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Fair Value Measurements
 3 Months Ended
Apr. 30, 2013
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
The Company’s financial assets and liabilities subject to fair value measurements are interest rate caps, interest rate swap agreements, TRS and borrowings subject to TRS (see Note E – Derivative Instruments and Hedging Activities). The Company’s impairment of real estate and unconsolidated entities is also subject to fair value measurements (see Note K – Impairment of Real Estate, Impairment of Unconsolidated Entities and Write-Off of Abandoned Development Projects and Note M – Discontinued Operations and Gain on Disposition of Rental Properties).
Items Measured at Fair Value on a Recurring Basis
The Company’s financial assets consist of interest rate caps, interest rate swap agreements and TRS with positive fair values that are included in other assets. The Company’s financial liabilities consist of interest rate swap agreements and TRS with negative fair values that are included in accounts payable, accrued expenses and other liabilities and borrowings subject to TRS included in mortgage debt and notes payable, nonrecourse. The Company records the redeemable noncontrolling interest related to Brooklyn Arena, LLC at redemption value, which approximates fair value.
The following table presents information about the Company’s financial assets and liabilities and redeemable noncontrolling interest that were measured at fair value on a recurring basis, and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value.
 
Fair Value Measurements
 
April 30, 2013
 
Level 1
Level 2
Level 3
Total
 
(in thousands)
Interest rate caps
$
—

$
18

$
—

$
18

Interest rate swap agreements (negative fair value)
—

(2,381
)
(126,171
)
(128,552
)
TRS (positive fair value)
—

—

20,305

20,305

TRS (negative fair value)
—

—

(27,141
)
(27,141
)
Fair value adjustment to the borrowings subject to TRS
—

—

10,044

10,044

Redeemable noncontrolling interest
—

—

(238,942
)
(238,942
)
Total
$
—

$
(2,363
)
$
(361,905
)
$
(364,268
)
 
 
 
 
 
 
January 31, 2013
 
(in thousands)
Interest rate caps
$
—

$
7

$
—

$
7

Interest rate swap agreements (positive fair value)
—

241

—

241

Interest rate swap agreements (negative fair value)
—

(3,016
)
(126,506
)
(129,522
)
TRS (positive fair value)
—

—

21,066

21,066

TRS (negative fair value)
—

—

(26,202
)
(26,202
)
Fair value adjustment to the borrowings subject to TRS
—

—

9,950

9,950

Redeemable noncontrolling interest
—

—

(239,136
)
(239,136
)
Total
$
—

$
(2,768
)
$
(360,828
)
$
(363,596
)

The following table presents a reconciliation of all financial assets and liabilities and redeemable noncontrolling interest measured at fair value on a recurring basis using significant unobservable inputs (Level 3).
 
Fair Value Measurements
 
Redeemable
Noncontrolling
Interest
 
Interest Rate
Swaps
 
Net
TRS
Fair value
adjustment
to the borrowings
subject to TRS
Total TRS
Related
 
Total
 
(in thousands)
Three Months Ended April 30, 2013
 
 
 
 
 
 
 
 
 
Balance, February 1, 2013
$
(239,136
)
 
$
(126,506
)
 
$
(5,136
)
$
9,950

$
4,814

 
$
(360,828
)
Loss attributable to redeemable noncontrolling interest
6,499

 
—

 
—

—

—

 
6,499

Total realized and unrealized gains (losses):
 
 
 
 
 
 
 
 
 
Included in earnings
—

 
—

 
(1,700
)
94

(1,606
)
 
(1,606
)
Included in other comprehensive income
—

 
335

 
—

—

—

 
335

Included in additional paid-in capital
(6,305
)
 
—

 
—

—

—

 
(6,305
)
Balance, April 30, 2013
$
(238,942
)
 
$
(126,171
)
 
$
(6,836
)
$
10,044

$
3,208

 
$
(361,905
)
Three Months Ended April 30, 2012
 
 
 
 
 
 
 
 
 
Balance, February 1, 2012
$
(229,149
)
 
$
(143,303
)
 
$
(15,013
)
$
9,180

$
(5,833
)
 
$
(378,285
)
Loss attributable to redeemable noncontrolling interest
1,691

 
—

 
—

—

—

 
1,691

Total realized and unrealized gains (losses):
 
 
 
 
 
 
 
 
 
Included in earnings
—

 
—

 
4,158

145

4,303

 
4,303

Included in other comprehensive income
—

 
6,786

 
—

—

—

 
6,786

Included in additional paid-in capital
(2,980
)
 
—

 
—

—

—

 
(2,980
)
Balance, April 30, 2012
$
(230,438
)
 
$
(136,517
)
 
$
(10,855
)
$
9,325

$
(1,530
)
 
$
(368,485
)

The following table presents quantitative information about the significant unobservable inputs used to estimate the fair value of financial instruments measured on a recurring basis as of April 30, 2013.
 
Quantitative Information about Level 3 Fair Value Measurements
 
Fair Value April 30, 2013
Valuation
Technique
Unobservable
Input
Input Values
 
(in thousands)
 
 
 
Credit valuation adjustment of interest rate swap
$
11,517

Potential future exposure
Credit spread
4.25%
TRS
$
(6,837
)
Bond quote
Discount rate
N/A(1)
 
 
 
Capitalization rate
N/A(1)
Fair value adjustment to the borrowings subject to TRS
$
10,044

Bond quote
Discount rate
N/A(1)
 
 
 
Capitalization rate
N/A(1)
Redeemable noncontrolling interest
$
(238,942
)
Discounted cash flows
Discount rate
9.3%
(1)
The Company does not have access to certain significant unobservable inputs used by these third parties to determine these fair values.
Third party service providers involved in fair value measurements are evaluated for competency and qualifications on an ongoing basis. Fair value measurements, including unobservable inputs, are evaluated for reasonableness based on current transactions and experience in the real estate and capital markets.
The Company does not deem the impact of changes in unobservable inputs used to determine the fair market value of the credit valuation adjustment, TRS and fair value adjustment to the borrowings subject to TRS to be significant; however, changes in the discount rate used to determine the fair market value of the redeemable noncontrolling interest could have a significant impact on its fair market value.
Fair Value of Other Financial Instruments
The carrying amount of notes and accounts receivable and accounts payable, accrued expenses and other liabilities approximates fair value based upon the short-term nature of the instruments. The Company estimates the fair value of its debt instruments by discounting future cash payments at interest rates that the Company believes approximate the current market. Estimated fair value is based upon market prices of public debt, available industry financing data, current treasury rates, recent financing transactions and loan to value ratios. The fair value of the Company’s debt instruments is classified as Level 3 in the fair value hierarchy.
The following table summarizes the fair value of nonrecourse mortgage debt and notes payable exclusive of the fair value of derivatives, bank revolving facility, senior and subordinated debt and nonrecourse mortgage debt and notes payable of land held for divestiture:
 
April 30, 2013
 
January 31, 2013
 
Carrying Value
Fair Value
 
Carrying Value
Fair Value
 
(in thousands)
Fixed Rate Debt
$
4,559,358

$
5,029,752

 
$
4,791,113

$
5,147,849

Variable Rate Debt
2,060,822

1,997,302

 
1,982,516

1,940,374

Total
$
6,620,180

$
7,027,054

 
$
6,773,629

$
7,088,223