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Equity Investments in Real Estate

3 Months Ended

Mar. 31, 2013

Note 6. Equity Investments in Real Estate

We own equity interests in single-tenant net leased properties that are generally leased to companies through noncontrolling interests (i) in partnerships and limited liability companies that we do not control but over which we exercise significant influence or (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). Investments in unconsolidated investments are required to be evaluated periodically. We compare an investment's carrying value to its estimated fair value and recognize an impairment charge to the extent that the carrying value exceeds fair value and such decline is determined to be other than temporary. Additionally, we provide funding to developers for the acquisition, development and construction of real estate (“ADC Arrangement”). Under ADC Arrangements, we have provided two loans to third-party developers for the acquisition, development and construction of real estate projects, which we account for as equity investments.

The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values along with those ADC Arrangements that are recorded as equity investments (dollars in thousands):


	Ownership Interest	Carrying Value at
Lessee/Counterparty	at March 31, 2013	March 31, 2013		December 31, 2012
C1000 Logistiek Vastgoed B.V. ^{(a) (b) (c)}	85%	$	80,013	$	81,516
U-Haul Moving Partners, Inc. and Mercury Partners, LP ^{(d) (e)}	12%		27,805		28,019
BPS Parent, LLC	15%		26,402		26,253
Hellweg Die Profi-Baumärkte GmbH & Co. KG ^{(a) (d) (e) (f)}	33%		21,254		22,827
Berry Plastics Corporation ^{(d) (g)}	50%		18,294		18,529
Tesco plc ^{(a) (d)}	49%		16,760		17,487
Eroski Sociedad Cooperativa - Mallorca ^{(a) (e)}	30%		9,133		9,336
Dick’s Sporting Goods, Inc. ^(d)	45%		4,971		5,010
			204,632		208,977
Shelborne Property Associates, LLC ^{(h) (i) (k)}	N/A		72,361		63,896
IDL Wheel Tenant, LLC ^{(h) (j) (k)}	N/A		2,296		2,260
		$	279,289	$	275,133

__________

The carrying value of this investment is affected by the impact of fluctuations in the exchange rate of the euro.
This investment represents a tenancy-in-common interest, whereby the property is encumbered by debt for which we are jointly and severally liable. For this investment, the co-obligor is the advisor and the total amount due under the arrangement is approximately $90.4 million. Of this amount, $77.7 million represents the amount we agreed to pay and is included within the carrying value of this investment. The carrying value of this investment also includes the undepreciated cost of the related properties.

(d) This investment is jointly-owned with Corporate Property Associates 16 – Global Incorporated.

(e) This investment is jointly-owned with WPC.

(f) We received distributions of $0.9 million from this investment during the three months ended March 31, 2013.

(g) We received distributions of $0.6 million from this investment during the three months ended March 31, 2013.

(h) Represents a domestic ADC Arrangement that we account for under the equity method of accounting as the characteristics of the arrangement with the third-party developer are more similar to a jointly-owned investment or partnership rather than a loan.

(i) We provided funding of $9.7 million to this investment during the three months ended March 31, 2013. At March 31, 2013, the unfunded balance on the loan was $55.0 million.

(j) At March 31, 2013, the unfunded balance on the loan related to this investment was $48.2 million.

(k) This investment is a VIE.

We recognized net income from equity investments in real estate of $1.1 million and $0.4 million for the three months ended March 31, 2013 and 2012, respectively. Net income from equity investments in real estate represents our proportionate share of the income or losses of these investments as well as certain depreciation and amortization adjustments related to other-than-temporary impairment charges and basis differentials from acquisitions of certain investments.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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