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Equity Investments in Real Estate

6 Months Ended

Jun. 30, 2011

Investments In Affiliates Subsidiaries Associates And Joint Ventures Abstract

Equity Method Investments Disclosure [Text Block]

Note 6. Equity Investments in Real Estate

We own interests in single-tenant net leased properties leased to corporations through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence, and (ii) as tenants-in-common subject to common control. Generally, the underlying investments are jointly-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).

The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values (dollars in thousands):

	Ownership Interest	Carrying Value at
Lessee	at June 30, 2011	June 30, 2011		December 31, 2010
C1000 B.V. (a) (b)	85%	$	99,643	$	-
U-Haul Moving Partners, Inc. and Mercury Partners, LP (c)	12%		29,408		-
Tesco plc (a)	49%		20,707		19,903
Hellweg Die Profi-Baumarkte GmbH & Co. KG (a)(c)	32%		20,570		-
Berry Plastics Corporation	50%		19,853		20,330
Eroski Sociedad Cooperativa - Mallorca (a)	30%		11,467		10,620
Dick’s Sporting Goods, Inc. (c)	45%		5,753		-
		$	207,401	$	50,853

__________

(a) The carrying value of this investment is affected by the impact of fluctuations in the exchange rate of the Euro.

(b) We acquired our tenancy-in-common interest in this investment in January 2011 as described below.

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):

	June 30, 2011		December 31, 2010
Assets	$	1,233,307	$	203,989
Liabilities		(815,612)		(79,786)
Partners’/members’ equity	$	417,695	$	124,203

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010

Revenues	$	20,926	$	3,688	$	28,424	$	7,282
Expenses		(17,117)		(3,562)		(21,887)		(6,532)
Net income	$	3,809	$	126	$	6,537	$	750

We recognized income from equity investments in real estate of $0.9 million and $2.7 million for the three and six months ended June 30, 2011, respectively, and $0.1 million and $0.5 million for the three and six months ended June 30, 2010, respectively. Income from equity investments in real estate represents our proportionate share of the income or loss of these ventures as well as certain depreciation and amortization adjustments related to other-than-temporary impairment charges.

Acquisitions of Equity Investments

In January 2011, we and our affiliate, Corporate Property Associates 15 Incorporated (“CPA®:15”), acquired a venture as a tenancy-in-common in which we and CPA®:15 hold interests of 85% and 15%, respectively, and that we account for under the equity method of accounting. The venture purchased properties from C1000 B.V., a Dutch supermarket chain, for $207.6 million. Our share of the purchase price was $176.5 million, which was funded in part with a $90.0 million short-term loan from the advisor that has since been repaid (Note 3). In connection with this transaction, the venture capitalized acquisition-related costs and fees totaling $12.5 million, of which our share was $10.6 million. In March 2011, the venture obtained non-recourse financing totaling $98.3 million and distributed the net proceeds to the venture partners, of which our share was $82.3 million. This mortgage loan bears interest at a variable rate equal to the three-month Euro inter-bank offered rate (“Euribor”) plus 2% and matures in March 2013. Amounts above are based upon the exchange rate of the Euro at the dates of acquisition and financing.

In May 2011, we acquired interests of 32%, 12% and 45% in the Hellweg 2, U-Haul and Dick's ventures, respectively, from CPA®:14 for an aggregate purchase price of a $55.7 million (Note 3). These ventures are jointly-owned with other affiliates. Because we do not control these ventures but we exercise significant influence over them, we account for our interests in these ventures as equity investments. The properties that the ventures own and the mortgages encumbering the properties had a total fair value of $947.3 million and $581.6 million, respectively, at the date of acquisition. Amounts provided are the total amounts attributable to the venture properties and do not represent the proportionate share that we purchased. Amounts are based on the exchange rate of the Euro at the date of acquisition, as applicable.

- Definition

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.

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