Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. HEALTHCARE REALTY TRUST INC (899749) 10-Q published on May 03, 2018 at 5:01 pm
Reporting Period: Mar 30, 2018
Revenue from Contracts with Customers (Topic 606)
The Company recognizes certain revenue under the core principle of Topic 606, as described under new accounting pronouncements. This requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the Company applies the five step model specified in the guidance. See the New Accounting Pronouncements section below for additional information.
The Company’s three major types of revenue that are accounted for under Topic 606 that are listed above are all accounted for as the performance obligation is satisfied. The performance obligations that are identified for each of these items are satisfied over time and the Company recognizes revenue monthly based on this principle.
Certain reclassifications have been made on the Company's Condensed Consolidated Statements of Income. After the adoption of Accounting Standards Update ("ASU") 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity," the Company's dispositions have not met the updated definition to be reported as a discontinued operations. The Company had some residual impact from properties that were identified as a discontinued operation prior to the adoption of ASU 2014-08 that was reported as discontinued operations. These amounts are considered immaterial and have been reclassified for the prior year presentation on the Company's Consolidated Statements of Income.
At March 31, 2018 and December 31, 2017, the Company had 13 and eight properties classified as held for sale, respectively. In March 2018, the Company reclassified five single-tenant net leased properties totaling 121,672 square feet and located in Michigan to held for sale in connection with management's decision to sell the properties. The Company expects to close the sale of these properties by the end of the second quarter of 2018. The table below reflects the assets and liabilities of the properties classified as held for sale as of March 31, 2018 and December 31, 2017:
In March 2018, the Company reclassified five skilled nursing facilities to held for sale. The net investment in these properties was $3.4 million, and the Company recognized net operating income of $0.6 million in the quarter related to these properties. The Company has executed a letter of intent to sell the buildings for $9.5 million to an owner/operator and expects to close by the end of the second quarter of 2018. The Company was previously under contract to sell the properties to a different buyer. However, that contract was terminated, and the Company recognized $0.5 million of income related to earnest money the buyer forfeited in the first quarter of 2018.