Annual report pursuant to Section 13 and 15(d)

DISCONTINUED OPERATIONS

v3.3.1.900
DISCONTINUED OPERATIONS
 12 Months Ended
Dec. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS

On May 15, 2013, Newcastle completed the spin-off of New Residential from Newcastle.
On February 13, 2014, Newcastle completed the spin-off of New Media from Newcastle.
On November 6, 2014, Newcastle completed the spin-off of New Senior from Newcastle.
In April 2015, Newcastle closed the sale of its commercial real estate properties in Beavercreek, OH for $7.0 million, net of closing costs, and recognized a net gain on the sale of these assets of approximately $0.3 million. In addition, Newcastle repaid the related debt on this property of $6.0 million held within CDO IX, which was eliminated in consolidation.

As a result of the spin-offs and the sale of the commercial real estate properties in Beavercreek, OH (which was initially reported as held-for-sale as of September 30, 2014), the assets, liabilities and results of operations of those components of Newcastle’s operations that (i) were part of the spin-offs and/or (ii) represent operations Newcastle plans to sell in which it has no significant continuing involvement, are presented separately in discontinued operations in Newcastle’s Consolidated Financial Statements for all periods presented.

With respect to the sale of the commercial real estate properties in Beavercreek, OH, the assets of discontinued operations include no investments in other real estate as of December 31, 2015 and $6.6 million as of December 31, 2014, and no cash and cash equivalents, restricted cash and receivables and other assets as of December 31, 2015 and $0.2 million as of December 31, 2014. There were no liabilities of discontinued operations as of December 31, 2015. The liabilities of discontinued operations include accounts payable, accrued liabilities and other liabilities of $0.5 million as of December 31, 2014.

Results of operations from discontinued operations were as follows:
 
Year Ended December 31,
 
2015
 
2014
 
2013
Interest income
$
—

 
$
—

 
$
15,098

Interest expense
—

 
(49,705
)
 
(12,372
)
Net interest income (expense)
—

 
(49,705
)
 
2,726

 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
Media income
—

 
68,212

 
61,637

Rental income
556

 
194,729

 
74,936

Care and ancillary income
—

 
20,428

 
12,387

Total operating revenues
556

 
283,369

 
148,960

Other Income
 
 
 
 
 
Other income (loss)
—

 
1,444

 
(2,404
)
Gain on settlement of investments
318

 
—

 
—

Change in fair value of investments in excess mortgage servicing rights
—

 
—

 
3,894

Change in fair value of investments in equity method investees
—

 
—

 
4,924

Earnings from investments in equity method investees
—

 
—

 
16,117

Total other income
318

 
1,444

 
22,531

 
 
 
 
 
 
Expenses
 
 
 
 
 
Property operating expenses
187

 
152,896

 
53,733

Media operating expenses
—

 
—

 
49,092

General and administrative expense (A)
30

 
20,096

 
21,742

Depreciation and amortization
11

 
90,627

 
30,969

Management fee to affiliate
—

 
7,789

 
5,034

Income tax expense (benefit)
—

 
(1,111
)
 
2,100

Total expenses
228

 
270,297

 
162,670

Income (loss) from discontinued operations, net of tax
$
646

 
$
(35,189
)
 
$
11,547


(A)
Includes acquisition and spin-off related expenses of $0.0 million, $15.8 million and $13.3 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The February 13, 2014 spin-off of New Media resulted in a $391.3 million reduction in the basis upon which Newcastle’s management fees are computed (and an equivalent reduction in the basis upon which the incentive compensation threshold is computed), as well as a reduction in the strike price of Newcastle’s then outstanding options (see Note 12).

The November 6, 2014 spin-off of New Senior resulted in a $673.0 million reduction in the basis upon which Newcastle’s management fees are computed (and an equivalent reduction in the basis upon which the incentive compensation threshold is computed), as well as a reduction in the strike price of Newcastle’s then outstanding options (see Note 12).