REAL ESTATE ACTIVITIES

Investments in real estate as of December 31, 2014 and 2013 were comprised of the following:



	As of December 31,
(in thousands of dollars)	2014			2013
Buildings, improvements and construction in progress	$	2,843,326		$	3,049,758
Land, including land held for development	442,078			478,110
Total investments in real estate	3,285,404			3,527,868
Accumulated depreciation	(1,061,051		)	(1,012,746		)
Net investments in real estate	$	2,224,353		$	2,515,122

Impairment of Assets

During the years ended December 31, 2014, 2013, and 2012, we recorded asset impairment losses of $19.7 million, $30.0 million and $3.8 million, respectively. Such impairment losses are recorded in either “Impairment of assets” or “Impairment of assets of discontinued operations” based upon the classification of the property in the consolidated statements of operations. The assets that incurred impairment losses and the amount of such losses are as follows:



	For the Year Ended December 31,
(in thousands of dollars)	2014		2013		2012
Nittany Mall⁽¹⁾	$	15,495	$	—	$	—
North Hanover Mall⁽¹⁾	2,900		6,304		—
South Mall⁽¹⁾	1,300		—		—
Chambersburg Mall⁽²⁾	—		23,662		—
Phillipsburg Mall⁽²⁾	—		—		3,805
Total Impairment of Assets	$	19,695	$	29,966	$	3,805

⁽¹⁾ Impairment of assets of this property is recorded in continuing operations.

⁽²⁾ Impairment of assets of this property is recorded in discontinued operations.

Nittany Mall

In 2014, we recorded an aggregate loss on impairment of assets at Nittany Mall of $15.5 million after entering into negotiations with the buyer of the property. As a result of these negotiations, we determined that the holding period for the property was less than had been previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible asset impairment at this property. Based upon the purchase and sale agreement with the then-prospective buyer of the property, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Nittany Mall were less than the carrying value of the property, and recorded both an initial loss on impairment of assets and a subsequent additional loss on impairment of assets when we sold the property in September 2014.

North Hanover Mall

In 2014, we recorded an aggregate loss on impairment of assets at North Hanover Mall of $2.9 million after entering into negotiations with the buyer of the property. As a result of these negotiations, we determined that the holding period for the property was less than had been previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible asset impairment at this property. Based upon the purchase and sale agreement with the then-prospective buyer of the property, 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 both an initial loss on impairment of assets and a subsequent additional loss on impairment of assets. We previously recognized losses on impairment of assets on North Hanover Mall of $6.3 million in 2013 and $24.1 million in 2011. We sold the property in September 2014.

South Mall

In 2014, we recorded a loss on impairment of assets at South Mall of $1.3 million after entering into negotiations with the buyer of the property. As a result of these negotiations, we determined that the holding period for the property was less than had been previously estimated, which we concluded was a triggering event, leading us to conduct an analysis of possible asset impairment at this property. Using updated assumptions, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for South Mall were less than the carrying value of the property, and recorded a loss on impairment of assets. We sold the property in June 2014.

Chambersburg Mall

In 2013, we recorded a loss on impairment of assets at Chambersburg Mall in Chambersburg, Pennsylvania of $23.7 million. During the third quarter of 2013, we entered into negotiations with a potential buyer of the property. As a result of these negotiations, 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, 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 an impairment loss. We recorded the loss on impairment of assets in discontinued operations in the third quarter of 2013 and sold this property in the fourth quarter of 2013.

Phillipsburg Mall

In 2012, we recorded a loss on impairment of assets on Phillipsburg Mall in Phillipsburg, New Jersey of $3.8 million. The amount of the impairment loss was determined based on the sale price of the property. We previously recognized a loss on impairment of assets on Phillipsburg Mall of $28.0 million in 2011. We sold this property in the first quarter of 2013.

Discontinued Operations

We have presented as discontinued operations the operating results of Phillipsburg Mall, Orlando Fashion Square, Chambersburg Mall, Paxton Towne Centre, Christiana Center and Commons at Magnolia, which are properties that were sold in 2013.

In 2014, we adopted new accounting requirements pertaining to the reporting of discontinued operations. We applied these new accounting requirements by reporting the results of operations of the properties that we sold in 2014 in the continuing operations section of our consolidated statements of operations in 2014. The properties that we sold in 2014 were South Mall, Nittany Mall, and North Hanover Mall, and the results of operations of these properties are recorded in continuing operations.

The following table summarizes revenue and expense information for the years ended December 31, 2013 and 2012 for our discontinued operations:



	For the year ended December 31,
(in thousands of dollars)	2013			2012
Real estate revenue	$	10,014		$	33,046
Expenses:
Operating expenses	(4,288		)	(15,340		)
Depreciation and amortization	(1,161		)	(8,877		)
Interest expense	(1,753		)	(4,202		)
Total expenses	(7,202		)	(28,419		)
Operating results from discontinued operations	2,812			4,627
Impairment of assets of discontinued operations	(23,662		)	(3,805		)
Gains on sales of discontinued operations	78,512			947
Income from discontinued operations	$	57,662		$	1,769

Acquisitions

In April 2013, we acquired a building located contiguous to The Gallery 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		Gain/ (Loss)
Sale Date	Property and Location	Description of Real Estate Sold	Capitalization Rate		(in millions of dollars)
2014 Activity:
June	South Mall Allentown, Pennsylvania	Mall	10.1	%	$	23.6	$	0.2
July	The Gallery at Market East Philadelphia, PA	Mall (50% interest)⁽¹⁾	5.1	%	106.8		(0.6		)
September	North Hanover Mall, Hanover, Pennsylvania and Nittany Mall State College, Pennsylvania	Two malls (single combined transaction)	North Hanover Mall 11.0% Nittany Mall 16.2%		32.3		(0.1		)
2013 Activity:
January	Phillipsburg Mall, Phillipsburg, New Jersey	Mall⁽²⁾	9.8	%	11.5		—
	Paxton Towne Centre, Harrisburg, Pennsylvania	Power center⁽³⁾⁽⁴⁾	6.9	%	76.8		32.7
February	Orlando Fashion Square, Orlando, Florida	Mall⁽⁵⁾	9.8	%	35.0		0.7
September	Commons at Magnolia, Florence, South Carolina	Strip center⁽⁶⁾	8.9	%	12.3		4.3
	Christiana Center, Newark, Delaware	Power center^(3)(6)(7)	6.5	%	75.0		40.8
November	Chambersburg Mall, Chambersburg, Pennsylvania	Mall⁽⁸⁾	NM⁽⁹⁾		8.5		—

⁽¹⁾

We entered into a 50/50 joint venture with Macerich to redevelop The Gallery. In connection therewith, we contributed and sold real estate assets to the venture and Macerich acquired its interest in the venture and real estate from us for $106.8 million in cash. Net proceeds after closing costs from the sale of the interests were $104.0 million. We used $25.8 million of such proceeds to repay a mortgage loan secured by 801 Market Street, Philadelphia, Pennsylvania, a property that is part of The Gallery, $50.0 million to repay the outstanding balance on our 2013 Revolving Facility, and the remaining proceeds for general corporate purposes.


⁽²⁾	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 property, which secured a portion of our 2010 Credit Facility (as defined in note 4).


⁽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 from the sale of this property to repay the $50.0 million mortgage loan secured by the property.


⁽⁵⁾	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 property, which secured a portion of our 2010 Credit Facility.


⁽⁶⁾	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.


⁽⁷⁾	The buyer of this property assumed the $49.2 million mortgage loan secured by this property.


⁽⁸⁾	We used proceeds from the sale of this property for general corporate purposes.


⁽⁹⁾	The capitalization rate was not meaningful in the context of this transaction.

Dispositions – Other Activity

In the fourth quarter of 2014, we sold an anchor pad, outparcels and undeveloped land for an aggregate sales price of $9.9 million. We recorded net gains on sales of interests in real estate of $0.7 million and a net gain on sales on non operating real estate of $1.8 million on these transactions.

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.

In December 2012, we sold our remaining interest in Northeast Tower Center in Philadelphia, Pennsylvania in exchange for cancellation of a $3.8 million note payable to the buyer. We recorded a gain of $0.9 million from this sale in 2012.

Development Activities

As of December 31, 2014 and 2013, we had capitalized amounts related to construction and development activities. The following table summarizes certain capitalized construction and development information for our consolidated properties as of December 31, 2014 and 2013:



	As of December 31,
(in millions of dollars)	2014		2013
Construction in progress	$	60.5	$	68.8
Land held for development	8.7		8.7
Deferred costs and other assets	1.3		1.1
Total capitalized construction and development activities	$	70.5	$	78.6

As of December 31, 2014, we had $0.1 million of refundable deposits on land and building purchase contracts.