Note 2 - Operating Property Activities

9 Months Ended

Sep. 30, 2011

Business Combination Disclosure [Text Block]

2. Operating Property Activities

Acquisitions -

During the nine months ended September 30, 2011, the Company acquired nine operating properties, in separate transactions as follows (in thousands):

				Purchase Price
Property Name	Location	Month Acquired		Cash		Debt Assumed		Total	GLA*
Columbia Crossing	Columbia, MD	Jan-11	$	4,100	$	-	$	4,100	31
Turnpike Plaza	Huntington Station, NY	Feb-11		7,920		-		7,920	53
Center Court	Pikesville, MD	Mar-11		9,955		15,445		25,400	106
Flowery Branch	Flowery Branch, GA	April-11		4,427		9,273		13,700	93
Garden State Pavilions	Cherry Hill, NJ	June-11		18,250		-		18,250	257
Village Crossroads	Phoenix, AZ	July-11		29,240		-		29,240	185
University Town Center	Pensacola, FL (1)	Aug-11		17,750		-		17,750	101
Gateway Station	Burleson, TX (2)	Sept-11		6,625		18,832		25,457	280
Park Hill Plaza	Miami, FL	Sept-11		17,251		8,199		25,450	112
		Total	$	115,518	$	51,749	$	167,267	1,218

*    Gross leasable area ("GLA")

(1)  This property was acquired from a joint venture in which the Company has a 13.4% noncontrolling interest.  The Company evaluated this transaction pursuant to the guidance for the remaining ownership interest relating to the FASB’s Consolidation guidance and as such recorded a gain of approximately $0.6 million from the fair value adjustment associated with its original 13.4% ownership.

(2)  The Company purchased the leasehold improvements at this property, for which it previously owned the land.

Upon acquisition of real estate operating properties, the Company estimates the fair value of acquired tangible assets (consisting of land, building, building improvements and tenant improvements) and identified intangible assets and liabilities (consisting of above and below-market leases, in-place leases and tenant relationships), assumed debt and redeemable units issued at the date of acquisition, based on evaluation of information and estimates available at that date. Based on these estimates, the Company allocates the estimated fair value to the applicable assets and liabilities. Fair value is determined based on an exit price approach, which contemplates the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  If, up to one year from the acquisition date, information regarding fair value of the assets acquired and liabilities assumed is received and estimates are refined, appropriate adjustments are made to the purchase price allocation on a retrospective basis.  The Company expenses transaction costs associated with business combinations in the period incurred.  

In allocating the purchase price to identified intangible assets and liabilities of an acquired property, the value of above-market and below-market leases is estimated based on the present value of the difference between the contractual amounts, including fixed rate renewal options, to be paid pursuant to the leases and management’s estimate of the market lease rates and other lease provisions (i.e., expense recapture, base rental changes, etc.) measured over a period equal to the estimated remaining term of the lease. The capitalized above-market or below-market intangible is amortized to rental income over the estimated remaining term of the respective leases, which includes the expected renewal option period.  Mortgage debt discounts or premiums are amortized into interest expense over the remaining term of the related debt instrument.  Unit discounts and premiums are amortized into noncontrolling interest in income, net over the period from the date of issuance to the earliest redemption date of the units.

The aggregate purchase price of the properties acquired during the nine months ended September 30, 2011 has been allocated as follows (in thousands):

Land	$	41,087
Buildings		84,566
Above Market Rents		5,306
Below Market Rents		(9,027)
In-Place Leases		9,313
Building Improvements		32,522
Tenant Improvements		6,787
Mortgage Fair Value Adjustment		(3,287)
	$	167,267

During July 2011, the Company acquired the remaining interest in a previously consolidated joint venture for approximately $0.2 million.  The Company continues to consolidate this entity as there was no change in control from this transaction. The purchase of the additional partnership interest resulted in a decrease to the Company’s Paid-in capital of approximately $0.2 million

During September 2011, the Company acquired additional interests in two separate consolidated joint ventures for an aggregate cost of approximately $9.7 million.  The Company continues to consolidate these entities as there was no change in control from these transactions. The purchase of the additional partnership interest resulted in an increase to the Company’s Paid-in capital of approximately $2.2 million.

Dispositions –

During the nine months ended September 30, 2011, the Company disposed of 17 operating properties, one development property and one outparcel, in separate transactions, for an aggregate sales price of approximately $70.0 million. These transactions, which are included in Discontinued Operations, resulted in an aggregate gain of approximately $8.7 million and impairment charges of approximately $8.9 million. Additionally, the Company disposed of a portion of an operating property for approximately $1.8 million. This transaction resulted in an impairment of approximately $0.6 million which is included in Impairment of property carrying values, on the Company’s Condensed Consolidated Statements of Income.  

Additionally, during the nine months ended September 30, 2011, a consolidated joint venture in which the Company had a preferred equity investment disposed of a property for a sales price of approximately $6.1 million.  As a result of this capital transaction, the Company received approximately $1.4 million of profit participation, before noncontrolling interest of approximately $0.1 million.  This profit participation has been recorded as Income from other real estate investments and is reflected in Income from discontinued operating properties in the Company’s Condensed Consolidated Statements of Income.

Impairment of Property Carrying Value -

During the nine months ended September 30, 2011, the Company recognized aggregate impairment charges of approximately $1.4 million relating to its investment in an operating property and one land parcel.  The aggregate book value of these properties was approximately $4.9 million. The estimated aggregate fair value of these properties is based upon purchase price offers aggregating approximately $3.5 million.

FNC Realty Corporation  –

During February 2011, the Company acquired an additional 9.9% interest in FNC Realty Corporation (“FNC”) for $9.6 million, which increased the Company’s total controlling ownership interest to approximately 66.51%.  The Company had previously and continues to consolidate FNC. Since there was no change in control from this transaction, the purchase of the additional partnership interest resulted in an increase to the Company’s Paid-in capital of approximately $1.0 million.

During the nine months ended September 30, 2011, FNC disposed of a property for a sales price of approximately $3.4 million which resulted in a pre-tax profit of approximately $2.5 million, before noncontrolling interest and income tax expense. This income has been recorded as Income from other real estate investments in the Company’s Condensed Consolidated Statements of Income.