Notes Receivable

12 Months Ended

Dec. 31, 2012

Notes Receivable

4.    Notes Receivable

The Company has notes receivable, including accrued interest, that are collateralized by certain rights in development projects, partnership interests, sponsor guaranties and/or real estate assets, some of which are subordinate to other financings.

Notes receivable consist of the following (in millions):

	December 31,				Maturity Date	Interest Rate
	2012		2011
Loans receivable(A)	$	60.4	$	84.5	September 2011 to November 2022	5.7% -14.0%
Other notes		3.1		3.0	November 2014 to September 2017	8.5% - 12.0%
Tax Increment Financing Bonds (“TIF Bonds”)(B)		5.2		6.4	April 2014 to July 2026	5.5% - 8.5%
	$	68.7	$	93.9

(A) Amounts include loans in default and exclude notes receivable and advances from unconsolidated joint ventures at December 31, 2012 and 2011 (Note 2).

(B) Principal and interest are payable solely from the incremental real estate taxes, if any, generated by the respective shopping center and development project pursuant to the terms of the financing agreement.

As of December 31, 2012 and 2011, the Company had six loans receivable. The following table summarizes the activity in loans receivable on real estate from January 1, 2011, to December 31, 2012 (in thousands):

	2012			2011
Balance at January 1	$	84,541		$	103,705
Additions:
New mortgage loans		10,239			10,000
Interest		876			811
Accretion of discount		826			780
Deductions:
Payments of principal		(104	)		(25,755	)
Loan loss reserve(A)		(4,300	)		(5,000	)
Other(B)		(31,700	)		—
Balance at December 31	$	60,378		$	84,541

(A) Amount classified in other expense, net in the consolidated statement of operations for both periods presented. In 2011, this reserve was written off upon the sale of the note.

(B) Loan assumed by the Company’s unconsolidated joint venture BRE DDR Retail Holdings, LLC and reclassified into Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheet at December 31, 2012 upon the Company’s acquisition of the equity interest.

The following table summarizes the activity in the loan loss reserve from January 1, 2010, to December 31, 2012 (in thousands):

	2012		2011			2010
Balance at January 1	$	10,806	$	10,806		$	10,806
Additions:
Loan loss reserve		4,300		5,000	(A)		—
Deductions:
Write downs		—		(5,000	)(A)		—
Balance at December 31	$	15,106	$	10,806		$	10,806

(A) In 2011, the Company sold a note receivable with a face value, including accrued interest, of $11.8 million for proceeds of $6.8 million, which resulted in the recognition of a $5.0 million reserve. At December 31, 2010, this note was more than 90 days past due on interest payments. A loan loss reserve had not been previously established based on the estimated value of the underlying real estate collateral.

At December 31, 2012, the Company had one loan outstanding aggregating $9.8 million that matured in September 2011 and was more than 90 days past due. The Company is no longer accruing interest income on this note as no payments have been received. A loan loss reserve of $4.3 million was established in 2012 based on the estimated value of the underlying real estate collateral.