FAIR VALUE MEASUREMENTS

The Company has categorized its financial assets and financial liabilities that are recorded at fair value into a hierarchy in accordance with Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosure, ("ASC 820") based on whether the inputs to valuation techniques are observable or unobservable. The fair value hierarchy contains three levels of inputs that may be used to measure fair value as follows:

Level 1 – Inputs represent quoted prices in active markets for identical assets and liabilities as of the measurement date.

Level 2 – Inputs, other than those included in Level 1, represent observable measurements for similar instruments in active markets, or identical or similar instruments in markets that are not active, and observable measurements or market data for instruments with substantially the full term of the asset or liability.

Level 3 – Inputs represent unobservable measurements, supported by little, if any, market activity, and require considerable assumptions that are significant to the fair value of the asset or liability. Market valuations must often be determined using discounted cash flow methodologies, pricing models or similar techniques based on the Company’s assumptions and best judgment.

The asset or liability's fair value within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Under ASC 820, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction at the measurement date. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs and consider assumptions such as inherent risk, transfer restrictions and risk of nonperformance.

Fair Value Measurements on a Recurring Basis

The following tables set forth information regarding the Company’s financial instruments that are measured at fair value on a recurring basis in the accompanying consolidated balance sheets as of December 31, 2015 and 2014:



			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2015		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Interest rate swaps	$	434	$	—	$	434	$	—



			Fair Value Measurements at Reporting Date Using
	Fair Value at December 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Available-for-sale securities	$	20,512	$	20,512	$	—	$	—

Liabilities:
Interest rate swaps	$	2,226	$	—	$	2,226	$	—

The Company recognizes transfers in and out of every level at the end of each reporting period. There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2015 and 2014.

Intangible lease assets and other assets in the consolidated balance sheets included marketable securities consisting of corporate equity securities that were classified as available-for-sale. Net unrealized gains and losses on available-for-sale securities that are deemed to be temporary in nature are recorded as a component of AOCI in redeemable noncontrolling interests, shareholders’ equity and partners' capital, and noncontrolling interests. The Company sold all of its marketable securities during 2015 and realized a gain of $16,560 for the difference between the net proceeds of $20,755 less the adjusted cost of $4,195. The Company did not recognize any realized gains or losses related to sales of marketable securities during 2014 and 2013. During the years ended December 31, 2015, 2014 and 2013, the Company did not recognize any write-downs for other-than-temporary impairments. The fair values of the Company’s available-for-sale securities are based on quoted market prices and are classified under Level 1. See Note 2 for a summary of the available-for-sale securities held by the Company.

The Company uses interest rate swaps to mitigate the effect of interest rate movements on its variable-rate debt. The Company had four interest rate swaps as of December 31, 2015 and 2014, that qualify as hedging instruments and are designated as cash flow hedges. The interest rate swaps are reflected in accounts payable and accrued liabilities in the accompanying consolidated balance sheets. The swaps have predominantly met the effectiveness test criteria since inception and changes in their fair values are, thus, primarily reported in OCI/L and are reclassified into earnings in the same period or periods during which the hedged item affects earnings. The fair values of the Company’s interest rate hedges, classified under Level 2, are determined based on prevailing market data for contracts with matching durations, current and anticipated LIBOR information, consideration of the Company’s credit standing, credit risk of the counterparties and reasonable estimates about relevant future market conditions. See Notes 2 and 6 for additional information regarding the Company’s interest rate hedging instruments.

The carrying values of cash and cash equivalents, receivables, accounts payable and accrued liabilities are reasonable estimates of their fair values because of the short-term nature of these financial instruments. Based on the interest rates for similar financial instruments, the carrying value of mortgage and other notes receivable is a reasonable estimate of fair value. The estimated fair value of mortgage and other indebtedness was $4,945,622 and $4,947,026 at December 31, 2015 and 2014, respectively. The fair value was calculated using Level 2 inputs by discounting future cash flows for mortgage and other indebtedness using estimated market rates at which similar loans would be made currently. The carrying amount of mortgage and other indebtedness was $4,710,628 and $4,683,333 at December 31, 2015 and 2014, respectively.

Fair Value Measurements on a Nonrecurring Basis

The Company measures the fair value of certain long-lived assets on a nonrecurring basis, through quarterly impairment testing or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The Company considers both quantitative and qualitative factors in its impairment analysis of long-lived assets. Significant quantitative factors include historical and forecasted information for each Property such as NOI, occupancy statistics and sales levels. Significant qualitative factors used include market conditions, age and condition of the Property and tenant mix. Due to the significant unobservable estimates and assumptions used in the valuation of long-lived assets that experience impairment, the Company classifies such long-lived assets under Level 3 in the fair value hierarchy. The fair value analysis for Chesterfield Mall as of December 31, 2015 used assumptions including an 11-year holding period with a sale at the end of the holding period, a capitalization rate of 8.25% and a discount rate of 8.25%. See Note 2 for additional information describing the Company's impairment review process.

The following table sets forth information regarding the Company’s assets that were measured at fair value on a nonrecurring basis and related impairment charges for the years ended December 31, 2015 and 2014:



			Fair Value Measurements at Reporting Date Using
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses
2015:
Long-lived assets	$	125,000	$	—	$	—	$	125,000	$	104,900

2014:
Long-lived assets	$	69,103	$	—	$	—	$	69,103	$	17,753

Long-lived Assets Measured at Fair Value in 2015

During the year ended December 31, 2015, the Company wrote down four properties to their estimated fair values. These Properties were Chesterfield Mall, Mayfaire Community Center, Chapel Hill Crossing and Madison Square. Of these four Properties, all but Chesterfield Mall were disposed of as of December 31, 2015 as described below.

In accordance with the Company's quarterly impairment review process, the Company recorded a non-cash impairment of real estate of $99,969 in the fourth quarter of 2015 related to Chesterfield Mall, located in Chesterfield, MO, to write-down the depreciated book value to its estimated fair value of $125,000 as of December 31, 2015. The mall had experienced declining cash flows as competition from several new outlet shopping centers in the area impacted its sales.

The Company wrote down the book values of Chapel Hill Crossing and Mayfaire Community Center to their net sales prices and recognized a non-cash impairment of real estate of $1,914 and $397, respectively, in the fourth quarter of 2015. Chapel Hill Crossing, an associated center located in Akron, OH was sold for $2,300 and Mayfaire Community Center located in Wilmington, NC was sold for $56,300. See Note 4 for additional information related to these sales.

The Company also recognized a non-cash impairment of real estate of $2,620 in the second quarter of 2015 when it adjusted the book value of Madison Square, a mall located in Huntsville, AL, to its net sales price of $5,000 based on its sale in April in 2015. See Note 4 for further information on this sale.

A reconciliation of Chesterfield Mall's carrying value for the year ended December 31, 2015 is as follows:



	Chesterfield Mall ⁽¹⁾
Beginning carrying value, January 1, 2015	$	234,422
Capital expenditures	552
Depreciation expense	(10,005		)
Loss on impairment of real estate	(99,969		)
Ending carrying value, December 31, 2015	$	125,000


(1)	The revenues of Chesterfield Mall accounted for approximately 1.5% of total consolidated revenues for the year ended December 31, 2015.

Long-lived Assets Measured at Fair Value in 2014

During the year ended December 31, 2014, the Company wrote down three properties to their estimated fair values. These properties were Chapel Hill Mall, Lakeshore Mall and Pemberton Plaza. All three of these properties were disposed of as of December 31, 2014 as described below.

In accordance with the Company's quarterly impairment review process, the Company recorded a non-cash impairment of real estate of $12,050 in the first quarter of 2014 related to Chapel Hill Mall, located in Akron, OH, to write-down the depreciated book value to its estimated fair value of $53,348 as of March 31, 2014. The mall had experienced declining cash flows which were insufficient to cover the debt service on the mortgage secured by the property and the non-recourse loan was in default. In the third quarter of 2014, the Company conveyed Chapel Hill Mall to the lender by a deed-in-lieu of foreclosure. See Note 4 and Note 6 for additional information.

The Company recognized a non-cash impairment of real estate of $5,100 in the first quarter of 2014 when it adjusted the book value of Lakeshore Mall, located in Sebring, FL, to its estimated fair value of $13,780 based on a binding purchase agreement signed in April 2014. The sale closed in May 2014 and the Company recognized an impairment loss of $106 in the second quarter of 2014 as a result of additional closing costs. See Note 4 for further information on this sale.

In the third quarter of 2014, the Company recognized an impairment loss of $497 to write down the book value of Pemberton Plaza, a community center located in Vicksburg, MS, to its sales price. See Note 4 for further information on this sale.

A reconciliation of each Property's carrying values for the year ended December 31, 2014 is as follows:



	Chapel Hill Mall ⁽¹⁾			Lakeshore Mall ⁽²⁾			Pemberton Plaza ⁽³⁾			Total
Beginning carrying value, January 1, 2014	$	66,120		$	19,127		$	2,541		$	87,788
Capital expenditures	—			12			31			43
Disposals	(33		)	—			(125		)	(158		)
Depreciation expense	(1,809		)	(320		)	(64		)	(2,193		)
Net sales proceeds	—			(13,613		)	(1,886		)	(15,499		)
Other	(1,961		)	—			—			(1,961		)
Non-recourse debt	(68,563		)	—			—			(68,563		)
Loss on impairment of real estate	(12,050		)	(5,206		)	(497		)	(17,753		)
Gain on extinguishment of debt	18,296			—			—			18,296
Ending carrying value, December 31, 2014	$	—		$	—		$	—		$	—


(1)	The revenues of Chapel Hill Mall accounted for approximately 0.4% of total consolidated revenues for the year ended December 31, 2014.


(2)	The revenues of Lakeshore Mall accounted for approximately 0.2% of total consolidated revenues for the year ended December 31, 2014.


(3)	The revenues of Pemberton Plaza accounted for approximately 0.0% of total consolidated revenues for the year ended December 31, 2014.

Long-lived Assets Measured at Fair Value in 2013

During the year ended December 31, 2013, the Company wrote down two Properties to their estimated fair value. As part of the Company's quarterly impairment review process, the Company recorded a non-cash impairment of real estate of $47,212 in the fourth quarter of 2013 to write-down the depreciated book value of Madison Square Mall, located in Huntsville, AL, from $55,212 to an estimated fair value of $8,000 as of December 31, 2013. Additionally, in accordance with the Company's quarterly impairment review process, the Company recorded a non-cash impairment of real estate of $20,453 in the second quarter of 2013 related to Citadel Mall, located in Charleston, SC, to write-down the depreciated book value of $44,353 to its estimated fair value of $23,900 as of June 30, 2013. The Mall experienced declining cash flows which were insufficient to cover the debt service on the mortgage secured by the Property. See Note 4 for information on the foreclosure of Citadel Mall in the first quarter of 2014.

A reconciliation of each Property's carrying values for the year ended December 31, 2013 is as follows:



	Madison Square ⁽¹⁾			Citadel Mall ⁽²⁾			Total
Beginning carrying value, January 1, 2013	$	57,231		$	45,178		$	102,409
Capital expenditures	5			262			267
Depreciation expense	(2,024		)	(1,380		)	(3,404		)
Loss on impairment of real estate	(47,212		)	(20,453		)	(67,665		)
Ending carrying value, December 31, 2013	$	8,000		$	23,607		$	31,607


(1)	The revenues of Madison Square accounted for approximately 0.7% of total consolidated revenues for the year ended December 31, 2013.


(2)	The revenues of Citadel Mall accounted for approximately 0.6% of total consolidated revenues for the year ended December 31, 2013.

Other Impairment Losses

2015

During 2015, the Company recorded an impairment of real estate of $161 related to the sale of a building at a formerly owned Mall for total net proceeds after sales costs of $750, which was less than its carrying amount of $911. We also recognized $884 of impairment from the sale of two outparcels.

2014

During 2014, the Company recorded an impairment of real estate of $105 related to the sale an outparcel for total net proceeds after sales costs of $176, which was less than its total carrying amount of $281.

2013

During 2013, the Company recorded an impairment of real estate of $1,799 related to the sale of an outparcel that was sold for net proceeds after sales costs of $4,292, which was less than its carrying amount of $6,091. Additionally, the Company recorded a non-cash impairment of $585 to write-down the depreciated book value of the corporate airplane owned by the Management Company to its fair value at its trade-in date.