Net Investments in Properties

9 Months Ended

Sep. 30, 2011

Real Estate Owned Disclosure Of Detailed Components [Abstract]

Real Estate Disclosure [Text Block]

Note 4.       Net Investments in Properties and Real Estate Under Construction

Real Estate

Real estate, which consists of land and buildings leased to others, at cost, and which are subject to operating leases, is summarized as follows (in thousands):

	September 30, 2011		December 31, 2010
Land	$	351,163	$	242,145
Buildings		993,433		688,259
Less: Accumulated depreciation		(33,198)		(16,274)
	$	1,311,398	$	914,130

Acquisitions of Real Estate

During the nine months ended September 30, 2011, we entered into the following domestic investments, which were classified as operating leases, at a total cost of $144.4 million, including net lease intangible assets totaling $17.1 million and acquisition-related costs and fees:

• an investment for $99.6 million with Terminal Freezers, LLC for three cold storage facilities;

• an investment for $32.1 million with Harbor Freight Tools USA, Inc. for a distribution facility;

• a parcel of land for $7.4 million that is leased to a developer for the construction of a restaurant; and

• two follow-on transactions in existing investments for total costs of $5.3 million, excluding a tenant-funded improvement of $9.0million.

In connection with these investments, which we deemed to be real estate asset acquisitions under current authoritative accounting guidance, we capitalized acquisition-related costs and fees totaling $6.5 million.

Additionally, in September 2011 we entered into an investment in Italy whereby we purchased substantially all of the economic and voting interests in a real estate fund that owns 20 cash and carry retail stores located throughout Italy for a total cost of $395.5 million, including net lease intangible assets of $120.9million. As this acquisition was deemed to be a real estate asset acquisition under current authoritative accounting guidance, we capitalized acquisition-related fees and expenses of $21.4million.In connection with this investment, we assumed $222.7 million of indebtedness (Note 9). Amounts are based on the exchange rate of the Euro on the date of acquisition. The retail stores are leased to Metro Cash & Carry Italia S.p.A (“Metro”), and Metro AG, its German parent company, has guaranteed Metro's obligations under the leases.The purchase price was allocated to the assets acquired and liabilities assumed, based upon their preliminary fair values. The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed in the acquisition, based on the best estimates of management at the date of acquisition (in thousands). We are in the process of finalizing our assessment of the fair value of the assets acquired and liabilities assumed. Accordingly, the fair value of these assets and liabilities are subject to change.

Assets acquired at fair value:
	Investments in real estate	$	274,840
	Intangible assets, net		122,735
Liabilities assumed at fair value:
	Non-recourse debt		(222,680)
	Accounts payable, accrued expenses and other liabilities		(8,912)
	Prepaid and deferred rental income		(1,791)
Net assets acquired		$	164,192

During the third quarter of 2011, we finalized the purchase price allocation for our investment with Harbor Freight Tools USA, Inc based on the latest information available, which resulted in a reduction to Real estate of $15.1 million and an increase to Intangible assets, net of the same amount, and an increase to Depreciation and amortization of $0.7 million.

Operating Real Estate

Operating real estate, which consists primarily ofour hotel and self-storage operations, at cost, is summarized as follows (in thousands):

	September 30, 2011		December 31, 2010
Land	$	38,164	$	1,330
Buildings		114,766		10,483
Furniture, fixtures & equipment		1,690		364
Less: Accumulated depreciation		(1,494)		(300)
	$	153,126	$	11,877

Acquisitions of Operating Real Estate

During the nine months ended September 30, 2011, we acquired 34 self-storage properties throughout the U. S. from A-American Self Storage in six separate transactions for a total cost of $139.8 million, including net lease intangible assets of $9.8 million. In addition, we acquired a domestic self storage property for $3.4 million, including net lease intangible assets of $0.1 million. As these acquisitions were deemed to be business combinations under current authoritative accounting guidance, we expensed the acquisition-related fees and expenses totaling$5.2 million, which are included in General and administrative expenses in the consolidated financial statements.

Real Estate Under Construction

During the nine months ended September 30, 2011, we entered into 11 build-to-suit projects located in the U.S., which consisted of the following projects:

• one project with ICF International Inc. for the construction of an office facility for a total cost of up to $14.8 million, of which we funded $3.9 million;

• nine projects with Dollar General Corp. as part of an estimated $40.0 million platform build-to-suit program covering up to 40 facilities, for a total cost of up to $9.1 million, of which we funded $6.4 million and placed $4.3 million into service; and

• one project with Faurecia USA Holdings, Inc. for the construction of a manufacturing facility for a total cost of up to $6.8 million, of which we funded $2.4 million.

Amounts above are based on the estimated construction costs at the respective dates of acquisition. In connection with these investments, which were deemed to be real estate acquisitions under current authoritative accounting guidance, we capitalized acquisition-related costs and fees totaling $3.0 million.

During the nine months ended September 30, 2011, we also had the following activity on projects entered into during 2010:

• we funded $17.5 million and placed $32.4 million into service on a project with Sun Products Corporation. The unfunded commitment on this project at September 30, 2011 was $9.2 million;

• we funded $24.8 million on a project with Walgreens. The unfunded commitment on this project at September 30, 2011 was $32.6 million; and

• we funded a total of $6.8 million and placed a total of $13.1 million into service on several small projects.

At September 30, 2011, the unfunded commitment on these projects totaled approximately $59.8 million.

Other

In connection with our prior acquisitions of properties, we have recorded net lease intangibles of $403.0 million, including $147.9 million of net lease intangibles acquired in connection with our investment activity during the nine months ended September 30, 2011. These intangible assets and liabilities are being amortized over periods ranging from 10 years to 40 years. In-place lease, tenant relationship and above-market rent intangibles are included in Intangible assets, net in the consolidated financial statements. Below-market rent intangibles are included in Prepaid and deferred rental income. Amortization of below-market and above-market rent intangibles is recorded as an adjustment to Lease revenues in the consolidated financial statements, while amortization of in-place lease and tenant relationship intangibles is included in Depreciation and amortization. Net amortization of intangibles, including the effect of foreign currency translation, was $5.5 million and $1.2 million for the three months ended September 30, 2011 and 2010, respectively, and $12.4 million and $3.1 million for the nine months ended September 30, 2011 and 2010, respectively.