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Impairment Charges and Impairment of Joint Venture Investments

12 Months Ended

Dec. 31, 2015

Asset Impairment Charges [Abstract]

Impairment Charges and Impairment of Joint Venture Investments

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,
	2015				2014				2013
Assets marketed for sale or assets sold(A)	$	179.7			$	10.6			$	16.0
Undeveloped land previously held for development(B)		99.3				18.6				3.0
Total continuing operations	$	279.0			$	29.2			$	19.0
Sold assets – discontinued operations		—				8.9				53.6
Joint venture investments(C)		1.9				30.7				1.0
Total impairment charges	$	280.9			$	68.8			$	73.6

(A) In March 2015, the Company’s new senior management team initiated changes in the Company’s investment strategy.  Senior management took steps to accelerate the Company’s portfolio quality improvement initiative, which it intends to accomplish in part through the acceleration of disposition plans of lower quality assets that do not have strong long-term growth profiles.  As a result, in connection with the preparation of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2015, the Company concluded that certain assets were impaired.  The Company recorded impairment charges on 25 operating shopping centers that management identified as disposition candidates over the 12 to 24-month period following March 2015.  The impairment charges for the years ended December 31, 2014 and 2013, 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.

(B) Amounts recorded primarily were related to land previously held for future development.  The asset impairments were triggered primarily by the decision made by the Company’s senior management to sell the land and no longer consider development alternatives.  

(C) Represents “other than temporary impairment” charges on unconsolidated joint venture investments.  Amount recorded in 2014 represents a charge on a joint venture development project in Canada.  The impairment primarily was triggered as a result of a major retailer’s decision to exit the Canadian market, as well as changes in the timing of the project and development assumptions.  

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 or not at stabilization, 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, 2015, 2014 and 2013.  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, 2015
Long-lived assets held and used		$	—			$	—			$	407.1			$	407.1			$	279.0
Unconsolidated joint venture investments			—				—				—				—				1.9
December 31, 2014
Long-lived assets held and used			—				—				141.2				141.2				38.1
Unconsolidated joint venture investments			—				—				6.4				6.4				30.7
December 31, 2013
Long-lived assets held and used/held for sale			—				—				164.2				164.2				72.6
Unconsolidated joint venture investments			—				—				35.3				35.3				1.0

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, except price per square foot, which is in thousands):

Quantitative Information About Level 3 Fair Value Measurements

Fair Value at December 31,

Range

Description

2015

2014

Valuation Technique

Unobservable Inputs

2015

2014

Impairment of consolidated assets

$

33.8

$

74.2

Indicative Bid(A)/ Contracted Price

Indicative Bid(A)/ Contracted Price

N/A

N/A

287.6

67.0

Income Capitalization Approach(B)/ Sales Comparison Approach

Market Capitalization Rate

8%–9%

8%

Price per Square Foot

$10–$40

N/A

51.5

N/A

Indicative Bid(A)

Indicative Bid(A)

N/A

N/A

Discounted Cash Flow

Discount Rate

10%–14%

N/A

Terminal Capitalization Rate

8%–10%

N/A

34.2

N/A

Indicative Bid(A)/ Sales Comparison Approach

Indicative Bid(A)

N/A

N/A

Impairment of joint venture investments

—

6.4

Discounted Cash Flow

Discount Rate

N/A

15%

Terminal Capitalization Rate

N/A

6%

(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.

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- Definition

The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported.

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