Investment in Real Estate

6 Months Ended

Jun. 30, 2011

Investment in Real Estate [Abstract]

Investment in Real Estate

3. Investment in Real Estate

   Acquisition

     During the six months ended June 30, 2011, we acquired one industrial property comprising approximately 0.7 million square feet of GLA in connection with the purchase of the 85% equity interest in one property from the institutional investor in the 2003 Net Lease Joint Venture (see Note 4). The gross agreed-upon fair value for the real estate was $30,625, excluding costs incurred in conjunction with the acquisition of the industrial property. The acquisition was funded through the assumption of a mortgage loan, whose carrying value approximated fair market value, in the amount of $24,417 and a cash payment of $5,277 (85% of the net fair value of the acquisition). We accounted for this transaction as a step acquisition utilizing the purchase method of accounting. Due to the change in control that occurred, we recorded a gain of approximately $689 related to the difference between our carrying value and fair value of our previously held equity interest on the acquisition date.

     During the six months ended June 30, 2010, we acquired three industrial properties comprising approximately 0.5 million square feet of GLA, including one industrial property purchased from the 2005 Development/Repositioning Joint Venture. The purchase price of these acquisitions totaled approximately $22,408, excluding costs incurred in conjunction with the acquisition of the industrial properties.

   Intangible Assets Subject to Amortization in the Period of Acquisition

     The fair value at the date of acquisition of in-place leases, above market leases and tenant relationships recorded due to real estate properties acquired during the six months ended June 30, 2011 and June 30, 2010 and included in deferred leasing intangibles is as follows:

	Six Months		Six Months
	Ended		Ended
	June 30,		June 30,
	2011		2010
In-Place Leases	$	2,511	$	1,782
Above Market Leases	$	2,883	$	239
Tenant Relationships	$	1,553	$	1,881

     The weighted average life in months of in-place leases, above market leases and tenant relationships recorded as a result of the real estate properties acquired during the six months ended June 30, 2011 and June 30, 2010 is as follows:

	Six Months		Six Months
	Ended		Ended
	June 30,		June 30,
	2011		2010
In-Place Leases		56		100
Above Market Leases		56		88
Tenant Relationships		116		165

   Sales and Discontinued Operations

     During the six months ended June 30, 2011, we sold 17 industrial properties comprising approximately 1.1 million square feet of GLA. Gross proceeds from the sales of the 17 industrial properties were approximately $31,045. The gain on sale of real estate was approximately $7,341, all of which is shown in discontinued operations. The 17 industrial properties sold meet the criteria to be included in discontinued operations. Therefore the results of operations and gain on sale of real estate for the 17 sold industrial properties are included in discontinued operations.

     At June 30, 2011, we had 158 industrial properties comprising approximately 12.3 million square feet of GLA and several land parcels held for sale. The results of operations of the 158 industrial properties held for sale at June 30, 2011 are included in discontinued operations. There can be no assurance that such industrial properties or land parcels held for sale will be sold.

     Income from discontinued operations for the six months ended June 30, 2010 reflects the results of operations of the 17 industrial properties that were sold during the six months ended June 30, 2011, the results of operations of 13 industrial properties and one land parcel that received ground rental revenues that were sold during the year ended December 31, 2010, the results of operations of the 158 industrial properties identified as held for sale at June 30, 2011 and the gain on sale of real estate relating to five industrial properties and one land parcel that received ground rental revenues that were sold during the six months ended June 30, 2010.

     The following table discloses certain information regarding the industrial properties included in discontinued operations for the three and six months ended June 30, 2011 and June 30, 2010:

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2011			2010			2011			2010
Total Revenues	$	11,040		$	13,263		$	23,095		$	26,800
Property Expenses		(4,545	)		(5,384	)		(9,950	)		(11,819	)
Impairment of Real Estate, Net		(1,108	)		—			(2,937	)		—
Depreciation and Amortization		(508	)		(6,525	)		(1,459	)		(12,603	)
Gain on Sale of Real Estate		3,537			3,610			7,341			7,619
Provision for Income Taxes		(1,974	)		—			(2,615	)		—
Income from Discontinued Operations	$	6,442		$	4,964		$	13,475		$	9,997

     At June 30, 2011 and December 31, 2010, we had notes receivables outstanding of approximately $49,815 and $58,803, net of a discount of $351 and $383, respectively, which are included as a component of Prepaid Expenses and Other Assets, Net. At June 30, 2011 and December 31, 2010, the fair values of the notes receivables were $52,277 and $60,944, respectively. The fair values of our notes receivables were determined by discounting the future cash flows using current rates at which similar loans with similar remaining maturities would be made to other borrowers.

   Impairment Charges

     On October 22, 2010, we amended our unsecured revolving credit facility (as amended, the “Unsecured Credit Facility”). In conjunction with the amendment, management identified a pool of real estate assets (the “Non-Strategic Assets”) that it intends to market and sell. At June 30, 2011, the Non-Strategic Assets consisted of 179 industrial properties comprising approximately 15.4 million square feet of GLA and land parcels comprising approximately 600 acres. The Non-Strategic Assets (except 21 industrial properties comprising approximately 3.1 million square feet of GLA) were classified as held for sale as of June 30, 2011.

     The net impairment charges for assets that qualify to be classified as held for sale at June 30, 2011 were calculated as the difference of the carrying value of the properties and land parcels over the fair value less costs to sell. The net impairment charges are due to updated fair market values for certain of the Non-Strategic Assets whose estimated fair market values have changed since December 31, 2010. On the date an asset no longer qualifies to be classified as held for sale, the carrying value must be reestablished at the lower of the estimated fair market value of the asset or the carrying value of the asset prior to held for sale classification, adjusted for any depreciation and amortization that would have been recorded if the asset had not been classified as held for sale. Impairment has been reversed and/or catch-up depreciation and amortization has been recorded during the six months ended June 30, 2011, if applicable, for these assets that are no longer classified as held for sale. During the six months ended June 30, 2010, we recorded an impairment charge in the amount of $9,155 related to a property comprised of 0.3 million square feet of GLA located in Grand Rapids, Michigan (“Grand Rapids Property”) in connection with the negotiation of a new lease. The non-cash impairment charge related to the Grand Rapids Property was based upon the difference between the fair value of the property and its carrying value. The fair market values were determined using widely accepted valuation techniques including discounted cash flow analyses on expected cash flows, internal valuations of real estate and third party offers.

     During the three and six months ended June 30, 2011 and June 30, 2010, we recorded the following net non-cash impairment charges:

	Three Months			Three Months		Six Months			Six Months
	Ended			Ended		Ended			Ended
	June 30,			June 30,		June 30,			June 30,
	2011			2010		2011			2010
Operating Properties — Held for Sale	$	(1,108	)	$	—	$	(2,937	)	$	—
Impairment — Discontinued Operations	$	(1,108	)	$	—	$	(2,937	)	$	—
Land Parcels — Held for Sale	$	5,879		$	—	$	5,879		$	—
Operating Properties — Held for Use		—			—		1,286			(9,155	)
Land Parcels — Held for Use		—			—		595			—
Impairment — Continuing Operations	$	5,879		$	—	$	7,760		$	(9,155	)
Total Net Impairment	$	4,771		$	—	$	4,823		$	(9,155	)

     The guidance for the fair value measurement provisions for the impairment of long lived assets recorded at fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

     The following tables present information about our assets that were measured at fair value on a non-recurring basis during the six months ended June 30, 2011 and June 30, 2010. The tables indicate the fair value hierarchy of the valuation techniques we utilized to determine fair value.

			Fair Value Measurements on a Non-Recurring Basis Using:
			Quoted Prices in
	Six Months		Active Markets for		Significant Other		Unobservable
	Ended		Identical Assets		Observable Inputs		Inputs		Total
Description	June 30, 2011		(Level 1)		(Level 2)		(Level 3)		Impairment
Long-lived Assets Held for Sale*	$	116,049		—		—	$	116,049	$	(6,041	)
Long-lived Assets Held and Used*	$	17,908		—		—	$	17,908		357
									$	(5,684	)

			Fair Value Measurements on a Non-Recurring Basis Using:
			Quoted Prices in
	Six Months		Active Markets for		Significant Other		Unobservable
	Ended		Identical Assets		Observable Inputs		Inputs		Total
Description	June 30, 2010		(Level 1)		(Level 2)		(Level 3)		Impairment
Long-lived Assets Held and Used	$	4,122		—		—	$	4,122	$	(9,155	)

* Excludes industrial properties and land parcels for which an impairment reversal of $10,507 was recorded during the six months ended June 30, 2011 since the related assets are recorded at carrying value, which is lower than estimated fair value at June 30, 2011.