Notes Receivable Backed by Real Estate

6 Months Ended

Jun. 30, 2011

Notes Receivable Backed by Real Estate [Abstract]

5. Notes Receivable Backed by Real Estate

The activity on the notes receivable backed by real estate for the six months ended June 30, 2011 is as follows (in thousands):

		$188 million Preferred Equity Interest		$55 million Preferred Equity Interest (1)		ProLogis NAIF II Secured Mortgage Receivable (2)		Other Notes Receivable			Total
Balance as of December 31, 2010		$	189,550	$	-	$	81,540	$	31,054	$	302,144
	Investment		-		55,000		-		-		55,000
	Principal payment received		-		-		(2,676)		-		(2,676)
	Accrued interest, net of interest payments received		1,668		959		-		-		2,627
	Impact of changes in foreign currency exchange rates		-		-		-		2,133		2,133
Balance as of June 30, 2011		$	191,218	$	55,959	$	78,864	$	33,187	$	359,228

(1) In the first quarter of 2011, we completed the sale of a portfolio of retail, mixed-use and other non-core assets to a third party. As part of the transaction, we invested approximately $55 million in a preferred equity interest in a subsidiary of the buyer. Based on the terms of this instrument, the preferred equity interest meets the definition of an investment in a debt security from an accounting perspective. We earn a preferred return at an annual rate of 7% for the first three years, 8% for the fourth year and 10% for the fifth year. Partial or full redemption can occur at any time at the buyer's discretion or after the five year anniversary at our discretion.

(2) During the first quarter of 2011, one of the properties securing this note was sold and the proceeds were used to pay down the balance on the note. As of June 30, 2011 this note is secured by 12 properties.