Real Estate Acquisitions and Discontinued Operations
|6 Months Ended|
Jun. 30, 2011
|Real Estate Acquisitions and Discontinued Operations|
|Real Estate Acquisitions and Discontinued Operations||
NOTE 3: REAL ESTATE ACQUISITIONS AND DISCONTINUED OPERATIONS
WRIT acquired the following properties and land for development during the 2011 Period:
The results of operations from the acquired operating properties are included in the income statement as of their acquisition dates.
Noncontrolling Interests in Subsidiaries
During the 2011 Quarter we executed a joint venture operating agreement with a real estate developer to develop a 150-unit mid-rise multifamily property at 650 North Glebe Road in Arlington, Virginia. We estimate the total cost of the project to be $43.5 million, with approximately 70% of the project financed with debt. WRIT will be a 90% owner of the joint venture, and, as managing member, will have management and leasing responsibilities when the project is completed and stabilized (defined as 90% of the residential units leased). WRIT is also responisble for obtaining the debt financing for the project. The real estate developer will own 10% of the joint venture and is responsible for the development, construction and lease-up of the property.
We have determined that this joint venture is a variable interest entity ("VIE") primarily based on the fact that the equity investment at risk is not sufficient to permit the entity to finance its activities without additional financial support. We expect that 70% of the total development costs will be financed through debt. We have also determined that WRIT is the primary beneficiary of the VIE due to the fact that WRIT is providing 90% of the equity contributions, obtaining the debt financing and will manage the property after stabilization.
On June 15, 2011 the joint venture purchased the land at 650 North Glebe Road for a contract purchase price of $11.8 million. As of June 30, 2011, we included $12.8 million of land and capitalized development costs in "Development in progress" on our consolidated balance sheets.
We dispose of assets (sometimes using tax-deferred exchanges) that no longer meet our long-term strategy or return objectives and where market conditions for sale are favorable. The proceeds from the sales may be reinvested into other properties, used to fund development operations or to support other corporate needs, or distributed to our shareholders. Properties are considered held for sale when they meet the criteria specified by GAAP. Depreciation on these properties is discontinued at that time, but operating revenues, other operating expenses and interest continue to be recognized until the date of sale.
We sold the following properties during the 2011 Period and 2010:
We recognized $1.2 million in income tax expense during the 2011 Quarter in connection with the sale of Dulles Station, Phase I, which is included in discontinued operations (see note 1 to the consolidated financial statements – Nature of Business).
Operating results of the properties classified as discontinued operations are summarized as follows (in thousands):
Operating income (loss) by each property classified as discontinued operations is summarized below (in thousands):
The operating loss for Dulles Station, Phase I for the 2011 Period includes a $0.6 million impairment charge to reflect the property's fair value less any selling costs based on its contract sales price.
The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures.
Reference 1: http://www.xbrl.org/2003/role/presentationRef