaid and deferred rental income and security deposits (inclusive of amounts attributable to consolidated VIEs of $24,586 and $25,402, respectively)	91,565	93,208
Due to affiliates	4,724	6,401
Distributions payable	34,706	33,965
Total liabilities	1,866,180	1,961,685
Redeemable noncontrolling interest	22,252	21,747
Commitments and Contingencies (Note 11)
CPA:16 Global stockholders' equity
Common stock $0.001 par value; 400,000,000 shares authorized; 221,841,495 and 216,822,067 shares issued, respectively; and 206,300,331 and 202,617,274 shares outstanding, respectively	222	217
Additional paid-in capital	2,023,361	1,980,984
Distributions in excess of accumulated earnings	(574,220)	(500,050)
Accumulated other comprehensive loss	(21,051)	(27,043)
Less: treasury stock at cost, 15,541,164 and 14,204,793 shares, respectively	(137,595)	(126,228)
Total CPA:16 Global stockholders' equity	1,290,717	1,327,880
Noncontrolling interests	89,703	95,480
Total equity	1,380,420	1,423,360
Total liabilities and equity	$ 3,268,852	$ 3,406,792