Variable Interest Entities

9 Months Ended

Sep. 30, 2012

Variable Interest Entities [Abstract]

Variable Interest Entities

Variable Interest Entities

Included within our consolidated operating properties at September 30, 2012 are two consolidated joint venture properties, Danbury Green and Southbury Green, and one property owned by a qualified intermediary, Clocktower Plaza Shopping Center, that are held through VIEs and for which we are the primary beneficiary. These entities have been established to own and operate real estate property. Our involvement with these entities is through our majority ownership of the properties. These entities were deemed VIEs primarily because they may not have sufficient equity at risk for them to finance their activities without additional subordinated financial support from other parties. Specifically, with respect to the VIEs holding the Danbury Green and Southbury Green properties, we determined that the interests held by the other equity investors were not equity investments at risk pursuant to the Consolidation Topic of the FASB ASC and also gave consideration to the maturity of certain debt obligations of the entities. Additionally, as it relates to the VIE holding Clocktower Plaza Shopping Center, we also determined that the equity investors, whose investment was not sufficient for the entity to finance its activities, do not have the characteristics of a controlling financial interest. We determined that we are the primary beneficiary of these VIEs as a result of our having the power to direct the activities that most significantly impact their economic performance and the obligation to absorb losses, as well as the right to receive benefits, that could be potentially significant to the VIEs.

At September 30, 2012 and December 31, 2011, the total assets of the VIE which owns Danbury Green and Southbury Green were approximately $111.2 million and $109.2 million, respectively. These assets can only be used to settle obligations of the VIE. At September 30, 2012 and December 31, 2011, the liabilities of the VIE which owns Danbury Green and Southbury Green of $63.0 million and $61.9 million, respectively, include third party liabilities for which the creditors or beneficial interest holders do not have recourse against us other than for customary environmental indemnifications and non-recourse carve-outs. The classification of these assets is primarily within real estate and the classification of liabilities is primarily within mortgages payable and redeemable and nonredeemable noncontrolling interests in the condensed consolidated balance sheets (as discussed further in Note 12).

Included within our consolidated operating properties at December 31, 2011, in addition to Danbury Green and Southbury Green, was one consolidated property, 90-30 Metropolitan Avenue, which was held at the time by a qualified intermediary. Legal ownership of 90-30 Metropolitan Avenue was transferred to us by the qualified intermediary during the first quarter of 2012, and as such, it is no longer considered a VIE.

At September 30, 2012 and December 31, 2011, total assets of these VIEs were approximately $167.5 million and $138.2 million, respectively, and total liabilities were approximately $63.5 million and $62.4 million, respectively, including non-recourse mortgage debt of $45.7 million at both September 30, 2012 and December 31, 2011.

The majority of the operations of these VIEs are funded with cash flows generated from the properties. We have not provided financial support to any of these VIEs that we were not previously contractually required to provide; our contractual commitments consist primarily of funding any capital expenditures, including tenant improvements, which are deemed necessary to continue to operate the entity and any operating cash shortfalls that the entity may experience.