Discontinued Operations and Investment Properties Held for Sale

9 Months Ended

Sep. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Investment Properties Held for Sale

Discontinued Operations and Investment Properties Held for Sale

The Company employs a business model that utilizes asset management as a key component of monitoring its investment properties to ensure that each property continues to meet expected investment returns and standards. This strategy incorporates the sale of non-core and non-strategic assets that no longer meet the Company's criteria.

The Company sold 20 properties during the nine months ended September 30, 2012, as summarized below:

Date	Square Footage	Property Type	Property Name	Consideration		Mortgage Debt Extinguished			Net Sales Proceeds/(Outflow)			Gain
February 1, 2012	13,800	Single-user retail	CVS - Jacksonville	$	5,800	$	—		$	5,702		$	915
April 10, 2012	501,000	Single-user office	GMAC Ins. Building	23,570		23,570			—			6,847		(a)
August 17, 2012	1,035,800	Single-user industrial	Cost Plus Dist. Center	63,000		16,300			46,555			8,235
September 18, 2012	1,000,400	Single-user retail	Various (b)	100,400		97,253		(b)	(251		)	—		(b)
September 25, 2012	132,600	Multi-tenant retail	Various (c)	19,050		—			18,048			—		(c)
September 28, 2012	75,200	Single-user retail	Winco - Ventura	8,015		—			7,999			521
	2,758,800			$	219,835	$	137,123		$	78,053		$	16,518

(a) This property was transferred to the lender through a deed-in-lieu of foreclosure transaction.

(b) The Company sold 13 former Mervyns properties located throughout California in a single transaction on September 18, 2012. No gain or loss was recognized upon disposition as the Company recorded an impairment charge of $1,100 during the three months ended September 30, 2012 based upon the negotiated sales price less costs to sell. Proceeds from the sale, along with restricted escrows held by the lender, were used to pay off, in its entirety, the $116,400 outstanding loan that was secured by the Company's entire portfolio of 23 former Mervyns properties.

(c) The terms of the sale of three properties located near Dallas, Texas were negotiated as a single transaction. No gain or loss was recognized upon disposition as the Company recognized an impairment charge of $5,528 during the three months ended September 30, 2012 based upon the negotiated sales price less costs to sell.

The Company also received net proceeds of $9,039 and recorded gains of $6,652 from condemnation awards, earnouts and the sale of parcels at certain operating properties. The aggregate proceeds, net of closing costs, from the property sales and additional transactions during the nine months ended September 30, 2012 totaled $200,645 with aggregate gains of $23,170.

During the year ended December 31, 2011, the Company sold 11 properties, six of which were sold during the nine months ended September 30, 2011. The dispositions and additional transactions, including the partial sale of a multi-tenant retail property to the Company's RioCan joint venture (see Note 12), condemnation awards, earnouts and the sale of a parcel at one of its operating properties, during the nine months ended September 30, 2011 resulted in sales proceeds, net of closing costs, to the Company of $160,303 with aggregate gains of $22,849.

As of September 30, 2012, the Company had entered into contracts to sell Mervyns - Bakersfield, a 75,100 square foot single-user retail property located in Bakersfield, California and American Express - Phoenix, a 117,600 square foot single-user office property located in Phoenix, Arizona. Such properties qualified for held for sale accounting treatment upon meeting all applicable GAAP criteria during the third quarter of 2012, at which time depreciation and amortization were ceased. As such, the assets and liabilities associated with the two properties are separately classified as held for sale in the condensed consolidated balance sheets as of September 30, 2012 and the operations for all periods presented are classified as discontinued operations in the condensed consolidated statements of operations and other comprehensive loss. No consolidated properties were classified as held for sale as of December 31, 2011. The following table presents the assets and liabilities associated with the held for sale properties:

	September 30, 2012
Assets
Land, building and other improvements	$	8,996
Accumulated depreciation	(379		)
	8,617
Other assets	16
Investment properties held for sale	$	8,633
Liabilities
Other liabilities	$	228
Liabilities associated with investment properties held for sale	$	228

The Company does not allocate general corporate interest expense to discontinued operations. The results of operations for the investment properties that are accounted for as discontinued operations are presented in the table below:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues:
Rental income	$	2,741		$	5,531		$	11,875		$	18,957
Tenant recovery income	(565		)	687			165			2,095
Other property income	34			15			59			68
Total revenues	2,210			6,233			12,099			21,120
Expenses:
Property operating expenses	332			988			1,197			2,354
Real estate taxes	(503		)	487			326			2,132
Depreciation and amortization	952			2,206			4,380			7,851
Provision for impairment of investment properties	11,507			1,379			11,507			31,752
Loss on lease terminations	—			85			40			87
General and administrative expenses	—			—			—			34
Interest expense	1,709			1,465			4,374			5,736
Other expense	1			1			—			4
Total expenses	13,998			6,611			21,824			49,950
Loss from discontinued operations, net	$	(11,788	)	$	(378	)	$	(9,725	)	$	(28,830	)