Impairments

9 Months Ended

Sep. 30, 2012

Impairments

Impairments

(21)Impairments

During the three months ended September 30, 2012, the Company executed an expansion of its tenant relationship with General Atomics in Poway, CA, to a total of 396,000 square feet, consisting of the following: (i) a lease extension of 281,000 square feet through June 2024, (ii) a new 10–year lease for a 115,000 square feet building to be developed and (iii) the purchase of a 19 acre land parcel from the Company for $19 million. As a result of the pending land sale the Company recognized an impairment charge of $7.9 million, which reduced the carrying value of the Company’s investment from $27 million to the expected sales price of $19 million. The fair value of the Company’s land parcel was based on the sales price from its anticipated disposition in conjunction with this transaction. The contractual sales price of the land parcel is considered to be a Level 2 measurement within the fair value hierarchy.

During the three months ended September 30, 2011, the Company recognized additional provisions for losses (impairment) of $15.4 million related to its Cirrus loan investment that reduced the carrying value of its loan and related receivables from $91.1 million to $75.7 million, which was the fair value of the collateral supporting this loan. See Note 7 for additional information on this loan and related impairment. The fair value of the collateral supporting the Company’s loan investment was based on a discounted cash flow valuation model and inputs considered to be a Level 3 measurement within the fair value hierarchy. Inputs to this valuation model include discount rates, earnings multiples, market comparables, industry growth rates and operating margins, some of which influence the fair value of the collateral supporting this loan.