Real Estate Activities

3 Months Ended

Mar. 31, 2022

2. REAL ESTATE ACTIVITIES

Investments in real estate as of March 31, 2022 and December 31, 2021 were comprised of the following:


(in thousands of dollars)	March 31, 2022			December 31, 2021
Buildings, improvements and construction in progress	$	2,740,712		$	2,762,675
Land, including land held for development		422,509			443,686
Total investments in real estate		3,163,221			3,206,361
Accumulated depreciation		(1,417,522	)		(1,405,260	)
Net investments in real estate	$	1,745,699		$	1,801,101

Capitalization of Costs

The following table summarizes our capitalized interest, compensation, including commissions, and real estate taxes for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31,
(in thousands of dollars)	2022		2021
Development/Redevelopment Activities:
Interest (1)	$	24	$	130
Compensation		46		37
Real estate taxes		—		29
Leasing Activities:
Compensation, including commissions (2)		29		—

(1) Includes interest capitalized on investments in partnerships under development.

(2) The definition of initial direct costs under ASC 842 includes only those incremental costs of a lease that would not have been incurred if the lease had not been obtained. Commissions paid for successful leasing transactions continue to be capitalized.

Impairment of Assets

Exton Square Mall

In conjunction with the preparation of our 2021 annual financial statements, we identified a triggering event at Exton Square Mall in Exton, Pennsylvania as a result of our determination to decrease the holding period of the property. This led us to conduct an analysis of possible impairment at the property and, during the year ended December 31, 2021, we recorded a loss on impairment of assets of approximately $8.4 million. In March 2022, we executed a purchase and sale agreement for Exton Square Mall for $27.5 million, which includes an initial amount of $8.0 million towards the residential land parcel that is under contract. As a result, Exton Square Mall met the criteria to be classified as held for sale as of March 31, 2022.

Disposition

Valley View Mall Derecognition

In August 2020, a court order assigned a receiver to operate Valley View Mall in La Crosse, Wisconsin on behalf of the lender of the mortgage loan secured by the property. Although we have not yet conveyed the property because foreclosure proceedings are ongoing, we no longer control or operate the property as a result of court order assigning the receiver. In September 2020, a court order was issued to conduct a foreclosure sale of the property and as a result we have no further operating liabilities from the property. As a result of our loss of control of the property, we derecognized the property and recorded an offsetting contract asset and recognized a gain on derecognition of property of $8.1 million in the consolidated statement of operations for the year ended December 31, 2020. The contract asset is included in deferred costs and other assets, net in the consolidated balance sheets as of March 31, 2022 and December 31, 2021. The mortgage principal balance was $27.2 million at March 31, 2022 and December 31, 2021, which we continue to recognize until the foreclosure process is completed. The derecognition of Valley View Mall and its related assets was a non-cash conversion of assets, which had no impact on the Company’s cash flows. In May 2022, the foreclosure proceedings were completed.

Other Property Disposition

In February 2022, we completed the redemption of preferred equity issued as part of a previous sale of our New Garden land parcel. In connection with this settlement, we received approximately $2.5 million, which funds were used to pay down our First Lien Revolving Facility and First Lien Term Loan. In connection with this transaction, we recorded a gain on sale of preferred equity of $3.7 million in the three months ended March, 31 2022.