| Summary of notes receivable backed by real estate |
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$188 million
Preferred
Equity
Interest (1) |
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$55 million
Preferred
Equity
Interest (2) |
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NAIF II
Secured
Mortgage
Receivable (3) |
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Other Notes
Receivable (4) |
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Total |
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Balance as of December 31, 2010
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$ |
189,550 |
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$ |
- |
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$ |
81,540 |
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$ |
31,054 |
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$ |
302,144 |
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Investment
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- |
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55,000 |
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- |
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- |
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55,000 |
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Principal payment received
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- |
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- |
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(2,676) |
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- |
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(2,676) |
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Accrued interest, (interest payments received), net
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(1,550) |
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970 |
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- |
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- |
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(580) |
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Fair value received from exchange
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- |
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- |
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- |
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(10,886) |
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(10,886) |
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Impairment
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- |
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- |
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- |
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(20,500) |
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(20,500) |
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Impact of changes in foreign currency exchange rates
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- |
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- |
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- |
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332 |
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332 |
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Balance as of December 31, 2011
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$ |
188,000 |
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$ |
55,970 |
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$ |
78,864 |
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$ |
- |
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$ |
322,834 |
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| (1) |
We invested in a preferred equity interest in 2010 through a sale of a portfolio of industrial properties. We earn a preferred return at an annual rate of 7% for the
first three years, 8% for the fourth year and 10% thereafter until redeemed. Partial or full redemption can occur at any time at the buyer’s discretion or after the five year anniversary at our discretion. Based on the terms of this instrument,
the preferred equity interest meets the definition of an investment in a debt security from an accounting perspective. |
| (2) |
In the first quarter of 2011, we completed the sale of a portfolio of retail, mixed-use and other non-core assets to a third party. As part of the transaction, we
invested approximately $55 million in a preferred equity interest in a subsidiary of the buyer. Based on the terms of this instrument, the preferred equity interest meets the definition of an investment in a debt security from an accounting
perspective. We earn a preferred return at an annual rate of 7% for the first three years, 8% for the fourth year and 10% for the fifth year. Partial or full redemption can occur at any time at the buyer’s discretion or after the five year
anniversary at our discretion. |
| (3) |
In July 2010, we purchased an $81.0 million loan to NAIF II from the lender that bears interest at 8%, matures in May 2015 and was secured by 13 buildings. During the
first quarter of 2011, one of the properties securing this note was sold and the proceeds were used to pay down the balance on the note. As of December 31, 2011, this note was secured by 12 properties. In February 2012, we purchased our
partner’s 63% interest in NAIF II. As a result, we will consolidate this entity and eliminate this note receivable beginning in 2012. For additional information on this acquisition see Note 25. |
| (4) |
The balance as of December 31, 2010 represented a receivable from an entity that developed retail and mixed use properties in Europe that was secured by land
parcels. In late 2011, the entity went into administration. In exchange for the note receivable, we received three land parcels and debt. We expect to sell the land parcels and repay the debt with the proceeds. Based on the fair value of the land
less the assumption of debt received in the exchange and information available to us in the fourth quarter of 2011, the remaining receivable balance of $20.5 million was impaired. |
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