REAL ESTATE ACTIVITIES

Investments in real estate as of September 30, 2013 and December 31, 2012 were comprised of the following:



(in thousands of dollars)	As of September 30, 2013			As of December 31, 2012
Buildings, improvements and construction in progress	$	3,039,163		$	2,996,301
Land, including land held for development	481,988			481,239
Total investments in real estate	3,521,151			3,477,540
Accumulated depreciation	(993,735		)	(907,928		)
Net investments in real estate	$	2,527,416		$	2,569,612

Capitalization of Costs

The following table summarizes our capitalized salaries, commissions and benefits, real estate taxes and interest for the three and nine months ended September 30, 2013 and 2012:



	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands of dollars)	2013		2012		2013		2012
Development/Redevelopment Activities:
Salaries and benefits	$	272	$	193	$	585	$	675
Real estate taxes	5		133		5		277
Interest	331		325		620		1,430
Leasing Activities:
Salaries, commissions and benefits	1,180		1,636		3,902		4,137

Impairment of Assets

Chambersburg Mall

In September 2013, we recorded a loss on impairment of assets at Chambersburg Mall in Chambersburg, Pennsylvania of $23.7 million to write down the carrying value of the property’s long-lived assets to the property’s estimated fair value of $8.2 million. During the third quarter of 2013, we entered into negotiations with a potential buyer of the property, which are ongoing and could result in changes to our underlying assumptions. As a result of this factor, we determined that the holding period for the property was less than had been previously estimated, which we concluded to be a triggering event, leading us to conduct an analysis of possible asset impairment at this property. Using updated assumptions based on this factor, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Chambersburg Mall were less than the carrying value of the property, and recorded the impairment loss.

North Hanover Mall

In September 2013, we recorded a loss on impairment of assets at North Hanover Mall in Hanover, Pennsylvania of $6.3 million to write down the carrying value of the property’s long-lived assets to the property’s estimated fair value of $16.7 million. We had previously recognized a loss on impairment of assets on the property of $24.1 million in 2011. Since 2011, the property experienced further declines in net operating income and occupancy. During the third quarter of 2013, we entered into negotiations with a potential buyer of the property, which are ongoing and could result in changes to our underlying assumptions. As a result of these factors, we determined that the holding period for the property was less than had previously been estimated, which we concluded to be a triggering event, leading us to conduct an analysis of possible asset impairment at this property. Using updated assumptions based on these factors, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for North Hanover Mall were less than the carrying value of the property, and recorded the impairment loss.

Acquisitions

In April 2013, we acquired a building located contiguous to The Gallery at Market East in Philadelphia, Pennsylvania for $59.6 million, representing a capitalization rate of approximately 5.7%.

Dispositions

The table below presents our dispositions since January 1, 2013:



Sale Date	Property and Location	Description of Real Estate Sold	Capitalization Rate		Sale Price (in millions of dollars)		Gain (in millions of dollars)
2013 Activity:
January	Phillipsburg Mall, Phillipsburg, New Jersey ⁽¹⁾	Mall	9.8	%	$	11.5	$	—
	Paxton Towne Centre, Harrisburg, Pennsylvania⁽²⁾⁽³⁾	Power center	6.9	%	76.8		32.7
February	Orlando Fashion Square, Orlando, Florida ⁽⁴⁾	Mall	9.8	%	35.0		0.6
September	Commons at Magnolia, Florence, South Carolina ⁽⁵⁾	Strip center	8.9	%	12.3		4.2
	Christiana Center, Newark, Delaware ^(3)(5)(6)	Power center	6.5	%	75.0		40.9

_________________________


⁽¹⁾	We used proceeds of $11.5 million plus $4.5 million of available working capital to pay for the release of the lien on this collateral property that secured a portion of the 2010 Credit Facility (as defined in note 4 to the unaudited consolidated financial statements).


⁽²⁾	We used proceeds from the sale of this property to repay the $50.0 million mortgage loan secured by the property.


⁽³⁾	We divested goodwill of $0.7 million and $0.8 million in connection with the dispositions of Paxton Towne Centre and Christiana Center, respectively.


⁽⁴⁾	We used proceeds of $35.0 million plus a nominal amount of available working capital to pay for the release of the lien on this collateral property that secured a portion of the 2010 Credit Facility.


⁽⁵⁾	We used combined proceeds from the sales of these properties to repay $35.0 million of amounts outstanding under our 2013 Revolving Facility and we used the remaining proceeds for general corporate purposes.


⁽⁶⁾	The buyer of this property assumed the $49.2 million mortgage loan secured by this property.

Other Dispositions

In September 2013, we sold a condominium interest in connection with a ground lease located at Voorhees Town Center in Voorhees, New Jersey for $10.5 million. No gain or loss was recorded in connection with this sale.

Discontinued Operations

We have presented as discontinued operations the operating results of Phillipsburg Mall, Orlando Fashion Square, Paxton Towne Centre, Christiana Center and Commons at Magnolia. The following table summarizes revenue and expense information for the three and nine months ended September 30, 2013 and 2012 for these discontinued operations:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2013			2012			2013			2012
Real estate revenue	$	1,427		$	7,027		$	6,221		$	21,048
Expenses:
Operating expenses	(443		)	(2,983		)	(2,170		)	(9,521		)
Depreciation and amortization	(62		)	(1,858		)	(216		)	(5,662		)
Interest expense	(494		)	(1,101		)	(1,753		)	(3,031		)
Total expenses	(999		)	(5,942		)	(4,139		)	(18,214		)
Operating results from discontinued operations	428			1,085			2,082			2,834
Gains on sales of discontinued operations	45,097			—			78,351			—
Income from discontinued operations	$	45,525		$	1,085		$	80,433		$	2,834