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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2017
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies |
9. | Commitments and Contingencies
Hurricane Casualty and Impairment Loss In September 2017, Hurricane Irma made landfall in both Puerto Rico and Florida, and Hurricane Maria made landfall in Puerto Rico. The Company’s Florida assets were minimally impacted by Hurricane Irma, with the majority of repair costs related to debris removal. At September 30, 2017, the Company owned 12 assets in Puerto Rico, aggregating 4.4 million square feet of Company-owned GLA. One of the 12 assets (Plaza Palma Real, consisting of approximately 0.4 million of Company-owned GLA) was severely damaged; it is currently not operational, except for one tenant, and is not expected to open for the foreseeable future. The other 11 assets incurred varying degrees of damage, including some tenant spaces currently untenantable. The damage consisted primarily of roof and HVAC system damage and water intrusion. As of October 31, 2017, nine of these assets had partial to full utility power and were available for occupancy by some tenants, although due to the damage, portions of these properties remain unavailable for occupancy. With respect to the Company’s anchor spaces comprising greater than 25,000 square feet of GLA in Puerto Rico, 24, or 73% of such tenants, had utility or generator power and were open as of October 31, 2017, including six of seven Walmart stores, a Sam's Club, both Home Depot stores, all three Sears/Kmart and all five grocery stores (including Pueblo, Econo and Selectos Supermarket). The Company has completed debris removal, roof repairs, interior building mitigation, repairs to building exteriors and repairs to mechanical systems to prevent further water intrusion and related damages at its Puerto Rico shopping centers and continues to assess the scope of necessary repairs. The schedule of additional repair work, as well as the ability to turn over space to tenants, is highly dependent on the full restoration of utilities at all of its shopping centers in Puerto Rico, and the availability of building materials, supplies and skilled labor. The Company does not currently know when full utility service will be restored at the shopping centers with partial or no service, or the extent of the services that will be provided in the interim, if any. As such, the Company is unable to estimate when repair work will be completed or when the remaining tenants will reopen for business. The Company maintains insurance on its assets in Puerto Rico with policy limits of approximately $330 million for both property damage and business interruption. The Company's insurance policies are subject to various terms and conditions, including a combined property damage and business interruption deductible of approximately $6.0 million. The Company expects that its casualty insurance and business interruption claims to include the costs to clean up, repair and rebuild, as well as lost revenue. The Company also expects to receive casualty insurance proceeds from certain U.S.-based anchor tenants that maintain property insurance of their Company-owned premises. The Company is unable to estimate the impact of potential increased costs associated with resource constraints in Puerto Rico relating to building materials, supplies and labor. The Company believes it maintains adequate insurance coverage on each of its properties and is working closely with the insurance carriers to obtain the maximum amount of insurance recovery provided under the policies. However, the Company can give no assurances as to the amounts of such claims, timing of payments and resolution of the claims. As of September 30, 2017, the estimated net book value of the property damage written off for damage to the Company’s Puerto Rico assets was $64.8 million. However, the Company is still assessing the impact of the hurricane on its properties, and the final net book value write-offs could vary significantly from this estimate. Any changes to this estimate will be recorded in the periods in which they are determined. The Company recorded a corresponding receivable of $59.7 million for estimated insurance recoveries related to the net book value of the property damage written off, as the Company believes it is probable that the insurance recovery, net of the deductible, will exceed the net book value of the damaged property. The receivable is recorded within Accounts Receivable on the Company’s consolidated balance sheet as of September 30, 2017. The net impact of $5.1 million representing the property damage insurance deductible is reflected as a hurricane casualty and impairment loss in the Company’s consolidated statements of operations for the three and nine months ended September 30, 2017. Based on current replacement cost estimates, insurance proceeds are expected to equal or exceed the net book value of the impacted assets; therefore, the Company does not expect to record a loss after insurance proceeds, excluding the impact of the deductible. The Company’s business interruption insurance covers lost revenue through the period of property restoration and for up to 365 days following completion of restoration. The Company recorded a reduction in rental revenues of $2.6 million for Hurricanes Irma and Maria for the three and nine months ended September 30, 2017, related to lost tenant revenue that is expected to be partially defrayed by insurance proceeds. The Company estimates the waiting period deductible for the business interruption claim to be $0.9 million for the period ended September 30, 2017. The Company will record revenue for covered business interruption in the period it determines that it is probable it will be compensated. This income recognition criteria will likely result in business interruption insurance recoveries being recorded in a period subsequent to the period that the Company experiences lost revenue from the damaged properties. In October 2017, the Company received an advance of approximately $2 million of insurance proceeds related to business interruption insurance claims. This advance has not been reflected in the third-quarter financial statements because it was received after the end of the period. At September 30, 2017, six of the Puerto Rico assets were encumbered by mortgage notes aggregating $264.8 million at a weighted-average interest rate of 4.9%. The Company has contacted the mortgage holders and is complying with all lender requirements and mortgage covenants. Accrued Expense The Company recorded separation charges aggregating $16.6 million for the nine months ended September 30, 2017. The aggregate charge included $9.4 million related to the March 2, 2017, executive management transition, which was the result of the termination without cause of several of the Company’s executives under the terms of their respective employment agreements. The remaining $7.2 million related to the elimination of 65 positions, including nine officer level roles, in April 2017 as part of organization changes to further centralize key operational decision-making. The total nine-month charge included stock-based compensation expense of approximately $4.5 million related to the acceleration of expense associated with the grant date fair value of the unvested stock-based awards. At September 30, 2017, approximately $1.4 million was included in accounts payable and accrued expenses related to the aggregate charges in the Company’s consolidated balance sheet.

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- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
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