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Equity Investments in Real Estate and CPA REITs
0205 - Disclosure - Equity Investments in Real Estate and CPA REITs
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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 5 - us-gaap:EquityMethodInvestmentsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>Note 5. Equity Investments in Real Estate and CPA</b><b><sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">Our equity investments in real estate for our investments in the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs and for our
interests in unconsolidated real estate investments are summarized below.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>CPA</i><i><sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">We own interests in the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs and account for these interests under the equity
method because, as their advisor, we do not exert control but have the ability to exercise
significant influence. Shares of the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs are publicly registered and the
CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs file periodic reports with the SEC, but the shares are not listed on any
exchange and are not actively traded. We earn asset management and performance revenue from the
CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs and have elected, in certain cases, to receive a portion of this revenue in
the form of restricted common stock of the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs rather than cash.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">The following table sets forth certain information about our investments in the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>
REITs (dollars in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>% of Outstanding Shares at</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Carrying Amount of Investment at</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Fund</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b> <sup style="font-size: 85%; vertical-align: text-top"> <b>(a)</b></sup></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2009 <sup style="font-size: 85%; vertical-align: text-top"> (a)</sup></b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:14
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">8.9</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">8.5</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="left">$</td>
<td align="right">84,191</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">79,906</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:15
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.8</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">6.5</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">82,654</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">78,816</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:16 — Global
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5.1</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">4.7</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">58,218</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">53,901</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:17 —
Global <sup style="font-size: 85%; vertical-align: text-top">(b)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">0.5</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">0.4</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">5,374</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,328</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">230,437</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">215,951</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 13pt; width: 18%; border-bottom: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr style="font-size: 6pt">
<td width="3%"> </td>
<td width="1%"> </td>
<td width="96"> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(a)</td>
<td> </td>
<td>Includes asset management fee receivable at period end for which shares will be issued
during the subsequent period.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(b)</td>
<td> </td>
<td>CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:17 — Global has been deemed to be a VIE in which we are not the primary
beneficiary (Note 2).</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 10pt">The following tables present combined summarized financial information for the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>
REITs. Amounts provided are the total amounts attributable to the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs and do not
represent our proportionate share (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">8,350,867</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,468,955</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,475,544</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,638,552</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Shareholders’ equity
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,875,323</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,830,403</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three months ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six months ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">201,334</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">190,557</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">394,088</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">370,487</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expenses
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(152,792</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(158,565</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(306,510</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(350,701</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">48,542</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">31,992</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">87,578</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">19,786</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">We recognized income from our equity investments in the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs of
$4.0 million and $1.8 million for the three months ended June 30, 2010 and 2009, respectively, and
$6.8 million and $0.6 million for the six months ended June 30, 2010 and 2009, respectively. Our
proportionate share of income or loss recognized from our equity investments in the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>
REITs is impacted by several factors, including impairment charges recorded by the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>
REITs. During the three months ended June 30, 2010 and 2009, the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup> REITs recognized
impairment charges totaling $0.5 million and $15.0 million, respectively, which reduced the income
we earned from these investments by less than $0.1 million and $0.8 million, respectively. During
the six months ended June 30, 2010 and 2009, impairment charges recognized by the CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>
REITs totaled $10.7 million and $54.6 million, respectively, which reduced the income we earned
from these investments by $0.7 million and $2.8 million, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Interests in Unconsolidated Real Estate Investments</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">We own interests in single-tenant net leased properties leased to corporations through
noncontrolling interests in (i) partnerships and limited liability companies which we do not
control, but over which we exercise significant influence, and (ii) as tenants-in-common subject to
common control. All of the underlying investments are generally owned with affiliates. We account
for these investments
under the equity method of accounting (i.e., at cost, increased or decreased by our share of
earnings or losses, less distributions, plus contributions and other adjustments required by equity
method accounting, such as basis differences from other-than-temporary impairments).
</div>
<div align="right" style="font-size: 10pt; margin-top: 0pt">
<i>
</i>
<b>
</b>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">The following table sets forth our ownership interests in our equity investments in real estate and
their respective carrying values. The carrying value of these ventures is affected by the timing
and nature of distributions (dollars in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="58%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>Ownership Interest</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Carrying Value at</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td nowrap="nowrap" align="left" style="border-bottom: 1px solid #000000"><b>Lessee</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>at June 30, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Schuler A.G. <sup style="font-size: 85%; vertical-align: text-top">(a) (b)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">33</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td align="left">$</td>
<td align="right">21,427</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">23,755</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">The New York Times Company
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">18</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">19,767</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">19,740</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Carrefour France, SAS <sup style="font-size: 85%; vertical-align: text-top">(a) </sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">46</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">16,294</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">17,570</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">U. S. Airways Group, Inc.<sup style="font-size: 85%; vertical-align: text-top"> (b)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">75</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">8,188</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,927</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Medica — France, S.A. <sup style="font-size: 85%; vertical-align: text-top">(a) (c) </sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">46</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">4,656</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,160</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Hologic, Inc. <sup style="font-size: 85%; vertical-align: text-top">(b)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">36</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">4,555</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,388</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Consolidated Systems, Inc.<sup style="font-size: 85%; vertical-align: text-top"> (b)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">60</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">3,380</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">3,395</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Information Resources, Inc.<sup style="font-size: 85%; vertical-align: text-top"> </sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">33</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">2,918</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,270</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Hellweg Die Profi-Baumarkte GmbH & Co.
KG <sup style="font-size: 85%; vertical-align: text-top"> (a) </sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">5</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">2,656</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,639</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Childtime Childcare, Inc.
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">34</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">1,831</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,843</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Federal Express Corporation
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">1,708</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,976</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">The Retail Distribution Group <sup style="font-size: 85%; vertical-align: text-top">(d)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,099</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Amylin Pharmaceuticals, Inc. <sup style="font-size: 85%; vertical-align: text-top">(e)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">50</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,737</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,723</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">82,643</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">89,039</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 13pt; width: 18%; border-bottom: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr style="font-size: 6pt">
<td width="3%"> </td>
<td width="1%"> </td>
<td width="96"> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(a)</td>
<td> </td>
<td>Carrying value of the investment is affected by the impact of fluctuations in the exchange
rate of the Euro.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(b)</td>
<td> </td>
<td>Represents tenant-in-common interest.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(c)</td>
<td> </td>
<td>The decrease in carrying value was due to cash distributions made to us by the venture.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(d)</td>
<td> </td>
<td>In March 2010, this venture sold its property, recognized a gain of $2.5 million and
distributed the proceeds to the venture partners. We have no further economic interest in this
venture.</td>
</tr>
<tr style="font-size: 3pt">
<td> </td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left">(e)</td>
<td> </td>
<td>In 2007, this venture refinanced its existing non-recourse mortgage debt with new
non-recourse financing of $35.4 million based on the appraised value of the underlying real
estate of the venture and distributed the proceeds to the venture partners. Our share of the
distribution was $17.6 million, which exceeded our total investment in the venture at that
time.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 10pt">As discussed in Note 2, we adopted the FASB’s amended guidance on consolidating VIEs effective
January 1, 2010. Upon adoption of the amended guidance, we re-evaluated our existing interests in
unconsolidated entities and determined that we should continue to account for our interests in The
New York Times and Hellweg ventures using the equity method of accounting primarily because the
partners in each of these ventures has the power to direct the activities that most significantly
impact the entity’s economic performance, including disposal rights of the property. Carrying
amounts related to these VIEs are noted in the table above. Because we generally utilize
non-recourse debt, our maximum exposure to either VIE is limited to the equity we have in each VIE.
We have not provided financial or other support to either VIE, and there are no guarantees or other
commitments from third parties that would affect the value or risk of our interest in such
entities.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">The following tables present combined summarized financial information of our venture properties.
Amounts provided are the total amounts attributable to the venture properties and do not represent
our proportionate share (in thousands):
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="72%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>June 30, 2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>December 31, 2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Assets
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">1,395,873</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">1,452,103</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Liabilities
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(807,484</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(714,558</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Partners’/members’ equity
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">588,389</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">737,545</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="right" style="font-size: 10pt; margin-top: 0pt">
<i>
</i>
<b>
</b>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif; margin-left: 0in; ">
<div align="left" style="font-size: 10pt; margin-top: 0pt">
<b>
</b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="44%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="9%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Three months ended June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>Six months ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 10pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2009</b></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">37,849</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">37,263</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">76,058</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">69,011</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expenses
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(19,948</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(16,100</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(39,657</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(32,721</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">17,901</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21,163</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">36,401</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">36,290</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">We recognized income from these equity investments in real estate of approximately $3.7
million and $3.1 million for the three months ended June 30, 2010 and 2009, respectively, and $9.9
million and $5.7 million for the six months ended June 30, 2010 and 2009, respectively. Income from
equity investments in real estate represents our proportionate share of the income or losses of
these
ventures as well as certain depreciation and amortization adjustments related to purchase
accounting and other-than-temporary impairment charges.
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Equity Investment in Direct Financing Lease Acquired</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 10pt">In March 2009, an entity in which we, CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:16 — Global and CPA<sup style="font-size: 85%; vertical-align: text-top">®</sup>:17 — Global
hold 17.75%, 27.25% and 55% interests, respectively, completed a net lease financing transaction
with respect to a leasehold condominium interest, encompassing approximately 750,000 rentable
square feet, in the office headquarters of The New York Times Company for approximately $233.7
million. Our share of the purchase price was approximately $40 million, which we funded with
proceeds from our line of credit. We account for this investment under the equity method of
accounting as we do not have a controlling interest in the entity but exercise significant
influence over it. In connection with this investment, which was deemed a direct financing lease,
the venture capitalized costs and fees totaling $8.7 million. In August 2009, the venture obtained
mortgage financing on the New York Times property of $119.8 million at an annual interest rate of
LIBOR plus 4.75% that has been capped at 8.75% through the use of an interest rate cap. This
financing has a term of five years.
</div>
</div>
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Equity investment disclosure, or group of investments for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20% of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Principles Board Opinion (APB)
-Number 18
-Paragraph 20
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