Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2012

Goodwill And Intangible Assets Disclosure

Goodwill And Intangible Assets Disclosure

Note 8. Intangible Assets and Liabilities and Goodwill

In connection with our acquisitions of properties, we have recorded net lease intangibles which are being amortized over periods ranging from one year to 40 years. In-place lease, tenant relationship and above-market rent intangibles are included in Intangible assets and goodwill, net in the consolidated financial statements. Below-market rent intangibles are included in Accounts payable, accrued expenses and other liabilities in the consolidated financial statements.

In connection with our investment activity during the year ended December 31, 2012, comprised of the Merger (Note 3) and the Walgreens acquisition (Note 5), we have recorded net lease intangibles comprised as follows (dollars in thousands):


			Initially		Measurement		As
	Weighted-Average		Reported at		Period		Revised at
	Life		September 30, 2012		Adjustments		December 31, 2012
Amortizable Intangible Assets
Lease intangibles:
In-place lease		12.9	$	413,198	$	5,322	$	418,520
Above-market rent		11.7		284,174		790		284,964
Total intangible assets			$	697,372	$	6,112	$	703,484

Amortizable Intangible Liabilities
Below-market rent		29.9	$	(79,312)	$	(1,111)	$	(80,423)
Above-market ground lease		11.8		(6,896)		-		(6,896)

Unamortizable Intangible Liabilities
Below-market purchase option				(16,711)		314		(16,397)
Total intangible liabilities			$	(102,919)	$	(797)	$	(103,716)

In connection with the Merger, we recorded goodwill of $268.7 million as a result of the Merger Consideration exceeding the fair value of the assets acquired and liabilities assumed (Note 3). The goodwill was attributed to our Real Estate Ownership reporting unit as it relates to the real estate assets we acquired. The following table presents a reconciliation of our goodwill (in thousands):


	Investment		Real Estate
	Management		Ownership		Total
Balance at January 1, 2010	$	63,607	$	-	$	63,607
Activity		-		-		-
Balance at December 31, 2010		63,607		-		63,607
Activity		-		-		-
Balance at December 31, 2011		63,607		-		63,607
Acquisition of CPA®:15		-		268,683		268,683
Allocation of goodwill to dispositions of properties within the reporting unit^(a)		-		(3,158)		(3,158)
Balance at December 31, 2012	$	63,607	$	265,525	$	329,132

Intangible assets and liabilities and goodwill are summarized as follows (in thousands):


	December 31,
	2012						2011
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Total		Amount		Amortization		Total
Amortizable Intangible Assets
Management contracts	$	32,765	$	(31,283)	$	1,482	$	32,765	$	(30,172)	$	2,593
		32,765		(31,283)		1,482		32,765		(30,172)		2,593
Lease Intangibles:^(a)
In-place lease		474,629		(27,351)		447,278		62,162		(17,585)		44,577
Other intangibles		8,149		(3,406)		4,743		10,968		(4,586)		6,382
Above-market rent		293,627		(13,742)		279,885		9,905		(5,082)		4,823
		776,405		(44,499)		731,906		83,035		(27,253)		55,782
Unamortizable Goodwill and Indefinite-Lived Intangible Assets
Goodwill		329,132		-		329,132		63,607		-		63,607
Trade name		3,975		-		3,975		3,975		-		3,975
		333,107		-		333,107		67,582		-		67,582
Total Intangible Assets	$	1,142,277	$	(75,782)	$	1,066,495	$	183,382	$	(57,425)	$	125,957

Amortizable Intangible Liabilities
Below-market rent	$	(86,171)	$	3,227	$	(82,944)	$	(6,455)	$	1,482	$	(4,973)
Above-market ground lease		(6,896)		103		(6,793)		-		-		-
		(93,067)		3,330		(89,737)		(6,455)		1,482		(4,973)
Unamortizable Intangible Liabilities
Below-market purchase option		(16,711)		-		(16,711)		-		-		-
Total Intangible Liabilities	$	(109,778)	$	3,330	$	(106,448)	$	(6,455)	$	1,482	$	(4,973)

__________

The fair value of the below-market purchase option was equal to the residual value at the date of acquisition.

Net amortization of intangibles, including the effect of foreign currency translation, was $24.7 million, $4.0 million and $1.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Amortization of below-market rent, above-market rent and above-market ground lease intangibles is recorded as an adjustment to Lease revenues, while amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization.

Based on the intangible assets and liabilities recorded at December 31, 2012, scheduled annual net amortization for each of the next five years and thereafter is as follows (in thousands):


Years Ending December 31,	Total
2013	$	84,274
2014		79,533
2015		72,016
2016		70,050
2017		66,667
Thereafter		271,111
Total	$	643,651

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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