4. Strategic Repositioning Initiatives

The Company has begun to implement a strategic repositioning which includes, among other things:

(1)

Simplifying the business model by discontinuing all construction and development and focusing on organic growth;

(2)

Reducing the number of joint ventures through planned dispositions of certain assets within its joint ventures to simplify asset ownership structure and reduce exposure to off-balance sheet obligations;

(3)

Disposing of land which was previously held for future development (held in land and property held for sale as of December 31, 2014, some of which was disposed of subsequent to the year ended December 31, 2014 (See Note 19) and the rest of which we expect to dispose of during 2015);

(4)

Identifying costs savings at the Company's properties and at the corporate office; and

(5)

Focusing time and resources on recruiting new members of our management team.

During the year ended December 31, 2014, the Company discontinued all construction and development operations (see Note 7).

During the year ended December 31, 2014, the Company recorded an other than temporary impairment of $57.8 million in the consolidated statement of operations and comprehensive income (loss) for certain of our unconsolidated entities, including $31.3 million related to HSRE I, HSRE V, HSRE VI and HSRE X (the “HSRE Investments”) and $26.5 million related to our investment in CSH Montreal LP. Factors giving rise to the strategic repositioning, including results below our expectations in original underwriting as well as our communications from the venture partner during the year ended December 31, 2014 about their desire to dispose of certain properties in the HSRE Investments in the near term, resulted in our determination that an other than temporary impairment existed. See Note 11 for additional information on impairments.

In connection with exiting the construction and development businesses during 2014, the Company recorded impairment for land and pre-development costs of $31.9 million in the consolidated statement of operations and comprehensive income (loss), based on their estimated fair values. The fair values were obtained from third-party appraisals based on comparable properties (market approach; which involved Level 3 inputs in the fair value hierarchy). The land held for sale is expected to be disposed of pursuant to a standard sale process during 2015. See Note 19.

Additionally, the Company recorded $15.1 million of impairments of other assets related to corporate infrastructure changes, as a result of the strategic repositioning. Assets impaired included the corporate aircraft and certain enterprise resource planning related assets.

The Company also terminated the employment of certain employees and eliminated positions as part of the strategic repositioning. In connection with these terminations, the Company recognized severance expense of $9.1 million during the year ended December 31, 2014, of which $2.9 million is included in loss from discontinued operations and $6.2 million is included in operating expenses in the consolidated statements of operations and comprehensive income (loss). Severance expense included $2.7 million for the acceleration of the vesting conditions of restricted shares. As of December 31, 2014, there was $5.7 million included in accounts payable and accrued expenses in the consolidated balance sheet of which $4.3 million and $1.4 million is expected to be paid in 2015 and 2016, respectively. Significant components of the severance accrual during 2014 are as follows (in thousands):

Balance at January 1, 2014	$	-
New charges		6,411
Cash payments		(668)
Balance at December 31, 2014	$	5,743