Net Investments in Properties and Real Estate Under Construction

3 Months Ended

Mar. 31, 2013

Net Investments in Properties and Real Estate Under Construction

Real Estate Disclosure

Note4.Net Investments in Properties and Real Estate Under Construction

Real Estate

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

	March 31, 2013		December 31, 2012
Land	$	489,977	$	491,584
Buildings		1,648,946		1,614,188
Less: Accumulated depreciation		(88,158)		(77,245)
	$	2,050,765	$	2,028,527

Acquisitions

During the three months ended March 31, 2013, we entered into one domestic investment for a manufacturing and office facility, which was deemed to be a real estate asset acquisition, at a cost of $10.9 million, including net lease intangible assets of$1.8 million(Note7) and acquisition-related costs and fees of $0.5 million, which were capitalized.

Additionally, we acquired a domesticentertainment complex, which was deemed to be a business combination, at a cost of $15.7million, including land of $2.7million, buildings of $12.7million, and net lease intangible assets of $0.3million (Note7). We expensedacquisition-related costs and fees of $0.8million, which are included in General and administrative expenses in the consolidated financial statements.

During this period, the U.S. dollar strengthened against the euro, as the end-of-period rate for the U.S. dollar in relation to the euro at March 31, 2013 decreased by3.0% to $1.2821 from $1.3218at December 31, 2012. The impact of this strengthening was a $28.8 million decrease in Real estate from December 31, 2012 to March 31, 2013.

Operating Real Estate

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

	March 31, 2013		December 31, 2012
Land	$	60,493	$	60,493
Buildings		196,079		193,067
Furniture, fixtures, and equipment		1,281		1,245
Less: Accumulated depreciation		(9,657)		(7,757)
	$	248,196	$	247,048

Acquisitions of Operating Real Estate

During the three months ended March 31, 2013, we acquired one self-storage property for $2.8 million, including buildings of $2.3 million and lease intangible assets of $0.5 million (Note 7). As this acquisition was deemed to be a business combination, we expensed the acquisition-related costs of $0.1 million, which are included in General and administrative expenses in the consolidated financial statements.

Allocation of Purchase Price

For two investments we acquired during the three months ended March 31, 2013, as well as one acquired in December 2012, the purchase price was allocated to the assets acquired and liabilities assumed based upon their preliminary estimated fair values, which are based on the best estimates of management at each respective date of acquisition. We are still in the process of finalizing our assessment of the fair value of the assets acquired and liabilities assumed.

Real Estate Under Construction

Construction activity during the three months ended March 31, 2013 included five build-to-suit projects, of which three remained as open projects at March 31, 2013 and twowere placed into service during the quarter. In connection with these five build-to-suit projects, we capitalized $24.0 million and placed assets totaling $35.4 million into service, which are now classified as Real estate, at cost. Additionally, we capitalized interest totaling $1.0 million. The aggregate unfunded commitments on the remaining open projects totaled approximately $108.9 million at March 31, 2013.

Asset Retirement Obligations

We have recorded asset retirement obligations for the removal of asbestos and environmental waste in connection with several of our acquisitions. We estimated the fair value of the asset retirement obligations based on the estimated economic lives of the properties and the estimated removal costs provided by the inspectors. The liability was discounted using the weighted-average interest rate on the associated fixed-rate mortgage loans at the time the liability was incurred.

The following table provides a reconciliation of our asset retirement obligations, which are included in Accounts payable, accrued expenses and other liabilities on the consolidated balance sheets, for the periods presented (in thousands):

	Three Months Ended		Year Ended
	March 31, 2013		December 31, 2012
Balance - beginning of period	$	19,194	$	11,453
Additions		-		6,842
Accretion expense		190		572
Foreign currency translation adjustments and other		(5)		327
Balance - end of period	$	19,379	$	19,194