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Noncontrolling Interests

6 Months Ended

Jun. 30, 2012

Noncontrolling Interests [Abstract]

Noncontrolling Interests

5.

Noncontrolling Interests

Noncontrolling interests represent limited partnership interests in the Operating Partnership in which the Company is the general partner. Units of limited partnership interest were issued as part of the initial capitalization of the Operating Partnership and in conjunction with the contribution of certain assets, as discussed in Note 1, Organization, and in Note 3, Real Estate, respectively. As of June 30, 2012, noncontrolling interests were approximately 28% of total shares outstanding (assuming limited partnership units were converted to common stock) and approximately 33% of weighted average shares outstanding (assuming limited partnership units were converted to common stock). The Company has evaluated the terms of the limited partnership interests in the Operating Partnership and as a result, has classified limited partnership interests issued as the initial capitalization and in conjunction with the contributed assets to noncontrolling interests and are presented as a component of permanent equity, except as discussed below.

The Company evaluates individual noncontrolling interests for the ability to recognize the noncontrolling interest as permanent equity on the consolidated balance sheets at the time such interests are issued and on a continual basis. Any noncontrolling interest that fails to qualify as permanent equity has been reclassified as temporary equity and adjusted to the greater of (a) the carrying amount, or (b) its redemption value as of the end of the period in which the determination is made.

The Operating Partnership has issued 4.0 million limited partnership units to affiliated parties and unaffiliated third parties in exchange for certain properties. To the extent the contributors should elect to redeem all or a portion of their Operating Partnership units, pursuant to the terms of the respective contribution agreement, such redemption shall be at a per unit value equivalent to the price at which the contributor acquired its limited partnership units in the respective transaction.

The limited partners of the Operating Partnership will have the right to cause the Operating Partnership to redeem their limited partnership units for cash equal to the value of an equivalent number of shares, or, at the Company’s option, purchase their limited partnership units by issuing one share of the Company’s common stock for the original redemption value of each limited partnership unit redeemed. These rights may not be exercised under certain circumstances which could cause the Company to lose its REIT election. Furthermore, the limited partners may exercise their redemption rights only after their limited partnership units have been outstanding for one year. As of June 30, 2012, a request was made to redeem 11,907 limited partnership units of the Operating Partnership to be processed subsequent to June 30, 2012. The redemption amount of these limited partnership units was approximately $0.1 million and was reclassified from noncontrolling interests to accounts payable and accrued liabilities in the consolidated balance sheets as of June 30, 2012. On July 31, 2012, the Company satisfied this eligible redemption request at 95.3% of the contributed value.

Operating partnership units issued pursuant to the Will Partners (World Kitchen) contribution are not included in equity. The partners holding these units can cause the general partner, the Company, to redeem the units for the cash value, as defined in the operating partnership agreement. As the general partner does not control these redemptions these units are presented on the consolidated balance sheet as noncontrolling interest subject to redemption at their redeemable value. As discussed above, these limited partners are not allocated net income (loss), nor are they allocated distributions.

The following summarizes the activity for noncontrolling interests for the six months ended June 30, 2012 and for the year ended December 31, 2011:


		Six Months Ended June 30, 2012				Year Ended December 31, 2011
Beginning balance		$	21,786,577			$	18,577,800
Repurchase of noncontrolling interests			(113,473	)			—
Contribution of noncontrolling interests			—				7,788,990
Distributions for noncontrolling interests			(1,162,169	)			(2,135,649	)
Allocated distributions for noncontrolling interests subject to redemption			(57,866	)			(169,775	)
Net loss			(1,409,333	)			(2,274,789	)

Ending balance		$	19,043,736			$	21,786,577

The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock.

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