12.	Impairment Charges, Impairment of Joint Venture Investments and Reserves

The Company recorded impairment charges and reserves 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,
	2017		2016		2015
Assets marketed for sale^(A)	$	325.4	$	110.9	$	179.7
Undeveloped land previously held for development^(B)		15.1		—		99.3
Total continuing operations	$	340.5	$	110.9	$	279.0
Reserve of preferred equity interests^(C)		61.0		—		—
Joint venture investments		—		—		1.9
Total impairment charges	$	401.5	$	110.9	$	280.9

(A)

The Company recorded impairment charges triggered by changes in its strategic plan that impacted its asset hold-period assumptions and/or expected future cash flows. During 2015, management accelerated the Company’s then in place portfolio quality improvement initiative, which it intended to accomplish in part through the disposition of less strategic assets and undeveloped land. The disposition initiative triggered the recording of impairment charges on 25 operating shopping centers. In 2016, the Company’s management and Board of Directors decided to increase the volume of asset sales beyond the level contemplated in 2015 primarily to accelerate progress on its deleveraging goal. As a result, the decision to accelerate sales triggered the recording of impairment charges on 20 operating shopping centers that management identified as short-term disposition candidates. During 2017, impairments were triggered related to changes in asset hold-period assumptions and/or expected future cash flows primarily in conjunction with the Company’s change in executive management team and strategic direction. This change triggered the recording of impairment charges on 27 operating shopping centers in both the United States and Puerto Rico.

(B)

Amounts recorded primarily were related to land previously held for future development. In 2017, the impairment was triggered primarily by an indicative bid. In 2015, the 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)	As a result of an aggregate valuation allowance on its preferred equity interests in the BRE DDR Joint Ventures (Note 2).

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 the valuation of the preferred equity interests, the significant assumptions used in the discounted cash flow analysis included the discount rate, projected net operating income, the timing of the expected redemption and the exit capitalization rates. 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 and impairments 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, 2017, 2016 and 2015. 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 Impairment Charges
December 31, 2017
Long-lived assets held and used	$	—	$	—	$	1,556.1	$	1,556.1	$	340.5
Preferred equity interests		—		—		272.0		272.0		61.0
December 31, 2016
Long-lived assets held and used		—		—		438.2		438.2		110.9
December 31, 2015
Long-lived assets held and used		—		—		407.1		407.1		279.0
Unconsolidated joint venture investments		—		—		—		—		1.9

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, except price per square foot and price per acre, in thousands):

Quantitative Information About Level 3 Fair Value Measurements

Fair Value at

Range

Description

December 31, 2017

Valuation Technique

Unobservable Inputs

2017

Impairment of consolidated assets

166.8

Indicative Bid^(A)/

Contracted Price

Indicative Bid^(A)/

Contracted Price

N/A

882.6

Income Capitalization Approach/

Sales Comparison Approach

Market Capitalization

Rate

6.25%–10%

499.3

Discounted Cash Flow

Discount Rate

7.75%–9.5%

Terminal Capitalization Rate^(B)

7.45%–21.39%

7.4

Sales Comparison Approach

Price per Acre

$50–$218

Reserve of preferred equity interests

272.0

Discounted Cash Flow

Discount Rate

8.4%–8.8%

Terminal Capitalization

Rate

7.8%–8.5%

NOI Growth Rate

Quantitative Information About Level 3 Fair Value Measurements

Fair Value at

Range

Description

December 31, 2016

Valuation Technique

Unobservable Inputs

2016

Impairment of consolidated assets

13.4

Indicative Bid^(A)/

Contracted Price

Indicative Bid^(A)/

Contracted Price

N/A

398.2

Income Capitalization Approach^(C)/

Sales Comparison Approach

Market Capitalization

Rate

7%–10%

Price per

Square Foot

$15–$31

26.6

Indicative Bid^(A)

N/A

Discounted Cash Flow

Discount Rate

10%–11%

Terminal Capitalization

Rate

10%–12%

(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)	Weighted-average rate of 8.8%

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