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Properties Held For Sale And Related Transactions | 6 Months Ended
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Jun. 30, 2013
Properties Held For Sale And Related Transactions [Abstract] |
Properties Held For Sale And Related Transactions | Note 4 – Properties Held For Sale and Related Transactions The Company conducts a continuing review of the values for all remaining properties “held for sale/conveyance” based on final sales prices and sales contracts entered into. Impairment charges/reversals, if applicable, are based on a comparison of the carrying values of the properties with either (1) actual sales prices less costs to sell for properties sold, or contract amounts for properties in the process of being sold, (2) estimated sales prices based on discounted cash flow analyses, if no contract amounts were as yet being negotiated, as discussed in more detail in Note 5 — “Fair Value Measurements”, (3) an “as is” appraisal with respect to the Philadelphia Redevelopment Property, or (4) with respect to land parcels, estimated sales prices, less cost to sell, based on comparable sales completed in the selected market areas. Prior to the Company’s plan to dispose of properties reclassified to “held for sale/conveyance”, the Company performed recoverability analyses based on the estimated undiscounted cash flows that were expected to result from the real estate investments’ use and eventual disposal. The projected undiscounted cash flows of each property reflected that the carrying value of each real estate investment would be recovered. However, as a result of the properties’ meeting the “held for sale” criteria, such properties were written down to the lower of their carrying value and estimated fair values less costs to sell. On June 5, 2013, the Company sold, through a short sale, Westlake Discount Drug Mart Plaza for net proceeds of $2.1 million. As of that date, the balance of the mortgage loan payable secured by the sold property, including accrued interest and real estate taxes, totaled $3.4 million. The lender accepted the net proceeds of $2.1 million in full satisfaction of the mortgage loan payable and related accrued interest. As a result, the Company recorded a gain on extinguishment of debt of $1.3 million during the second quarter of 2013, which is included in discontinuing operations in the accompanying consolidated statements of operations. As of June 30, 2013, the Company was in the process of negotiating with the respective lenders to three of its properties (Roosevelt II, Gahanna Discount Drug Mart Plaza, and McCormick Place) to convey the properties either through short sale, foreclosure, or deed-in-lieu of foreclosure processes (mortgage loans payable and accrued interest and real estate taxes aggregated $21.5 million at that date). In connection with these conveyances, each applicable subsidiary borrower has stopped paying monthly mortgage payments and is currently in default on these non-recourse mortgages. At the time of such conveyances, the Company would recognize gains (an aggregate of approximately $10.7 million as of June 30, 2013) based on the excess of the carrying amounts of the liabilities (mortgage principal and any accrued property-related expenses) over the carrying amounts of the properties. The following is a summary of the components of income from discontinued operations:
|  | Three months ended June 30, |  | Six months ended June 30,
|  | 2013 |  | 2012 |  | 2013 |  | 2012
Revenues: |  |  |  |  |  |  |  |
Rents |  | $ 1,428,000 |  | $ 4,503,000 |  | $ 3,232,000 |  | $ 9,650,000
Expense recoveries and other |  | 441,000 |  | 1,134,000 |  | 999,000 |  | 2,595,000
Total revenues |  | 1,869,000 |  | 5,637,000 |  | 4,231,000 |  | 12,245,000
Expenses: |  |  |  |  |  |  |  |
Operating, maintenance and management |  | 661,000 |  | 1,905,000 |  | 2,075,000 |  | 3,804,000
Real estate and other property-related taxes |  | 512,000 |  | 832,000 |  | 1,038,000 |  | 2,031,000
Depreciation and amortization |  | - |  | 28,000 |  | - |  | 76,000
Interest |  | 415,000 |  | 1,914,000 |  | 909,000 |  | 3,894,000
Early extinguishment of debt costs |  | - |  | - |  | 437,000 |  | -
Total expenses |  | 1,588,000 |  | 4,679,000 |  | 4,459,000 |  | 9,805,000
Income (loss) from discontinued operations |  |  |  |  |  |  |  |
before impairments |  | 281,000 |  | 958,000 |  | (228,000) |  | 2,440,000
Impairment reversals, net |  | - |  | - |  | - |  | 1,138,000
Income (loss) from discontinued operations |  | $ 281,000 |  | $ 958,000 |  | $ (228,000) |  | $ 3,578,000
Gain on extinguishment of debt |  | $ 1,298,000 |  | $ - |  | $ 1,298,000 |  | $ -
Gain on sales of discontinued operations |  | $ - |  | $ 293,000 |  | $ - |  | $ 750,000
In April 2011, the Company made a two-year $4.1 million loan to the developers of a site located in Reynoldsburg, Ohio (the developers are members of the group from which the Company acquired substantially all of its drug store/convenience centers). The loan bore interest at 6.25% per annum and was collateralized by a first mortgage on the development parcel and personal guarantees from certain of the borrowers. During the fourth quarter of 2012, the borrowers failed to make a scheduled payment and, as of December 31, 2012, the Company concluded that the loan was unlikely to be paid given (1) the then ability of the developers to find an anchor tenant for the development site, (2) certain use restrictions on the land, and (3) numerous legal judgments against individuals that provided the personal guarantees. As a result, the Company wrote off the loan and accrued interest in the fourth quarter of 2012, resulting in an impairment charge of $4.4 million. Subsequently, on March 28, 2013, the borrowers sold the development land parcel for approximately $1.1 million and, simultaneously, the Company accepted $1.1 million in full satisfaction of the loan. As a result, the Company recorded an impairment reversal of $1.1 million during the first quarter of 2013, which is included in continuing operations in the accompanying consolidated statements of operations. During the six months ended June 30, 2013, the Company completed the following transactions related to properties “held for sale/conveyance”:
|  | Percent |  |  |  | Date |  | Sales |  | Gain on
Property |  | Sold |  | Location |  | Sold |  | Price |  | Sale
Discontinued operations: |  |  |  |  |  |  |  |  |  |
East Chestnut |  | 100% |  | Lancaster, PA |  | 1/2/2013 |  | $ 3,100,000 |  | $ -
Columbia Mall |  | 100% |  | Bloomsburg, PA |  | 4/17/2013 |  | $ 2,775,000 |  | $ -
Heritage Crossing |  | 100% |  | Limerick, PA |  | 5/9/2013 |  | $ 9,400,000 |  | $ -
Westlake Discount Drug Mart Plaza |  | 100% |  | Westlake, OH |  | 6/5/2013 |  | $ 2,240,000 |  | $ -
Continuing operations: |  |  |  |  |  |  |  |  |  |
Huntingdon Plaza land parcel |  | 100% |  | Huntingdon, PA |  | 3/29/2013 |  | $ 390,000 |  | $ 291,000

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