Business Combinations

9 Months Ended

Sep. 30, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

Effective April 13, 2011, we acquired a partner’s 50% interest in an unconsolidated joint venture related to a development property in Florida, which resulted in the consolidation of this property. Management has determined that this transaction qualified as a business combination to be accounted for under the acquisition method. Accordingly, the assets and liabilities of this transaction were recorded in our Condensed Consolidated Balance Sheet at its estimated fair value as of the effective date. Fair value of assets acquired, liabilities assumed and equity interests was estimated using market-based measurements, including cash flow and other valuation techniques. The fair value measurement is based on both significant inputs for similar assets and liabilities in comparable markets and significant inputs that are not observable in the markets in accordance with our fair value measurements accounting policy. Key assumptions include third-party broker valuation estimates; a discount rate of 8.0%; a terminal capitalization rate for similar properties; and factors that we believe market participants would consider in estimating fair value. The result of this transaction is included in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) beginning April 13, 2011.

The following table summarizes the transaction related to the business combination, including the assets acquired and liabilities assumed as indicated (in thousands):

	April 13, 2011
Fair value of our equity interest before business combination	$	7,578
Fair value of consideration transferred	$	11,462		(1)
Amounts recognized for assets and liabilities assumed:
Assets:
Property	$	32,807
Unamortized debt and lease costs	2,421
Accrued rent and accounts receivable	211
Cash and cash equivalents	1,402
Other, net	694
Liabilities:
Accounts payable and accrued expenses	(137		)
Other, net	(318		)
Total net assets	$	37,080

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(1) Consideration included $.5 million of cash and $11.0 million in debt reimbursement.

As a result of this business combination, we recognized a gain of $4.6 million, which is attributable to the realization upon consolidation of our preferred return on equity. For the nine months ended September 30, 2011, the gain on this business combination is included in discontinued operations in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as the property was sold during December 2011.

During 2012, we have acquired four shopping centers located in California, Georgia, Maryland and Texas, as well as, we consolidated a partner's 79.6% interest in an unconsolidated tenancy-in-common arrangement related to a property in Louisiana. The following table summarizes the transactions related to these acquisitions, including the assets acquired and liabilities assumed as indicated (in thousands):

	September 30, 2012
Fair value of our equity interest before acquisition	$	3,825
Fair value of consideration transferred	$	218,481		(1)
Amounts recognized for assets and liabilities assumed:
Assets:
Property	$	195,377
Unamortized debt and lease costs	36,787
Restricted deposits and mortgage escrows	395
Other, net	3,742
Liabilities:
Debt, net	(46,923		)	(2)
Accounts payable and accrued expenses	(2,250		)
Other, net	(5,899		)
Total net assets	$	181,229
Acquisition costs (included in operating expenses)	$	1,369
Gain on acquisition	$	1,869

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(1) Includes assumption of debt totaling $37.8 million.

(2) Represents the fair value of debt, which includes $6.3 million that was previously recorded.

The following table summarizes the impact to revenues and net income attributable to common shareholders from our acquisitions as follows (in thousands):

	Three Months Ended September 30, 2012		Nine Months Ended September 30, 2012
Increase in revenues	$	4,006	$	4,248
Increase in net income attributable to common shareholders	245		387

The following table summarizes the pro forma impact of these transactions as if they had been consolidated or acquired on January 1, 2011, the earliest year presented, as follows (in thousands, except per share amounts):

	Three Months Ended September 30,					Nine Months Ended September 30,
	Pro Forma 2012(1)		Pro Forma 2011(1)			Pro Forma 2012(1)		Pro Forma 2011(1)
Revenues	$	130,244	$	127,578		$	381,862	$	374,024
Net income (loss)	41,934		(35,739		)	97,052		(15,312		)
Net income (loss) attributable to common shareholders	31,291		(41,870		)	65,888		(41,509		)
Earnings per share – basic	0.26		(0.35		)	0.55		(0.35		)
Earnings per share – diluted	0.26		(0.35		)	0.54		(0.35		)

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(1) There are no non-recurring pro forma adjustments included within or excluded from the amounts in the preceding table.