Impairment Charges and Impairment of Joint Venture Investments

12 Months Ended

Dec. 31, 2016

Asset Impairment Charges [Abstract]

Impairment Charges and Impairment of Joint Venture Investments

12. Impairment Charges and Impairment of Joint Venture Investments

The Company recorded impairment charges based on the difference between the carrying value of the assets or investments and the estimated fair market value as follows (in millions):  

	For the Year Ended December 31,
	2016		2015		2014
Assets marketed for sale or assets sold(A)	$	110.9	$	179.7	$	10.6
Undeveloped land previously held for development(B)		—		99.3		18.6
Total continuing operations	$	110.9	$	279.0	$	29.2
Sold assets – discontinued operations		—		—		8.9
Joint venture investments(C)		—		1.9		30.7
Total impairment charges	$	110.9	$	280.9	$	68.8

(A) The Company recorded impairment charges in 2015 and 2016 triggered by changes in its strategic plan that impacted its asset hold-period assumptions.  During 2015, management accelerated the Company’s portfolio quality improvement initiative, which it intended to accomplish in part through the disposition of less strategic assets.  The disposition initiative triggered the recording of impairment charges on 25 operating shopping centers.  In 2016, in conjunction with the change of the Chief Executive Officer, the Company’s management and Board of Directors decided to increase the volume of near-term asset sales beyond the level contemplated in 2015 primarily to accelerate progress on its deleveraging goal.  As a result, the decision to accelerate sales triggered the recording of impairment charges on 20 operating shopping centers that management identified as short-term disposition candidates.  The impairment charges recorded in 2014 were triggered primarily by the Company’s marketing of certain assets for sale and management’s then-assessment of the likelihood and timing of potential transactions.

(B) Amounts recorded primarily were related to land previously held for future development.  The impairments were triggered primarily by the decision made by the Company’s senior management to sell the land and no longer consider development alternatives.  

(C) Represents “other than temporary impairment” charges on unconsolidated joint venture investments.  Amount recorded in 2014 represents a charge on a joint venture development project in Canada.  The impairment primarily was triggered as a result of a major retailer’s decision to exit the Canadian market, as well as changes in the timing of the project and development assumptions.  

Items Measured at Fair Value on a Non-Recurring Basis

The Company is required to assess the fair value of certain impaired consolidated and unconsolidated joint venture investments.  The valuation of impaired real estate assets and investments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset, as well as the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence.  In general, the Company considers multiple valuation techniques when measuring fair value of an investment.  However, in certain circumstances, a single valuation technique may be appropriate.  

For operational real estate assets, the significant assumptions included the capitalization rate used in the income capitalization valuation as well as the projected property net operating income.  For projects under development or not at stabilization, the significant assumptions included the discount rate, the timing and the estimated costs for the construction completion and project stabilization, projected net operating income and the exit capitalization rate.  For investments in unconsolidated joint ventures, the Company also considered the valuation of any underlying joint venture debt.  These valuation adjustments were calculated based on market conditions and assumptions made by management at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or the underlying assumptions change.  

The following table presents information about the Company’s impairment charges on both financial and nonfinancial assets that were measured on a fair value basis for the years ended December 31, 2016, 2015 and 2014.  The table also indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions).

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total		Total Losses
December 31, 2016
Long-lived assets held and used	$	—	$	—	$	438.2	$	438.2	$	110.9
December 31, 2015
Long-lived assets held and used		—		—		407.1		407.1		279.0
Unconsolidated joint venture investments		—		—		—		—		1.9
December 31, 2014
Long-lived assets held and used/held for sale		—		—		141.2		141.2		38.1
Unconsolidated joint venture investments		—		—		6.4		6.4		30.7

The following table presents quantitative information about the significant unobservable inputs used by the Company to determine the fair value of non-recurring items (in millions, except price per square foot, which is in thousands):

	Quantitative Information About Level 3 Fair Value Measurements
	Fair Value at December 31,						Range
Description	2016		2015		Valuation Technique	Unobservable Inputs	2016	2015
Impairment of consolidated assets	$	13.4	$	33.8	Indicative Bid(A)/ Contracted Price	Indicative Bid(A)/ Contracted Price	N/A	N/A
		398.2		287.6	Income Capitalization Approach(B)/ Sales Comparison Approach	Market Capitalization Rate	7%–10%	8%–9%
						Price per Square Foot	$15–$31	$10–$40
		26.6		51.5	Indicative Bid(A)	Indicative Bid(A)	N/A	N/A
					Discounted Cash Flow	Discount Rate	10%–11%	10%–14%
						Terminal Capitalization Rate	10%–12%	8%–10%
		—		34.2	Indicative Bid(A)/ Sales Comparison Approach	Indicative Bid(A)	N/A	N/A

(A) Fair value measurements based upon indicative bids were developed by third-party sources (including offers and comparable sales values), subject to the Company’s corroboration for reasonableness.  The Company does not have access to certain unobservable inputs used by these third parties to determine these estimated fair values.  

(B) Vacant space in certain assets was valued based on a price per square foot.