REAL ESTATE ACTIVITIES

Investments in real estate as of December 31, 2015 and 2014 were comprised of the following:



	As of December 31,
(in thousands of dollars)	2015			2014
Buildings, improvements and construction in progress	$	2,847,986		$	2,843,326
Land, including land held for development	519,903			442,078
Total investments in real estate	3,367,889			3,285,404
Accumulated depreciation	(1,015,647		)	(1,061,051		)
Net investments in real estate	$	2,352,242		$	2,224,353

Impairment of Assets

During the years ended December 31, 2015, 2014, and 2013, we recorded asset impairment losses of $140.3 million, $19.7 million and $30.0 million, respectively. Such impairment losses are recorded in “Impairment of assets” for the years ended 2015 and 2014. In 2013, such impairment losses are recorded either to “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)	2015		2014		2013
Gadsden Mall, New River Valley Mall and Wiregrass Commons Mall	$	63,904	$	—	$	—
Voorhees Town Center	39,242		—		—
Lycoming Mall	28,345		—		—
Uniontown Mall	7,394		—		—
Palmer Park Mall	1,383		—		—
Nittany Mall	—		15,495		—
North Hanover Mall	—		2,900		6,304
South Mall	—		1,300		—
Chambersburg Mall⁽¹⁾	—		—		23,662
Other	50		—		—
Total Impairment of Assets	$	140,318	$	19,695	$	29,966

⁽¹⁾ Impairment of assets of this property is recorded in discontinued operations for 2013.

Gadsden Mall, New River Valley Mall and Wiregrass Commons Mall

In 2015, we recorded aggregate losses on impairment of assets on Gadsden Mall in Gadsden, Alabama, New River Valley Mall in Christiansburg, Virginia and Wiregrass Commons Mall in Dothan, Alabama of $63.9 million in connection with negotiations with a prospective buyer of the properties. The negotiations with this prospective buyer of the properties are ongoing, and could result in additional changes to our underlying assumptions. As a result of these negotiations, we determined that the holding period for the properties 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 these properties. Based upon the purchase and sale agreement with the prospective buyer of the properties and subsequent further negotiations, we determined that the estimated aggregate undiscounted cash flows, net of estimated capital expenditures, for Gadsden Mall, New River Valley Mall and Wiregrass Commons Mall were less than the aggregate carrying value of the properties, and recorded a loss on impairment of assets.

Voorhees Town Center

In 2015, we recorded a loss on impairment of assets on Voorhees Town Center in Voorhees, New Jersey of $39.2 million in connection with negotiations with the buyer of the property. In connection with 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 buyer of the property, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Voorhees Town Center were less than the carrying value of the property, and recorded a loss on impairment of assets. We sold this property in October 2015.

Lycoming Mall

In 2015, we recorded aggregate losses on impairment of assets on Lycoming Mall in Pennsdale, Pennsylvania of $28.3 million in connection with negotiations with a prospective buyer of the property. In connection with 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 initial purchase and sale agreement with the prospective buyer of the property, which has since been terminated, as well as the current purchase and sale agreement, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Lycoming Mall were less than the carrying value of the property, and recorded a loss on impairment of assets.

Uniontown Mall

In 2015, we recorded aggregate losses on impairment of assets on Uniontown Mall in Uniontown, Pennsylvania of $7.4 million. In connection with negotiations with the buyer of the property, we had 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 original purchase and sale agreement with the prospective buyer of the property and subsequent further negotiations, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Uniontown 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 sold the property in August 2015.

Palmer Park Mall

In 2015, we recorded a losses on impairment of assets on Palmer Park Mall in Easton, Pennsylvania of $1.4 million. In connection with negotiations with the prospective buyer of the property, we had 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 prospective buyer of the property and subsequent further negotiations, we determined that the estimated undiscounted cash flows, net of estimated capital expenditures, for Palmer Park Mall were less than the carrying value of the property, and recorded a loss on impairment of assets. We sold the property in February 2016.

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 a prospective 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 and subsequent further negotiations, 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 a prospective 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 and subsequent further negotiations, 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.

Discontinued Operations

In 2014, we adopted new accounting requirements pertaining to the reporting of discontinued operations such that the results of operations of properties sold are now recorded in continuing 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, prior to the adoption of the new accounting requirements.

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



	For the year ended December 31, 2013
(in thousands of dollars)
Real estate revenue	$	10,014
Expenses:
Property operating expenses	(4,288		)
Depreciation and amortization	(1,161		)
Interest expense	(1,753		)
Total expenses	(7,202		)
Operating results from discontinued operations	2,812
Impairment of assets of discontinued operations	(23,662		)
Gains on sales of discontinued operations	78,512
Income from discontinued operations	$	57,662

Acquisitions

On March 31, 2015, we acquired Springfield Town Center in Springfield, Virginia for aggregate consideration of $486.6 million, consisting of the following components: (i) the assumption and immediate payoff of $263.8 million of indebtedness owed to affiliates of Vornado Realty L.P.; (ii) 6,250,000 OP Units valued at $145.2 million, (iii) liabilities relating to tenant improvements and allowances of $14.8 million, (iv) the estimated present value of the “Earnout” (as described below) of $8.6 million, and (v) the remainder in cash. The seller is potentially entitled to receive consideration (the “Earnout”) under the terms of the Contribution Agreement which will be calculated as of March 31, 2018. The table below sets forth our allocation of the purchase price:



(in thousands of dollars)
Land		$	119,912
Building		299,012
Common area improvements		16,776
Site improvements and tenant improvements		35,565
Intangible assets (liabilities):
	In-place lease value	18,123
	Above market lease value	260
	Below market lease value	(393		)
	Above market ground lease value (as lessor)	(5,882		)
Deferred and other assets		3,231
Total		$	486,604

In April 2013, we acquired a building located contiguous to The Gallery at Market East (“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)
2016 Activity:
February	Palmer Park Mall, Easton, PA	Mall⁽¹⁾	13.6	%	$	18.0	$	—

2015 Activity:
August	Uniontown Mall, Uniontown, PA	Mall⁽¹⁾	17.5	%	23.0		—
October	Voorhees Town Center, Voorhees, NJ	Mall⁽¹⁾	10.3	%	13.4		—

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)⁽²⁾	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⁽³⁾	9.8	%	11.5		—
	Paxton Towne Centre, Harrisburg, Pennsylvania	Power center⁽⁴⁾⁽⁵⁾	6.9	%	76.8		32.7
February	Orlando Fashion Square, Orlando, Florida	Mall⁽⁶⁾	9.8	%	35.0		0.7
September	Commons at Magnolia, Florence, South Carolina	Strip center⁽⁷⁾	8.9	%	12.3		4.3
	Christiana Center, Newark, Delaware	Power center^(4)(7)(8)	6.5	%	75.0		40.8
November	Chambersburg Mall, Chambersburg, Pennsylvania	Mall⁽¹⁾	NM⁽⁹⁾		8.5		—


⁽¹⁾	We used the proceeds from the sale of this property for general corporate purposes.

⁽²⁾

We entered into a 50/50 joint venture with Macerich to redevelop The Gallery into the Fashion Outlets of Philadelphia. 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.


⁽³⁾	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 former credit facility.


⁽⁴⁾	We divested goodwill of $0.7 million and $0.8 million in connection with the dispositions of Paxton Towne Centre and Christiana Center, respectively.


⁽⁵⁾	We used proceeds from the sale of this property to repay the $50.0 million mortgage loan secured by the property.


⁽⁶⁾	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 former credit facility.


⁽⁷⁾	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.


⁽⁸⁾	The buyer of this property assumed the $49.2 million mortgage loan secured by this property.


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

Dispositions – Other Activity

In 2016, we sold an outparcel for $2.0 million. No gain or loss was recorded in connection with this sale.

In 2015, we sold several outparcels for an aggregate sales price of $5.1 million. We recorded net gains on sales of real estate of $0.6 million on these transactions.

In 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 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.

Development Activities

As of December 31, 2015 and 2014, 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, 2015 and 2014:



	As of December 31,
(in millions of dollars)	2015		2014
Construction in progress	$	64.0	$	60.5
Land held for development	6.4		8.7
Deferred costs and other assets	2.3		1.3
Total capitalized construction and development activities	$	72.7	$	70.5

As of December 31, 2015, we had $0.1 million of refundable deposits on land and building purchase contracts.