12. Impairment Charges and Impairment of Joint Venture Investments

The Company recorded impairment charges based on the difference between the carrying value of the assets or investments and the estimated fair market value as follows (in millions):


	For the Year Ended December 31,
	2013		2012		2011
Land held for development^(A)	$	—	$	10.1	$	54.2
Undeveloped land^(B)		3.0		20.1		9.0
Assets marketed for sale^(B)		42.0		28.6		—

Total continuing operations	$	45.0	$	58.8	$	63.2

Sold assets or assets held for sale – discontinued operations		27.6		67.7		62.7
Joint venture investments^(C)		1.0		26.7		2.9

Total impairment charges	$	73.6	$	153.2	$	128.8

(A)	Amounts reported in the year ended December 31, 2012, primarily related to land held for development in Canada that was owned through a consolidated joint venture (Note 14).

Amounts reported in the year ended December 31, 2011, primarily were related to the investment in land held for development in Russia (the “Yaroslavl Project”) and land held for development in Canada that were owned through consolidated joint ventures. The Company’s proportionate share of the loss was $50.4 million after adjusting for the allocation of loss to the non-controlling interest in certain of the projects. The Company sold its interest in the land held for development in Canada in the fourth quarter of 2011 to its joint venture partner in the project (Note 14). The Yaroslavl Project was sold to a third party in the first quarter of 2012 (Note 14).

(B)	These charges were triggered primarily due to the Company’s marketing of these assets for sale and management’s assessment of the likelihood and timing of one or more potential transactions.

(C)	Represents “other than temporary impairment” charges on unconsolidated joint venture investments. In 2012, the charges related primarily to the investment in the Coventry II DDR Montgomery Farm LLC joint venture in which the Company has sold its interest.

Items Measured at Fair Value on a Non-Recurring Basis

The Company is required to assess the fair value of certain impaired consolidated and unconsolidated joint venture investments. The valuation of impaired real estate assets and investments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each asset as well as the income capitalization approach considering prevailing market capitalization rates, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties and/or consideration of the amount that currently would be required to replace the asset, as adjusted for obsolescence. In general, the Company considers multiple valuation techniques when measuring fair value of an investment. However, in certain circumstances, a single valuation technique may be appropriate.

For operational real estate assets, the significant assumptions included the capitalization rate used in the income capitalization valuation as well as the projected property net operating income. For projects under development, the significant assumptions included the discount rate, the timing and the estimated costs for the construction completion and project stabilization, projected net operating income and the exit capitalization rate. For investments in unconsolidated joint ventures, the Company also considered the valuation of any underlying joint venture debt. These valuation adjustments were calculated based on market conditions and assumptions made by management at the time the valuation adjustments were recorded, which may differ materially from actual results if market conditions or the underlying assumptions change.

The following table presents information about the Company’s impairment charges on both financial and nonfinancial assets that were measured on a fair value basis for the years ended December 31, 2013, 2012 and 2011. The table also indicates the fair value hierarchy of the valuation techniques used by the Company to determine such fair value (in millions).


	Fair Value Measurements
	Level 1		Level 2		Level 3		Total		Total Losses
December 31, 2013
Long-lived assets held and used and held for sale	$	—	$	—	$	164.2	$	164.2	$	72.6
Unconsolidated joint venture investments		—		—		35.3		35.3		1.0
December 31, 2012
Long-lived assets held and used		—		—		180.7		180.7		126.5
Unconsolidated joint venture investments		—		—		4.7		4.7		26.7
Deconsolidated joint venture investment		—		—		56.1		56.1		9.3
December 31, 2011
Long-lived assets held and used and held for sale		—		—		212.0		212.0		125.9
Unconsolidated joint venture investments		—		—		5.5		5.5		2.9

The following table presents quantitative information about the significant unobservable inputs used by the Company to determine the fair value of non-recurring items (in millions):

Quantitative Information About Level 3 Fair Value Measurements

Fair Value
at
December 31,

Valuation Technique

Unobservable Inputs

Range

Description

2013

2012

2013

2012

Impairment of consolidated assets

85.7

136.6

Indicative Bid^(A)/ Contracted Price

N/A

75.5

44.1

Income Capitalization Approach^(B)

Market Capitalization Rate

8% - 10%

8% - 12%

Price Per Square Foot

$12 - $117

$15 - $47

Impairment of consolidated assets – held for sale

3.0

—

Indicative Bid

N/A

Impairment of joint venture investments^(C)

35.3

4.7

Income Capitalization Approach

Market Capitalization Rate

N/A

Discounted Cash Flow

Discount Rate

8% - 15%

11%

Terminal Capitalization Rate

N/A

5.5% - 8.5%

Deconsolidated joint venture investment^(D)

—

56.1

Discounted Cash Flow

Discount Rate

N/A

8% - 15%

(A)

Fair value measurements based upon indicative bids were developed by third-party sources (including offers and comparable sales values), subject to the Company’s corroboration for reasonableness. The Company does not have access to certain unobservable inputs used by these third parties to determine these estimated fair values.

(B)	Vacant space in certain assets was valued based on a price per square foot.

(C)	The fair value measurements also include consideration of the fair market value of debt. These inputs are further described in the debt section of Note 8.

(D)	Related to loss reported in Change in Control and Sale of Interests (Note 2).