Note 2 - Operating Property Activities

9 Months Ended

Sep. 30, 2013

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

2. Operating Property Activities

Acquisitions -

During the nine months ended September 30, 2013, the Company acquired the following properties, in separate transactions (in thousands):

			Purchase Price
Property Name	Location	Month Acquired	Cash		Debt Assumed		Other		Total		GLA*
Santee Trolley Square(1)	Santee, CA	Jan-13	$	26,863	$	48,456	$	22,681	$	98,000		311
Shops at Kildeer (2)	Kildeer, IL	Jan-13		-		32,724		-		32,724		168
Village Commons S.C.	Tallahassee, FL	Jan-13		7,100		-		-		7,100		125
Putty Hill Plaza (3)	Baltimore, MD	Jan-13		4,592		9,115		489		14,196		91
Columbia Crossing II S.C.	Columbia, MD	Jan-13		21,800		-		-		21,800		101
Roseville Plaza (Parcel)	Roseville, MN	Jan-13		5,143		-		-		5,143		80
Wilton River Park (4)	Wilton, CT	Mar-13		777		36,000		5,223		42,000		187
Canyon Square (5)	Santa Clarita, CA	Apr-13		1,950		13,800		-		15,750		97
JTS Portfolio (6)	Baton Rouge, LA	Apr-13		-		43,267		11,733		55,000		520
Factoria Mall (7)	Bellevue, WA	May-13		37,283		56,000		37,467		130,750		510
6 Out-parcels	Various	Jun-13		13,053		-		-		13,053		97
Highlands Ranch II	Highlands Ranch, CO	July-13		14,600		-		-		14,600		44
Elmsford	Elmsford, NY	Aug-13		23,000		-		-		23,000		143
			$	156,161	$	239,362	$	77,593	$	473,116		2,474

* Gross leasable area ("GLA")

(1)	This property was acquired from a joint venture in which the Company had a 45% noncontrolling interest.  The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized a gain of $22.7 million, before income tax, from the fair value adjustment associated with the Company’s original ownership due to a change in control, which is reflected in the purchase price above in Other.
(2)	This property was acquired from a joint venture in which the Company had a 19% noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. This transaction resulted in a change in control with no gain or loss recognized.
(3)	The Company acquired the remaining 80% interest in an operating property from an unconsolidated joint venture in which the Company had a 20% noncontrolling interest.  The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized a gain of $0.5 million from the fair value adjustment associated with the Company’s original ownership due to a change in control, which is reflected in the purchase price above in Other.
(4)	The acquisition of this property included the issuance of $5.2 million of redeemable units, which are redeemable at the option of the holder after one year and earn a yield of 6% per annum, which is included in the purchase price above in Other. In connection with this transaction, the Company provided the sellers a $5.2 million loan at a rate of 6.5%, which is secured by the redeemable units.
(5)	This property was acquired from a joint venture in which the Company has a 15% noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. This transaction resulted in a change in control with no gain or loss recognized.
(6)	The Company acquired the remaining interest in a portfolio of office properties from a preferred equity investment in which the Company held a noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as such recognized a change in control loss of $9.6 million from the fair value adjustment associated with the Company’s original ownership, which is reflected in the purchase price above in Other. The debt assumed in connection with this transaction of $43.3 million was repaid in April 2013.
(7)	The Company acquired an additional 49% interest in this operating property from an unconsolidated joint venture in which the Company had a 50% noncontrolling interest. As such the Company now consolidates this investment. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as a result, recognized a gain of $8.2 million from the fair value adjustment associated with the Company’s original ownership due to a change in control, which is reflected in the purchase price above in Other.

The aggregate purchase price of the properties acquired during the nine months ended September 30, 2013 has been allocated as follows (in thousands):

Land	$	136,969
Buildings		244,194
Above Market Rents		10,787
Below Market Rents		(15,075	)
In-Place Leases		21,532
Building Improvements		65,274
Tenant Improvements		12,851
Mortgage Fair Value Adjustment		(3,884	)
Other Assets		867
Other Liabilities		(399	)
	$	473,116

During the nine months ended September 30, 2013, the Company acquired the remaining ownership interest in FNC Realty Corporation (“FNC”) of 17.3% for $20.3 million. As a result of this transaction the Company now owns 100% of FNC. The Company had previously and continues to consolidate FNC. Since there was no change in control from this transaction, the purchase of the additional interest resulted in a decrease in noncontrolling interest of $19.6 million and a decrease in the Company’s Paid-in capital of $0.7 million during 2013.

Additionally, during the nine months ended September 30, 2013, the Company acquired the remaining interest in three previously consolidated joint ventures for $6.5 million. The Company continues to consolidate these entities as there was no change in control from these transactions. The purchase of the remaining partnership interests resulted in an aggregate decrease in noncontrolling interest of $0.4 million and an aggregate decrease of $4.8 million, after income taxes, to the Company’s Paid-in capital, during the nine months ended September 30, 2013.

Dispositions –

During the nine months ended September 30, 2013, the Company disposed of 22 operating properties and three out-parcels in separate transactions, for an aggregate sales price of $153.3 million. These transactions, which are included in Discontinued Operations, resulted in an aggregate gain of $9.5 million and impairment charges of $31.7 million, after income taxes.

Additionally, during the nine months ended September 30, 2013, the Company sold four properties in its Mexico portfolio for an aggregate sales price of 84.0 million. These transactions, which are included in Discontinued Operations, resulted in an aggregate gain of $18.3 million, after income taxes, and impairment charges of $6.0 million.

Impairment Charges -

During the nine months ended September 30, 2013, the Company recognized aggregate impairment charges of $109.0 million, which are included in Impairment charges under Operating expenses on the Company’s Condensed Consolidated Statements of Income, as follows (in millions):

Mexico operating properties (1)	$	66.9
Land parcels (2)		17.4
Operating properties (2)		10.5
Cost method investment (3)		10.0
Preferred equity investment (4)		3.2
Joint venture investments (2)		1.0
Total	$	109.0

(1) Impairments resulted from the Company currently being in advanced negotiations to sell 27 operating properties within its Mexico portfolio. Based upon the allocation of the estimated selling prices, the Company determined that for 14 of these properties the estimated fair values are below the current carrying value. As such, the Company has recorded impairment charges of $76.7 million, after noncontrolling interests of $3.1 million ($66.9 million of which relates to eight consolidated properties and $12.9 million relates to six properties within the Company’s joint venture investments). These impairments resulted from the Company’s efforts to market certain assets within the Company’s Latin American portfolio and management’s assessment as to the likelihood and timing of such potential transactions. The above amounts are subject to change based upon finalization of contract terms, closing costs, additional cash amounts received as earn outs and fluctuations in the Mexican Peso exchange rate (see Footnote 17).

(2) Impairments are based upon purchase prices or purchase price offers. These impairments resulted from the Company’s efforts to market certain assets and management’s assessment as to the likelihood and timing of such potential transactions.

(3) The Company reviewed the underlying cause of the decline in value of this asset, as well as the severity and the duration of the decline and determined that the decline was other-than-temporary. Based upon the calculation of an estimated fair value of $5.0 million using a discounted cash flow model (see Footnote 12) impairment charges were recognized.

(4) Based upon a review of the debt maturity status and the likelihood of foreclosure of the underlying property within this preferred equity investment, the Company believes it will not recover its investment and as such recorded a full impairment of its investment.