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Acquisitions and Dispositions | 9 Months Ended
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Sep. 30, 2017
Business Combinations, Discontinued Operations and Disposal Groups [Abstract] [Abstract] |
Acquisitions and Dispositions | Acquisitions and Dispositions Asset Acquisitions During the nine months ended September 30, 2017, the Company acquired several Sears and Macy's stores, which include land, buildings and improvements, for future redevelopment at the related malls. These transactions are accounted for as asset acquisitions in accordance with ASU 2017-01. In January 2017, the Company purchased five Sears department stores and two Sears Auto Centers for $72,765 in cash, which includes $265 of capitalized transaction costs. Sears will continue to operate the department stores under new ten-year leases for which the Company will receive an aggregate initial annual base rent of $5,075. Annual base rent will be reduced by 0.25% for the third through tenth years of the leases. Sears will be responsible for paying CAM charges, taxes, insurance and utilities under the terms of the leases. The Company has the right to terminate each Sears lease at any time (except November 15 through January 15), with six month's advance notice. With six month's advance notice, Sears has the right to terminate one lease after a four-year period and may terminate the four other leases after a two-year period. The leases on the Sears Auto Centers may be terminated by Sears after one year, with six months' advance notice. The Company also acquired four Macy's stores in January 2017 for $7,034 in cash, which includes $34 of capitalized transaction costs. Three of these locations closed in March 2017. The Company entered into a lease with Macy's at the fourth store under which Macy's will continue to operate the store through March 2019 for annual base rent and fixed common area maintenance charges of $19 per year, subject to certain operating covenants. If Macy's ceases to operate at this location, the Company will be reimbursed for the pro rata portion of the amount paid for the operating covenant based on the remaining lease term. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the respective acquisition dates:
|  | Sears Stores |  | Macy's Stores |  | Total
Land |  | $ | 45,028 |  |  | $ | 4,635 |  |  | $ | 49,663 |
Building and improvements |  | 14,814 |  |  | 1,965 |  |  | 16,779 |
Tenant improvements |  | 4,234 |  |  | 377 |  |  | 4,611 |
Above-market leases |  | 681 |  |  | — |  |  | 681 |
In-place leases |  | 8,364 |  |  | 579 |  |  | 8,943 |
Total assets |  | 73,121 |  |  | 7,556 |  |  | 80,677 |
Below-market leases |  | (356 | ) |  | (522 | ) |  | (878 | )
Net assets acquired |  | $ | 72,765 |  |  | $ | 7,034 |  |  | $ | 79,799 |
The intangible assets and liabilities acquired with the acquisition of the Sears and Macy's stores have weighted-average amortization periods as of the respective acquisition dates as follows (in years):
|  | Sears Stores |  | Macy's Stores
Above-market leases |  | 2.0 |  | N/A
In-place leases |  | 2.2 |  | 2.2
Below-market leases |  | 5.4 |  | 2.2
Dispositions The Company evaluates its disposals utilizing the guidance in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Based on its analysis, the Company determined that the dispositions described below do not meet the criteria for classification as discontinued operations and are not considered to be significant disposals based on its quantitative and qualitative evaluation. Thus, the results of operations of the shopping center properties described below, as well as any related gain or impairment loss, are included in net income for all periods presented, as applicable. 2017 Dispositions Net proceeds realized from the 2017 dispositions were used to reduce the outstanding balances on the Company's credit facilities. The following is a summary of the Company's 2017 dispositions by sale:
|  |  |  |  |  |  |  | Sales Price |  |
Sales Date |  | Property |  | Property Type |  | Location |  | Gross |  | Net |  | Gain
January |  | One Oyster Point & Two Oyster Point (1) |  | Office Building |  | Newport News, VA |  | $ | 6,250 |  |  | $ | 6,142 |  |  | $ | — |
April |  | The Outlet Shoppes at Oklahoma City (2) |  | Mall |  | Oklahoma City, OK |  | 130,000 |  |  | 55,368 |  |  | 75,434 |
May |  | College Square Mall & Foothills Mall (3) |  | Mall |  | Morristown, TN / Maryville, TN |  | 53,500 |  |  | 50,566 |  |  | 546 |
|  |  |  |  |  |  |  | $ | 189,750 |  |  | $ | 112,076 |  |  | $ | 75,980 |
(1) | The Company recorded a loss on impairment of $3,844 in the third quarter of 2016 to write down the office buildings to their estimated fair value based upon a signed contract with the third party buyer, adjusted to reflect disposition costs.
(2) | In conjunction with the sale of this 75/25 consolidated joint venture, three loans secured by the mall were retired. See Note 6 for more information. The Company's share of the gain from the sale was approximately $48,800. In accordance with the joint venture agreement, the joint venture partner received a priority return of $7,477 from the proceeds of the sale.
(3) | The Company recognized a gain of $1,994 in the second quarter of 2017 upon the sale of the malls. This gain was partially reduced in the third quarter of 2017 due to construction costs of $1,448 not previously considered.
The Company also realized a gain of $10,924 primarily related to the sale of eight outparcels during the nine months ended September 30, 2017. The Company recognized a gain on extinguishment of debt for the properties listed below, which represented the amount by which the outstanding debt balance exceeded the net book value of the property as of the transfer date. See Note 6 for additional information. The following is a summary of the Company's other 2017 dispositions:
Transfer Date |  | Property |  | Property Type |  | Location |  | Balance of Non-recourse Debt |  | Gain on Extinguishment of Debt
January |  | Midland Mall (1) |  | Mall |  | Midland. MI |  | $ | 31,953 |  |  | $ | 3,760 |
June |  | Chesterfield Mall (2) |  | Mall |  | Chesterfield, MO |  | 140,000 |  |  | 29,187 |
August |  | Wausau Center (3) |  | Mall |  | Wausau, WI |  | 17,689 |  |  | 6,851 |
|  |  |  |  |  |  |  | $ | 189,642 |  |  | $ | 39,798 |
(1) | The mortgage lender completed the foreclosure process and received title to the mall in satisfaction of the non-recourse debt secured by the property. A loss on impairment of real estate of $4,681 was recorded in the first quarter of 2016 to write down the book value of the mall to its then estimated fair value. The Company also recorded $479 of aggregate non-cash default interest expense.
(2) | The mortgage lender completed the foreclosure process and received title to the mall in satisfaction of the non-recourse debt secured by the property. A loss on impairment of real estate of $99,969 was recorded in the fourth quarter of 2015 to write down the book value of the mall to its then estimated fair value. The Company also recorded $4,324 of aggregate non-cash default interest expense.
(3) | The mortgage lender completed the foreclosure process and received title to the mall in satisfaction of the non-recourse debt secured by the property. A loss on impairment of real estate of $10,738 was recorded in the second quarter of 2016 to write down the book value of the mall to its then estimated fair value. The Company also recorded $575 of aggregate non-cash default interest expense.

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