Notes Receivable

9 Months Ended

Sep. 30, 2011

Notes Receivable [Abstract]

NOTES RECEIVABLE

4. NOTES RECEIVABLE

The Company has notes receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and real estate assets. Notes receivable include certain loans that are held for investment and are generally collateralized by real estate related investments. Loan receivables are recorded at stated principal amounts or at initial investment plus accretable yield for loans purchased at a discount. The Company defers certain loan origination and commitment fees, net of certain origination costs, and amortizes them over the term of the related loan. The Company considers notes receivable to be past-due or delinquent when a contractually required principal or interest payment is not remitted in accordance with the provisions of the underlying agreement. The Company evaluates the collectability of both interest and principal on each loan based on an assessment of the underlying collateral to determine whether it is impaired, and not by using internal risk ratings. A loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a loan is considered to be impaired, the amount of loss is calculated by comparing the recorded investment to the value of the underlying collateral. As the underlying collateral for a majority of the notes receivable are real estate related investments, the same valuation techniques are utilized to value the collateral as those used to determine the fair value of real estate investments for impairment purposes. A loan is placed on non-accrual status when, based upon current information and events, it is probable that the Company will not be able to collect all amounts due according to the existing contractual terms. Interest income on performing loans is accrued as earned. Interest income on non-performing loans is generally recognized on a cash basis. Recognition of interest income on an accrual basis is resumed when it is probable that the Company will be able to collect amounts due according to the contractual terms.

Notes receivable consist of the following (in millions):

	September 30, 2011		December 31, 2010
Loans receivable (A)	$	103.3	$	103.7
Other notes		2.9		2.8
Tax Increment Financing Bonds (“TIF Bonds”): (B)
Chemung County Industrial Development Agency		2.1		2.0
City of Merriam, Kansas		1.0		2.3
City of St. Louis, Missouri		3.2		3.2
Town of Plainville, Connecticut (C)		—		6.3
		6.3		13.8
	$	112.5	$	120.3

(A) Amounts exclude notes receivable and advances from unconsolidated joint ventures including the Bloomfield Loan, which was in default and fully reserved at September 30, 2011 and December 31, 2010 (Note 2).

(B) Principal and interest are payable solely from the incremental real estate taxes, if any, generated by the respective shopping center and development project pursuant to the terms of the financing agreement.

(C) Repaid during the second quarter of 2011.

As of September 30, 2011 and December 31, 2010, the Company had eight loans receivable outstanding, with total remaining discretionary commitments of $6.0 million and $4.0 million, respectively. In June 2011, the Company sold a note receivable with a face value, including accrued interest, of $11.8 million for proceeds of $6.8 million, which resulted in the recognition of a $5.0 million reserve that is recorded in Other Expense in the condensed consolidated statement of operations for the nine-month period ended September 30, 2011. The following table reconciles the loans receivable on real estate for the nine months ended September 30, 2011 and 2010 (in millions):

	2011			2010
Balance at January 1	$	103.7		$	58.7
Additions:
New mortgage loans		10.0			58.3
Interest		0.8			4.8
Accretion of discount		0.6			0.1
Deductions:
Collections of principal		(6.8	)		—
Loan foreclosure		—			(19.0	)
Loan loss reserve (A)		(5.0	)		—
Balance at September 30	$	103.3		$	102.9

(A) Amount classified in other expense, net in the consolidated statement of operations for the year ended September 30, 2011. This reserve was written off upon the sale of the note in the second quarter of 2011.

The Company has one loan aggregating $9.3 million that is more than 90 days past due on interest payments and matured in September 2011. The Company has continued to record interest income through September 30, 2011 as the Company anticipates the note (including accrued interest) to be collected in full based upon the underlying estimated fair value of the real estate collateral.