ACQUISITIONS AND INTANGIBLES

6 Months Ended

Jun. 30, 2012

ACQUISITIONS AND INTANGIBLES

ACQUISITIONS AND INTANGIBLES

NOTE 3         ACQUISITIONS AND INTANGIBLES

Acquisitions

During the six months ended June 30, 2012, we acquired four anchor boxes for an aggregate purchase price of $16.3 million.

On April 17, 2012, we acquired 11 Sears anchor pads (including fee interests in five anchor pads and long-term leasehold interests in six anchor pads) for the purpose of redevelopment or remerchandising.  Total consideration paid was $270.0 million. The purchase price of $212.0 million for the leasehold interests was recorded in construction in progress, as the buy-out costs were necessary costs related to redevelopment projects at these properties, and the purchase price of $58.0 million for the fee interests was recorded in land and building in our Consolidated Balance Sheets as of June 30, 2012.

On April 5, 2012, we acquired the remaining 49% interest in The Oaks and Westroads, previously owned through a joint venture, for $191.1 million which included the assumption of the remaining 49% of debt of $92.8 million and $98.3 million of cash.  The properties were previously recorded under the equity method of accounting and are now consolidated.  The acquisition resulted in a remeasurement of the net assets acquired to fair value.  We recorded a gain from the change in control, since the fair value of the net assets acquired was greater than our investment in the joint venture.  This gain is reported in our Consolidated Statements of Operations and Comprehensive Income (Loss).  The table below summarizes the gain calculation:

Total net assets acquired	$	200,271
Previous investment in The Oaks and Westroads	(83,415		)
Cash paid to acquire our joint venture partner’s interest	(98,309		)
Gain from change in control of investment properties	$	18,547

The following table summarizes the allocation of the purchase price to the net assets acquired at the date of acquisition.  These allocations were based on the relative fair values of the assets acquired and liabilities assumed.

Investment in real estate	$	420,256
Above-market lease intangibles	9,378
Below-market lease intangibles	(41,084		)
Fair value of mortgages, notes and loans payable	(197,927		)
Net working capital	9,648
Net assets acquired	$	200,271

Intangible Assets and Liabilities

The following table summarizes our intangible assets and liabilities:

	Gross Asset (Liability)			Accumulated (Amortization)/ Accretion			Net Carrying Amount
As of June 30, 2012
Tenant leases:
In-place value	$	1,043,393		$	(361,766	)	$	681,627
Above-market	1,276,564			(346,467		)	930,097
Below-market	(765,392		)	204,398			(560,994		)
Building leases:
Above-market	(15,268		)	2,545			(12,723		)
Ground leases:
Above-market	(9,839		)	631			(9,208		)
Below-market	202,259			(8,712		)	193,547
Real estate tax stabilization agreement	111,506			(10,367		)	101,139
As of December 31, 2011
Tenant leases:
In-place value	$	1,252,484		$	(391,605	)	$	860,879
Above-market	1,478,798			(315,044		)	1,163,754
Below-market	(819,056		)	184,254			(634,802		)
Building leases:
Above-market	(15,268		)	1,697			(13,571		)
Ground leases:
Above-market	(9,839		)	439			(9,400		)
Below-market	204,432			(6,202		)	198,230
Real estate tax stabilization agreement	111,506			(7,211		)	104,295

The gross asset balances of the in-place value of tenant leases are included in buildings and equipment in our Consolidated Balance Sheets.  The above-market tenant leases and below-market ground leases are included in prepaid expenses and other assets (Note 12); the below-market tenant leases, above-market ground leases and above-market building lease are included in accounts payable and accrued expenses (Note 13) in our Consolidated Balance Sheets.

Amortization/accretion of these intangibles had the following effects on our loss from continuing operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Amortization/accretion effect on continuing operations	$	(86,755	)	$	(122,918	)	$	(192,587	)	$	(242,133	)

Future amortization/accretion is estimated to decrease net income by approximately $172.2 million for the remainder of 2012, $285.3 million in 2013, $233.7 million in 2014, $191.3 million in 2015 and $151.0 million in 2016.