Mortgage Notes Payable:

9 Months Ended

Sep. 30, 2012

10. Mortgage Notes Payable:

Mortgage notes payable at September 30, 2012 and December 31, 2011 consist of the following:

	Carrying Amount of Mortgage Notes(1)

	September 30, 2012				December 31, 2011
	Related Party		Other		Related Party		Other		Interest Rate(2)			Monthly Debt Service(3)		Maturity Date(4)
Chandler Fashion Center(5)(6)	$	—	$	200,000	$	—	$	155,489		3.77	%	$	625		2019
Chesterfield Towne Center(7)		—		110,000		—		—		4.80	%		573		2022
Danbury Fair Mall		120,475		120,476		122,382		122,381		5.53	%		1,538		2020
Deptford Mall		—		172,500		—		172,500		5.41	%		778		2013
Deptford Mall		—		14,860		—		15,030		6.46	%		101		2016
Eastland Mall		—		168,000		—		168,000		5.79	%		811		2016
Fashion Outlets of Niagara Falls USA		—		127,212		—		129,025		4.89	%		727		2020
Fiesta Mall		—		84,000		—		84,000		4.98	%		341		2015
Flagstaff Mall		—		37,000		—		37,000		5.03	%		151		2015
Freehold Raceway Mall(5)		—		232,900		—		232,900		4.20	%		805		2018
Fresno Fashion Fair		80,891		80,892		81,733		81,734		6.76	%		1,104		2015
Great Northern Mall		—		36,617		—		37,256		5.19	%		234		2013
Northgate, The Mall at(8)		—		64,000		—		38,115		3.11	%		132		2017
Oaks, The(9)		—		219,064		—		257,264		4.14	%		1,064		2022
Pacific View(10)		—		138,985		—		—		4.08	%		668		2022
Paradise Valley Mall(11)		—		81,750		—		84,000		6.30	%		625		2014
Prescott Gateway(12)		—		—		—		60,000		—			—		—
Promenade at Casa Grande(13)		—		74,629		—		76,598		5.21	%		280		2013
Salisbury, Center at		—		115,000		—		115,000		5.83	%		555		2016
SanTan Village Regional Center(14)		—		138,087		—		138,087		2.63	%		268		2013
South Plains Mall		—		101,710		—		102,760		6.56	%		648		2015
South Towne Center		—		85,574		—		86,525		6.39	%		555		2015
Towne Mall(15)		—		12,376		—		12,801		4.99	%		100		2012
Tucson La Encantada(16)		74,505		—		75,315		—		4.23	%		368		2022
Twenty Ninth Street(17)		—		107,000		—		107,000		3.07	%		255		2016
Valley Mall		—		43,070		—		43,543		5.85	%		280		2016
Valley River Center		—		120,000		—		120,000		5.59	%		558		2016
Valley View Center(18)		—		—		—		125,000		—			—		—
Victor Valley, Mall of(19)		—		93,700		—		97,000		2.08	%		142		2013
Vintage Faire Mall(20)		—		135,000		—		135,000		3.52	%		363		2015
Westside Pavilion(21)		—		155,000		—		175,000		4.49	%		783		2022
Wilton Mall(22)		—		40,000		—		40,000		1.23	%		30		2013

	$	275,871	$	3,109,402	$	279,430	$	3,049,008

(1): The mortgage notes payable balances include the unamortized debt premiums (discounts). Debt premiums (discounts) represent the excess (deficiency) of the fair value of debt over (under) the principal value of debt assumed in various acquisitions and are amortized to interest expense over the remaining term of the related debt in a manner that approximates the effective interest method.

Debt premiums (discounts) consist of the following:

Property Pledged as Collateral	September 30, 2012			December 31, 2011

Deptford Mall	$	(21	)	$	(25	)
Fashion Outlets of Niagara Falls USA		7,502			8,198
Great Northern Mall		(35	)		(55	)
Towne Mall		18			88
Valley Mall		(328	)		(365	)

	$	7,136		$	7,841

(2): The interest rate disclosed represents the effective interest rate, including the debt premiums (discounts) and deferred finance costs.
(3): The monthly debt service represents the payment of principal and interest.
(4): The maturity date assumes that all extension options are fully exercised and that the Company does not opt to refinance the debt prior to these dates. These extension options are at the Company's discretion, subject to certain conditions, which the Company believes will be met.
(5): A 49.9% interest in the loan has been assumed by a third party in connection with a co-venture arrangement (See Note 12—Co-Venture Arrangement).
(6): On June 29, 2012, the Company replaced the existing loan on the property with a new $200,000 loan that bears interest at 3.77% and matures on July 1, 2019.
(7): On September 17, 2012, the Company placed a $110,000 loan on the property that bears interest at 4.80% and matures on October 1, 2022.
(8): On March 23, 2012, the Company borrowed an additional $25,885 and modified the loan to bear interest at LIBOR plus 2.25% with a maturity of March 1, 2017. At September 30, 2012 and December 31, 2011, the total interest rate was 3.11% and 7.00%, respectively.
(9): On May 17, 2012, the Company replaced the existing loan on the property with a new $220,000 loan that bears interest at 4.14% and matures on June 5, 2022.
(10): On March 30, 2012, the Company placed a new $140,000 loan on the property that bears interest at 4.08% and matures on April 1, 2022.
(11): The loan bears interest at LIBOR plus 4.0% with a total interest rate floor of 5.50% and matures on August 31, 2014. At September 30, 2012 and December 31, 2011, the total interest rate was 6.30%.
(12): On May 31, 2012, the Company conveyed the property to the lender by a deed-in-lieu of foreclosure. As a result, the Company has been discharged from this non-recourse loan. (See Note 16—Discontinued Operations).
(13): The loan bears interest at LIBOR plus 4.0% with a LIBOR rate floor of 0.50% and matures on December 30, 2013. At September 30, 2012 and December 31, 2011, the total interest rate was 5.21%.
(14): The loan bears interest at LIBOR plus 2.10% and matures on June 13, 2013. At September 30, 2012 and December 31, 2011, the total interest rate was 2.63% and 2.69%, respectively.
(15): On October 25, 2012, the Company replaced the existing loan on the property with a new $23,400 loan that bears interest at 4.39% and matures on November 1, 2022.
(16): On February 1, 2012, the Company replaced the existing loan on the property with a new $75,135 loan that bears interest at 4.23% and matures on March 1, 2022.

(17): The loan bears interest at LIBOR plus 2.63% and matures on January 18, 2016. At September 30, 2012 and December 31, 2011, the total interest rate was 3.07% and 3.12%, respectively.
(18): On April 23, 2012, the property was sold by a court appointed receiver. As a result, the Company was discharged from this non-recourse loan (See Note 16—Discontinued Operations).
(19): The loan bears interest at LIBOR plus 1.60% and was to mature on May 6, 2013. On October 5, 2012, the Company modified and extended the loan to November 6, 2014 with an interest rate of LIBOR plus 2.25% during the extension period. At September 30, 2012 and December 31, 2011, the total interest rate was 2.08% and 2.13%, respectively.
(20): The loan bears interest at LIBOR plus 3.0% and matures on April 27, 2015. At September 30, 2012 and December 31, 2011, the total interest rate was 3.52% and 3.56%, respectively.
(21): On September 6, 2012, the Company replaced the existing loan on the property with a new $155,000 loan that bears interest at 4.49% and matures on October 1, 2022.
(22): The loan bears interest at LIBOR plus 0.675% and matures on August 1, 2013. As additional collateral for the loan, the Company is required to maintain a deposit of $40,000 with the lender, which has been included in restricted cash. The interest on the deposit is not restricted. At September 30, 2012 and December 31, 2011, the total interest rate was 1.23% and 1.28%, respectively.

Most of the mortgage loan agreements contain a prepayment penalty provision for the early extinguishment of the debt.

The Company expects that all loan maturities during the next twelve months will be refinanced, restructured, extended and/or paid-off from the Company's line of credit or with cash on hand.

Total interest expense capitalized was $2,984 and $2,979 during the three months ended September 30, 2012 and 2011, respectively, and $7,899 and $9,598 during the nine months ended September 30, 2012 and 2011, respectively.

Related party mortgage notes payable are amounts due to affiliates of NML. See Note 18—Related Party Transactions for interest expense associated with loans from NML.

The fair value of mortgage notes payable at September 30, 2012 and December 31, 2011 was $3,531,796 and $3,477,483, respectively, based on current interest rates for comparable loans. The method for computing fair value (Level 2 measurement) was determined using a present value model and an interest rate that included a credit value adjustment based on the estimated value of the property that serves as collateral for the underlying debt.