Note 2 - Operating Property Activities

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2.

Operating Property Activities

Acquisitions of Operating Real Estate -

During the six months ended June 30, 2016, the Company acquired the following properties, in separate transactions (in thousands):

			Purchase Price
Property Name	Location	Month Acquired	Cash		Debt Assumed		Other *		Total		GLA* *
Jericho Atrium	Jericho, NY	Apr-16	$	29,750	$	-	$	-	$	29,750		147
Oakwood Plaza (1)	Hollywood, FL	Apr-16		53,412		100,000		61,588		215,000		899
			$	83,162	$	100,000	$	61,588	$	244,750		1,046

* Includes the Company’s previously held equity interest investment.

** Gross leasable area ("GLA")

(1) The Company acquired from its partner the remaining ownership interest in one property that was held in a joint venture in which the Company has a 55.0% noncontrolling interest. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance and as a result, recognized a gain on change in control of interest of $46.5 million resulting from the fair value adjustment associated with the Company’s previously held equity interest, which is reflected in the purchase price above in Other.

The purchase price for these acquisitions has been preliminarily allocated to real estate and related intangible assets acquired and liabilities assumed, as applicable, in accordance with our accounting policies for business combinations. The purchase price allocations and related accounting will be finalized upon completion of the Company’s valuation studies. Accordingly, the fair values allocated to these assets and liabilities are subject to revision. The Company records allocation adjustments when purchase price allocations are finalized. The aggregate purchase price of the properties acquired during the six months ended June 30, 2016, has been preliminarily allocated as follows (in thousands):

Land	$	67,108
Buildings		115,952
Above Market Rents		4,558
Below Market Rents		(11,228	)
In-Place Leases		17,991
Building Improvements		44,278
Tenant Improvements		5,165
Mortgage Fair Value Adjustment		694
Other Assets		232
Other Liabilities		-
	$	244,750

The pro forma financial information set forth below is based upon the Company’s historical Condensed Consolidated Statements of Income for the six months ended June 30, 2016 and 2015, adjusted to give effect to properties acquired during the six months ended June 30, 2016 and 2015 as if they were acquired at the beginning of 2015 and 2014, respectively. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods. (Amounts presented in millions, except per share figures). 

	Six Months Ended June 30,
	201 6		201 5
Revenues from rental property	$	584.9	$	581.9
Net income	$	347.5	$	451.2
Net income available to the Company’s common shareholders	$	321.5	$	419.1
Net income available to the Company’s common shareholders per common share:
Basic	$	0.77	$	1.02
Diluted	$	0.77	$	1.01

Dispositions

and Assets Held for Sale

–

During the six months ended June 30, 2016, the Company disposed of 20 consolidated operating properties, in separate transactions, for an aggregate sales price of $282.3 million. These transactions resulted in (i) an aggregate gain of $66.2 million, after income tax expense, and (ii) aggregate impairment charges of $7.2 million.

At June 30, 2016, the Company had two properties classified as held-for-sale at a carrying amount of $9.0 million, net of accumulated depreciation of $1.1 million, which are included in Other assets on the Company’s Condensed Consolidated Balance Sheets. The book value of one of these properties exceeded its estimated fair value, less costs to sell, and as such impairment charges of $0.1 million were recognized. The Company’s determination of the fair value of these properties was based upon executed contracts of sale with third parties.

Impairments

–

During the six months ended June 30, 2016, the Company recognized aggregate impairment charges of $58.1 million. These impairment charges consist of (i) $50.7 million related to certain properties maintained in KRS for which the hold period was re-evaluated in connection with the anticipated Merger (see Footnote 1), (ii) $7.2 million related to the sale of certain operating properties, as discussed above, and (iii) $0.2 million related to adjustments to property carrying values for which the Company has marketed for sale as part of its active capital recycling program and as such has adjusted the anticipated hold periods for such properties. The Company’s estimated fair values for these properties were based on a third party offer through a signed contract, third party appraisals or discounted cash flow models. (See Footnote 10 for fair value disclosure).