Organization and Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2011

Organization and Basis of Presentation [Abstract]

Marketable Securities

Marketable Securities

The Company reports its available for sale securities at fair value, based on quoted market prices (Level 2 for the unsecured bonds and Level 1 for the common stock and investment funds, as defined by the Financial Accounting Standards Board (“FASB”) standard entitled “Fair Value Measurements and Disclosures”), and any unrealized gain or loss is recorded as other comprehensive income (loss).  There were no impairment charges for the three and nine months ended September 30, 2011 and 2010, respectively.  Realized gains and losses and interest income are included in interest and other income on the condensed consolidated statement of operations.  Amortization of purchase discounts are included in interest income.

As of September 30, 2011, marketable securities consisted primarily of common stock and investments in mortgage backed securities and investment funds that invest in U.S. treasury or agency securities.  As of September 30, 2011, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost of $45.5 million.  The estimated fair values of the mortgage backed securities (Level 2 securities) are approximately equal to the carrying values.

As of September 30, 2011 the Company classified the following marketable securities as available for sale (dollars in thousands):

	September 30, 2011
			Gross
	Amortized		Unrealized
	Cost		Gain/(Loss)			Fair Value
Investment-grade unsecured bonds	$	3,611	$	373		$	3,984
Investment funds - US treasuries		11,789		145			11,934
Common stock		14,513		(319	)		14,194
Total	$	29,913	$	199		$	30,112

	December 31, 2010
			Gross
	Amortized		Unrealized
	Cost		Gain		Fair Value
Investment-grade unsecured bonds	$	22,243	$	4,403	$	26,646
Investment funds - US treasuries		14,345		582		14,927
Common stock		8,638		112		8,750
Total	$	45,226	$	5,097	$	50,323

The Company uses the specific identification method to determine the cost basis of a security sold and to reclassify amounts from accumulated other comprehensive income for securities sold.  For the nine months ended September 30, 2011 and 2010, the proceeds from sales of available for sale securities totaled $26.8 million and $64.7 million, respectively.  These sales all resulted in gains, which totaled $4.5 million and $9.0 million for the nine months ended September 30, 2011 and 2010, respectively.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for share based compensation using the fair value method of accounting.  The estimated fair value of stock options granted by the Company is being amortized over the vesting period of the stock options.  The estimated grant date fair values of the long term incentive plan units (discussed in Note 13, “Stock Based Compensation Plans,” in the Company's Form 10-K for the year ended December 31, 2010) are being amortized over the expected service periods.

Stock-based compensation expense for options and restricted stock totaled $0.3 million for the three months ended September 30, 2011 and 2010, and $1.0 million and $0.7 million for the nine months ended September 30, 2011 and 2010, respectively.  The intrinsic value of the stock options exercised during the three months ended September 30, 2011 and 2010 totaled $0.6 million and $0.4 million and $3.6 million and $1.9 million for the nine months ended September 30, 2011 and 2010, respectively.  As of September 30, 2011, the intrinsic value of the stock options outstanding totaled $6.9 million.  As of September 30, 2011, total unrecognized compensation cost related to unvested share-based compensation granted under the stock option and restricted stock plans totaled $3.7 million.  The cost is expected to be recognized over a weighted-average period of 1 to 6 years for the stock option plans and is expected to be recognized straight-line over 7 years for the restricted stock awards.

The Company has adopted an incentive program involving the issuance of Series Z and Series Z-1 Incentive Units (collectively referred to as “Z Units”) of limited partnership interest in the Operating Partnership.  Stock-based compensation expense for Z Units totaled $0.2 million and $0.4 million for the three months ended September 30, 2011 and 2010, respectively, and $0.7 million and $1.8 million for the nine months ended September 30, 2011 and 2010, respectively.  On January 1, 2011, 131,409 Series Z Units were converted into common units of the Operating Partnership.

Stock-based compensation for Z units capitalized totaled $0.1 million for the three months ended September 30, 2011, and 2010, and $0.3 million and $0.6 million for the nine months ended September 30, 2011 and 2010, respectively.  As of September 30, 2011, the intrinsic value of the Z-1 Units subject to future vesting totaled $15.6 million.  As of September 30, 2011, total unrecognized compensation cost related to Z-1 Units subject to future vesting totaled $6.3 million.  The unamortized cost is expected to be recognized over the next year to fourteen years subject to the achievement of the stated performance criteria.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB statement entitled “Fair Value Measurements and Disclosures”.  Level 1 inputs are unadjusted, quoted prices in active

markets for identical assets or liabilities at the measurement date.  Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability.   Level 3 inputs are unobservable inputs for the asset or liability.  The Company uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities.  The Company uses Level 2 inputs for its investments in unsecured bonds, mortgage backed securities, notes receivable, notes payable, and derivative liabilities.  These inputs include interest rates for similar financial instruments.  The Company's valuation methodology for the swap related to the multifamily revenue refunding bonds for the 101 San Fernando apartment community, is described in more detail in Note 8.  The Company does not use Level 3 inputs to estimate fair values of any of its financial instruments.  The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Management believes that the carrying amounts of its amounts outstanding under lines of credit, notes receivable and notes and other receivables approximate fair value as of September 30, 2011 and December 31, 2010, because interest rates, yields and other terms for these instruments are consistent with yields and other terms currently available for similar instruments.  Management has estimated that the fair value of the Company's $1.77 billion of fixed rate debt, including unsecured bonds, at September 30, 2011 is approximately $1.88 billion and the fair value of the Company's $242.2 million of variable rate debt, excluding borrowings under the lines of credit, at September 30, 2011 is $224.9 million based on the terms of existing mortgage notes payable, unsecured bonds and variable rate demand notes compared to those available in the marketplace.  Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities and dividends payable approximate fair value as of September 30, 2011 due to the short-term maturity of these instruments.  The fair values of the Company's investments in mortgage backed securities are approximately equal to the amortized cost carrying value of these securities.  Marketable securities and both the note payable and the swap related to multifamily revenue refunding bonds for the 101 San Fernando apartment community, are carried at fair value as of September 30, 2011, as discussed above and in Note 8.

Accounting Estimates

Accounting Estimates and Reclassifications

The preparation of condensed consolidated financial statements, in accordance with U.S. generally accepted accounting principles, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate properties, its investments in and advances to joint ventures and affiliates, its notes receivables and its qualification as a Real Estate Investment Trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

Reclassifications for discontinued operations have been made to prior year statements of operations balances in order to conform to current year presentation.  Such reclassifications have no impact on reported earnings, cash flows, total assets or total liabilities.