Impairment of Real Estate, Impairment of Unconsolidated Entities and Write-Off of Abandoned Development Projects

Impairment of Real Estate

The Company reviews its real estate portfolio, including land held for development and sale, for impairment whenever events or changes indicate that its carrying value may not be recoverable. In cases where the Company does not expect to recover its carrying costs, an impairment charge is recorded. The impairments recorded during the three and six months ended July 31, 2012 and 2011 represent write-downs to estimated fair value due to a change in events, such as a bona fide third-party purchase offer or changes in certain assumptions, including estimated holding periods and current market conditions and the impact of these assumptions to the properties’ estimated future cash flows, which represents Level 3 inputs.

The following table summarizes the Company's impairment of real estate included in continuing operations.



		Three Months Ended July 31,				Six Months Ended July 31,
		2012		2011		2012		2011
		(in thousands)
White Oak Village (Specialty Retail Center)	Richmond, Virginia	$	1,566	$	—	$	1,566	$	—
Investment in triple net lease retail property	Portage, Michigan	882		—		2,263		3,435
Other		460		235		460		1,635
		$	2,908	$	235	$	4,289	$	5,070

In addition, included in discontinued operations is a $261,000 impairment of real estate for the three and six months ended July 31, 2012.

The following table presents quantitative information about the significant unobservable inputs used to determine the fair value of the non-recurring impairment of real estate (including discontinued operations) for the six months ended July 31, 2012:



	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value July 31, 2012		Valuation Technique	Unobservable Input	Range of Input Values
	(in thousands)
Impairment of real estate	$	80,929	Indicative Bids	Indicative Bids	N/A ⁽¹⁾


(1)	These fair value measurements were derived from three bona fide purchase offers from third party prospective buyers, subject to the Company’s corroboration for reasonableness.

Impairment of Unconsolidated Entities

The Company reviews its portfolio of unconsolidated entities for other-than-temporary impairments whenever events or changes indicate that its carrying value in the investments may be in excess of fair value. An equity method investment’s value is impaired if management’s estimate of its fair value is less than the carrying value and the difference is deemed to be other-than-temporary. In order to arrive at the estimates of fair value, the Company uses varying assumptions that may include comparable sale prices, market discount rates, market capitalization rates and estimated future discounted cash flows specific to the geographic region and property type, which are considered to be Level 3 inputs. For newly opened properties, assumptions also include the timing of initial lease up at the property. In the event the initial lease up assumptions differ from actual results, estimated future discounted cash flows may vary resulting in impairment charges in future periods. The Company recorded $390,000 of impairments of unconsolidated entities during the three and six months ended July 31, 2012. The Company recorded no impairments of unconsolidated entities during the three and six months ended July 31, 2011.

Write-Off of Abandoned Development Projects

On a quarterly basis, the Company reviews each project under development to determine whether it is probable the project will be developed. If management determines that the project will not be developed, project costs are written off as an abandoned development project cost. The Company abandons certain projects under development for a number of reasons, including, but not limited to, changes in local market conditions, increases in construction or financing costs or third party challenges related to entitlements or public financing. The Company wrote off abandoned development projects of $13,212,000 and $13,659,000 during the three and six months ended July 31, 2012, respectively, and $5,088,000 and $5,245,000 during the three and six months ended July 31, 2011, respectively.