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EX-23 - CONSENT OF KPMG - InvenTrust Properties Corp.exhibit231.htm
EX-32 - BRENDA GUJRAL - InvenTrust Properties Corp.exhibit321.htm
EX-31 - LORI FOUST - InvenTrust Properties Corp.exhibit312.htm
EX-32 - LORI FOUST - InvenTrust Properties Corp.exhibit322.htm
EX-21 - SUBSIDIARIES - InvenTrust Properties Corp.exhibit211.htm
EX-31 - BRENDA GUJRAL - InvenTrust Properties Corp.exhibit311.htm


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K


X

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                TO     


COMMISSION FILE NUMBER: 000-51609


Inland American Real Estate Trust, Inc.

 (Exact name of registrant as specified in its charter)


Maryland

34-2019608

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)


2901 Butterfield Road, Oak Brook, Illinois

60523

 (Address of principal executive offices)

(Zip Code)


630-218-8000

 (Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

None


Securities registered pursuant to Section 12(g) of the Act:

Common stock, $0.001 par value per share

(Title of Class)

______________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o      No  X


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   o    No  X


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes X       No o


Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.45 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o        No o


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act).

Large accelerated filer  o          Accelerated filer  o          Non-accelerated filer  X          Smaller reporting company  o


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o     No  X


While there is no established market for the registrant's shares of common stock, the registrant has completed a follow-on primary offering of its shares of common stock pursuant to a registration statement on Form S-11. In each of its primary offerings, the registrant sold shares of its common stock for $10.00 per share, with discounts available for certain categories of purchasers. The number of shares held by non-affiliates as of June 30, 2009 (the last business day of the registrant's most recently completed second fiscal quarter) was approximately 811,245,794.


As of March 10, 2010, there were 827,415,405 shares of the registrant's common stock outstanding.


Documents Incorporated by Reference:  Portions of the registrant's proxy statement for the 2010 annual stockholders meeting which is expected to be filed no later than April 30, 2010 are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14.






INLAND AMERICAN REAL ESTATE TRUST, INC.


TABLE OF CONTENTS


 

Part I

Page

Item  1.

Business

1

 

 

 

Item 1A.

Risk Factors

3

 

 

 

Item 1B.

Unresolved Staff Comments

20

 

 

 

Item  2.

Properties

20

 

 

 

Item  3.

Legal Proceedings

29

 

 

 

Item  4.

Reserved

30

 

 

 

 

Part II

 

 

 

 

Item  5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity   Securities

30

 

 

 

Item  6.

Selected Financial Data

31

 

 

 

Item  7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

33

 

 

 

Item  7A.

Quantitative and Qualitative Disclosures About Market Risk

62

 

 

 

Item  8.

Consolidated Financial Statements and Supplementary Data

64

 

 

 

Item  9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

157

 

 

 

Item 9A(T).

Controls and Procedures

157

 

 

 

Item 9B.

Other Information

157

 

 

 

 

Part III

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

157

 

 

 

Item 11.

Executive Compensation

157

 

 

 

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

157

 

 

 

Item 13.

Certain Relationships and Related Transactions, and Director Independence

158

 

 

 

Item 14.

Principal Accounting Fees and Services

158

 

 

 

 

Part IV

 

 

 

 

Item 15.

Exhibits and Financial Statement Schedules

158

 

 

 

 

Signatures

159


This Annual Report on Form 10-K includes references to certain trademarks. Courtyard by Marriott®, Marriott®, Marriott Suites®, Residence Inn by Marriott® and SpringHill Suites by Marriott® trademarks are the property of Marriott International, Inc. (“Marriott”) or one of its affiliates. Doubletree®, Embassy Suites®, Hampton Inn®, Hilton Garden Inn®, Hilton Hotels® and Homewood Suites by Hilton® trademarks are the property of Hilton Hotels Corporation (“Hilton”) or one or more of its affiliates. Hyatt Place® trademark is the property of Hyatt Corporation (“Hyatt”). Intercontinental Hotels ® trademark is the property of IHG. Wyndham ® and Baymont Inn & Suites ® trademarks are the property of Wyndham Worldwide. Comfort Inn ® trademark is the property of Choice Hotels International. The Aloft service name is the property of Starwood. For convenience, the applicable trademark or service mark symbol has been omitted but will be deemed to be included wherever the above-referenced terms are used.




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PART I


Item 1. Business


General


We were incorporated in October 2004, as a Maryland corporation, to acquire and develop a diversified portfolio of commercial real estate, including retail, multi-family, industrial, lodging, office and student housing properties, as well as triple-net, single use properties of a similar type, located in the United States and Canada. Our sponsor, Inland Real Estate Investment Corporation, herein referred to as our sponsor, is a subsidiary of The Inland Group, Inc. Various affiliates of our sponsor are involved in our operations. We have entered into property management agreements with Inland American Retail Management LLC, Inland American Office Management LLC, Inland American Industrial Management LLC, Inland American Apartment Management LLC, and Inland American Management Services LLC, affiliates of The Inland Group, Inc., which we refer to collectively as our property managers. We have entered into a business management agreement with Inland American Business Manager & Advisor, Inc., an affiliate of our sponsor, to be our business manager.


As of December 31, 2009, we had issued a total of 790,233,468 shares, which includes 670,000 shares issued to our sponsor and business manager primarily in respect of acquisition fees. In addition, we sold 65,912,852 shares through our DRP as of December 31, 2009. We had raised a total of approximately $8.5 billion of gross offering proceeds as of December 31, 2009.


As of December 31, 2009, on a consolidated basis, we owned interests in 713 retail properties (the “retail properties”) containing a total of approximately 16.6 million square feet of retail space, 40 office properties (the “office properties”) containing a total of approximately 10.1 million square feet of office space, 65 industrial properties (the “industrial properties”) containing a total of approximately 15.7 million square feet of industrial space, 99 hotel properties (the "lodging properties") containing a total of 15,121 rooms, 27 multi-family properties (the “multi-family properties”) containing a total of 9,481 units and eight LIP-Holdings LLC (“LIP-H”) properties containing a total of 487,038 square feet. The aggregate purchase price for the properties was $9.7 billion on a consolidated basis. The retail properties, office properties, industrial properties, lodging properties, multi-family properties and LIP-H properties are herein referred to collectively as the “properties”. All of our properties are located within the United States. As of December 31, 2009, the retail properties, the office properties, the industrial properties, the multi-family properties and the LIP-H properties were 93%, 96%, 96%, 84% and 96% leased based on a weighted average basis, respectively. Lodging properties average revenue per available room was $75 and occupancy was 65% for the year ended December 31, 2009.


Segment Data


We have six business segments: Office, Retail, Industrial, Lodging, Multi-family and LIP-H. We evaluate segment performance primarily based on net property operations. Net property operations of the segments do not include interest expense, depreciation and amortization, general and administrative expenses, noncontrolling interest expense or interest and other investment income from corporate investments. The non-segmented assets include our cash and cash equivalents, investment in marketable securities, construction in progress, investment in unconsolidated entities and notes receivable. Information related to our business segments for the year 2009 is set forth in Note 14 to our consolidated financial statements in Item 8 of this annual report on Form 10-K.


Customers


For the year ended December 31, 2009, we generated more than 18% of our rental revenue from two tenants, SunTrust Bank and AT&T, Inc. SunTrust Bank leases multiple properties throughout the United States, which collectively generated approximately 10% of our rental revenue for the year ended December 31, 2009. As of December 31, 2009, approximately 8% of our rental revenue was generated by three properties leased to AT&T, Inc. We are not aware of any current tenants who will not be able to pay their contractual rental amounts as they become due whose inability to pay would have a material adverse impact on our results of operations, financial condition and ability to pay distributions.


Tax Status


We and Minto Builders (Florida), Inc., a majority owned subsidiary, herein referred to as MB REIT, have elected to be taxed as real estate investment trusts, or REITs, under Sections 856 through 860 of the Internal Revenue Code of 1986 as amended (the Code) beginning with the tax year ended December 31, 2005. Because we and MB REIT qualify for taxation as REITs, we and MB REIT generally will not be subject to federal income tax on taxable income that is distributed to stockholders. If we or MB REIT fail to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, we or MB REIT will be subject to federal and state income tax on our taxable income at regular corporate rates. Even if we and MB REIT qualify for taxation as a REIT, we and MB REIT may be subject to certain state and local taxes on our income, property or net worth, respectively, and to Federal income and excise taxes on our or MB REIT's undistributed income.







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Competition


We are subject to significant competition in seeking real estate investments and tenants. We compete with many third parties engaged in real estate investment activities including other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, lenders, hedge funds, governmental bodies and other entities. We also face competition from real estate investment programs, including three REITs, sponsored by our sponsor and its affiliates for retail shopping centers and single tenant net-leased properties that may be suitable for our investment. Some of these competitors, including larger REITs, have substantially greater financial resources than we do and generally may be able to accept more risk. They also may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.


Employees


We have 98 full-time individuals employed primarily by our multi-family subsidiaries. Our executive officers do not receive any compensation from us for their services as such officers. Our executive officers are officers of one or more of The Inland Group, Inc.'s affiliated entities, including our business manager, and are compensated by these entities, in part, for their services rendered to us.


Conflicts of Interest Policies


Our governing documents require a majority of our directors to be independent. Further, any transactions between The Inland Group, Inc. or its affiliates and us must be approved by a majority of our independent directors.


Beginning on page 3 is a discussion of the risks that we believe are material to investors who purchase or own our common stock. You should consider carefully these risks, together with the other information contained in and incorporated by reference in this Annual Report on Form 10-K, and the descriptions included in our consolidated financial statements and accompanying notes.


Environmental Matters


Compliance with federal, state and local environmental laws has not had a material adverse effect on our business, assets, or results of operations, financial condition and ability to pay distributions, and we do not believe that our existing portfolio will require us to incur material expenditures to comply with these laws and regulations.


Seasonality


The lodging segment is seasonal in nature, reflecting higher revenue and operating income during the second and third quarters. This seasonality can be expected to cause fluctuations in our net property operations for the lodging segment. All of our other segments are not seasonal in nature.


Executive Officers


The following sets forth certain information with regard to our executive officers as of December 31, 2009:


Robert D. Parks, 66, has been our chairman of the board and director since our formation.


Brenda G. Gujral, 67, has been our president and director since our formation.


Roberta S. Matlin, 65, has been our vice president - administration since our formation.


Lori J. Foust, 45, has been our treasurer since October 2005 and principal financial officer since September 2007.


Scott W. Wilton, 49, has been our secretary since our formation.


Jack H. Potts, 40, has been our principal accounting officer since September 2007.


Access to Company Information


We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission ("SEC"). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically.





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We make available, free of charge, by responding to requests addressed to our customer relations group, the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports on our website, www.inland-american.com. These reports are available as soon as reasonably practicable after such material is electronically filed or furnished to the SEC.


Certifications


We have filed with the Securities and Exchange Commission the principal executive officer and principal financial officer certifications required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which are attached as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K.


Item 1A.  Risk Factors


The occurrence of any of the risks discussed below could have a material adverse affect on our business, financial condition, results of operations and ability to pay distributions to our stockholders.


Risks Related to Our Business


Recent disruptions in the financial markets and current economic conditions could adversely affect our ability to service our existing indebtedness, our ability to refinance or secure additional debt financing on attractive terms and the values of our investments.


The capital and credit markets have been extremely volatile since the fall of 2008. Liquidity in the global credit market has been severely contracted by these market disruptions, making it costly to refinance existing debt. As a result of the ongoing credit market turmoil, we may not be able to refinance the debt maturing in 2010 and 2011 or to obtain new financing on attractive terms. Accordingly, we may be forced to use a greater proportion of our available cash, including proceeds from the offering under our distribution reinvestment plan, to refinance our debt.


The disruptions in the financial markets and current economic conditions have adversely affected the values of our investments. Turmoil in the capital markets has constrained equity and debt capital available for investment in commercial real estate, resulting in fewer buyers seeking to acquire commercial properties and possible increases in cap rates, which, all things equal, results in lower property values. Further, these current economic conditions have negatively impacted commercial real estate fundamentals, which could have, and in some cases have already had, various negative impacts, including:


·

the values of our investments in commercial properties could decrease below the amounts paid for such investments;


·

the value of collateral securing any loan investment we have made could decrease below the outstanding principal amounts of such loans;


·

revenues from our properties have decreased, and could continue to decrease, due to lower occupancy and rental rates, which may make it more difficult for us to pay distributions or meet our debt service obligations on debt financing; or


·

revenues on the properties and other assets underlying any loan investments we have made could decrease, making it more difficult for borrowers to meet their payment obligations to us.


There is no assurance that we will be able to continue paying cash distributions or that distributions will increase over time.


We intend to continue paying regular monthly cash distributions to our stockholders. However, there are many factors that can affect the availability and timing of cash distributions to stockholders such as our ability to buy, and earn positive yields on, real estate assets, the yields on securities of other entities in which we invest, our operating expense levels, as well as many other variables. Actual cash available for distributions may vary substantially from estimates. There is no assurance that we will be able to continue paying distributions at the current level or that the amount of distributions will increase, or not decrease further, over time. Even if we are able to continue paying distributions, the actual amount and timing of distributions is determined by our board of directors in its discretion and typically depends on the amount of funds available for distribution, which depends on items such as current and projected cash requirements and tax considerations. As a result, our distribution rate and payment frequency may vary from time to time.


Funding distributions from sources other than cash flow from operating activities may negatively impact our ability to sustain or pay distributions.


If our cash flow from operating activities is not sufficient to fully fund the payment of distributions, the level of our distributions may not be sustainable and some or all of our distributions will be paid from other sources. For example, we may generate cash to pay distributions from financing activities, components of which may include borrowings (including borrowings secured by our assets) in




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anticipation of future operating cash flow. To the extent distributions are paid from financing activities, we will have less money available for other uses, such as cash needed to refinance existing indebtedness, which may negatively impact our ability to achieve our investment objectives.


In addition, from time to time, our business manager has determined, in its sole discretion, to either forgo or defer a portion of the business management fee to which it is entitled, to ensure that we generated sufficient cash from operating, investing and financing activities to pay distributions while continuing to raise capital and acquire properties. For the year ended December 31, 2009, we paid a business management fee of $39 million, or approximately .38% of our average invested assets on an annual basis, as well as an investment advisory fee of approximately $1.3 million, together which are less than the full 1% fee that the business manager could be paid. There is no assurance that our business manager will forgo or defer any portion of its business management fee in the future, which may affect our ability to pay distributions or result in us having less cash available for other uses.


An estimated value of our shares of common stock may not exceed the price at which we are offering shares under the distribution reinvestment plan.


Under rules published by the Financial Industry Regulatory Authority (“FINRA”), registered broker-dealers must disclose in a customer’s account statement an estimated value for a REIT’s securities if the annual report of that REIT discloses a per share estimated value. The FINRA rules prohibit broker-dealers from using a per share estimated value developed from data that is more than eighteen months old. We are currently evaluating the method that we will use to assist broker-dealers with this requirement. Because of the uncertainties in the marketplace generally and the factors described herein, which could continue to impact our results of operations and financial condition, we expect that the future per share estimated value of our shares will be less than the price at which we last offered shares in a primary offering or the price of our shares currently offered through our distribution reinvestment plan.


Our share repurchase program has been suspended until further notice, therefore reducing the potential liquidity of a stockholder’s investment.


Our board of directors voted to suspend our share repurchase program until further notice, effective March 30, 2009, therefore eliminating a channel through which stockholders could seek liquidity.


The failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.


We have deposited our cash and cash equivalents in several banking institutions in an attempt to minimize exposure to the failure or takeover of any one of these entities. However, the Federal Insurance Deposit Corporation, or “FDIC,” generally only insures limited amounts per depositor per insured bank. Through 2013, the FDIC is insuring up to $250,000 per depositor per insured bank. At December 31, 2009, we had cash and cash equivalents and restricted cash deposited in interest bearing transaction accounts at certain financial institutions exceeding these federally insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose our deposits over the federally insured levels. The loss of our deposits could reduce the amount of cash we have available to distribute or invest.


Stockholders’ interest in us will be diluted if we issue additional shares.


Stockholders do not have preemptive rights to any shares issued by us in the future. Our articles authorize us to issue up to 1.5 billion shares of capital stock, of which 1.46 billion shares are designated as common stock and 40 million are designated as preferred stock. Future issuances of common stock, including issuances through the DRP, will reduce the percentage of our shares owned by our current stockholders who do not participate in future stock issuances. Stockholders generally will not be entitled to vote on whether or not we issue additional shares. In addition, depending on the terms and pricing of an additional offering of our shares and the value of our properties, our stockholders may experience dilution in both the book value and fair value of their shares. Further, our board could authorize the issuance of stock with terms and conditions that could subordinate the rights of the holders of our current common stock or have the effect of delaying, deferring or preventing a change in control in us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for our stockholders.


Stockholders’ returns may be reduced if we are required to register as an investment company under the Investment Company Act.


We are not registered, and do not intend to register our company or any of our subsidiaries, as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If we become obligated to register our company or any of our subsidiaries as an investment company, the registered entity would have to comply with a variety of substantive requirements under the Investment Company Act imposing, among other things:


·

limitations on capital structure;


·

restrictions on specified investments;




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·

prohibitions on transactions with affiliates; and


·

compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.


We intend to continue to conduct our operations, directly and through wholly or majority-owned subsidiaries, so that we and each of our subsidiaries continue to be exempt from registration as an investment company under the Investment Company Act. Under Section 3(a)(1)(A) of the Investment Company Act, a company is not deemed to be an “investment company” if it neither is, nor holds itself out as being, engaged primarily, nor proposes to engage primarily, in the business of investing, reinvesting or trading in securities. Under Section 3(a)(1)(C) of the Investment Company Act, a company is not deemed to be an “investment company” if it neither is engaged, nor proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and does not own or propose to acquire “investment securities” having a value exceeding 40% of the value of its total assets on an unconsolidated basis, which we refer to as the “40% test.”


We believe that we and most, if not all, of our wholly and majority-owned subsidiaries are not considered investment companies under either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act. In the event that the company or any of its wholly or majority-owned subsidiaries would ever inadvertently fall within one of the definitions of “investment company,” we intend to rely on the exception provided by Section 3(c)(5)(C) of the Investment Company Act.


Under Section 3(c)(5)(C), the SEC staff generally requires us to maintain at least 55% of our assets directly in qualifying assets to qualify for this exception. Mortgage-backed securities may or may not constitute such qualifying assets, depending on the characteristics of the mortgage-backed securities, including the rights that we have with respect to the underlying loans. Our ownership of mortgage-backed securities, therefore, is limited by provisions of the Investment Company Act and SEC staff interpretations.


The method we use to classify our assets for purposes of the Investment Company Act is based in large measure upon no-action positions taken by the SEC staff in the past. These no-action positions were issued in accordance with factual situations that may be substantially different from the factual situations we may face, and a number of these no-action positions were issued more than ten years ago. No assurance can be given that the SEC staff will concur with our classification of our assets. In addition, the SEC staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of qualifying for exemption from regulation under the Investment Company Act. If we are required to re-classify our assets, we may no longer be in compliance with the exclusion from the definition of an “investment company” provided by Section 3(c)(5)(C) of the Investment Company Act.


A change in the value of any of our assets could cause us to fall within the definition of “investment company” and negatively affect our ability to maintain our exemption from regulation under the Investment Company Act. To avoid being required to register our company or any of our subsidiaries as an investment company under the Investment Company Act, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in companies that we would otherwise want to acquire and would be important to our investment strategy.


If we were required to register the company as an investment company but failed to do so, we would be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business.


Risks Related to Investments in Real Estate


There are inherent risks with real estate investments.


Investments in real estate assets are subject to varying degrees of risk. For example, an investment in real estate cannot generally be quickly converted to cash, limiting our ability to promptly vary our portfolio in response to changing economic, financial and investment conditions. Investments in real estate assets also are subject to adverse changes in general economic conditions which, for example, reduce the demand for rental space. Other factors also affect the value of real estate assets, including:


·

federal, state or local regulations and controls affecting rents, zoning, prices of goods, fuel and energy consumption, water and environmental restrictions;


·

the attractiveness of a property to tenants; and


·

labor and material costs.


Further, our investments may not generate revenues sufficient to meet operating expenses.





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We are directly affected by general economic and regulatory factors that impact real estate investments.


Because we invest primarily in commercial real estate, we are impacted by general economic and regulatory factors impacting real estate investments. These factors are generally outside of our control. Among the factors that could impact our real estate assets and the value of an investment in us are:


·

local conditions such as an oversupply of space or reduced demand for real estate assets of the type that we own or seek to acquire, including, with respect to our lodging facilities, quick changes in supply of and demand for rooms that are rented or leased on a day-to-day basis;


·

inability to collect rent from tenants;


·

vacancies or inability to rent space on favorable terms;


·

inflation and other increases in operating costs, including insurance premiums, utilities and real estate taxes;


·

increases in energy costs or airline fares or terrorist incidents which impact the propensity of people to travel and therefore impact revenues from our lodging facilities, although operating costs cannot be adjusted as quickly;


·

adverse changes in the laws and regulations applicable to us;


·

the relative illiquidity of real estate investments;


·

changing market demographics;


·

an inability to acquire and finance, or refinance, properties on favorable terms;


·

acts of God, such as earthquakes, floods or other uninsured losses; and


·

changes or increases in interest rates and availability of permanent mortgage funds.


In addition, periods of economic slowdown or recession, or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or increased defaults under existing leases.


Increasing vacancy rates for certain classes of real estate assets resulting from the recent economic downturn and disruption in the financial markets could adversely affect the value of our assets.


Recent disruptions in the financial markets and deteriorating economic conditions have resulted in a trend toward increasing vacancy rates for certain classes of commercial property, including office, retail and industrial properties, due to increased tenant delinquencies and defaults under leases, generally lower demand for rentable space, as well as potential oversupply of rentable space. Business failures and downsizings have led to reduced demand for office and industrial space and reduced consumer demand for retail products and services, which has led to reduced demand for retail space. Reduced demand for commercial properties such as retail, office and industrial space could require us to increase concessions, tenant improvement expenditures or reduce rental rates to maintain occupancies beyond those anticipated at the time we acquired the properties. The continuation of disruptions in the financial markets and deteriorating economic conditions could impact certain of our properties, and these properties could experience higher levels of vacancies than anticipated at the time of our acquisition. The value of our real estate assets could decrease below the amounts we paid for them. Revenues from properties could decrease due to lower occupancy rates, reduced rental rates and potential increases in uncollectible rent. Additionally, we will incur expenses, such as for maintenance costs, insurances costs and property taxes, even though a property is vacant. The longer the period of significant vacancies for a property, the greater the potential negative impact on our revenues and results of operations.


Current economic conditions may adversely affect the lodging industry, and thus our lodging segment.


The performance of the lodging industry has historically been closely linked to the performance of the general economy and, specifically, growth in U.S. GDP. It is also sensitive to business and personal discretionary spending levels. Declines in corporate travel budgets and consumer demand due to adverse general economic conditions, such as declines in U.S. GDP, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions have lowered, and may continue to lower, the revenues and profitability of our hotel properties and therefore the net operating profits of the lessees to whom we lease our hotel properties. The current global economic downturn has led to a significant decline in demand for products and services provided by the lodging industry, lower occupancy levels and significantly reduced room rates. We anticipate that recovery of demand for products and services provided by the lodging industry will lag improvement in economic conditions. We cannot predict how severe or prolonged the global economic downturn will be or how severe or prolonged the lodging industry downturn will be. A further extended period of economic weakness will have an adverse impact on revenues from our lodging segment.




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We depend on tenants for the majority of our revenue, and lease terminations or the exercise of any co-tenancy rights could have an adverse effect.


Defaults on lease payment obligations by our tenants would cause us to lose the revenue associated with that lease and require us to find an alternative source of revenue to pay our mortgage indebtedness and prevent a foreclosure action. If a tenant defaults, we may experience delays in enforcing our rights as a landlord and may incur substantial costs in protecting our investment. We would face increased difficulties with respect to a lease containing co-tenancy provisions where a failure by one tenant gives another tenant the right to abate minimum rent, reduce its share or the amount of its payments of common area operating expenses and property taxes or cancel its lease. In addition, if a tenant at one of our “single-user facilities,” properties designed or built primarily for a particular tenant or a specific type of use, fails to renew its lease or defaults on its lease obligations, we may not be able to readily market a single-user facility to a new tenant without making substantial capital improvements or incurring other significant re-leasing costs.


We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.


The current economic conditions have caused, and may continue to cause, our tenants to experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business. The retail sector in particular has been affected by economic conditions, resulting in some retailers declaring bankruptcy or closing their stores. We cannot provide assurance that any tenant that files for bankruptcy protection will continue to pay us rent. A bankruptcy filing by or relating to one of our tenants or a lease guarantor would bar efforts by us to collect pre-bankruptcy debts from that tenant or lease guarantor, or its property, unless we receive an order permitting us to do so from the bankruptcy court. In addition, we cannot evict a tenant solely because of bankruptcy. The bankruptcy of a tenant or lease guarantor could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude collection of these sums. If a lease is assumed by the tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full. If, however, a lease is rejected by a tenant in bankruptcy, we would have only a general, unsecured claim for damages. An unsecured claim would only be paid to the extent that funds are available and only in the same percentage as is paid to all other holders of general, unsecured claims. Restrictions under the bankruptcy laws further limit the amount of any other claims that we can make if a lease is rejected. As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.


We may be unable to secure funds for future tenant improvements.


We may be required to expend substantial funds to improve leasable space either to maintain existing tenants or to attract new tenants. Although we have established reserves for capital improvements, these reserves may not be sufficient, thus requiring us to seek funds from other sources. We cannot assure you that sufficient financing will be available or, if available, will be available on terms acceptable to us, if at all. Moreover, certain reserves required by lenders may be designated for specific uses and may not be available to use for tenant improvements. Additional borrowing for capital improvements will increase our interest expense. Failure to make these improvements could have a material adverse effect on the value of the impacted properties and the revenues generated by those properties.


Delays in locating suitable investments could adversely affect the return on a stockholder’s investment.


Even if we are able to access sufficient capital, we may suffer from delays in deploying the capital into properties or other real estate assets. Delays may occur, for example, as a result of our relying on our business manager and its affiliates, including Inland Real Estate Acquisitions, Inc., or “IREA,” to identify these opportunities given that these entities are simultaneously seeking to locate suitable investments for other programs sponsored by our sponsor. Delays in selecting, acquiring and developing real estate assets could adversely affect investor returns. In addition, when we acquire a property prior to the start of construction or during the early stages of construction, it typically takes several months to complete construction and rent available space. Further, we also may experience delays as a result negotiating or obtaining the necessary purchase documentation to close an acquisition.


We may be restricted from re-leasing space.


In the case of leases with retail tenants, the majority of the leases contain provisions giving the particular tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center. These provisions may limit the number and types of prospective tenants interested in leasing space in a particular retail property.


Two of our tenants generated a significant portion of our revenue, and rental payment defaults by these significant tenants could adversely affect our results of operations.


For the year ended December 31, 2009, approximately 10% of our rental revenue was generated by over 400 retail banking properties leased to SunTrust Bank. Also, as of December 31, 2009, approximately 8% of our rental revenue was generated by three properties leased to AT&T, Inc. As a result of the concentration of revenue generated from these properties, if either SunTrust or AT&T were to cease paying rent or fulfilling its other monetary obligations, we could have significantly reduced rental revenues or higher expenses until the defaults were cured or the properties were leased to a new tenant or tenants.




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Geographic concentration of our portfolio may make us particularly susceptible to adverse economic developments in the real estate markets of those areas or natural disasters in those areas.


In the event that we have a concentration of properties in a particular geographic area, and lack a geographically diversified portfolio, our operating results are likely to be impacted by economic changes affecting the real estate markets in that area. As of December 31, 2009, approximately 4%, 4%, 5%, 8% and 10% of our base rental income of our consolidated portfolio, excluding our lodging facilities, was generated by properties located in the Dallas, Washington, D.C., Minneapolis, Chicago and Houston metropolitan areas, respectively.


Additionally, at December 31, 2009, thirty-nine of our lodging facilities, or approximately 39% of our lodging portfolio, were located in the eight eastern seaboard states ranging from Connecticut to Florida, including thirteen hotels located in North Carolina. Adverse events in these areas, such as recessions, hurricanes or other natural disasters, could cause a loss of revenues from these hotels. Further, several of the hotels are located near the Atlantic Ocean and are exposed to more severe weather than hotels located inland. Elements such as salt water and humidity can increase or accelerate wear on the hotels’ weatherproofing and mechanical, electrical and other systems, and cause mold issues. As a result, we may incur additional operating costs and expenditures for capital improvements at these hotels. This geographic concentration also exposes us to risks of oversupply and competition in these markets. Significant increases in the supply of certain property types, including hotels, without corresponding increases in demand could have a material adverse effect on our financial condition, results of operations and our ability to pay distributions.


To qualify as a REIT, we must rely on third parties to operate our hotels.


To continue qualifying as a REIT, we may not, among other things, operate any hotel, or directly participate in the decisions affecting the daily operations of any hotel. Thus, we have retained third party managers to operate our hotel properties. We do not have the authority to directly control any particular aspect of the daily operations of any hotel, such as setting room rates. Thus, even if we believe our hotels are being operated in an inefficient or sub-optimal manner, we may not be able to require an immediate change to the method of operation. Our only alternative for changing the operation of our hotels may be to replace the third party manager of one or more hotels in situations where the applicable management agreement permits us to terminate the existing manager. Certain of these agreements may not be terminated without cause, which generally includes fraud, misrepresentation and other illegal acts. Even if we terminate or replace any manager, there is no assurance that we will be able to find another manager or that we will be able to enter into new management agreements favorable to us. Any change of hotel management would cause a disruption in operations.


Conditions of franchise agreements could adversely affect us.


Our lodging properties are operated under franchises with nationally recognized franchisors including Marriott International, Inc., Hilton Hotels Corporation, Intercontinental Hotels Group PLC, Hyatt Corporation, Wyndham Worldwide Corporation and Choice Hotels International. These agreements generally contain specific standards for, and restrictions and limitations on, the operation and maintenance of a hotel in order to maintain uniformity within the franchisor’s system. These standards are subject to change over time, in some cases at the discretion of the franchisor, and may restrict our ability to make improvements or modifications to a hotel without the consent of the franchisor. Conversely, these standards may require us to make certain improvements or modifications to a hotel, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment. Compliance with these standards could require us to incur significant expenses or capital expenditures.


These agreements also permit the franchisor to terminate the agreement in certain cases such as a failure to pay royalties and fees or perform our other covenants under the franchise agreement, bankruptcy, abandonment of the franchise, commission of a felony, assignment of the franchise without the consent of the franchisor or failure to comply with applicable law or maintain applicable standards in the operation and condition of the relevant hotel. If a franchise license terminates due to our failure to make required improvements or to otherwise comply with its terms, we may be liable to the franchisor for a termination payment. These payments vary. Also, these franchise agreements do not renew automatically. We received notice from a franchisor that the franchise license agreement for one hotel, consisting of 129 rooms, which expires in November 2010, will not be renewed.


Actions of our joint venture partners could negatively impact our performance.


As of December 31, 2009, we had entered into joint venture agreements with sixteen entities to fund the development or acquisition of office, industrial/distribution, retail, lodging, healthcare and mixed use properties. The balance of our investment in these joint ventures, which we do not consolidate for financial reporting purposes, was $453.8 million. For the year ended December 31, 2009, we recorded impairments on these investments in an aggregate amount equal to $7.4 million and recognized losses of $78.5 million. Our joint venture investments may involve risks not otherwise present with other methods of investment in real estate, as our co-member, co-venturer or partner may have economic or business interests or goals which are or which become inconsistent with our business interests or goals or may take action contrary to our instructions or requests or contrary to our policies or objectives. We have experienced these events from time to time with our current venture partners, which in some cases has resulted in litigation with these partners. More specifically, we are involved in litigation in respect of our ventures with Lex-Win Concord LLC and affiliates of The Lauth Group, Inc. There can be no assurance that an adverse outcome in these lawsuits, or any future lawsuits, will not have a material




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effect on our results of operations for any particular period. In addition, any litigation increases our expenses and prevents our officers and directors from focusing their time and effort on other aspects of our business.


Current economic conditions have also increased the risk that our venture partners may become bankrupt, which would mean that we and any other remaining venture partners would generally remain liable for the joint venture’s liabilities, and the risk that that our partners may fail to fund their share of any required capital contributions, which could result in us having to contribute that capital. In addition, our relationships with our venture partners are contractual in nature. These agreements may restrict our ability to sell our interest when we desire or on advantageous terms and, on the other hand, may be terminated or dissolved under the terms of the agreements and, in each event, we may not continue to own or operate the interests or assets underlying the relationship or may need to purchase these interests or assets at an above-market price to continue ownership.


Current credit market disruptions and recent economic trends may increase the likelihood of a commercial developer defaulting on its obligations with respect to our development projects, including projects where we have notes receivable, or becoming bankrupt or insolvent.


We have entered into, and may continue to enter into, projects that are in various stages of pre-development and development. Investing in properties under development, and in lodging facilities, which typically must be renovated or otherwise improved on a regular basis, including renovations and improvements required by existing franchise agreements, subjects us to uncertainties such as the ability to achieve desired zoning for development, environmental concerns of governmental entities or community groups, ability to control construction costs or to build in conformity with plans, specifications and timetables. The current economic climate has continued to impact real developments as well. The current and projected slow-down in consumer spending has negatively impacted the retail environment in particular, and is causing many retailers to pull back from new leasing and expansion plans. We believe that our retail developments will experience longer lease-up periods and future leasing will be at leasing rates less than originally underwritten.


In addition, current economic conditions have caused an increase in developer failures. The developers of the projects in which we have invested are exposed to risks not only with respect to our projects, but also other projects in which they are involved. A default by a developer in respect of one of our development project investments, or the bankruptcy, insolvency or other failure of a developer for one of these projects, may require that we determine whether we want to assume the senior loan, fund monies beyond what we are contractually obligated to fund, take over development of the project, find another developer for the project, or sell our interest in the project. Developer failures could give tenants the right to terminate pre-construction leases, delay efforts to complete or sell the development project and could ultimately preclude us from realizing our anticipated returns. These events could cause a decrease in the value of our assets and compel us to seek additional sources of liquidity, which may or may not be available, in order to hold and complete the development project.


Generally, under bankruptcy law and our bankruptcy guarantees with our joint venture development partners, we may seek recourse from the developer-guarantor to complete our development project with a substitute developer partner. However, in the event of a bankruptcy by the developer-guarantor, we cannot provide assurance that the developer or its trustee will satisfy its obligations. The bankruptcy of any developer and the rejection of its development obligations would likely cause us to have to complete the development on our own or find a replacement developer, which could result in delays and increased costs. We cannot provide assurance that we would be able to complete the development on terms as favorable as when we first entered into the project. If we are not able to, or elected not to, proceed with a development opportunity, the development costs ordinarily would be charged against income for the then-current period if we determine our costs are not recoverable.


Sale leaseback transactions may be recharacterized in a manner unfavorable to us.


From time to time we have entered into a sale leaseback transaction where we purchase a property and then lease the property to the seller. These transactions could, however, be characterized as a financing instead of a sale in the case of the seller’s bankruptcy. In this case, we would not be treated as the owner of the property but rather as a creditor with no interest in the property itself. The seller may have the ability in a bankruptcy proceeding to restructure the financing by imposing new terms and conditions. The transaction also may be recharacterized as a joint venture. In this case, we would be treated as a joint venturer with liability, under some circumstances, for debts incurred by the seller relating to the property.


We may be unable to sell assets if or when we decide to do so.


Our ability to sell real estate assets is limited by the provisions governing our continued qualifications as a REIT as well as by many other factors, such as general economic conditions, the availability of financing to the purchaser, interest rates and the supply and demand for the particular asset type. Specifically, as a result of current economic conditions, potential purchasers may be unable to obtain financing on acceptable terms, if at all, thereby delaying our ability to sell our real estate investments. In addition, the capitalization rates at which properties may be sold could rise, thereby reducing our potential proceeds from sale. In addition, if we sell properties by providing financing to purchasers, we will bear the risk of default by the purchaser and may incur significant litigation costs in enforcing our rights against the purchaser. We cannot predict whether we will be able to sell any real estate asset on favorable terms and conditions, if at all, or the length of time needed to sell an asset.




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An increase in real estate taxes may decrease our income from properties.


From time to time, the amount we pay for property taxes increases as either property values increase or assessment rates are adjusted. Increases in a property’s value or in the assessment rate result in an increase in the real estate taxes due on that property. If we are unable to pass the increase in taxes through to our tenants, our net operating income for the property decreases.


Uninsured losses or premiums for insurance coverage may adversely affect a stockholder’s returns.


We attempt to adequately insure all of our properties against casualty losses. There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders sometimes require commercial property owners to purchase specific coverage against terrorism as a condition for providing mortgage loans. These policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. If we incur any casualty losses not fully covered by insurance, the value of our assets will be reduced by the amount of the uninsured loss. In addition, other than any reserves we may establish, we have no source of funding to repair or reconstruct any uninsured damaged property, and we cannot provide assurance that any of these sources of funding will be available to us in the future.


Terrorist attacks and other acts of violence or war may affect the markets in which we operate, our operations and our profitability.


We may acquire real estate assets located in areas that are susceptible to attack. These attacks may directly impact the value of our assets through damage, destruction, loss or increased security costs. Although we may obtain terrorism insurance, we may not be able to obtain sufficient coverage to fund any losses we may incur. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Further, certain losses resulting from these types of events are uninsurable or not insurable at reasonable costs.


More generally, any terrorist attack, other act of violence or war, including armed conflicts, could result in increased volatility in, or damage to, the United States and worldwide financial markets and economy. Any terrorist incident may, for example, deter people from traveling, which could affect the ability of our hotels to generate operating income and therefore our ability to pay distributions. Additionally, increased economic volatility could adversely affect our tenants’ ability to pay rent on their leases or our ability to borrow money or issue capital stock at acceptable prices.


The cost of complying with environmental and other governmental laws and regulations may adversely affect us.


All real property and the operations conducted on real property are subject to federal, state and local laws and regulations (including those of foreign jurisdictions) relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. We also are required to comply with various local, state and federal fire, health, life-safety and similar regulations. Some of these laws and regulations may impose joint and several liability on tenants or owners for the costs of investigating or remediating contaminated properties. These laws and regulations often impose liability whether or not the owner knew of, or was responsible for, the presence of the hazardous or toxic substances. The cost of removing or remediating could be substantial. In addition, the presence of these substances, or the failure to properly remediate these substances, may adversely affect our ability to sell or rent a property or to use the property as collateral for borrowing.


Environmental laws and regulations also may impose restrictions on the manner in which properties may be used or businesses may be operated, and these restrictions may require substantial expenditures by us. Environmental laws and regulations provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Third parties may seek recovery from owners of real properties for personal injury or property damage associated with exposure to released hazardous substances. Compliance with new or more stringent laws or regulations or stricter interpretations of existing laws may require material expenditures by us. For example, various federal, regional and state laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions. Among other things, “green” building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency, and waste management. We are not aware of any such existing requirements that we believe will have a material impact on our current operations. However, future requirements could increase the costs of maintaining or improving our existing properties or developing new properties.







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Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.


The presence of mold at any of our properties could require us to undertake a costly program to remediate, contain or remove the mold. Mold growth may occur when moisture accumulates in buildings or on building materials. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing because exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. The presence of mold could expose us to liability from our tenants, their employees and others if property damage or health concerns arise.


We may incur significant costs to comply with the Americans With Disabilities Act.


Investment in real estate assets also may be subject to the Americans With Disabilities Act of 1990, as amended. Under this act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The act’s requirements could require us to remove access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages.


We may have increased exposure to liabilities as a result of any participation by us in Section 1031 Exchange Transactions.


We may enter into transactions that qualify for like-kind exchange treatment under Section 1031 of the Internal Revenue Code (a “1031 Exchange Transaction”). Real estate acquired through a 1031 Exchange Transaction is commonly structured as the acquisition of real estate owned in co-tenancy arrangements with persons (“1031 Participants”) in tax pass-through entities, including single-member limited liability companies or similar entities. Changes in tax laws may adversely affect 1031 Exchange Transactions. Owning co-tenancy interests involves risks generally not otherwise present with an investment in real estate such as:


·

the risk that a co-tenant may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;


·

the risk that a co-tenant may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or


·

the possibility that a co-tenant might become insolvent or bankrupt, which may be an event of default under mortgage loan financing documents or allow a bankruptcy court to reject the tenants in common agreement or management agreement entered into by the co-tenants owning interests in the property.


If our interests become adverse to those of the other co-tenants in a 1031 Exchange Transaction, we may not have the contractual right to purchase the co-tenancy interests from the other co-tenants. Even if we are given the opportunity to purchase the co-tenancy interests, we cannot guarantee that we will have sufficient funds available to complete a purchase.


In addition, we may desire to sell our co-tenancy interests in a given property at a time when the other co-tenants do not desire to sell their interests. Therefore, we may not be able to sell our interest in a property at the time we would like to sell. We also expect it to be more difficult to find a willing buyer for our co-tenancy interests in a property than it would be to find a buyer for a property we owned outright. Further, agreements that contain obligations to acquire unsold co-tenancy interests in properties may be viewed by institutional lenders as a contingent liability against our cash or other assets, limiting our ability to borrow funds in the future.


Risks Related to Investments in Other Real Estate Assets


Our investments in equity and debt securities have materially impacted, and may in the future materially, impact our results.


We have invested, and may continue to invest, in real estate related securities of both publicly traded and private real estate companies. Real estate related equity securities are always unsecured and subordinated to other obligations of the issuer. Investments in real estate related equity securities are subject to risks of: (1) limited liquidity in the secondary trading market in the case of unlisted or thinly traded securities; (2) substantial market price volatility resulting from changes in prevailing interest rates in the case of traded equity securities; (3) subordination to the liabilities of the entity; (4) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to redeem the securities; and (5) the possibility that earnings of the issuer may be insufficient to meet its debt service and distribution obligations.  In addition, investments in real estate related securities will involve special risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer. Issuers of real estate related securities generally invest in real estate or real estate related assets and are subject to the inherent risks associated with real estate related investments.


As of December 31, 2009, we had investments valued at $217.1 million in real estate related equity and debt securities. Many of the entities that we have invested in have reduced the dividends paid on their stocks. The stock prices for these entities have declined




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since our initial purchase. There is no assurance that the stock market in general, and the market for REIT stocks, in particular, will improve in the near future.


Recent market conditions and the risk of continued market deterioration may reduce the value of any real estate related securities in which we may invest.


Recently the U.S. credit markets and the residential mortgage market have experienced severe dislocations and liquidity disruptions. Mortgage loans have experienced increasing rates of delinquency, foreclosure and loss. These and other related events have had a significant impact on the capital markets associated not only with mortgage-backed securities, asset-backed securities and collateralized debt obligations, but also with the U.S. credit and financial markets as a whole.


Our investments in real estate related securities, including commercial mortgage-backed securities, sometimes referred to herein as “CMBS,” expose us to the volatility of the credit markets. Turmoil in the credit market may continue to have a material adverse effect on the value of our securities portfolio.


Because there may be significant uncertainty in the valuation of, or in the stability of the value of, securities holdings, the fair values of these investments might not reflect the prices that we would obtain if we sold these investments. Furthermore, due to the recent market events, these investments are subject to rapid changes in value caused by sudden developments that could have a material adverse affect on the value of these investments.


To the extent that these volatile market conditions persist or deteriorate, they have and may continue to negatively impact our ability to both acquire and potentially sell our real estate related securities holdings at a price and with terms acceptable to us, and, as noted above, we may be required to recognize additional impairment charges or unrealized losses.


We have invested in commercial mortgage-backed securities, which may increase our exposure to credit and interest rate risk.


We have invested, and may continue to invest, in commercial mortgage-backed securities, which may increase our exposure to credit and interest rate risk. In this context, credit risk is the risk that borrowers will default on the mortgages underlying the commercial mortgage-backed securities. Interest rate risk occurs as prevailing market interest rates change relative to the current yield on the commercial mortgage-backed securities. For example, when interest rates fall, borrowers are more likely to prepay their existing mortgages to take advantage of the lower cost of financing. As prepayments occur, principal is returned to the holders of the commercial mortgage-backed securities sooner than expected, thereby lowering the effective yield on the investment. On the other hand, when interest rates rise, borrowers are more likely to maintain their existing mortgages. As a result, prepayments decrease, thereby extending the average maturity of the mortgages underlying the commercial mortgage-backed securities. We may be unable to manage these risks.


Any mortgage loans that we originate or purchase are subject to the risks of delinquency and foreclosure.


We may originate and purchase mortgage loans, including indirectly through our lodging subsidiaries. These loans are subject to risks of delinquency and foreclosure, and risks of loss. The ability of a borrower to repay a loan secured by an income-producing property depends primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. A property’s net operating income can be affected by, among other things:


·

increased costs, including, with respect to our lodging facilities, added costs imposed by franchisors for improvements or operating changes required, from time to time, under the franchise agreements;


·

poor property management decisions;


·

property location and condition;


·

competition from comparable types of properties;


·

changes in specific industry segments;


·

declines in regional or local real estate values, or occupancy rates; and


·

increases in interest rates, real estate tax rates and other operating expenses.


We bear the risks of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to that borrower will be deemed to be collateralized only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-




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in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process that could have a substantial negative effect on our anticipated return on the foreclosed mortgage loan. We may also be forced to foreclose on certain properties, be unable to sell these properties and be forced to incur substantial expenses to improve operations at the property.


We may make a mortgage loan to affiliates of, or entities sponsored by, our sponsor.


If we have excess working capital, we may, from time to time, and subject to the conditions in our articles, make a mortgage loan to affiliates of, or entities sponsored by, our sponsor. These loan arrangements will not be negotiated at arm’s length and may contain terms and conditions that are not in our best interest and would not otherwise be applicable if we entered into arrangements with a third-party borrower not affiliated with these entities.


Risks Associated with Debt Financing


Borrowings may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans.


In some instances, we acquire real estate assets by using either existing financing or borrowing new monies. Our articles generally limit the total amount we may borrow to 300% of our net assets. In addition, we may obtain loans secured by some or all of our properties or other assets to fund additional acquisitions or operations including to satisfy the requirement that we distribute at least 90% of our annual “REIT taxable income” (subject to certain adjustments) to our stockholders, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for federal income tax purposes. Payments required on any amounts we borrow reduce the funds available for, among other things, distributions to our stockholders because cash otherwise available for distribution is required to pay principal and interest associated with amounts we borrow.


Defaults on loans secured by a property we own may result in us losing the property or properties securing the loan that is in default as a result of foreclosure actions initiated by a lender. For tax purposes, a foreclosure would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the property. If the outstanding balance of the debt exceeds our tax basis in the property, we would recognize taxable gain on the foreclosure but would not receive any cash proceeds. We also may fully or partially guarantee any monies that subsidiaries borrow to purchase or operate real estate assets. In these cases, we will be responsible to the lender for repaying the loans if the subsidiary is unable to do so. If any mortgage contains cross-collateralization or cross-default provisions, more than one property may be affected by a default.


Lenders may restrict certain aspects of our operations, which could, among other things, limit our ability to make distributions.


The terms and conditions contained in any of our loan documents may require us to maintain cash reserves, limit the aggregate amount we may borrow on a secured and unsecured basis, require us to satisfy restrictive financial covenants, prevent us from entering into certain business transactions, such as a merger, sale of assets or other business combination, restrict our leasing operations or require us to obtain consent from the lender to complete transactions or make investments that are ordinarily approved only by our board of directors. In addition, secured lenders typically restrict our ability to discontinue insurance coverage on a mortgaged property even though we may believe that the insurance premiums paid to insure against certain losses, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, are greater than the potential risk of loss.


Interest-only indebtedness may increase our risk of default.


We have financed, and may continue to finance, our property acquisitions or any re-financings using interest-only mortgage indebtedness. During the interest only period, the amount of each scheduled payment is less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan and will reduce the funds available for distribution to our stockholders.


Increases in interest rates could increase the amount of our debt payments.


We have borrowed money that bears interest at variable rates. To date, we have effectively converted some of our variable rate debt into fixed rate debt through the use of swap agreements. Increased payments will reduce the funds available for other needs, including distribution to our stockholders, because cash otherwise available for distribution will be required to pay increased interest costs. In addition, if rising interest rates cause us to need additional capital to repay indebtedness, we may be forced to sell one or more of our properties or investments in real estate at times which may not permit us to realize the return on the investments we would have otherwise realized.






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To hedge against interest rate fluctuations, we use derivative financial instruments, which may be costly and ineffective.


From time to time, we use derivative financial instruments to hedge exposures to changes in interest rates on certain loans secured by our assets. Our derivative instruments currently consist of interest rate swap contracts but may, in the future, include, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions are determined in light of the facts and circumstances existing at the time of the hedge and may differ from our currently anticipated hedging strategy. There is no assurance that our hedging strategy will achieve our objectives. We may be subject to costs, such as transaction fees or breakage costs, if we terminate these arrangements.


To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we are exposed to credit risk, basis risk and legal enforceability risks. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract. As a result of the global credit crisis, there is a risk that counterparties could fail, shut down, file for bankruptcy or be unable to pay out contracts. The failure of a counterparty that holds collateral that we post in connection with certain interest rate swap agreements could result in the loss of that collateral.


Hedging instruments often are not traded on regulated exchanges, guaranteed by an exchange or its clearing house, or regulated by any U.S. or foreign governmental authorities and involve risks of default by the hedging counterparty and illiquidity.


Hedging instruments involve risk since they often are not traded on regulated exchanges, guaranteed by an exchange or its clearinghouse, or regulated by any U.S. or foreign governmental authorities. Consequently, there are no requirements with respect to record keeping, financial responsibility or segregation of customer funds and positions. Furthermore, the enforceability of agreements underlying derivative transactions may depend on compliance with applicable statutory and commodity and other regulatory requirements and, depending on the identity of the counterparty, applicable international requirements. The business failure of a hedging counterparty with whom we enter into a hedging transaction will most likely result in a default. Default by a party with whom we enter into a hedging transaction may result in the loss of unrealized profits and force us to cover our resale commitments, if any, at the then current market price. Although generally we will seek to reserve the right to terminate our hedging positions, it may not always be possible to dispose of or close out a hedging position without the consent of the hedging counterparty, and we may not be able to enter into an offsetting contract to cover our risk. We cannot provide assurance that a liquid secondary market will exist for hedging instruments purchased or sold, and we may be required to maintain a position until exercise or expiration, which could result in losses.


We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition.


We typically finance a portion of the purchase price for each property that we acquire. However, to ensure that our offers are as competitive as possible, we generally do not enter into contracts to purchase property that include financing contingencies. Thus, we may be contractually obligated to purchase a property even if we are unable to secure financing for the acquisition. In this event, we may choose to close on the property by using cash on hand, which would result in less cash available for our operations and distributions to stockholders. Alternatively, we may choose not to close on the acquisition of the property and default on the purchase contract. If we default on any purchase contract, we could lose our earnest money and become subject to liquidated or other contractual damages and remedies.


Risks Related to Conflicts of Interest


There are conflicts of interest between us and affiliates of our sponsor that may affect our acquisition of properties and financial performance.


Our operation and management may be influenced or affected by conflicts of interest arising out of our relationship with entities sponsored by our sponsor. Specifically, our sponsor recently formed a new REIT, Inland Diversified Real Estate Trust, Inc., which relies on an affiliate of our business manager to serve as its business manager. Inland Diversified invests in the same broad range of asset types as us. As a result, we are seeking to buy properties and other real estate assets at the same time as Inland Diversified. The resolution of conflicts in favor of Inland Diversified and any other entities sponsored by our sponsor could result in us losing investment opportunities, losing tenants or suffering from delays in locating replacement tenants.


We do not have our own acquisition group.


Except for the persons employed by our student housing subsidiaries, we do not employ directly any persons responsible for identifying and acquiring properties or other real estate assets. Instead, we rely on entities affiliated with our sponsor such as IREA and Inland Institutional Capital Partners Corporation to identify and acquire other real estate assets. Other entities formed and organized by our sponsor likewise utilize these entities to identify and acquire real estate assets, including the type of assets that we seek to acquire. IREA is a wholly owned indirect subsidiary of The Inland Group, Inc. Mr. Parks is a director of The Inland Group and




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Mr. Parks and Ms. Gujral are both directors of our sponsor and two of the other REITs formed and organized by our sponsor. Under the property acquisition agreement we have entered into with IREA, we have been granted certain rights to acquire all properties, REITs or real estate operating companies IREA identifies, acquires or obtains the right to acquire. This right is subject to prior rights granted by IREA to other REITs formed and organized by our sponsor, which grant these entities rights superior to ours to acquire neighborhood retail facilities, community centers or single-user properties located throughout the United States. The agreement with IREA may result in a property being offered to another entity, even though we may also be interested in, and have the ability to acquire, the subject property.


We do not have arm’s-length agreements with our business manager, property managers or any other affiliates of our sponsor.


None of the agreements and arrangements with our business manager, property managers and other affiliates of our sponsor were negotiated at arm’s length. These agreements may contain terms and conditions that would not otherwise be applicable if we entered into arm’s-length agreements with third parties.


Our business manager receives fees based upon our invested assets and, in certain cases, the purchase price for these assets, and may recommend that we make investments in an attempt to increase its fees.


Our business manager receives fees based on the aggregate book value, including acquired intangibles, of our invested assets and on the purchase price paid to acquire controlling interests in REITs or other real estate operating companies. The book value of our assets includes amounts borrowed to acquire these assets. Also, we will pay our business manager a fee each time we acquire a REIT or other real estate operating company and an affiliate of our business manager receives fees for managing our portfolio of marketable securities. Our business manager may, therefore: (1) borrow more money than prudent to increase the amount we can invest; (2) retain instead of sell assets; or (3) avoid reducing the carrying value of assets that may otherwise be viewed as impaired. Further, because we will pay our business manager a fee when we acquire a controlling interest in a REIT or other real estate operating company but not a fee interest in real estate, our business manager may focus on, and recommend, acquiring REITs or other real estate operating companies even if fee interests in real estate assets generate better returns.


We pay significant fees to our business manager, property managers and other affiliates of our sponsor.


We pay significant fees to our business manager, property managers and other affiliates of our sponsor for services provided to us. In addition, because employees of our business manager are given broad discretion to determine when to consummate a particular real estate transaction, we rely on these persons to dictate the level of our business activity. Fees paid to our business manager, property managers and other affiliates of our sponsor reduce funds available for distribution. We have also issued stock to our business manager in consideration of acquisition fees earned by the business manager and may do so again in the future. These issuances have the effect of reducing the percentage of our outstanding shares owned by our stockholders.


Our sponsor may face a conflict of interest in allocating personnel and resources between its affiliates, our business manager and property managers.


We rely on persons employed by our business manager and property managers to manage our day-to-day operations. Some of these individuals, including two of our directors, Ms. Gujral and Mr. Parks, who serve as our president and chairman of the board, respectively, also are employed by our sponsor or its affiliates, and may provide services to one or more other investment programs sponsored by our sponsor. These individuals face competing demands for their time and service and may have conflicts in allocating their time between our business and the business of our sponsor, its affiliates and the other entities formed and organized by our sponsor. These individuals may not be able to devote all of their time and resources to our business even if needed.


We acquire real estate assets from affiliates of our sponsor in transactions in which the price is not the result of arm’s length negotiations.


We have acquired real estate assets from affiliates of our sponsor, and may do so in the future. Although the purchase price we paid for the assets was equal to the price paid for the assets by the affiliate plus any costs incurred by the affiliate in acquiring or financing the property or asset, it is possible that we could have negotiated a better price if we had negotiated directly with the seller.


From time to time, we purchase real estate assets from persons who have prior business relationships with affiliates of our sponsor. Our interests in these transactions may be different from the interests of affiliates in these transactions.


From time to time, we purchase real estate assets from third parties who have existing or previous business relationships with entities affiliated with our sponsor. The officers, directors or employees of our business manager, our property managers, IREA or Inland Institutional Capital Partners Corporation who also perform services for our sponsor or these other affiliates may have a conflict in representing our interests in these transactions on the one hand and the interests of our sponsor and its affiliates in preserving or furthering their respective relationships on the other hand. We may, therefore, end up paying a higher price to acquire the asset or sell the asset for a lower price than we would if these other relationships did not exist.





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Risks Related to Our Corporate Structure


Maryland law and our organizational documents limit a stockholder’s right to bring claims against our officers and directors.


Subject to the limitations set forth in our articles, a director will not have any liability for monetary damages under Maryland law so long as he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interest, and with the care that an ordinary prudent person in a like position would use under similar circumstances. In addition, our articles, in the case of our directors, officers, employees and agents, and the business management agreement and the property management agreements, with our business manager and property managers, respectively, require us to indemnify these persons for actions taken by them in good faith and without negligence or misconduct, or, in the case of our independent directors, actions taken in good faith without gross negligence or willful misconduct. Moreover, we may enter into separate indemnification agreements with each of our directors and some of our executive officers. As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by these persons in some cases.


Our board of directors may, in the future, adopt certain measures under Maryland law without stockholder approval that may have the effect of making it less likely that stockholders would receive a “control premium” for their shares.


Corporations organized under Maryland law are permitted to protect themselves from unsolicited proposals or offers to acquire the company. Although we are not subject to these provisions, our stockholders could approve an amendment to our articles eliminating this restriction. If we do become subject to these provisions, our board of directors would have the power under Maryland law to, among other things, amend our articles without stockholder approval to:


·

stagger our board of directors into three classes;


·

require a two-thirds vote of stockholders to remove directors;


·

empower only remaining directors to fill any vacancies on the board;


·

provide that only the board can fix the size of the board;


·

provide that all vacancies on the board, regardless of how the vacancy was created, may be filled only by the affirmative vote of a majority of the remaining directors in office; and


·

require that special stockholders meetings be called only by holders of a majority of the voting shares entitled to be cast at the meeting.


These provisions may discourage an extraordinary transaction, such as a merger, tender offer or sale of all or substantially all of our assets, all of which might provide a premium price for a stockholder’s shares.


Further, under the Maryland Business Combination Act, we may not engage in any merger or other business combination with an “interested stockholder” or any affiliate of that interested stockholder for a period of five years after the most recent purchase of stock by the interested stockholder. After the five-year period ends, any merger or other business combination with the interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least:


·

80% of all votes entitled to be cast by holders of outstanding shares of our voting stock; and


·

two-thirds of all of the votes entitled to be cast by holders of outstanding shares of our voting stock other than those shares owned or held by the interested stockholder unless, among other things, our stockholders receive a minimum payment for their common stock equal to the highest price paid by the interested stockholder for its common stock.


Our articles exempt any business combination involving us and The Inland Group or any affiliate of The Inland Group, including our business manager and property managers, from the provisions of this law.


Our articles place limits on the amount of common stock that any person may own without the prior approval of our board of directors.


To continue to qualify as a REIT, no more than 50% of the outstanding shares of our common stock may be beneficially owned, directly or indirectly, by five or fewer individuals at any time during the last half of each taxable year. Our articles prohibit any persons or groups from owning more than 9.8% of our common stock without the prior approval of our board of directors. These provisions may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets that might involve a premium price for holders of our




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common stock. Further, any person or group attempting to purchase shares exceeding these limits could be compelled to sell the additional shares and, as a result, to forfeit the benefits of owning the additional shares.


Our articles permit our board of directors to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third party from acquiring us.


Our board of directors is permitted, subject to certain restrictions set forth in our articles, to issue up to forty million shares of preferred stock without stockholder approval. Further, subject to certain restrictions set forth in our articles, our board may classify or reclassify any unissued preferred stock and establish the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms or conditions of redemption of any preferred stock. Thus, our board of directors could authorize us to issue shares of preferred stock with terms and conditions that could subordinate the rights of the holders of our common stock or have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common stock.


Maryland law limits, in some cases, the ability of a third party to vote shares acquired in a “control share acquisition.”


Under the Maryland Control Share Acquisition Act, persons or entities owning “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights with respect to those shares except to the extent approved by a vote of two-thirds of the corporation’s disinterested stockholders. Shares of stock owned by the acquirer or by officers or directors who are employees of the corporation, are not considered disinterested for these purposes. “Control shares” are shares of stock that, taken together with all other shares of stock the acquirer previously acquired, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:


·

one-tenth or more but less than one-third of all voting power;


·

one-third or more but less than a majority of all voting power; or


·

a majority or more of all voting power.


Control shares do not include shares of stock the acquiring person is entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions. The Control Share Acquisition Act does not apply to (1) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (2) acquisitions approved or exempted by our articles or bylaws. Our articles exempt transactions between us and The Inland Group and its affiliates, including our business manager and property managers, from the limits imposed by the Control Share Acquisition Act. This statute could have the effect of discouraging offers from third parties to acquire us and increase the difficulty of successfully completing this type of offer by anyone other than The Inland Group and its affiliates.


Federal Income Tax Risks


If we fail to qualify as a REIT, our operations and distributions to stockholders will be adversely affected.


Our qualification as a REIT depends on our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets as well as other tests imposed by the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). If we were to fail to qualify as a REIT, without the benefit of certain relief provisions, in any taxable year:


·

we would not be allowed to deduct distributions paid to stockholders when computing our taxable income;


·

we would be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates;


·

we would be disqualified from being taxed as a REIT for the four taxable years following the year during which we failed to qualify, unless entitled to relief under certain statutory provisions;


·

we would have less cash to pay distributions to stockholders; and


·

we may be required to borrow additional funds or sell some of our assets in order to pay corporate tax obligations we may incur as a result of being disqualified.


In addition, if we were to fail to qualify as a REIT, we would not be required to pay distributions to stockholders, and all distributions to stockholders that we did pay would be subject to tax as regular corporate dividends to the extent of our current and accumulated earnings and profits. This means that, under current law, which is subject to change, our U.S. stockholders who are taxed as




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individuals would be taxed on our dividends at long-term capital gains rates through 2010 and that our corporate stockholders generally would be entitled to the dividends received deduction with respect to such dividends, subject, in each case, to applicable limitations under the Internal Revenue Code.


To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions to make distributions to our stockholders, which could increase our operating costs and decrease the value of an investment in our company.


To continue to qualify as a REIT, we must distribute to our stockholders each year 90% of our REIT taxable income (which is determined without regard to the dividends-paid deduction or net capital gain). At times, we may not have sufficient funds to satisfy these distribution requirements and may need to borrow funds to make these distributions and maintain our REIT status and avoid the payment of income and excise taxes. These borrowing needs could result from (1) differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes; (2) the effect of non-deductible capital expenditures; (3) the creation of reserves; or (4) required debt amortization payments. We may need to borrow funds at times when market conditions are unfavorable. Further, if we are unable to borrow funds when needed for this purpose, we would have to fund alternative sources of funding or risk losing our status as a REIT. If we borrow the needed monies, distributions to tax-exempt investors may be classified as unrelated business taxable income.


Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on an investment in our company.


Our ability to dispose of property during the first two years following acquisition is restricted to a substantial extent as a result of our REIT status. Under applicable provisions of the Internal Revenue Code regarding prohibited transactions by REITs, we will be subject to a 100% tax on any gain realized on the sale or other disposition of any property (other than foreclosure property) we own, directly or through any subsidiary entity, excluding our taxable REIT subsidiaries, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of trade or business. Determining whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. We cannot provide assurance that any particular property we own, directly or through any subsidiary entity, excluding our taxable REIT subsidiaries, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.


Certain fees paid to us may affect our REIT status.


Income received in the nature of rental subsidies or rent guarantees, in some cases, may not qualify as rental income from real estate and could be characterized by the Internal Revenue Service as non-qualifying income for purposes of satisfying the 75% and 95% gross income tests required for REIT qualification. If the aggregate of non-qualifying income under the 95% gross income test in any taxable year ever exceeded 5% of our gross revenues for the taxable year or non-qualifying income under the 75% gross income test in any taxable year ever exceeded 25% of our gross revenues for the taxable year, we could lose our REIT status for that taxable year and the four taxable years following the year of losing our REIT status.


Complying with the REIT requirements may force us to liquidate otherwise attractive investments.


To maintain qualification as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including shares of stock in other REITs, certain mortgage loans and mortgage backed securities. The remainder of our investment in securities (other than governmental securities, qualified real estate assets and taxable REIT subsidiaries) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, qualified real estate assets and taxable REIT subsidiaries) can consist of the securities of any one issuer, and no more than 25% of the value of our total securities can be represented by securities of one or more taxable REIT subsidiaries. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within thirty days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments, which, in the case of foreign stockholders, may impose a withholding tax obligation on us.


The “taxable mortgage pool” rules may increase the taxes that we or our stockholders incur and may limit the manner in which we conduct securitizations.


We may make investments in entities that own or are deemed to be taxable mortgage pools. Similarly, if we securitize mortgages, certain of our securitizations could be considered to result in the creation of taxable mortgage pools for federal income tax purposes. As a REIT, provided that we own 100% of the equity interests in a taxable mortgage pool, we generally would not be adversely affected by the characterization of the securitization as a taxable mortgage pool. Certain categories of stockholders, however, such as foreign stockholders eligible for treaty or other benefits, stockholders with net operating losses, and certain tax-exempt stockholders that are subject to unrelated business income tax, could be subject to increased taxes on a portion of their dividend income from us that is attributable to the taxable mortgage pool, which, in the case of foreign stockholders, may be imposed as a withholding tax




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obligation on us. In addition, to the extent that our stock is owned by tax-exempt “disqualified organizations,” such as certain government-related entities and charitable remainder trusts that are not subject to tax on unrelated business income, we will incur a corporate-level tax on a portion of our income from the taxable mortgage pool. In that case, we are authorized to reduce and intend to reduce the amount of our distributions to any disqualified organization whose stock ownership gave rise to the tax. Moreover, we would be precluded from selling equity interests in these securitizations to outside investors, or selling any debt securities issued in connection with these securitizations that might be considered to be equity interests for federal income tax purposes. These limitations may prevent us from using certain techniques to maximize our returns from securitization transactions.


Stockholders may have tax liability on distributions that they elect to reinvest in our common stock.


Stockholders that participate in our distribution reinvestment plan will be deemed to have received, and for income tax purposes will be taxed on, the fair market value of the share of our common stock that they receive in lieu of cash distributions. As a result, unless the stockholder is a tax-exempt entity, he or she will have to use funds from other sources to pay his or her tax liability.


In certain circumstances, we may be subject to federal, state and local income taxes as a REIT, which would reduce our cash available to pay distributions.


Even if we qualify and maintain our status as a REIT, we may become subject to federal, state and local income taxes. For example:


·

We will be subject to tax on any undistributed income. We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year plus amounts retained for which federal income tax was paid are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.


·

If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.


·

If we sell a property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax.


·

We will be subject to a 100% penalty tax on certain amounts if the economic arrangements of our tenants, our taxable REIT subsidiaries and us are not comparable to similar arrangements among unrelated parties.


Certain equity participation in mortgage loans may result in taxable income and gains from these properties, which could adversely impact our REIT status.


If we participate under a mortgage loan in any appreciation of the properties securing the mortgage loan or its cash flow and the Internal Revenue Service characterizes this participation as “equity,” we might have to recognize income, gains and other items from the property. This could affect our ability to maintain our status as a REIT.


Complying with REIT requirements may limit our ability to hedge effectively.


The REIT provisions of the Internal Revenue Code may limit our ability to hedge the risks inherent to our operations. Under current law, any income that we generate from derivatives or other transactions intended to hedge our interest rate risk generally will not constitute gross income for purposes of the 75% and 95% income requirements applicable to REITs. In addition, any income from other hedging transactions would generally not constitute gross income for purposes of both the 75% and 95% income tests. However, we may have to limit the use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.


Legislative or regulatory action could adversely affect investors.


In recent years, numerous legislative, judicial and administrative changes have been made in the federal income tax laws applicable to investments similar to an investment in shares of our common stock. Additional changes to the tax laws are likely to continue to occur, and we cannot provide assurance that any of these changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Stockholders are urged to consult with their own tax advisors with respect to the impact of recent legislation on their investments in our shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.


Congress passed major federal tax legislation in 2003, with modifications to that legislation in 2005. One of the changes effected by that legislation generally reduced the tax rate on dividends paid by corporations to individuals to a maximum of 15% prior to 2011. REIT distributions generally do not qualify for this reduced rate. The tax changes did not, however, reduce the corporate tax rates.




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Therefore, the maximum corporate tax rate of 35% has not been affected. However, as a REIT, we generally would not be subject to federal or state corporate income taxes on that portion of our ordinary income or capital gain that we distribute currently to our stockholders, and we thus expect to avoid the “double taxation” to which other corporations are typically subject.


Although REITs currently avoid the double taxation applicable generally to taxed as corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be taxed for federal income tax purposes as a corporation. As a result, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a corporation, other than a REIT, without the vote of our stockholders.


Item 1B. Unresolved Staff Comments


None.


Item 2. Properties


General


We own interests in retail, office, industrial, multi-family properties and lodging properties. As of December 31, 2009, we, directly or indirectly, including through joint ventures in which we have a controlling interest, have an interest in 853 properties, excluding our lodging and development properties, located in 34 states and the District of Columbia. In addition, we, through our wholly-owned subsidiaries, Inland American Winston Hotels, Inc., Inland American Orchard Hotels, Inc., Inland American Urban Hotels, Inc., and Inland American Lodging Corporation, owned 99 lodging properties in 23 states and the District of Columbia.


The following table sets forth information regarding the 10 individual tenants comprising the greatest 2009 annualized base rent based on the properties owned as of December 31, 2009 excluding our lodging and development properties. (Dollar amounts stated in thousands, except for revenue per available room and average daily rate).


Tenant Name

Type

Annualized Base Rental Income ($)

% of Total Portfolio Annualized Income

Square Footage

% of Total Portfolio Square Footage

SunTrust Bank

Retail/Office

53,783

9.37%

2,269,701

4.50%

AT&T, Inc.

Office

44,827

7.81%

3,545,114

7.04%

Citizens Banks

Retail

20,125

3.51%

986,378

1.96%

Sanofi-Aventis

Office

16,073

2.80%

736,572

1.46%

United Healthcare Services

Office

15,608

2.72%

1,210,670

2.40%

C&S Wholesalers

Industrial/Distribution

14,656

2.55%

3,031,295

6.02%

Atlas Cold Storage

Industrial/Distribution

12,751

2.22%

1,896,815

3.76%

Shop Rite

Retail

10,164

1.77%

601,652

1.19%

Cornell Corrections

Industrial/Distribution

10,112

1.76%

301,029

0.60%

Select Medical Facilities

LIP-H (1)

9,928

1.73%

268,895

0.53%


(1) See further discussion of our LIP-H segment in Item 7 of this report, Management’s Discussion and Analysis of Financial Conditions and Results of Operations.


The following tables set forth certain summary information about the location and character of the properties that we owned at December 31, 2009. (Dollar amounts stated in thousands, except for revenue per available room and average daily rate).


Retail Segment


Retail Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

14th Street Market

TX

79,418

98%

10

7,712

24 Hour Fitness - 249 & Jones

TX

85,000

84%

6

-

24 Hour Fitness -The Woodlands

TX

45,906

100%

1

-




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Retail Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

6101 Richmond Avenue

TX

19,231

100%

2

-

825 Rand

IL

42,792

100%

1

5,767

95th And Cicero

IL

77,468

97%

5

8,949

Alcoa Exchange

AR

90,740

93%

22

12,810

Alcoa Exchange II

AR

43,750

100%

2

-

Antoine Town Center

TX

46,995

87%

17

-

Ashford Plaza

TX

35,819

81%

15

-

Atascocita Shopping Center

TX

47,326

100%

8

-

Bay Colony

TX

193,622

99%

29

-

Bear Creek Village Center

CA

80,318

90%

13

15,065

Bellerive Plaza

KY

75,730

75%

7

6,092

Bent Tree Plaza

NC

79,503

98%

14

5,453

Bi-Lo Greenville

SC

55,718

100%

1

4,286

Blackhawk Town Center

TX

127,128

100%

12

-

Brandon Centre South

FL

133,344

77%

23

16,133

Brooks Corner

TX

172,927

93%

19

14,276

Buckhead Crossing

GA

221,874

97%

33

33,215

Buckhorn Plaza

PA

79,359

100%

15

9,025

Campus Marketplace

CA

144,287

95%

29

20,000

Canfield Plaza

OH

100,958

85%

9

7,575

Carver Creek

TX

33,321

84%

2

-

Centerplace Of Greeley

CO

148,574

95%

21

17,175

Chesapeake Commons

VA

79,476

100%

3

8,950

Cheyenne Meadows

CO

89,893

100%

12

4,890

Chili's - Hunting Bayou

TX

5,476

100%

1

-

Cinemark - Jacinto City

TX

68,000

100%

1

-

Cinemark - Webster

TX

80,000

100%

1

-

Cinemark 12 - Silverlake

TX

38,910

100%

1

-

Citizens Portfolio

Multiple States

993,926

100%

160

200,000

Coweta Crossing

GA

68,489

96%

7

3,143

Cross Timbers Court

TX

81,169

87%

5

8,193

Crossroads At Chesapeake Square

VA

121,629

83%

18

11,210

Custer Creek Village

TX

93,876

100%

13

10,149

Cyfair Town Center

TX

54,597

98%

26

-

Cypress Town Center

TX

55,000

70%

18

-

Donelson Plaza

TN

12,165

100%

3

2,315

Dothan Pavilion

AL

327,534

84%

20

37,165

East Gate

SC

75,716

94%

10

6,800

Eldridge Lakes Town Center

TX

55,050

81%

16

-

Eldridge Town Center

TX

78,471

83%

23

-

Fabyan Randall Plaza

IL

91,415

56%

10

13,405

Fairview Market

SC

53,888

97%

10

2,692

Flower Mound Crossing

TX

84,443

100%

13

8,342

Forest Plaza

WI

122,829

95%

6

2,142

Friendswood Shopping Center

TX

71,325

100%

15

-

Fury's Ferry

GA

70,458

93%

11

6,381

Garden Village

CA

112,767

97%

17

-

Glendale Heights I, II, III

IL

60,820

100%

3

4,705

Grafton Commons

WI

238,816

100%

10

18,516

Gravois Dillon Plaza

MO

148,110

95%

22

12,630

Heritage Heights

TX

92,521

93%

9

10,719




-21-





Retail Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

Heritage Plaza - Chicago

IL

128,872

92%

22

15,243

Highland Plaza

TX

73,780

85%

18

-

Hunter's Glen Crossing

TX

97,570

99%

13

9,790

Hunting Bayou

TX

133,269

86%

19

-

James Center

WA

140,240

89%

17

12,368

Josey Oaks Crossing

TX

90,119

100%

15

9,346

Lakeport Commons

IA

282,163

82%

25

-

Lakewood Shopping Center

FL

149,077

87%

25

11,715

Lakewood Shopping Ctr Phase II

FL

87,602

100%

6

-

Legacy Crossing

OH

134,389

97%

17

10,890

Lexington Road

GA

46,000

100%

1

5,454

Lincoln Mall

RI

439,132

86%

36

33,835

Lincoln Village

IL

163,168

97%

27

22,035

Lord Salisbury Center

MD

113,821

98%

10

12,600

Market At Morse / Hamilton

OH

44,742

97%

11

7,893

Market At Westlake

TX

29,625

100%

4

4,803

McKinney TC Outlots

TX

18,846

100%

5

3,400

Merchants Crossing

FL

213,739

91%

18

11,816

Middleburg Crossing

FL

64,232

95%

11

6,432

Monadnock Marketplace

NH

200,791

90%

11

26,785

New Forest Crossing II

TX

26,700

100%

8

3,438

Newtown Road

VA

7,488

-

-

968

Northwest Marketplace

TX

185,172

99%

28

19,965

NTB Eldridge

TX

6,155

100%

1

-

Palm Harbor Shopping Center

FL

166,041

84%

28

12,100

Paradise Shops Of Largo

FL

54,641

97%

5

7,325

Park West Plaza

TX

83,157

91%

8

7,532

Parkway Centre North

OH

132,577

99%

11

13,892

Parkway Centre North Outlot B

OH

10,245

100%

6

2,198

Pavilion At LaQuinta

CA

166,043

98%

18

23,976

Pavilions At Hartman Heritage

MO

223,761

51%

19

23,450

Peachland Promenade

FL

82,082

95%

16

4,791

Penn Park

OK

241,349

82%

17

31,000

Pinehurst Shopping Center

TX

39,934

51%

16

-

Pioneer Plaza

TX

16,200

93%

9

2,250

Plaza At Eagle's Landing

GA

33,265

75%

6

5,310

Poplin Place

NC

227,721

86%

27

24,586

Promenade Fultondale

AL

256,054

99%

27

16,870

Riverstone Shopping Center

TX

272,515

97%

15

21,000

Riverview Village

TX

88,916

92%

10

10,121

Rose Creek

GA

69,790

99%

9

3,968

Rosewood Shopping Center

SC

36,887

100%

7

3,131

Saltgrass Restaurant

TX

7,216

100%

1

-

Saratoga Town Center

TX

61,682

84%

18

-

Scofield Crossing

TX

97,561

100%

16

8,435

Shakopee Shopping Center

MN

103,442

100%

2

8,800

Shallotte Commons

NC

85,897

94%

9

6,078

Sherman Plaza

IL

150,802

78%

13

30,275

Sherman Town Center

TX

381,704

100%

33

36,191

Shiloh Square

TX

24,038

89%

11

3,238

Shop Rite Portfolio

Multiple States

544,112

100%

8

80,767




-22-





Retail Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

Siegen Plaza

LA

156,418

95%

28

16,638

Silverlake

KY

100,926

98%

15

4,750

Southgate Village

AL

75,092

95%

11

4,921

Spring Town Center

TX

54,231

88%

14

-

Spring Town Center III

TX

30,438

83%

6

-

Stables Town Center I

TX

42,800

97%

8

-

Stables Town Center II

TX

55,493

86%

23

-

State Street Market

IL

193,657

100%

6

10,450

Streets Of Cranberry

PA

107,499

97%

27

24,425

Streets Of Indian Lake

TN

253,639

92%

37

40,800

Suncreek Village

TX

17,510

83%

9

2,683

SunTrust Portfolio

Multiple States

1,972,720

100%

419

343,528

The Center At Hugh Howell

GA

82,820

95%

14

7,722

The Highlands

TX

94,596

94%

14

9,745

The Market At Hilliard

OH

115,223

100%

14

11,205

Thomas Crossroads

GA

104,928

97%

17

4,460

Tomball Town Center

TX

60,690

71%

21

-

Triangle Center

WA

253,064

96%

32

23,600

Walgreens - Springfield

MO

14,560

100%

1

-

Washington Park Plaza

IL

237,766

96%

26

30,600

West End Square

TX

36,637

42%

8

-

Willis Town Center

TX

17,540

91%

9

-

Winchester Town Center

TX

18,000

100%

10

-

Windermere Village

TX

25,360

81%

11

-

Woodforest Square

TX

39,966

57%

9

-

Woodlake Crossing

TX

159,703

77%

15

15,400

 

 

16,643,477

93% (1)

2,297

$1,722,867


(1) Financial Occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area being leased. The weighted average is an average of the properties’ occupancy based on the total Gross Leasable Area of the segment.


The total gross leasable area includes an aggregate of 991,622 square feet leased to tenants under ground lease agreements.


Office Segment


Office Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

11500 Market Street

TX

2,719

100%

1

-

6234 Richmond Avenue

TX

26,780

62%

1

-

American Exp - Greensboro

NC

389,377

100%

1

33,040

American Exp - Salt Lake City

UT

395,787

100%

1

30,149

AT&T - St Louis

MO

1,461,274

100%

1

112,695

AT&T Cleveland

OH

458,936

86%

2

29,242

Bridgeside Point Office Bldg

PA

153,110

100%

1

17,325

Commons Drive

IL

60,000

75%

1

3,663

Computershare / Equiserve

MA

185,171

100%

1

44,500

Denver Highlands

CO

85,680

100%

1

10,500




-23-





Office Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

Dulles Executive Plaza

VA

379,596

100%

5

68,750

Houston Lakes

TX

119,527

100%

1

8,988

IDS Center

MN

1,463,047

93%

180

125,000

Kinross Lakes

OH

86,000

-

-

10,065

Lake View Technology Center

VA

110,007

100%

2

14,470

Regional Road

NC

113,526

-

-

8,679

Sanofi Aventis

NJ

736,572

100%

1

190,000

Santee - Civic Center

CA

76,977

100%

1

12,023

SBC Center

IL

1,690,214

100%

1

200,472

SunTrust Office Portfolio

Multiple States

293,981

100%

13

21,910

United Health - Cypress

CA

214,000

100%

1

22,000

United Health - Frederick

MD

209,184

100%

1

18,240

United Health - Green Bay

WI

400,000

100%

1

-

United Health - Indianapolis

IN

200,000

100%

1

16,545

United Health - Onalaska

WI

66,000

100%

1

4,149

United Health - Wauwatosa

WI

121,486

100%

1

10,050

Washington Mutual - Arlington

TX

239,905

100%

1

20,115

Worldgate Plaza

VA

322,326

100%

8

59,950

 

 

10,061,182

96% (1)

230

$1,092,520


(1) Financial Occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area being leased. The weighted average is an average of the properties’ occupancy based on the total Gross Leasable Area of the segment.


Industrial Segment


Industrial Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

 Mortgage Payable as of December 31, 2009

11500 Melrose Ave -294 Tollway

IL

97,766

100%

1

4,561

1800 Bruning

IL

202,000

100%

1

10,156

500 Hartland

WI

134,210

100%

1

5,860

55th Street

WI

175,052

100%

1

7,351

Airport Distrib Center #10

TN

161,350

-

-

2,042

Airport Distrib Center #11

TN

121,345

100%

1

1,539

Airport Distrib Center #15

TN

81,639

-

-

1,203

Airport Distrib Center #16

TN

251,685

79%

1

2,714

Airport Distrib Center #18

TN

75,000

100%

3

1,007

Airport Distrib Center #19

TN

175,275

100%

1

2,546

Airport Distrib Center #2

TN

102,400

100%

1

1,734

Airport Distrib Center #4

TN

80,000

100%

2

1,287

Airport Distrib Center #7

TN

42,000

100%

1

699

Airport Distrib Center #8

TN

32,400

100%

1

448

Airport Distrib Center #9

TN

42,000

94%

2

811

Anheuser Busch

MA

183,900

100%

1

7,549

Atlas - Belvidere

IL

189,052

100%

1

11,329

Atlas - Cartersville

GA

179,240

100%

1

8,273

Atlas - Douglas

GA

86,732

100%

1

3,432

Atlas - Gaffney

SC

58,160

100%

1

3,350




-24-





Industrial Properties

State

Total Gross Leasable Area

% of Financial Occupancy as of December 31, 2009

Total # of Financially Active Leases as of December 31, 2009

 Mortgage Payable as of December 31, 2009

Atlas - Gainesville

GA

127,632

100%

1

7,731

Atlas - Pendergrass

GA

243,233

100%

1

14,919

Atlas - Piedmont

SC

224,320

100%

1

13,563

Atlas - St Paul

MN

219,664

100%

1

8,226

Atlas-Brooklyn Park

MN

128,275

100%

1

7,407

Atlas-New Ulm

MN

269,985

100%

1

6,015

Atlas-Zumbrota

MN

170,522

100%

1

10,242

Baymeadow - Glen Burnie

MD

120,000

100%

1

13,824

C&S - Aberdeen

MD

400,000

100%

1

22,720

C&S - Birmingham

AL

1,311,295

100%

1

-

C&S - North Hatfield

MA

467,000

100%

1

20,280

C&S - South Hatfield

MA

333,000

100%

1

10,000

C&S - Westfield

MA

520,000

100%

1

29,500

Clarion

IA

126,900

100%

1

3,172

Coloma

MI

423,230

100%

1

10,017

Deer Park Seaco

TX

23,218

100%

1

2,965

Delp Distribution Center #2

TN

97,716

67%

1

1,623

Delp Distribution Center #5

TN

144,000

-

-

1,623

Delp Distribution Center #8

TN

94,500

100%

2

1,399

Doral - Waukesha

WI

43,500

-

-

1,364

Haskell-Rolling Plains Facility

TX

156,316

100%

1

-

Home Depot - Lake Park

GA

657,600

100%

1

15,469

Home Depot - MaCalla

AL

657,600

100%

1

17,094

Hudson Correctional Facility

CO

301,029

100%

1

-

Industrial Drive

WI

139,000

100%

1

3,709

Kinston

NC

400,000

100%

1

8,930

Kirk Road

IL

299,176

100%

1

7,863

Libertyville Associates

IL

197,100

100%

1

14,807

McKesson Distribution Center

TX

162,613

100%

1

5,760

Mount Zion Road

IN

1,091,435

100%

1

24,632

Ottawa

IL

38,285

100%

1

1,768

Schneider Electric

IL

545,000

100%

1

11,000

Southwide Industrial Center #5

TN

28,380

50%

3

392

Southwide Industrial Center #6

TN

58,560

98%

4

1,007

Southwide Industrial Center #7

TN

118,320

60%

4

2,014

Southwide Industrial Center #8

TN

10,185

100%

1

196

Stone Fort Distrib Center #1

TN

500,000

100%

1

6,770

Stone Fort Distrib Center #4

TN

86,072

100%

1

1,399

Thermo Process Systems

TX

150,000

100%

1

8,201

Tri-State Holdings I

IL

137,607

100%

1

4,665

Tri-State Holdings II

TX

223,599

100%

1

6,372

Tri-State Holdings III

WI

193,200

100%

1

4,334

Union Venture

OH

970,168

100%

1

36,426

UPS E-Logistics

KY

400,000

100%

1

9,249

Westport - Mechanicsburg

PA

178,600

100%

1

4,029

 

 

15,659,041

96% (1)

74

$460,567


(1) Financial Occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area being leased. The weighted average is an average of the properties’ occupancy based on the total Gross Leasable Area of the segment.






-25-


Multi-family Segment


Multi-family Properties

State

Total Gross Leasable Area (sq.ft.)

Total # of units/beds

Total # of units/beds occupied as of December 31, 2009

% of Financial Occupancy as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

Alden Landing Apartments

TX

252,424

292

266

91%

11,237

Brazos Ranch Apartments

TX

312,866

308

256

84%

15,246

Cityville Oak Park

TX

315,556

372

133

35%

27,696

Encino Canyon Apartments

TX

252,572

228

196

85%

12,000

Fields Apartment Homes

IN

324,284

290

245

86%

18,700

Grogans Landing Apartments

TX

321,496

384

312

81%

9,705

Lake Wyndemere Apartments

TX

321,918

320

267

83%

13,067

Landings At Clearlake

TX

339,180

364

285

78%

18,590

Legacy At Art Quarter

OK

296,315

311

274

86%

29,645

Legacy Corner

OK

317,479

298

276

92%

14,630

Legacy Crossing

OK

408,768

396

365

92%

23,700

Legacy Woods

OK

302,124

328

294

89%

21,190

Malibu Lakes Apartments

FL

370,188

356

328

92%

17,929

Parkside Apartments

TX

313,000

360

319

88%

18,000

Seven Palms Apartments

TX

334,596

360

280

78%

18,750

Southgate Apartments

KY

233,514

256

225

88%

10,725

Sterling Ridge Estates Apartments

TX

265,700

254

209

81%

14,324

The Radian (1)

PA

210,594

498

497

97%

58,500

University House 13th Street

FL

198,748

584

480

82%

23,460

University House Acadiana

LA

138,944

384

358

93%

9,306

University House Birmingham

AL

189,156

496

463

93%

11,770

University House Lake Road

TX

240,765

687

584

85%

15,387

Village Square Apartments

TX

232,783

271

243

90%

8,112

Villages At Kitty Hawk

TX

245,854

308

233

76%

11,550

Waterford Place II Villas

TX

287,231

264

224

84%

16,117

Waterford Place Shadow Creek

TX

328,676

296

247

83%

16,500

Woodridge Park Apartments

TX

184,704

216

180

84%

13,399

 

 

7,539,435

9,481

8,039

 84% (2)

$479,235

(1) includes 41,441 square feet of retail space of which 36,278 or 88% is financially occupied

(2) Financial Occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area  being leased. The weighted average is an average of the properties’ occupancy based on the total Gross Leasable Area of the segment.


Lodging Segment


Lodging Properties

Location

Franchisor (1)

Number of Rooms

Revenue Per Available Room for the Year 2009 ($)

Average Daily Rate for the Year 2009 ($)

Occupancy for the Year 2009 (%)

Mortgage Payable as of 12/31/2009 ($)

Comfort Inn Riverview

SC

Choice

129

50

78

64

-

Comfort Inn University

NC

Choice

136

32

65

50

-

Comfort Inn Cross Creek

NC

Choice

123

60

84

72

-

Comfort Inn Orlando

FL

Choice

214

30

48

61

-

Courtyard by Marriott

MI

Marriott

160

75

110

68

12,225

Courtyard by Marriott Brookhollow

TX

Marriott

197

49

110

45

-

Courtyard by Marriott Northwest

TX

Marriott

126

66

122

54

7,263

Courtyard by Marriott Roanoke   Airport

VA

Marriott

135

75

116

64

14,651

Courtyard by Marriott Chicago-St.   Charles

IL

Marriott

121

49

97

51

-

Courtyard by Marriott

NC

Marriott

128

59

91

64

-

Courtyard By Marriott-Richmond   Airport

VA

Marriott

142

56

94

59

11,800




-26-





Lodging Properties

Location

Franchisor (1)

Number of Rooms

Revenue Per Available Room for the Year 2009 ($)

Average Daily Rate for the Year 2009 ($)

Occupancy for the Year 2009 (%)

Mortgage Payable as of 12/31/2009 ($)

Fairfield Inn

MI

Marriott

110

54

91

59

-

Hampton Inn Suites Duluth-Gwinnett

GA

Hilton

136

51

83

61

9,585

Hampton Inn Baltimore-Inner Harbor

MD

Hilton

116

93

142

65

13,700

Hampton Inn Raleigh - Cary

NC

Hilton

129

54

83

65

7,024

Hampton Inn University Place

NC

Hilton

126

53

85

63

8,164

Comfort Inn Medical Park

NC

Choice

136

37

64

58

-

Baymont Inn

NC

Wyndham

118

58

84

69

-

Hampton Inn Atlanta-Perimeter   Center

GA

Hilton

131

51

85

60

8,450

Hampton Inn Crabtree Valley

NC

Hilton

141

44

83

53

-

Hampton Inn White Plains-Tarrytown

NY

Hilton

156

74

122

61

15,643

Hilton Garden Inn Albany Airport

NY

Hilton

155

80

114

70

12,050

Hilton Garden Inn Atlanta Winward

GA

Hilton

164

50

98

51

10,503

Hilton Garden Inn

IL

Hilton

178

88

125

70

19,928

Hilton Garden Inn RDU Airport

NC

Hilton

155

76

110

69

8,000

Hilton Garden Inn Chelsea

NY

Hilton

169

147

174

85

30,250

Hilton Garden Inn Hartford North   Bradley International

CT

Hilton

157

64

105

61

10,384

Holiday Inn Express Clearwater   Gateway

FL

IHG

127

49

87

56

-

Holiday Inn Harmon Meadow-  Secaucus

NJ

IHG

161

78

126

62

-

Homewood Suites

NC

Hilton

150

71

110

65

12,747

Homewood Suites

NC

Hilton

96

64

95

67

7,950

Homewood Suites Houston- Clearlake

TX

Hilton

92

102

132

77

7,222

Homewood Suites

FL

Hilton

112

60

94

64

9,900

Homewood Suites Metro Center

AZ

Hilton

126

48

84

57

6,330

Homewood Suites

NJ

Hilton

142

82

119

69

11,800

Homewood Suites Crabtree Valley

NC

Hilton

137

70

104

67

12,869

Quality Suites

SC

Choice

168

44

79

56

10,350

Residence Inn

AZ

Marriott

168

42

88

47

7,500

Residence Inn Roanoke Airport

VA

Marriott

79

84

114

74

5,122

Towneplace Suites Northwest

TX

Marriott

127

51

89

57

7,082

Towneplace Suites Birmingham-  Homewood

AL

Marriott

128

38

62

61

-

Towneplace Suites

TX

Marriott

94

57

100

57

4,900

Towneplace Suites Northwest

TX

Marriott

128

42

96

43

-

Towneplace Suites

TX

Marriott

94

71

106

67

5,815

Courtyard by Marriott Country Club   Plaza

MO

Marriott

123

86

121

71

9,610

Hilton Garden Inn - Akron

OH

Hilton

121

76

111

69

7,164

Hilton Garden Inn

NC

Hilton

119

70

110

64

9,530

Courtyard by Marriott Williams   Center

AZ

Marriott

153

53

98

54

16,030

Courtyard by Marriott

NJ

Marriott

125

73

119

62

10,320

Courtyard by Marriott Quorum

TX

Marriott

176

50

99

50

18,860

Courtyard by Marriott

TX

Marriott

114

71

92

77

6,790

Courtyard by Marriott Westchase

TX

Marriott

153

65

117

56

16,680

Courtyard by Marriott West   University

TX

Marriott

100

68

108

63

10,980

Courtyard by Marriott West Lands   End

TX

Marriott

92

63

113

55

7,550

Courtyard by Marriott Dunn Loring-  Fairfax

VA

Marriott

206

89

125

71

30,810

Courtyard by Marriott Seattle-Federal   Way

WA

Marriott

160

86

128

67

22,830

Hilton Garden Inn Tampa Ybor

FL

Hilton

95

89

124

72

9,460




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Lodging Properties

Location

Franchisor (1)

Number of Rooms

Revenue Per Available Room for the Year 2009 ($)

Average Daily Rate for the Year 2009 ($)

Occupancy for the Year 2009 (%)

Mortgage Payable as of 12/31/2009 ($)

Hilton Garden Inn

NY

Hilton

140

120

154

78

21,680

Homewood Suites Colorado Springs   North

CO

Hilton

127

62

93

66

7,830

Homewood Suites

LA

Hilton

115

86

115

75

12,930

Homewood Suites

NM

Hilton

151

75

97

77

10,160

Homewood Suites Cleveland- Solon

OH

Hilton

86

67

106

63

5,490

Residence Inn Williams Centre

AZ

Marriott

120

91

112

82

12,770

Residence Inn Cypress- Los Alamitos

CA

Marriott

155

78

121

65

20,650

Residence Inn South Brunswick-  Cranbury

NJ

Marriott

108

53

104

51

10,000

Residence Inn Somerset-Franklin

NJ

Marriott

108

87

111

79

9,890

Residence Inn

NY

Marriott

100

105

125

84

10,810

Residence Inn Nashville Airport

TN

Marriott

168

61

89

68

12,120

Residence Inn West University

TX

Marriott

120

83

115

73

13,100

Residence Inn

TX

Marriott

102

55

90

61

6,900

Residence Inn DFW Airport North

TX

Marriott

100

70

113

62

9,560

Residence Inn Westchase

TX

Marriott

120

85

114

74

12,550

Residence Inn Park Central

TX

Marriott

139

46

91

50

8,970

SpringHill Suites

CT

Marriott

106

67

103

65

9,130

Courtyard by Marriott

MD

Marriott

140

77

124

62

14,400

Marriott Atlanta Century Center

GA

Marriott

287

60

108

55

9,628

Courtyard by Marriott

AL

Marriott

122

90

126

72

6,378

Marriott Residence Inn

MA

Marriott

221

134

167

80

26,726

Courtyard by Marriott

NJ

Marriott

203

68

90

76

9,737

Marriott Residence Inn

NJ

Marriott

198

72

97

74

10,297

Courtyard by Marriott

TX

Marriott

203

79

136

58

14,984

Marriott Residence Inn

NY

Marriott

128

94

118

80

8,109

Embassy Suites

OH

Hilton

216

63

114

55

14,752

Marriott

IL

Marriott

113

92

153

60

7,896

Doubletree

DC

Hilton

220

125

169

74

26,398

Residence Inn

MD

Marriott

188

114

151

76

40,040

Hilton Garden Inn

MA

Hilton

179

68

107

64

5,871

Hilton Garden Inn

DC

Hilton

300

182

201

91

61,000

Hampton Inn Suites

CO

Hilton

148

82

131

62

7,216

Embassy Suites

MD

Hilton

223

73

115

63

12,661

Hilton Suites

AZ

Hilton

226

74

138

53

22,062

Hilton Garden Inn

CO

Hilton

154

44

87

50

8,570

Homewood Suites

TX

Hilton

162

90

130

70

9,415

Hilton Garden Inn

TX

Hilton

117

61

107

58

6,085

Hyatt Place

MA

Hyatt

157

77

109

71

8,142

Doubletree

GA

Hilton

154

64

98

65

6,116

Hilton University of Florida-Hotel &   Convention Center

FL

Hilton

248

90

143

63

27,775

The Woodlands Waterway-Marriott Hotel & Convention Center

TX

Marriott

341

126

182

69

-

Hyatt Regency Orange County  

CA

Hyatt

654

76

114

67

-

 

 

 

 

 

 

 

 

 

 

 

15,121

$75

$115

65

$1,044,619


(1)

Our hotels generally are operated under franchise agreements with franchisors including Marriott International, Inc. ("Marriott"), Hilton Hotels Corporation ("Hilton"), Hyatt Corporation ("Hyatt"), Intercontinental Hotels Group PLC ("IHG"), Wyndham Worldwide and Choice Hotels International ("Choice").









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LIP-H Segment


Company

State

Gross Leasable Area (sq.ft.)

% of Financial Occupancy as of December 31, 2009

Total # of Leases as of December 31, 2009

Mortgage Payable as of December 31, 2009 ($)

Meridian Corporate Plaza One

IN

63,600

100%

1

6,967

Meridian Corporate Plaza Two

IN

135,503

89%

9

14,681

St. Francis Cancer Center

VA

51,183

94%

11

12,350

Select Medical Augusta

GA

71,900

100%

1

15,175

Select Medical Orlando

FL

48,598

100%

1

13,626

Select Medical Dallas

TX

50,530

100%

1

9,200

Select Medical Tallahassee

FL

46,684

100%

1

20,505

Intech Retail

IN

19,040

83%

7

2,787

 

 

 

 

 

 

 

 

487,038

96% (1)

32

$95,291


(1) Financial Occupancy is defined as the percentage of total gross leasable area for which a tenant is obligated to pay rent under the terms of its lease agreement, regardless of the actual use or occupation by that tenant of the area being leased. The weighted average is an average of the properties’ occupancy based on the total Gross Leasable Area of the segment.


Item 3. Legal Proceedings


Contemporaneous with our merger with Winston Hotels, Inc., our wholly-owned subsidiary, Inland American Winston Hotels, Inc., referred to herein as “Inland American Winston,” WINN Limited Partnership, or “WINN,” and Crockett Capital Corporation, or “Crockett,” memorialized in a development memorandum our intentions to subsequently negotiate and enter into a series of contracts to develop certain hotel properties, including without limitation a Westin Hotel in Durham, North Carolina, a Hampton Inn & Suites/Aloft Hotel in Raleigh, North Carolina, an Aloft Hotel in Chapel Hill, North Carolina and an Aloft Hotel in Cary, North Carolina (collectively referred to herein as the “development hotels”).


On March 6, 2008, Crockett filed an amended complaint in the General Court of Justice of the State of North Carolina against Inland American Winston and WINN. The amended complaint alleges that the development memorandum reflecting the parties’ intentions regarding the development hotels was instead an agreement that legally bound the parties. The amended complaint further claims that Inland American Winston and WINN breached the terms of the alleged agreement by failing to take certain actions to develop the Cary, North Carolina hotel and by refusing to convey their rights in the three other development hotels to Crockett. The amended complaint seeks, among other things, monetary damages in an amount not less than $4.8 million with respect to the Cary, North Carolina property. With respect to the remaining three development hotels, the amended complaint seeks specific performance in the form of an order directing Inland American Winston and WINN to transfer their rights in the hotels to Crockett or, alternatively, monetary damages in an amount not less than $20.1 million. Inland American Winston and WINN deny these claims and, on March 26, 2008, filed a motion to dismiss the amended complaint. On March 13, 2009, the court denied the motion to dismiss. Inland American Winston and WINN have filed answers and affirmative defenses to the amended complaint as well as counter claims against Crockett. Contemporaneously with the close of fact discovery, Crockett sought leave to amend its complaint to add another cause of action and to seek treble damages and attorneys fees. The court has not yet ruled on this request. Expert discovery has commenced, but has not yet been completed. Based upon an expert report recently received from Crockett, it is believed that Crockett’s maximum claim, without the inclusion of treble damages or attorneys fees, is approximately $16.8 million. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate an amount or range of potential loss that could result if an unfavorable outcome occurs.


On May 22, 2009, Inland American Concord (Sub), LLC (“IA Sub”) filed an action against Lex-Win Concord LLC (“Concord”) in the Delaware Court of Chancery seeking a declaration in connection with certain of our rights/obligations under the Limited Liability Company Agreement (“Agreement”) that governs this venture. IA Sub filed this action, in part, due to a capital call demanded by Concord, which was, in purpose or effect, directed toward satisfying a lender’s concerns about the venture’s ability to perform under its existing credit facilities. IA Sub claimed, as a result of the foregoing, that it was not required to fund the capital call. In response to this action, Concord has answered and filed counterclaims against IA Sub. It claimed that IA Sub was required to fund the additional capital and it also claimed damages against IA Sub for not contributing the additional capital.


On December 22, 2009, Lexington Realty Trust, Winthrop Realty Trust, Inland American Real Estate Investment Trust, Inc., and their respective subsidiaries entered into a settlement agreement to resolve and settle the IA Sub v. Concord action. The settlement agreement provides for, among other things, the termination of any party’s obligation to contribute capital to Concord, the allocation of distributions equally among Inland, Lexington and Winthrop in Concord, and the formation of a new entity to be owned by subsidiaries of Inland, Lexington and Winthrop. The effectiveness of the settlement agreement is conditioned on certain conditions, including the cancellation of certain CDO bonds held by Concord Debt Funding Trust. A lawsuit has been filed in the Delaware Court of Chancery by Concord to effect such cancellation. The bonds must be cancelled by August 14, 2010, or the settlement agreement




-29-


becomes null and void. If the settlement agreement becomes null and void, the Concord lawsuit set forth above will become reinstated.


On July 21 2009, Inland American (LIP) Sub, L.L.C., (“IA LIP Sub”) filed an action against Robert Lauth, Michael Curless, Gregory Gurnick, Lawrence Palmer, (collectively “the Defendants”) and Thomas Peck (the “Peck Defendant”) for civil fraud, deception, racketeering, conspiracy and other violations of law (the “Lawsuit”) in order to recover damages with regard to certain losses of IA LIP Sub which occurred as a result with IA LIP Sub’s investment LIP Holdings, L.L.C.(“Holdings”)  On September 10, 2009, the Defendants filed answers and counterclaims against IA LIP Sub claiming breach of contract, promissory estoppel, constructive fraud, and breach of duty of good faith and fair dealing, claiming that IA LIP Sub promised to contribute additional funds to Holdings.  IA LIP Sub denies all aspects of this counterclaim, and believes that it was filed, without basis in fact, in an attempt to gain leverage over IA LIP Sub in connection with the Lawsuit. On September 16, 2009, the Peck Defendant filed answers and counterclaims against IA LIP Sub claiming, inter alia, that the Lawsuit was filed against Peck for the purpose of inducing Peck to cooperate with IA LIP Sub in its prosecution of its claims against the Defendants. IA LIP Sub denies all aspects of this counterclaim. The parties are now engaged in various pre-trial motions and are undertaking discovery. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate an amount or range of potential loss that could result if an unfavorable outcome occurs.


IA LIP Sub is also a member of Holdings, an entity formed by Inland American with regard to its investment in Lauth. Lauth has defaulted in its obligation to pay dividends to IA LIP Sub, and as a result thereof, has recently received approval from the Bankruptcy Court of the Southern District of Indiana, which is administering a bankruptcy proceeding filed by various subsidiaries of Holdings that are being prosecuted by Lauth principals, that the bankruptcy stay does not apply to Holdings, and granting the right to Holdings to begin the process of liquidating Holdings in connection with the terms of the Holdings LLC agreement.  Shortly after that ruling, Lauth representatives served a notice of a claim against Holdings relating to allegations and assertions in connection with a liquidation of Holdings. Holdings believes the claim has no merit. To IA LIP Sub’s knowledge, no lawsuit has yet been filed.


While management does not believe that an adverse outcome in the above lawsuits would have a material adverse effect on our financial condition, there can be no assurance that an adverse outcome would not have a material effect on the results of operations for any particular period.


We have also filed a number of eviction actions against tenants and are involved in a number of tenant bankruptcies. The tenants in some of the eviction cases may file counterclaims against us in an attempt to gain leverage against us in connection with the eviction. In our opinion, none of these counterclaims is likely to result in any material losses.


Item 4. Reserved.


PART II


Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.


Market Information


There is no public market for our common stock and no assurance that one may develop. We do not expect that our shares will be listed for trading on a national securities exchange in the near future. Our board will determine when, and if, to apply to have our shares of common stock listed for trading on a national securities exchange, subject to satisfying existing listing requirements.


We are currently selling shares pursuant to our distribution reinvestment plan at a price equal to $9.50 per share. The offering price of our shares may be higher or lower than the price at which the shares would trade if they were listed on a national securities exchange or actively traded by dealers or marketmakers. Further, there is no assurance that stockholders will be able to sell any shares that they have purchased in our offerings at prices that equal or exceed the offering price, if at all.


Under rules published by the Financial Industry Regulatory Authority (“FINRA”), registered broker-dealers must disclose in a customer’s account statement an estimated value for a REIT’s securities if the annual report of that REIT discloses a per share estimated value. The FINRA rules prohibit broker-dealers from using a per share estimated value developed from data that is more than eighteen months old. We are currently evaluating the method that we will use to assist broker-dealers with this requirement. Because of the uncertainties in the marketplace generally and the factors described herein and in our other reports filed under the Exchange Act, which could continue to impact our results of operations and financial condition, we expect that the future per share estimated value of our shares will be less than the price at which we last offered shares in a primary offering or the price of our shares currently offered through our distribution reinvestment plan.


Share Repurchase Program


We adopted a share repurchase program, effective August 31, 2005, to provide limited liquidity for stockholders. Our obligation to repurchase any shares under the program is conditioned upon our having sufficient funds available to complete the repurchase. Subject to funds being available, we limit the number of shares repurchased during any consecutive twelve month period to 5.0% of the




-30-


number of outstanding shares of common stock at the beginning of that twelve month period. The share repurchase program may be suspended or terminated if: (1) our shares are listed on any national securities exchange, or are subject to bona fide quotes on any inter-dealer quotation system or electronic communications network, or are subject of bona fide quotes in the pink sheets; or (2) our board of directors determines that it is in our best interest to suspend or terminate the share repurchase program.


Effective March 30, 2009, our board of directors voted to suspend the share repurchase program until further notice. Therefore, no shares were repurchased during the months of October, November or December 2009. Written notice of the suspension was provided to each stockholder pursuant to the terms of the share repurchase program.


Stockholders


As of March 10, 2010, we had 186,656 stockholders of record.


Distributions


We have been paying monthly cash distributions since October 2005. During the years ended December 31, 2009 and 2008, we declared cash distributions, which are paid monthly to stockholders, totaling $405.3 million and $418.7 million, respectively, or $.50 and $.62 per share on an annualized basis. For federal income tax purposes for the years ended December 31, 2009 and 2008, 72% and 48% of the distributions paid constituted a return of capital in the applicable year.


We intend to continue paying regular monthly cash distributions to our stockholders. However, there are many factors that can affect the availability and timing of cash distributions to stockholders. There is no assurance that we will be able to continue paying distributions at the current level or that the amount of distributions will increase, or not decrease further, over time. Even if we are able to continue paying distributions, the actual amount and timing of distributions is determined by our board of directors in its discretion and typically depends on the amount of funds available for distribution, which depends on items such as current and projected cash requirements and tax considerations. As a result, our distribution rate and payment frequency may vary from time to time.


Securities Authorized for Issuance under Equity Compensation Plans


The following table provides information regarding our equity compensation plans as of December 31, 2009.


Equity Compensation Plan Information


 

Number of securities to be issued upon exercise of outstanding options,

 

Weighted-average exercise price of outstanding options,

Number of securities remaining available for future issuance under equity

Plan category

warrants and rights

 

warrants and rights

compensation plans

 

 

 

 

 

Equity compensation plans approved by security holders:

 

 

 

 

  Independent Director   Stock Option Plan

29,000

$

8.95

46,000

 

 

 

 

 

Total:

29,000

$

8.95

46,000


We have adopted an Independent Director Stock Option Plan which, subject to certain conditions, provides for the grant to each independent director of an option to purchase 3,000 shares following their becoming a director and for the grant of additional options to purchase 500 shares on the date of each annual stockholder's meeting. The options for the initial 3,000 shares are exercisable as follows: 1,000 shares on the date of grant and 1,000 shares on each of the first and second anniversaries of the date of grant. All other options are exercisable on the second anniversary of the date of grant. The initial options are exercisable at $8.95 per share. The subsequent options are exercisable at $8.95 per share prior to the time that there is a public market for our shares.


Recent Sales of Unregistered Securities 


None.


Item 6. Selected Financial Data


The following table shows our consolidated selected financial data relating to our consolidated historical financial condition and results of operations. Such selected data should be read in conjunction with Item 7, "Management's Discussion and Analysis of




-31-


Financial Condition and Results of Operations" and the consolidated financial statements and related notes appearing elsewhere in this report (dollar amounts are stated in thousands, except per share amounts.)


 

 

2009

2008

2007

2006

2005

 

 

 

 

 

 

 

Total assets

$

11,328,211 

11,136,866 

8,211,758 

3,040,037 

865,851 

 

 

 

 

 

 

 

Mortgages, notes and margins payable

$

5,085,899 

4,437,997 

3,028,647 

1,107,113 

227,654 

 

 

 

 

 

 

 

Total income

$

1,130,148 

1,050,738 

478,736 

123,202 

6,668 

 

 

 

 

 

 

 

Total interest and dividend income

$

55,189 

81,274 

84,288 

22,164 

1,663 

 

 

 

 

 

 

 

Net income (loss) applicable to Company

$

(397,960)

(365,178)

55,922 

1,896 

(1,457)

 

 

 

 

 

 

 

Net income (loss) per common share, basic and   diluted (a)

$

(.49)

(.54)

.14 

.03 

(1.65)

 

 

 

 

 

 

 

Distributions declared to common stockholders

$

405,337 

418,694 

242,606 

41,178 

438 

 

 

 

 

 

 

 

Distributions per weighted average common   share (a)

$

.50 

.62 

.61 

.60 

.11 

 

 

 

 

 

 

 

Funds from operations (a)(b)

$

35,820 

6,350 

234,215 

48,088 

(859)

 

 

 

 

 

 

 

Cash flows provided by operating activities

$

369,031 

384,365 

263,420 

65,883 

11,498 

 

 

 

 

 

 

 

Cash flows used in investing activities

$

(563,163)

(2,484,825)

(4,873,404)

(1,552,014)

(810,725)

 

 

 

 

 

 

 

Cash flows provided by (used in) financing   activities

$

(250,602)

2,636,325 

4,716,852 

1,751,494 

836,156 

 

 

 

 

 

 

 

Weighted average number of common shares   outstanding, basic and diluted

 

811,400,035 

675,320,438 

396,752,280 

68,374,350 

884,058 


(a)

The net income (loss) per share basic and diluted is based upon the weighted average number of common shares outstanding for the years ended December 31, 2009, 2008 and 2007, respectively. The distributions per common share are based upon the weighted average number of common shares outstanding for the years ended December 31, 2009, 2008 and 2007. See Footnote (b) below for information regarding our calculation of FFO. Our distributions of our current and accumulated earnings and profits for federal income tax purposes are taxable to stockholders as ordinary income; however in 2005 we had a tax loss which resulted in distributions paid during that period being treated as a return of capital for tax purposes. Distributions in excess of these earnings and profits generally are treated as a non-taxable reduction of the stockholder's basis in the shares to the extent thereof, and thereafter as taxable gain for tax purposes. Distributions in excess of earnings and profits have the effect of deferring taxation of the amount of the distributions until the sale of the stockholder's shares, only to the extent of a shareholder's basis. For the years ended December 31, 2009, 2008 and 2007, $296,491, $194,239 and $81,701 (or approximately 72%, 48% and 37% of the $411,797, $405,925 and $222,697 distributions paid in 2009, 2008 and 2007, respectively) represented a return of capital. In order to maintain our qualification as a REIT, we must make annual distributions to stockholders of at least 90% of our REIT taxable income, subject to certain adjustments, such as excluding net capital gains. Under certain circumstances, we may be required to make distributions in excess of cash available for distribution in order to meet the REIT distribution requirements.


(b)

Cash generated from operations is not equivalent to our net income from continuing operations as determined under U.S. generally accepted accounting principles or GAAP. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a standard known as "Funds from Operations”, or "FFO", which it believes more accurately reflects the operating performance of a REIT such as us. As defined by NAREIT, FFO means net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization on real property and after adjustments for unconsolidated partnerships and joint ventures in which the Company holds an interest. FFO is not intended to be an alternative to  "Net Income" as an indicator of our performance nor to  "Cash Flows from Operating Activities" as determined by GAAP as a measure of our capacity to pay distributions. We believe that FFO is a better measure of our operating performance because FFO excludes non-cash items from GAAP net income. This allows us to compare our property performance to our investment objectives. Management uses the calculation of FFO for several reasons. We use FFO to compare our performance to that of




-32-


other REITs. Additionally, we use FFO in conjunction with our acquisition policy to determine investment capitalization strategy. FFO is calculated as follows (in thousands):


 

 

 

Year ended December 31,

 

 

 

2009

2008

2007

 

Net income (loss) applicable to common shares

$

(397,960)

(365,178)

55,922

Add:

Depreciation and amortization:

 

 

 

 

 

  Related to investment properties

 

394,995 

320,402 

174,163

 

  Related to investment in unconsolidated entities, net of     related gains on sale of real estate

 

41,300 

53,761 

6,538

Less:

Noncontrolling interests' share:

 

 

 

 

 

  Depreciation and amortization related to investment     properties

 

2,515 

2,635 

2,408

 

 

 

 

 

 

 

Funds from operations

$

35,820 

6,350 

234,215


Below is additional information related to certain items that significantly impact the comparability of our Funds from Operations and Net Income from the periods presented:


 

 

Year ended December 31,

 

 

2009

2008

2007

Additions (deductions) that were included in net income and FFO

 

 

 

 

  Provision for asset impairment

$

(34,051)

(33,809)

  Provision for goodwill impairment

$

(26,676)

(11,199)

  Impairment of notes receivable

$

(74,136)

  Loss on consolidated investment

$

(148,887)

  Equity in earnings (loss) of Concord Debt Holdings, LLC

$

(75,787)

6,888 

  Impairment of investment in unconsolidated entities

$

(7,443)

(61,993)

(10,084)

  Realized gain (loss) and impairment on securities, net

$

34,155 

(262,105)

(2,466)

  Gain on extinguishment of debt

$

7,760


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations


We electronically file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the Securities and Exchange Commission ("SEC"). The public may read and copy any of the reports that are filed with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549-3628. The public may obtain information on the operation of the Public Reference room by calling the SEC at (800)-SEC-0330. The SEC maintains an Internet site at (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.


Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-K constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical, including statements regarding management’s intentions, beliefs, expectations, representations, plans or predictions of the future and are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “will,” “should” and “could.” Similarly, statements that describe or contain information related to matters such as management’s intent, belief or expectation with respect to the Company’s financial performance, investment strategy and portfolio, cash flows, growth prospects, legal proceedings, amount and timing of anticipated future cash distributions, estimated per share value of the Company’s common stock and other matters are forward-looking statements. These forward-looking statements are not historical facts but are the intent, belief or current expectations of the Company’s management based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Annual Report on Form 10-K . These factors include, but are not limited to: market and economic challenges experienced by the U.S. economy or real estate industry as a whole, including in the lodging industry, and the local economic conditions in the markets in which the Company’s properties are located; the Company’s ability to refinance maturing debt or to obtain new financing on attractive terms; the availability of cash flow from operating activities to fund distributions; future increases in interest rates; and actions or failures by the Company’s joint venture partners, including development partners.  The Company intends that such forward-looking statements be subject to the safe harbors created by Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.





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The following discussion and analysis relates to the years ended December 31, 2009, 2008 and 2007 and as of December 31, 2009 and 2008. You should read the following discussion and analysis along with our Consolidated Financial Statements and the related notes included in this report.


Overview


We seek to invest in real estate assets that we believe will produce attractive current yields and long-term risk-adjusted returns to our stockholders and to generate sustainable cash flow from our operations to fund distributions to our stockholders. To achieve these objectives, we selectively acquire and actively manage, through affiliates of our business manager, investments in commercial real estate. Our property managers for our non-lodging properties actively seek to lease space at favorable rates, control expenses, and maintain strong tenant relationships. We oversee the management of our lodging facilities through active engagement with our third party managers and franchisors to maximize occupancy and daily rates as well as control expenses.


The credit market disruptions and lack of liquidity continue to impact the overall economy and real estate sector. The overall economic environment has experienced a significant slow-down, including lower consumer spending, increased unemployment with many business sectors having experienced lower earnings. Although the general economy has shown signs of a recovery, commercial real estate historically lags the general economy in a recovery. These factors will continue to impact the real estate market, including increased tenant bankruptcies and lower occupancies and rental rates across all segments. Our segments have experienced lower revenues from this slowdown all of which have impacted our business and results of operations as well as the cash available to pay as distributions.


On a consolidated basis, essentially all of our revenues and cash flows from operations for the year ended December 31, 2009 were generated by collecting rental payments from our tenants, room revenues from lodging properties, interest income on our notes receivable investments, distributions from unconsolidated entities and dividend income earned from investments in marketable securities. Our largest cash expense relates to the operation of our properties as well as the interest expense on our mortgages and notes payable. Our property operating expenses include, but are not limited to, real estate taxes, regular repair and maintenance, management fees, utilities and insurance (some of which are recoverable). Our lodging operating expenses include, but are not limited to, rooms, food and beverage, utility, administrative and marketing, payroll, franchise and management fees and repairs and maintenance expenses.


In evaluating our financial condition and operating performance, management focuses on the following financial and non-financial indicators, discussed in further detail herein:


·

Funds from Operations ("FFO"), a supplemental measure to net income determined in accordance with U.S. generally accepted accounting principles ("GAAP").

·

Economic and physical occupancy and rental rates.

·

Leasing activity and lease rollover.

·

Average daily room rate, revenue per available room, and average occupancy to measure our lodging properties.

·

Debt maturities and leverage ratios.

·

Liquidity levels


Results of Operations


General


Consolidated Results of Operations


This section describes and compares our results of operations for the years ended December 31, 2009, 2008 and 2007. We generate most of our net operating income from property operations. In order to evaluate our overall portfolio, management analyzes the operating performance of all properties from period to period and properties we have owned and operated for the same period during each year. A total of 716 and 93 of our investment properties satisfied the criteria of being owned for the entire years ended December 31, 2009 and 2008 and December 31, 2008 and 2007, respectively, and are referred to herein as "same store" properties. This analysis allows management to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio. Additionally, we are able to determine the effects of our new acquisitions on net income. Unless otherwise noted, all dollar amounts are stated in thousands (except per share amounts, per square foot amounts, revenue per available room and average daily rate).




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Comparison of the years ended December 31, 2009 and December 31, 2008


 

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

Net loss applicable to the Company

$

(397,960)

$

(365,178)

 

 

 

 

 

Net loss per share

 

(.49)

 

(.54)


Net loss increased from $(365,178) or $(.54) per share for the year ended December 31, 2008 to $(397,960) or $(.49) per share for the year ended December 31, 2009. The primary reason for the decrease was the loss on consolidated investment of $148,887, impairment of notes receivable of $74,136 and equity in losses of unconsolidated entities of $78,487 for the year ended December 31, 2009, countered by the effect of impairments on investment securities of $262,105 and on investments in unconsolidated entities at $61,993 for the year ended December 31, 2008. A detailed discussion of our impairments is included under Realized Gain (Loss) on Securities and Impairment of Investment in Unconsolidated Entities, Impairments of Notes Receivable and LIP-H consolidation.


Rental Income, Tenant Recovery Income, Lodging Income and Other Property Income. Except for our lodging and multi-family properties, the majority of the revenue from the properties consists of rents received under long-term operating leases. Some leases provide for the payment of fixed base rent paid monthly in advance, and for the reimbursement by tenants of the tenant's pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the landlord and recoverable under the terms of the lease. Under these leases, we pay all expenses and are reimbursed by the tenant for the tenant's pro rata share of recoverable expenses. Certain other tenants are subject to net leases which require the tenant to be responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases, where all expenses are paid directly by the tenant, expenses are not included in the consolidated statements of operations and other comprehensive income. Under leases where all expenses are paid by us, subject to reimbursement by the tenant, the expenses are included within property operating expenses, and reimbursements are included in tenant recovery income on the consolidated statements of operations and other comprehensive income.


Our lodging properties generate revenue through sales of rooms and associated food and beverage services. We measure our financial performance by revenue generated per available room known as RevPAR, which is an operational measure commonly used in the hotel industry to evaluate hotel performance. RevPAR represents the product of the average daily room rate charged and the average daily occupancy achieved but excludes other revenue generated by a hotel property, such as food and beverage, parking, telephone and other guest service revenues.


Rental income consists of basic monthly rent, straight-line rent adjustments, amortization of acquired above and below market leases, fee income, and percentage rental income recorded pursuant to tenant leases. Tenant recovery income consists of reimbursements for real estate taxes, common area maintenance costs, management fees, and insurance costs. Lodging income consists of room revenues, food and beverage revenues, telephone revenues and miscellaneous revenues. Other property income consists of lease termination fees and other miscellaneous property income.


Below is a summary of sources of revenue for years ended December 31, 2009 and 2008.


 

 

Year ended

December 31, 2009

 

Year ended

December 31, 2008

 

2009 increase (decrease) from 2008

Property rentals

$

529,230

$

398,417

$

130,813 

Straight-line rents

 

16,328

 

17,457

 

(1,129)

Amortization of acquired above and below

  market leases, net

 

1,688

 

2,408

 

(720)

Total rental income

$

547,246

$

418,282

$

128,964 

 

 

 

 

 

 

 

Tenant recoveries

 

84,237

 

74,169

 

10,068 

Other income

 

18,778

 

26,703

 

(7,925)

Lodging operating income

 

479,887

 

531,584

 

(51,697)

Total property revenues

$

1,130,148

$

1,050,738

$

79,410 


Total property revenues increased $79,410 for the year ended December 31, 2009 over the prior year. The increase in property revenues in 2009 was due primarily to a full year of operations reflected in 2009 for properties acquired during 2008 in addition to 2009 acquisitions of 48 properties, offset by decreases in our lodging segment, as discussed below.


Property Operating Expenses and Real Estate Taxes. Property operating expenses for properties other than lodging properties consist of property management fees paid to property managers including affiliates of our sponsor and operating expenses, including costs of owning and maintaining investment properties, real estate taxes, insurance, utilities, maintenance to the exterior of the buildings and




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the parking lots. Lodging operating expenses include the room, food and beverage, payroll, utilities, any fees paid to our third party operators, insurance, marketing, and other expenses required to maintain and operate our lodging facilities.


 

 

Year ended

December 31, 2009

 

Year ended

December 31, 2008

 

2009 increase (decrease) from 2008

Property operating expenses

$

115,858

$

84,614

$

31,244 

Lodging operating expenses

 

304,795

 

313,939

 

(9,144)

Real estate taxes

 

85,850

 

71,142

 

14,708 

Total property expenses

$

506,503

$

469,695

$

36,808 


Total property operating expenses increased $36,808 for the year ended December 31, 2009 compared to the year ended December 31, 2008 due to the effect of operations of the additional 48 properties acquired after December 31, 2008 as well as the full year impact of 2008 acquisitions, offset by decreases in the lodging segment.


Other Operating Income and Expenses


Other operating expenses are summarized as follows:


 

 

Year ended

December 31, 2009

 

Year ended

December 31, 2008

 

2009 increase (decrease) from 2008

Depreciation and amortization

$

395,501

$

320,792

$

74,709

Interest expense

 

254,308

 

231,822

 

22,486

General and administrative (1)

 

43,499

 

34,087

 

9,412

Business manager fee

 

39,000

 

18,500

 

20,500

 

$

732,308

$

605,201

$

127,107


(1)  Includes expenses paid to affiliates of our sponsor as described below.


Depreciation and amortization. The $74,709 increase in depreciation and amortization expense for the year ended December 31, 2009 relative to the year ended December 31, 2008 was due substantially to the impact of the properties acquired during 2008 and 2009.


Interest expense. The $22,486 increase in interest expense for the year ended December 31, 2009 as compared to the year ended December 31, 2008 was primarily due to mortgage debt financings during 2009 which increased to $5,056,398 from $4,405,558. Our average interest rate on outstanding debt was 4.9% and 5.1% as of December 31, 2009 and 2008, respectively.


We have experienced a lower overall weighted average interest rate due to the decline in London InterBank Offered Rate (“LIBOR”). If LIBOR increases, we will experience higher weighted average interest rates, which would impact our financial results.


A summary of interest expense for the years ended December 31, 2009 and 2008 appears below:


 

 

Year ended

December 31, 2009

 

Year ended

December 31, 2008

 

2009 increase (decrease) from 2008

Debt Type

 

 

 

 

 

 

Margin and other interest expense

$

16,190

$

23,482

$

(7,292)

Mortgages

 

238,118

 

208,340

 

29,778 

 

 

 

 

 

 

 

Total

$

254,308

$

231,822

$

22,486 


General and Administrative Expenses. General and administrative expenses primarily consist of legal, audit and other professional fees, acquisition related expenses, insurance, board of director fees, state and local taxes as well as salary, information technology and other administrative cost reimbursements paid to our business manager and affiliates, and investment advisor fees. Our expenses were $43,499 for the year ended December 31, 2009 and $34,087 for the year ended December 31, 2008. The increase is due primarily to the growth of our asset and stockholder base during 2009 and 2008, as well as $9,617 and $6,502 of acquisition and dead deal costs for the years ended December 31, 2009 and 2008, respectively.


During 2009, we expensed acquisition costs of all transactions as incurred. Thus all costs related to finding, analyzing and negotiating a transaction will be expensed as incurred as a general and administrative expense, whether or not the acquisition is completed. These expenses would include acquisition fees, if any, paid to an affiliate of our business manager. In the year ended December 31, 2009, we incurred $3,844 of acquisition costs that are included in the general and administrative expenses of $43,499. Separately, we expensed $5,773 of dead deal costs for the year ended December 31, 2009.


Business Manager Fee. After our stockholders have received a non-cumulative, non-compounded return of 5% per annum on their "invested capital," we pay our business manager an annual business management fee of up to 1% of the "average invested assets,"




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payable quarterly in an amount equal to 0.25% of the average invested assets as of the last day of the immediately preceding quarter. We incurred a business management fee equal to $39,000 for the year ended December 31, 2009 or .38% of average invested assets, waiving the remaining $64,584 for the year ended December 31, 2009. We incurred a business manager management fee of $18,500 for the year ended 2008. Once we have satisfied the minimum return on invested capital described above, the amount of the actual fee paid to the business manager is determined by the business manager up to the amount permitted by the agreement. There is no assurance that our business manager will continue to forego or defer all or a portion of its business management fee.


Interest and Dividend Income and Realized Gain (Loss) on Securities. Interest income consists of interest earned on short term investments and notes receivable. Dividends are earned from investments in our portfolio of marketable securities.


 

 

Year ended December 31, 2009

 

Year ended December 31, 2008

Interest Income

$

37,212 

$

50,331 

Dividend Income

 

17,977 

 

30,943 

  Total

$

55,189 

$

81,274 

 

 

 

 

 

Realized gain (loss) on investment securities

$

38,193 

$

(15,941)

Other than temporary impairments

 

(4,038)

 

(246,164)

  Total

$

34,155 

$

(262,105)


Interest income was $37,212 and $50,331 for the years ended December 31, 2009 and 2008, respectively. Interest income is earned on our cash balances and notes receivable. Our average cash balance in 2009 was $685,725 and our average interest rate earned on cash investments was .4% for the year ended December 31, 2009.


Our notes receivable balance of $423,478 as of December 31, 2009 consisted of installment notes from unrelated parties that mature on various dates through May 2012. The notes are secured by mortgages on land, shopping centers and lodging facilities. Interest only is due each month at rates ranging from 1.86% to 9.50% per annum. For the years ended December 31, 2009 and 2008, we recorded interest income from notes receivable of $26,355 and $27,614, respectively. See Notes Receivable section in Liquidity and Capital Resources for more discussion.


Dividend income decreased by $12,966 for the year ended December 31, 2009 compared to the year ended December 31, 2008 as a result of reduced dividend payout rates. Our investments continue to generate dividends, however some REITs we have invested in have reduced their payout rates and we could continue to see further reductions in the future. The following analysis outlines our yield earned on our portfolio of securities.


 

 

December 31, 2009

 

December 31, 2008

Dividend income

 

17,977 

 

30,943 

Margin interest expense

 

(168)

 

(3,776)

Investment advisor fee

 

(1,319)

 

(2,162)

 

 

16,490 

 

25,005 

 

 

 

 

 

Average investment in marketable securities (1)

 

449,480 

 

449,415 

Average margin payable balance

 

(25,214)

 

(115,557)

Net investment

 

424,266 

 

333,858 

 

 

 

 

 

Leveraged yield (annualized)

 

3.9%

 

7.5%


(1)

The average investment in marketable securities represents our original investment in securities. Unrealized gains and losses, including impairments, are not reflected.


Noncontrolling Interest. The noncontrolling interest represents the interests of the third parties in Minto Builders (Florida), Inc. ("MB REIT") and consolidated joint ventures managed by third parties.


Equity in Earnings of Unconsolidated Entities. In 2009, we have equity in losses of unconsolidated entities of $78.5 million. This is an increase of $32.4 million from last year’s equity in losses of unconsolidated entities of $46.1 million as of December 31, 2008, which is mainly due to significant losses incurred and impairments recorded by our Concord Debt joint venture of which our portion was $75.8 million.


Provision for Asset Impairment. For the year ended December 31, 2009, we recorded a provision for asset impairment of $34.1 million to reduce the book value of certain of our investment properties to fair value. For the year ended December 31, 2008, a provision of $33.8 million was recorded for asset impairment.





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Provision for Goodwill Impairment. For the year ended December 31, 2009, we have recorded impairment of $26.7 million to our goodwill. We recorded impairment of $11.2 million to our goodwill for the year ended December 31, 2008. The impairments are primarily due to the effect of the slowdown in the economy and its impact on the property resulting in increases in capitalization and discount rates used in the fair value calculation. Increases in these rates reduce the fair value of goodwill. Each of the three properties with goodwill recorded an impairment. As a result, goodwill on each property is stated at fair value as of December 31, 2009.


Impairment of Notes Receivable. For the year ended December 31, 2009, we have recorded an impairment of notes receivable of $74.1 million. No impairment was recorded for the year ended December 31, 2008. Certain of our loans, including loans in default, have had declines in the fair value of the underlying collateral which result in impairments of our loan receivable balance to the extent the collateral is valued below the loan book value.


Impairment of Investment in Unconsolidated Entities. For the year ended December 31, 2009, we recorded an impairment of $7.4 million on our investment in unconsolidated entities. For the year ended December 31, 2008, we recorded a $51.4 million loss on our investment in Feldman Mall Properties, Inc. Such impairment charge reduces the carrying value of our investment in Feldman to $0 as of December 31, 2008. In addition, the projected leasing for one of our development joint ventures did not meet our initial expectations and it is difficult to project when significant leasing will be achieved for the project and an impairment charge of $10.6 million was recorded for the year ended December 31, 2008.


Segment Reporting


An analysis of results of operations by segment is below. The tables contained throughout summarize certain key operating performance measures for the years ended December 31, 2009 and 2008.


Retail Segment


 

 

Total Retail Properties

 

 

As of December 31,

 

 

2009

 

2008

Retail Properties

 

 

 

 

Physical occupancy

 

92%

 

94%

Economic occupancy

 

93%

 

95%

Base rent per square foot

$

15.78

$

16.41

Gross investment in properties

$

3,444,670

$

2,978,232


The following table represents lease expirations for the retail segment:


Lease Expiration Year

Number of Expiring Leases

GLA of Expiring Leases (Sq. Ft.)

Annualized Base Rent of Expiring Leases ($)

Percent of Total GLA

Percent of Total Annualized Base Rent

Expiring Rent/Square Foot

2010

245 

639,402

10,289

4.1%

3.9%

$16.09

2011

262 

790,258

12,980

5.1%

4.9%

$16.43

2012

360 

1,496,841

28,276

9.6%

10.8%

$18.89

2013

216 

620,842

11,479

4.0%

4.4%

$18.49

2014

210 

1,399,151

20,761

9.0%

7.9%

$14.84

Thereafter

1,004 

10,570,098

178,803

68.2%

68.1%

$16.92

 

2,297 

15,516,592

262,588

100%

100%

$16.92


Our retail business is not highly dependent on specific retailers or specific retail industries which we believe shields the portfolio from significant revenue variances over time. The occupancy rates above are as of the end of the period and do not represent the average rate during the years ended December 31, 2009 and 2008.


Our retail business is centered on multi-tenant properties with fewer than 120,000 square feet of total space, located in stable communities, primarily in the southwest and southeast regions of the country. Adding to this core investment profile is a select number of traditional mall properties and single-tenant properties. Among the single-tenant properties, the largest holdings are comprised of investments in bank branches operated by SunTrust Bank and Citizens Bank, where the tenant-occupant pays rent with contractual increases over time, and bears virtually all expenses associated with operating the facility.


Our tenants largely consist of basic-need retailers such as grocery, pharmacy, moderate-fashion shoes and clothing, and services. We have only limited exposure to retail categories such as books/music/video, big-box electronics, fast-food restaurants, new-concept, and other goods-providers, which we believe are being impacted the greatest by the internet and existing economic conditions.





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During the year ended December 31, 2009, our retail portfolio had a limited number of tenant issues related to retailer bankruptcy. As of December 31, 2009, our retail portfolio contained only eleven retailers, renting approximately 279,061 square feet, that were under bankruptcy protection. We do not believe these bankruptcies will have a material adverse effect on our results of operations, financial condition and ability to pay distributions.


We have not experienced bankruptcies or receivable write-offs in our retail portfolio that have materially impacted our result of operations notwithstanding the overall decline in the economy or retail environment. However, we continue to actively monitor our retail tenants as a continued downturn in the economy could have negative impact on our tenants’ abilities to pay rent or our ability to fill space that is currently vacant, or space that becomes vacant in the near future.


Comparison of Years Ended December 31, 2009 and December 31, 2008


The table below represents operating information for the retail segment of 713 properties and for the same store retail segment consisting of 545 properties acquired prior to January 1, 2008. The properties in the same store portfolio were owned for the entire years ended December 31, 2009 and December 31, 2008, respectively.


 

Total Retail Segment

 

Same Store Retail Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

243,719

$

206,591

$

37,128

 

$

181,915

$

190,337

$

(8,422)

  Tenant recovery incomes

 

50,042

 

43,411

 

6,631

 

 

38,597

 

42,052

 

(3,455)

  Other property income

 

6,374

 

3,322

 

3,052

 

 

4,494

 

2,937

 

1,557 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

300,135

$

253,324

$

46,811

 

$

225,006

$

235,326

$

(10,320)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

48,063

$

39,264

$

8,799

 

$

35,978

$

37,532

$

(1,554)

  Real estate taxes

 

30,442

 

26,458

 

3,984

 

 

25,243

 

26,188

 

(945)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

78,505

$

65,722

$

12,783

 

$

61,221

$

63,720

$

(2,499)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

221,630

 

187,602

 

34,028

 

 

163,785

 

171,606

 

(7,821)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy for the   period

 

94%

 

96%

 

(2%)

 

 

93%

 

96%

 

(3%)


Our retail segment’s rental revenues increased from $253,324 for the year ended December 31, 2008 to $300,135 for the year ended December 31, 2009 mainly due to the acquisition of 25 retail properties since December 31, 2008. Retail property operating expenses also increased from $65,722 in 2008 to $78,505 in 2009 as a result of these acquisitions.


The primary reason for the decrease in revenue and net property operations for the retail same store comparison is a decrease in economic occupancy of 3% between the year ended December 31, 2008 and the year ended December 31, 2009. The decrease in occupancy has resulted from an overall decline in the economy and the impact on demand for retail space. We believe an increase in our occupancy is dependent on a recovery of consumer spending and increased demand by retailers for space. The primary reason for the decrease in property operating expenses was contract renegotiations that took place in 2009 for all contracted services as well as a decline in real estate taxes, in addition to 2008 experiencing hurricane related repairs.


Lodging Segment


 

 

For the year ended

 

For the year ended

 

 

December 31, 2009

 

December 31, 2008

Lodging Properties

 

 

 

 

Revenue per available room

$

75

$

89

Average daily rate

$

115

$

129

Occupancy

 

65%

 

69%

Gross investment in properties

$

2,720,238

$

2,703,097


We believe the decreases in lodging revenues per available room, average daily rate and occupancy are primarily a result of the current economic slowdown that has affected all industries and travel segments.





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Lodging facilities have characteristics different from those found in office, retail, industrial, and multi-family properties (also known as "traditional asset classes"). Revenue, operating expenses, and net income are directly tied to the daily hotel sales operation whereas other traditional asset classes generate revenue from medium to long-term lease contracts. In this way, net operating income is somewhat more predictable among the properties in the other traditional asset classes, though we believe that opportunities to increase revenue are, in many cases, limited because of the duration of the existing lease contracts. We believe lodging facilities have the benefit of capturing increased revenue opportunities on a daily or weekly basis but are also subject to immediate decreases in revenue as a result of declines in daily rental rates and/or daily occupancy when demand falls off quickly. Due to seasonality, we expect our revenues to be greater during the second and third quarters with lower revenues in the first and fourth quarters.


Two practices are common in the lodging industry:  1) association with national franchise organizations and 2) professional management by specialized third-party hotel managers. Our portfolio consists of assets aligned with what we believe are the top franchise enterprises in the lodging industry: Marriott, Hilton, Intercontinental, Hyatt, Wyndham, and Choice Hotels. By doing so, we believe our lodging operations benefit from enhanced advertising, marketing, and sales programs through a franchise arrangement while the franchisee (in this case us) pays only a fraction of the overall cost for these programs. We believe effective TV, radio, print, on-line, and other forms of advertisement are necessary to draw customers to our lodging facilities creating higher occupancy and rental rates, and increased revenue. Additionally, by using the franchise system we are also able to benefit from the frequent traveler rewards programs or “point awards” systems which we believe further bolsters occupancy and overall daily rental rates.


Our lodging facilities are generally classified in the upscale or upper-upscale lodging categories. All of our lodging facilities are managed by third-party managers with extensive experience and skill in hospitality operations. These third-party managers report to a dedicated, specialized group within our business manager that has, in our view, extensive expertise in lodging ownership and operation within a REIT environment. This group has daily interaction with all third-party managers, and closely monitors all aspects of our lodging interests. Additionally, this group also maintains close relationships with the franchisors to assure that each property maintains high levels of customer satisfaction, franchise conformity, and revenue-management.


During 2008 and 2009, the hotel industry experienced declines in both occupancy levels and rental rates (better known as "Average Daily Rate" or "ADR"). The downturn in performance affected all major segments of the travel industry (e.g. corporate travel, group travel, and leisure travel). The industry is projecting to see ongoing declines in Revenue per Available Room growth through early 2010 with a possible recovery in Rev/Par in the second half of 2010. For 2010, the industry is predicting Revenue per Available Room ranging from negative (1.5%) – (3.5%) compared to 2009. We believe revenues will start growing when Gross Domestic Product (“GDP”) begins a period of consistent growth. For 2010, we believe that our revenue per available room should be consistent with the overall industry trends.


Our third party managers and asset management are focusing on reducing variable costs and gaining market share from competitors as a result of the declines in revenues.


Comparison of Years Ended December 31, 2009 and December 31, 2008


The table below represents operating information for the lodging segment of 99 properties and for the same store portfolio consisting of 76 properties acquired prior to January 1, 2008. The properties in the same store portfolio were owned for the entire years ended December 31, 2009 and December 31, 2008.


 

Total Lodging Segment

 

Same Store Lodging Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Lodging operating income

$

479,887

$

531,584

$

(51,697)

 

$

298,395

$

359,614

$

(61,219)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

479,887

$

531,584

$

(51,697)

 

$

298,395

$

359,614

$

(61,219)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Lodging operating expenses     to non-related parties

$

304,795

$

313,939

$

(9,144)

 

$

183,903

$

210,982

$

(27,079)

  Real estate taxes

 

27,660

 

23,949

 

3,711 

 

 

16,482

 

15,849

 

633 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

332,455

$

337,888

$

(5,433)

 

$

200,385

$

226,831

$

(26,446)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

147,432

 

193,696

 

(46,264)

 

 

98,010

 

132,783

 

(34,773)


On a same store basis, the lodging segment’s net operating income decrease is primarily attributable to a decrease in same store occupancy from 68% to 64%, a reduction in the Average Daily Rate from $123 to $109, which together resulted in Rev/Par dropping from $83 to $69. The reduction is attributable to the current economic recession which has reduced travel from all major segments of the lodging industry (business transient and group, and leisure group and transient travel). Through our active involvement with our




-40-


managers, we have reduced variable costs consistent with occupancy decreases. However, certain fixed costs such as real estate taxes, insurance and maintenance of the properties cannot be reduced to match occupancy reductions.


Office Segment


 

 

Total Office Properties

 

 

As of December 31,

 

 

2009

 

2008

Office Properties

 

 

 

 

Physical occupancy

 

96%

 

97%

Economic occupancy

 

96%

 

97%

Base rent per square foot

$

15.33

$

14.82

Gross investment in properties

$

1,952,717

$

1,551,123


The following table represents lease expirations for the office segment:


Lease Expiration Year

Number of Expiring Leases

GLA of Expiring Leases (Sq. Ft.)

Annualized Base Rent of Expiring Leases ($)

Percent of Total GLA

Percent of Total Annualized Base Rent

Expiring Rent/Square Foot

2010

18

248,202 

3,514 

2.6%

2.1%

$14.16

2011

34

519,135 

13,362 

5.4%

8.2%

$25.74

2012

25

278,533 

5,090 

2.9%

3.1%

$18.27

2013

24

576,401 

11,589 

6.0%

7.1%

$20.11

2014

46

310,442 

5,980 

3.2%

3.7%

$19.26

Thereafter

83

7,740,817 

123,943 

79.9%

75.8%

$16.01

 

230

9,673,530 

163,478 

100%

100%

$16.90


Our investments in office properties largely represent assets leased and occupied to either a diverse group of tenants or to single tenants that fully occupy the space leased. Examples of the former include the IDS Center located in the central business district of Minneapolis, and Dulles Executive Plaza and Worldgate Plaza, both located in metropolitan Washington D.C. and catering to medium to high-technology companies and federal government contractors. Examples of the latter include three buildings leased and occupied by AT&T and located in three distinct US office markets - Chicago, St. Louis, and Cleveland. In addition, our office portfolio includes properties leased on a net basis to SunTrust, with the leased locations located in the east and southeast regions of the country.


Our office properties continue to experience consistent occupancy rates and stable rental rates for more recent acquisitions. For example, in the Minneapolis, Minnesota and Dulles, Virginia office markets, where a majority of our multi-tenant office properties are located, our high occupancy rate is consistent with the strength of the market. The increase in our base rent per square foot from $14.82 to $15.33 was primarily a result of acquisitions during 2008 and 2009. These rates are as of the end of the period and do not represent the average rate during the year ended December 31, 2009 and 2008.


Comparison of Years Ended December 31, 2009 and December 31, 2008


The table below represents operating information for the office segment of 40 properties and for the same store portfolio consisting of 28 properties acquired prior to January 1, 2008. The properties in the same store portfolio were owned for the years ended December 31, 2009 and December 31, 2008.


 

Total Office Segment

 

Same Store Office Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

148,456

$

109,410

$

39,046

 

$

106,808

$

108,215

$

(1,407)

  Tenant recovery incomes

 

28,437

 

27,034

 

1,403

 

 

27,142

 

27,034

 

108 

  Other property income

 

6,070

 

5,733

 

337

 

 

6,068

 

5,706

 

362 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

182,963

$

142,177

$

40,786

 

$

140,018

$

140,955

$

(937)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

31,266

$

28,184

$

3,082

 

$

28,633

$

28,384

$

249 

  Real estate taxes

 

14,360

 

13,775

 

585

 

 

14,329

 

13,775

 

554 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

45,626

$

41,959

$

3,667

 

$

42,962

$

42,159

$

803 




-41-





 

Total Office Segment

 

Same Store Office Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

137,337

 

100,218

 

37,119

 

 

97,056

 

98,796

 

(1,740)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy for the   period

 

97%

 

97%

 

 

 

96%

 

97%

 

(1%)


Office properties real estate rental revenues increased from $142,177 in 2008 to $182,963 in 2009 mainly due to the acquisition of four properties since January 1, 2009. Office properties real estate and operating expenses also increased from $41,959 in 2008 to $45,626 in 2009 as a result of these acquisitions and due to higher real estate taxes and common area maintenance costs.


The decrease in net operating income for the office same store comparison resulted primarily from a decrease in same store occupancy and an increase in real estate taxes.


Industrial Segment


 

 

Total Industrial Properties

 

 

As of December 31,

 

 

2009

 

2008

Industrial Properties

 

 

 

 

Physical occupancy

 

95%

 

97%

Economic occupancy

 

96%

 

99%

Base rent per square foot

$

5.45

$

4.75

Gross investment in properties

$

1,010,346

$

917,769


The following table represents lease expirations for the industrial segment:


Lease Expiration Year

Number of Expiring Leases

GLA of Expiring Leases (Sq. Ft.)

Annualized Base Rent of Expiring Leases ($)

Percent of Total GLA

Percent of Total Annualized Base Rent

Expiring Rent/Square Foot

2010

14 

979,924 

2,859 

6.5%

3.1%

$2.92

2011

10 

1,270,265 

5,000 

8.4%

5.4%

$3.94

2012

1,773,378 

8,806 

11.8%

9.5%

$4.97

2013

1,195,213 

7,113 

7.9%

7.7%

$5.95

2014

201,818 

1,045 

1.3%

1.1%

$5.18

Thereafter

32 

9,658,526 

67,898 

64.1%

73.2%

$7.03

 

74 

15,079,124 

92,721 

100%

100%

$6.15


During 2009, our industrial holdings continued to experience high economic occupancy rates. The majority of the properties are located in what we believe are active and sought-after industrial markets, including the Memphis Airport market of Memphis, Tennessee and the O’Hare Airport market of Chicago, Illinois, commonly one of the largest industrial markets in the world.


Comparison of Years Ended December 31, 2009 and December 31, 2008


The table below represents operating information for the industrial segment of 65 properties and for the same store portfolio consisting of 60 properties acquired prior to January 1, 2008.


 

Total Industrial Segment

 

Same Store Industrial Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

75,449

$

71,514

$

3,935 

 

$

63,520

$

64,700

$

(1,180)

  Tenant recovery incomes

 

4,106

 

3,759

 

347 

 

 

4,099

 

3,759

 

340 

  Other property income

 

1,083

 

15,133

 

(14,050)

 

 

83

 

133

 

(50)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

80,638

$

90,406

$

(9,768)

 

$

67,702

$

68,592

$

(890)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

4,973

$

4,836

$

137 

 

$

4,570

$

4,650

$

(80)




-42-





 

Total Industrial Segment

 

Same Store Industrial Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

  Real estate taxes

 

3,197

 

2,259

 

938 

 

 

3,197

 

2,259

 

938 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

8,170

$

7,095

$

1,075 

 

$

7,767

$

6,909

$

858 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

72,468

 

83,311

 

(10,843)

 

 

59,935

 

61,683

 

(1,748)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy for the   period

 

97%

 

99%

 

(2%)

 

 

96%

 

98%

 

(2%)


Industrial properties real estate revenues decreased from $90,406 for the year ended December 31, 2008 to $80,638 for the year ended December 31, 2009 mainly due to the termination fee of $15,000 for Faulkner Road realized in the fourth quarter of 2008. Industrial properties real estate and operating expenses increased from $7,095 in 2008 to $8,170 in 2009.


A majority of the tenants have net leases and they are directly responsible for operating costs and reimburse us for real estate taxes and insurance. Therefore, industrial segment operating expenses are generally lower than expenses for the other segments.


Our overall decrease in net operating income for the industrial same store comparison reflects lower revenues from a decrease in occupancy and higher real estate taxes. Our 2% decline in occupancy is primarily driven by an overall decline in demand for industrial space. We believe a future recovery in the overall economy will be needed to increase our occupancy.


Multi-family Segment


 

 

Total Multi-family Properties

 

 

As of December 31,

 

 

2009

 

2008

Multi-Family Properties

 

 

 

 

Physical occupancy

 

84%

 

92%

Economic occupancy

 

84%

 

92%

End of month scheduled base rent per unit per month

$

880

$

832

Gross investment in properties

$

820,261

$

557,965


Our portfolio contains 27 multi-family properties, each reporting stable rental rate levels. These rates are as of the end of the period and do not represent the average rate during the year ended December 31, 2009 and 2008. We believe that recent changes in the housing market and in this job market have caused downward pressure on multi-family occupancy rates, though rental rates have shown stability. We expect occupancy rates to recover and rental rates to grow modestly.


Comparison of Years Ended December 31, 2009 and December 31, 2008


The table below represents operating information for the multi-family segment of 27 properties and for the same store portfolio consisting of seven properties acquired prior to July 1, 2008. The properties in the same store portfolio were owned for the years ended December 31, 2009 and December 31, 2008.


 

Total Multi-Family Segment

 

Same Store Multi-Family Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

66,368

$

30,767 

$

35,601

 

$

19,425

$

19,875

$

(450)

  Tenant property income

 

295

 

(35)

 

330

 

 

30

 

(40)

 

70 

  Other property income

 

5,166

 

2,515 

 

2,651

 

 

1,533

 

1,601

 

(68)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

71,829

$

33,247 

$

38,582

 

$

20,988

$

21,436

$

(448)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

27,190

$

12,327 

$

14,863

 

$

8,322

$

8,917

$

(595)

  Real estate taxes

 

9,636

 

4,704 

 

4,932

 

 

3,351

 

4,041

 

(690)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

36,826

$

17,031 

$

19,795

 

$

11,673

$

12,958

$

(1,285)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income

 

35,003

 

16,216 

 

18,787

 

 

9,315

 

8,478

 

837 




-43-





 

Total Multi-Family Segment

 

Same Store Multi-Family Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2009

 

2008

 

(Decrease)

 

 

2009

 

2008

 

(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average occupancy for the   period

 

88%

 

89%

 

(1%)

 

 

87%

 

90%

 

(3%)


Multi–family real estate rental revenues increased from $33,247 for the year ended December 31, 2008 to $71,829 for the year ended December 31, 2009. The increases are mainly due to the acquisition of 10 properties since January 1, 2009. Multi-family properties real estate and operating expenses also increased from $17,031 in 2008 to $36,826 in 2009 as a result of these acquisitions.


The increase in net operating income was primarily caused by a decrease in overall operating expenses in 2009 related to decreases in real estate taxes, lower insurance expenses in 2009 and hurricane related expenses in 2008.


LIP-H Segment


On June 8, 2007, we, through a 100% owned subsidiary, entered into the LIP Holdings, LLC (LIP-H) operating agreement for the purpose of funding the development and ownership of real estate projects in the office, distribution, retail, healthcare and mixed-use markets. Our subsidiary invested $227,000 in exchange for the Class A Participating Preferred Interests of LIP-H, which entitles our subsidiary to a 9.5% preferred dividend and two of the five board seats of LIP-H.  


On January 6, 2009, our subsidiary was granted a third seat on the board of LIP-H. The third board seat gave effective control over LIP-H to our subsidiary, resulting in the consolidation of LIP-H as of January 6, 2009. The assets of LIP-H consist of eight operating office and retail projects and a mezzanine loan to LIP Development (LIP-D), an entity related to The Lauth Group, Inc. (the other venture partner of LIP-H). The mezzanine loan to LIP-D was secured primarily by partnership interests owning development projects at various stages of completion, including vacant land.


On April 27, 2009, we took actions through LIP-H to secure the collateral and protect LIP-H rights under the mezzanine loan. On May 1, 2009, the borrowers under the mezzanine loan filed for bankruptcy protection. LIP-H is in the process of asserting its rights under the mezzanine loan and initiating actions to protect its collateral.


Our control of LIP-H on January 6, 2009 was accounted as a business combination, which required us to record the assets and liabilities of LIP-H at fair value. We valued the eight operating properties using a discounted cash flow model, including discount rates and capitalization rates on the expected future cash flows of the properties. We estimated fair value of the debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments. The mezzanine loan was based on the expected contractual cash flows discounted using a rate adjusted for the risks associated with the bankruptcy and litigation process and time and effort in working through a bankruptcy to access the collateral under the mezzanine loan. The bankruptcy will most likely extend the development and leasing timeline and cost for the collateral as third party lenders, contractors and potential tenants are expected to not be willing to transact with an entity during the bankruptcy process or will need significant cost concessions as additional risk consideration. These factors resulted in the valuation of the mezzanine loan at $10,200 and loss on a consolidated investment of approximately $149,000. We also valued the non-controlling interest in LIP-H at zero. No consideration was given by us as part of this consolidation.


The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:


Investments in properties

$

124,187

Notes receivable

 

10,200

Cash

 

1,757

Other assets

 

1,299

Total assets acquired

$

137,443

Debt

 

96,763

Other liabilities

 

3,584

Net assets acquired

$

37,096


The following table summarizes the investment in LIP-H from December 31, 2008 to January 6, 2009.


Investments in unconsolidated entities at December 31, 2008

$

185,983 

Loss on consolidated investment

$

(148,887)

Net assets acquired at January 6, 2009

$

37,096 







-44-


Comparison of the years ended December 31, 2008 and December 31, 2007


Net income decreased from $55,922 or $.14 per share for the year ended December 31, 2007 to $(365,178) or $(.54) per share for the year ended December 31, 2008. The primary reason for the decrease was $262,105 taken as realized loss and impairments on investment securities and $61,993 of impairments on investments in unconsolidated entities for the year ended December 31, 2008, which decreased net income per share by $.48, as compared to 2007, where $2,466 was recorded as net realized loss and impairments on investment securities, and $10,084 was recorded as impairments on investments in unconsolidated entities, decreasing net income per share by $.03. A detailed discussion of our impairments is included under Realized Gain (Loss) on Securities and Impairment of Investment in Unconsolidated Entities.


 

 

Year ended

 

Year ended

 

 

December 31, 2008

 

December 31, 2007

Net income (loss) applicable to the Company

$

(365,178)

$

55,922

 

 

 

 

 

Net income (loss) per share

 

(.54)

 

.14


Rental Income, Tenant Recovery Income, Lodging Income and Other Property Income. Rental income consists of basic monthly rent, straight-line rent adjustments, amortization of acquired above and below market leases, fee income, and percentage rental income recorded pursuant to tenant leases. Tenant recovery income consists of reimbursements for real estate taxes, common area maintenance costs, management fees, and insurance costs. Lodging income consists of room revenues, food and beverage revenues, telephone revenues and miscellaneous revenues. Other property income consists of lease termination fees and other miscellaneous property income. Total property revenues were $1,050,738 and $478,736 for the years ended December 31, 2008 and 2007, respectively.


Except for our lodging properties, the majority of the revenue from the properties consists of rents received under long-term operating leases. Some leases provide for the payment of fixed base rent paid monthly in advance, and for the reimbursement by tenants of the tenant's pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the landlord and recoverable under the terms of the lease. Under these leases, we pay all expenses and are reimbursed by the tenant for the tenant's pro rata share of recoverable expenses. Certain other tenants are subject to net leases which require the tenant to be responsible for fixed base rent as well as all costs and expenses associated with occupancy. Under net leases, where all expenses are paid directly by the tenant, expenses are not included in the consolidated statements of operations and other comprehensive income. Under leases where all expenses are paid by us, subject to reimbursement by the tenant, the expenses are included within property operating expenses, and reimbursements are included in tenant recovery income on the consolidated statements of operations and other comprehensive income.


Our lodging properties generate revenue through sales of rooms and associated food and beverage services. We measure our financial performance by revenue generated per available room known as RevPAR, which is an operational measure commonly used in the hotel industry to evaluate hotel performance. RevPAR represents the product of the average daily room rate charged and the average daily occupancy achieved but excludes other revenue generated by a hotel property, such as food and beverage, parking, telephone and other guest service revenues.


Below is a summary of sources of revenue for years ended December 31, 2008 and 2007. Fluctuations are explained below.


 

 

Year ended

December 31, 2008

 

Year ended

December 31, 2007

 

2008 increase (decrease) from 2007

Property rentals

$

398,417

$

267,816

$

130,601

Straight-line rents

 

17,457

 

12,765

 

4,692

Amortization of acquired above and   below market leases, net

 

2,408

 

155

 

2,253

Total rental income

$

418,282

$

280,736

$

137,546

 

 

 

 

 

 

 

Tenant recoveries

 

74,169

 

59,587

 

14,582

Other income

 

26,703

 

12,021

 

14,682

Lodging operating income

 

531,584

 

126,392

 

405,192

Total property revenues

$

1,050,738

$

478,736

$

572,002


Total property revenues increased $572,002 for the year ended December 31, 2008 over the same period of the prior year. The increase in property revenues in 2008 was due primarily to acquisitions of 187 properties, including lodging facilities, since December 31, 2007.


Property Operating Expenses and Real Estate Taxes. Property operating expenses for properties other than lodging properties consist of property management fees paid to property managers including affiliates of our sponsor and operating expenses, including costs of




-45-


owning and maintaining investment properties, real estate taxes, insurance, utilities, maintenance to the exterior of the buildings and the parking lots. Total expenses were $469,695 for the year ended December 31, 2008 and $174,755 for the year ended December 31, 2007, respectively. Lodging operating expenses include the room, food and beverage, payroll, utilities, any fees paid to our third party operators, insurance, marketing, and other expenses required to maintain and operate our lodging facilities.


 

 

Year ended

December 31, 2008

 

Year ended

December 31, 2007

 

2008 increase (decrease) from 2007

Property operating expenses

$

84,614

$

59,678

$

24,936

Lodging operating expenses

 

313,939

 

75,412

 

238,527

Real estate taxes

 

71,142

 

39,665

 

31,477

Total property expenses

$

469,695

$

174,755

$

294,940


Total property operating expenses increased $294,940 for the year ended December 31, 2008 compared to the year ended December 31, 2007 due to the effect of properties acquired after December 31, 2007, primarily lodging facilities. The RLJ acquisition, as well as a full year’s results of the lodging acquisitions from 2007, contributed to a significant increase in lodging expenses in 2008.


Other Operating Income and Expenses


Other operating expenses are summarized as follows:


 

 

Year ended

December 31, 2008

 

Year ended

December 31, 2007

 

2008 increase (decrease) from 2007

Depreciation and amortization

$

320,792

$

174,163

$

146,629

Interest expense

 

231,822

 

108,060

 

123,762

General and administrative (1)

 

34,087

 

19,466

 

14,621

Business manager fee

 

18,500

 

9,000

 

9,500

 

$

605,201

$

310,689

$

294,512


(1)  Includes expenses paid to affiliates of our sponsor as described below.


Depreciation and amortization. The $146,629 increase in depreciation and amortization expense for the year ended December 31, 2008 relative to the year ended December 31, 2007 was due substantially to the impact of the properties acquired during 2007 and 2008.


Interest expense. The $123,762 increase in interest expense for the year ended December 31, 2008 as compared to the year ended December 31, 2007 was primarily due to mortgage debt financings during 2008 which increased to $4,405,559 from $2,959,480. Our average interest rate on outstanding debt is 4.97% and 5.66% as of December 31, 2008 and 2007, respectively.


A summary of interest expense for the years ended December 31, 2008 and 2007 appears below:


 

 

Year ended

December 31, 2008

 

Year ended

December 31, 2007

 

2008 increase (decrease) from 2007

Debt Type

 

 

 

 

 

 

Margin and other interest expense

$

23,482

$

15,933

$

7,549

Mortgages

 

208,340

 

92,127

 

116,213

 

 

 

 

 

 

 

Total

$

231,822

$

108,060

$

123,762


General and Administrative Expenses. General and administrative expenses consist of investment advisor fees, miscellaneous deal costs, professional services, legal fees, salaries and computerized information services costs reimbursed to affiliates or related parties of the business manager for, among other things, maintaining our accounting and investor records, directors' and officers' insurance, postage, board of directors fees, printer costs and state tax based on property or net worth. Our expenses were $34,087 for the year ended December 31, 2008 and $19,466 for the year ended December 31, 2007, respectively.


Business Manager Fee. After our stockholders have received a non-cumulative, non-compounded return of 5% per annum on their "invested capital," we pay our business manager an annual business management fee of up to 1% of the "average invested assets," payable quarterly in an amount equal to 0.25% of the average invested assets as of the last day of the immediately preceding quarter. For the year ended December 31, 2008, we paid our business manager $18,500 for the business manager fee and an investment advisory fee of approximately $2,162, which is less than the full 1% fee that the business manager could be paid. The investment advisor fee is included in general and administrative expenses. The business manager has waived any further fees that may have been permitted under the agreement for the years ended December 31, 2008 and 2007, respectively.





-46-


Interest and Dividend Income and Realized Gain (Loss) on Securities. Interest income consists of interest earned on short term investments and notes receivable. Dividends are earned from investments in our portfolio of marketable securities. We invest in marketable securities issued by other REIT entities, including those we may have an interest in acquiring, where we believe the yields and returns will exceed those of other short-term investments. These investments have historically generated both current dividend income and gains on sale, offset by impairments on securities where we believe the decline in stock price are other than temporary. Our interest and dividend income was $81,274 and $84,288 for the years ended December 31, 2008 and 2007, respectively. We realized a net loss on securities and other than temporary impairments of $262,105 and $2,466 for the years ended December 31, 2008 and 2007. For the years ended December 31, 2008 and 2007, we realized impairment losses of $246,164 and $21,746, respectively, on our portfolio of securities.


 

 

Year ended December 31, 2008

 

Year ended December 31, 2007

Interest Income

$

50,331 

$

61,546 

Dividend Income

 

30,943 

 

22,742 

  Total

$

81,274 

$

84,288 

 

 

 

 

 

Realized gain (loss) on investment   securities

$

(15,941)

$

19,280 

Other than temporary impairments

 

(246,164)

 

(21,746)

  Total

$

(262,105)

$

(2,466)


Interest income was $50,331 and $61,546 for the years ended December 31, 2008 and 2007, respectively. Interest income is earned on our cash balances and notes receivable. Our average cash balance in 2008 was $884,671 and our average interest rate earned on cash investments was 2.2% for the year ended December 31, 2008.


As of December 31, 2008, our cash balance of $945,225 had an approximate yield of 2.2%, which was less than the 6.2% distribution rate in effect for 2008 based on a $10 stock price and our average interest rate cost of 4.97%. During 2008, we earned approximately $18,200 on our cash balances.


Our notes receivable balance of $480,774 as of December 31, 2008 consisted of installment notes from unrelated parties that mature on various dates through May 2012. The notes are secured by mortgages on land, shopping centers and lodging facilities. Interest only is due each month at rates ranging from 3.26% to 10.09% per annum. For the years ended December 31, 2008 and 2007, we recorded interest income from notes receivable of $27,614 and $18,423, respectively.


Dividend income increased by $8,201 for the year ended December 31, 2008 compared to the year ended December 31, 2007 as a result of an increase in the amount we invested in marketable securities, offset by the reduced dividend payout rates. Our investments continued to generate dividends in 2008, however some REITs we have invested in reduced their payout rates in 2008. Certain REITs we have invested in stated in 2008 that they will pay a portion of their dividends in stock instead of cash. We did not recognize income for stock dividends and reduced the average cost per share of our investment. The following analysis outlines our yield earned on our portfolio of securities.


 

 

December 31, 2008

 

December 31, 2007

Dividend income

 

30,943 

 

22,742 

Margin interest expense

 

(3,776)

 

(5,479)

Investment advisor fee

 

(2,162)

 

(2,120)

 

 

25,005 

 

15,143 

 

 

 

 

 

Average investment in marketable securities (1)

 

449,415 

 

279,224 

Average margin payable balance

 

(115,557)

 

(89,456)

Net investment

 

333,858 

 

189,768 

 

 

 

 

 

Leveraged yield (annualized)

 

7.5%

 

8.0%


(1)

The average investment in marketable securities represents our original cost basis of these securities. Unrealized gains and losses, including impairments, are not reflected.


Our realized loss and impairment on securities, net increased by $259,639 for the year ended December 31, 2008 compared to the year ended December 31, 2007 primarily because we recognized significant other-than-temporary impairments during the year ended December 31, 2008. Other-than-temporary impairments were $246,164 for the year ended December 31, 2008 compared to $21,746 for the year ended December 31, 2007. Our securities and the overall REIT market experienced significant declines in 2008, including material declines in the fourth quarter of 2008.


Noncontrolling Interest. The noncontrolling interest represents the interests of the third parties in Minto Builders (Florida), Inc. ("MB REIT") and consolidated joint ventures managed by third parties.




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Equity in Earnings of Unconsolidated Entities. In 2008, we have equity in losses of unconsolidated entities of $46.1 million. This is a decrease of $50.6 million from equity in earnings of unconsolidated entities of $4.5 million as of December 31, 2007, which is mainly due to impairments recorded by one of our joint ventures in the amount of $50 million (our share was $44.8 million).


Impairment of Investment in Unconsolidated Entities. For the year ended December 31, 2008, we recorded a $51.4 million loss on our investment in Feldman Mall Properties, Inc. The underlying activities of Feldman continued to report losses and cash-flow deficits that impacted Feldman’s ability to meet its obligations. In addition, the retail market and its impact to the mall sector significantly deteriorated in the fourth quarter of 2008. Based on the combination of these factors, we concluded that our investment in Feldman experienced a decline that we believe is other-than-temporary. Accordingly, we recorded an impairment charge of $46.8 million in the fourth quarter of 2008 and a total of $51.4 million for the year ended December 31, 2008. Such impairment charge reduces the carrying value of our investment in Feldman to $0 as of December 31, 2008.


The projected leasing for one of our development joint ventures did not met our initial expectations and it is difficult to project when significant leasing will be achieved for the project. Based on these factors, we concluded that our investment has experienced a decline that we believe is other than temporary. Accordingly, we recorded an impairment charge of $10.6 million for the year ended December 31, 2008.


Other Income and Expense. Under ASC 480, (formerly SFAS 150 Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity) and ASC 815 (formerly SFAS 133 Accounting for Derivative Financial Instruments and Hedging Activities”) the put/call arrangements we entered into in connection with the Minto Builders (Florida), Inc. (“MB REIT”) transaction discussed below are considered derivative instruments. The asset and liabilities associated with these puts and calls are marked to market every quarter with changes in the value recorded as other income and expense in the consolidated statements of operations and other comprehensive income.


The value associated with the put/call arrangements was a liability of $3,000 and $2,349 as of December 31, 2008 and December 31, 2007, respectively. Other expense of $651 and $2,065 was recognized for the year ended December 31, 2008 and 2007, respectively. The liability associated with the put/call arrangements increased from December 31, 2007 to December 31, 2008 due to the life of the put/call being reduced and decrease in interest rates.


Segment Reporting


An analysis of results of operations by segment is below. The tables contained throughout summarize certain key operating performance measures for the years ended December 31, 2008 and 2007.


Retail Segment


 

 

Total Retail Properties

 

 

As of December 31,

 

 

2008

 

2007

Retail Properties

 

 

 

 

Physical occupancy

 

94%

 

95%

Economic occupancy

 

95%

 

96%

Base rent per square foot

$

16.41

$

16.04

Gross investment in properties

$

2,978,232

$

2,570,067


Occupancy of our retail properties remained consistent between 2008 and 2007. We continued to generate a positive return on our investment in these properties. Our retail business is not highly dependent on specific retailers or specific retail industries which we believe shields the portfolio from significant revenue variances over time. The increase in our base rent per square foot from $16.04 to $16.41 was primarily a result of acquisitions during fourth quarter 2007 and 2008. These rates are as of the end of the period and do not represent the average rate during the years ended December 31, 2008 and 2007.


During the year ended December 31, 2008, our retail portfolio had a limited number of tenant issues related to retailer bankruptcy. As of December 31, 2008, our retail portfolio contained only three retailers, renting approximately 102,172 square feet, that had filed for bankruptcy protection. All associated stores in our portfolio continued paying as-agreed rent. Subsequent to December 31, 2008, four additional retailers sought bankruptcy protection; these retailers encompass approximately 96,900 square feet.


Comparison of Years Ended December 31, 2008 and December 31, 2007


The table below represents operating information for the retail segment of 688 properties and for the same store retail segment consisting of 64 properties acquired prior to January 1, 2007. The properties in the same store portfolio were owned for the entire years ended December 31, 2008 and December 31, 2007, respectively.





-48-





 

Total Retail Segment

 

Same Store Retail Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2008

 

2007

 

(Decrease)

 

 

2008

 

2007

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

206,591

$

121,428

$

85,163

 

$

78,710

$

77,283

$

1,427 

  Tenant recovery incomes

 

43,411

 

32,210

 

11,201

 

 

25,225

 

22,153

 

3,072 

  Other property income

 

3,322

 

1,021

 

2,301

 

 

891

 

799

 

92 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

253,324

$

154,659

$

98,665

 

$

104,826

$

100,235

$

4,591 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

39,264

$

25,308

$

13,956

 

$

21,116

$

18,339

$

2,777 

  Real estate taxes

 

26,458

 

19,400

 

7,058

 

 

14,986

 

13,337

 

1,649 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

65,722

$

44,708

$

21,014

 

$

36,102

$

31,676

$

4,426 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

 

187,602

 

109,951

 

77,651

 

 

68,724

 

68,559

 

165 


Retail properties real estate rental revenues increased from $154,659 for the year ended December 31, 2007 to $253,324 for the year ended December 31, 2008 mainly due to the acquisition of 143 retail properties since December 31, 2007. Retail property operating expenses also increased from $44,708 in 2007 to $65,722 in 2008 as a result of these acquisitions.


On a same store retail basis, property net operating income increased from $68,559 to $68,724 for a total increase of $165 or .2%. Same store retail property operating revenues for the years ended December 31, 2008 and 2007 were $104,826 and $100,235, respectively, resulting in an increase of $4,591 or 4.6%. The primary reason for the increase was a lower tenant recovery income in 2007 resulting from common area abatements. Same store retail property operating expenses for the years ended December 31, 2008 and 2007 were $36,102 and $31,676 respectively, resulting in an increase of $4,426 or 14%. The increase in property operating expense was primarily caused by an increase in common area maintenance costs, including utility costs (gas and electric), and bad debt expense.


Retail segment property rental revenues are greater than the office segment primarily due to more gross leasable square feet for the retail properties. The retail segment had below market leases in place at the time of acquisition as compared to office segment properties, which had above market leases in place at the time of acquisition. Tenant recoveries for our retail segment are greater than other segments because the retail tenant leases allow for a greater percentage of their operating expenses and real estate taxes to be recovered from the tenants. Retail segment operating expenses are greater than the other non-lodging segments because the retail segment has higher common area maintenance costs and insurance costs.  


Lodging Segment


 

 

For the year ended

 

For the year ended

 

 

December 31, 2008

 

December 31, 2007

Lodging Properties

 

 

 

 

Revenue per available room

$

89

$

79

Average daily rate

$

129

$

117

Occupancy

 

69%

 

67%

Gross investment in properties

$

2,703,097

$

1,570,465


The increases in revenue per available room, average daily rate and occupancy are primarily a result of property acquisitions during 2008.


Comparison of Years Ended December 31, 2008 and December 31, 2007


The table below represents operating information for the lodging segment of 99 properties. A same store analysis is not presented for the lodging segment because no lodging property was owned for the entire twelve month period ended December 31, 2007 and December 31, 2008. However, we did own 44 properties for the last six months of 2007, which when compared to 2008, show a decline of $6,125 in net lodging operations for last six months of 2008 compared to the last six months of 2007. This decline resulted from an 8% decline in Rev/Par for the last six months of 2008 compared to 2007 for the 44 properties owned during that period.  


 

 

Total Lodging Segment

 

 

 

 

 

 

Increase/

 

 

2008

 

2007

 

(Decrease)

Revenues:

 

 

 

 

 

 

Lodging operating income

$

531,584

$

126,392

$

405,192




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Total Lodging Segment

 

 

 

 

 

 

Increase/

 

 

2008

 

2007

 

(Decrease)

 

 

 

 

 

 

 

Total revenues

$

531,584

$

126,392

$

405,192

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

  Lodging operating expenses to non-    related parties

$

313,939

$

75,412

$

238,527

  Real estate taxes

 

23,949

 

5,216

 

18,733

 

 

 

 

 

 

 

Total operating expenses

$

337,888

$

80,628

$

257,260

 

 

 

 

 

 

 

Net lodging operations

 

193,696

 

45,764

 

147,932


Office Segment


 

 

Total Office Properties

 

 

As of December 31,

 

 

2008

 

2007

Office Properties

 

 

 

 

Physical occupancy

 

97%

 

98%

Economic occupancy

 

97%

 

98%

Base rent per square foot

$

14.82

$

14.77

Gross investment in properties

$

1,551,123

$

1,344,954


During 2008, we continued to see positive trends in our portfolio including high occupancy and stable rental rates for newly acquired properties. For example, we believe in the Minneapolis, Minnesota and Dulles, Virginia office markets, where a majority of our multi-tenant office properties are located, our high occupancy rate was consistent with the strength of the market. The increase in our base rent per square foot from $14.77 to $14.82 was primarily a result of higher lease rates for new leases at new and existing properties. These rates are as of the end of the period and do not represent the average rate during the years ended December 31, 2008 and 2007.


Comparison of Years Ended December 31, 2008 and December 31, 2007


The table below represents operating information for the office segment of 36 properties and for the same store portfolio consisting of 13 properties acquired prior to January 1, 2007. The properties in the same store portfolio were owned for the years ended December 31, 2008 and December 31, 2007.


 

Total Office Segment

 

Same Store Office Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2008

 

2007

 

(Decrease)

 

 

2008

 

2007

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

109,410

$

98,764

$

10,646

 

$

85,071

$

84,531

$

540 

  Tenant recovery incomes

 

27,034

 

25,027

 

2,007

 

 

22,281

 

21,804

 

477 

  Other property income

 

5,733

 

4,782

 

951

 

 

4,903

 

4,439

 

464 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

142,177

$

128,573

$

13,604

 

$

112,255

$

110,774

$

1,481 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

28,184

$

25,842

$

2,342

 

$

23,462

$

23,110

$

352 

  Real estate taxes

 

13,775

 

11,494

 

2,281

 

 

10,842

 

9,669

 

1,173 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

41,959

$

37,336

$

4,623

 

$

34,304

$

32,779

$

1,525 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

 

100,218

 

91,237

 

8,981

 

 

77,951

 

77,995

 

(44)


Office properties real estate rental revenues increased from $128,573 in 2007 to $142,177 in 2008 mainly due to the acquisition of eight properties since January 1, 2008. Office properties real estate and operating expenses also increased from $37,336 in 2007 to $41,959 in 2008 as a result of these acquisitions and due to higher real estate taxes and common area maintenance costs.





-50-


On a same store office basis, property net operating income decreased to $77,951 from $77,995 for a total decrease of $44 or less than 0.1%. Same store office property operating revenues for the years ended December 31, 2008 and 2007 were $112,255 and $110,774, respectively, resulting in an increase of $1,481 or 1.3%. Same store office property operating expenses for the years ended December 31, 2008 and 2007 were $34,304 and $32,779, respectively, resulting in an increase of $1,525 or 4.7%. The increase in property operating expense was primarily caused by an increase in real estate tax expense and common area maintenance costs, including utility costs (gas and electric) in 2008.


Industrial Segment


 

 

Total Industrial Properties

 

 

As of December 31,

 

 

2008

 

2007

Industrial Properties

 

 

 

 

Physical occupancy

 

97%

 

93%

Economic occupancy

 

99%

 

99%

Base rent per square foot

$

4.75

$

5.10

Gross investment in properties

$

917,769

$

834,320


During 2008, our industrial holdings continued to experience high economic occupancy rates.  The majority of the properties are located in what we believe are active and sought-after industrial markets, including the Memphis Airport market of Memphis, Tennessee and the O’Hare Airport market of Chicago, Illinois; the latter being one of the largest industrial markets in the world.


Comparison of Years Ended December 31, 2008 and December 31, 2007


The table below represents operating information for the industrial segment of 64 properties and for the same store portfolio consisting of 16 properties acquired prior to January 1, 2007.


 

Total Industrial Segment

 

Same Store Industrial Segment

 

 

 

 

 

 

Increase/

 

 

 

 

 

 

Increase/

 

 

2008

 

2007

 

(Decrease)

 

 

2008

 

2007

 

(Decrease)

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Rental income

$

71,514

$

47,039

$

24,475

 

$

21,985

$

22,018

$

(33)

  Tenant recovery incomes

 

3,759

 

2,350

 

1,409

 

 

1,386

 

1,038

 

348 

  Other property income

 

15,133

 

4,797

 

10,336

 

 

15

 

4,739

 

(4,724)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

$

90,406

$

54,186

$

36,220

 

$

23,386

$

27,795

$

(4,409)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

  Property operating expenses

$

4,836

$

3,277

$

1,559

 

$

1,692

$

1,479

$

213 

  Real estate taxes

 

2,259

 

1,740

 

519

 

 

676

 

793

 

(117)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

$

7,095

$

5,017

$

2,078

 

$

2,368

$

2,272

$

96 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

 

83,311

 

49,169

 

34,142

 

 

21,018

 

25,523

 

(4,505)


Industrial properties real estate revenues increased from $54,186 for the year ended December 31, 2007 to $90,406 for the year ended December 31, 2008 mainly due to the acquisition of four properties since January 1, 2008. Also in the fourth quarter of 2008, we realized a termination fee for the Faulkner Road property of approximately $15,000. Industrial properties real estate and operating expenses also increased from $5,017 in 2007 to $7,095 in 2008 as a result of these acquisitions.


On a same store industrial basis, property net operating income decreased from $25,523 to $21,018 for a total decrease of $4,505 or 17.7%. Same store industrial property operating revenues for the years ended December 31, 2008 and 2007 were $23,386 and $27,795, respectively, resulting in a decrease of $(4,409) or 15.9%. The primary reason for the decrease was the impact of a one-time termination fee of $4,725 that impacted results in 2007. Same store industrial property operating expenses for the years ended December 31, 2008 and 2007 were $2,368 and $2,272, respectively, resulting in an increase of $96 or 4%.











-51-


Multi-family Segment


 

 

Total Multi-family Properties

 

 

As of December 31,

 

 

2008

 

2007

Multi-Family Properties

 

 

 

 

Physical occupancy

 

92%

 

89%

Economic occupancy

 

92%

 

89%

End of month scheduled base rent per unit per month

$

832

$

916

Gross investment in properties

$

557,965

$

221,659


Our portfolio contains 17 multi-family properties, each reporting stable rental rate levels.  The decrease in monthly base rent from $916 per month to $832 per month and increase in occupancy from 89% to 92% was a result of 2008 acquisition of lower rent base apartments.  These rates are as of the end of the period and do not represent the average rate during the years ended December 31, 2008 and 2007.


Comparison of Years Ended December 31, 2008 and December 31, 2007


The table below represents operating information for the multi-family segment of 17 properties. A same store analysis is not presented for the multi-family segment because only one property was owned for the entire years ended December 31, 2007 and December 31, 2008.


 

Total Multi-Family Segment

 

 

 

 

 

 

 

Increase/

 

 

 

2008

 

2007

 

(Decrease)

 

Revenues:

 

 

 

 

 

 

 

  Rental income

$

30,767

$

13,505

$

17,262

 

  Other property income

 

2,480

 

1,421

 

1,059

 

 

 

 

 

 

 

 

 

Total revenues

$

33,247

$

14,926

$

18,321

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

  Property operating expenses

$

12,327

$

5,251

$

7,076

 

  Real estate taxes

 

4,704

 

1,815

 

2,889

 

 

 

 

 

 

 

 

 

Total operating expenses

$

17,031

$

7,066

$

9,965

 

 

 

 

 

 

 

 

 

Net property operations

 

16,216

 

7,860

 

8,356

 


Multi–family real estate rental revenues increased from $14,926 for the year ended December 31, 2007 to $33,247 for the year ended December 31, 2008. The increases are mainly due to the acquisition of nine properties since January 1, 2008. Multi-family properties real estate and operating expenses also increased from $7,066 in 2007 to $17,031 in 2008 as a result of these acquisitions.


Critical Accounting Policies and Estimates


General


The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. This section discusses those critical accounting policies and estimates. These judgments often result from the need to make estimates about the effect of matters that are inherently uncertain. Critical accounting policies discussed in this section are not to be confused with GAAP. GAAP requires information in financial statements about accounting principles, methods used and disclosures pertaining to significant estimates. This discussion addresses our judgment pertaining to trends, events or uncertainties known which were taken into consideration upon the application of those policies.


Acquisitions


We allocate the purchase price of each acquired business between tangible and intangible assets at full fair value at the date of the transaction. Such tangible and intangible assets include land, building and improvements, acquired above market and below market leases, in-place lease value, customer relationships (if any), and any assumed financing that is determined to be above or below market terms. Any additional amounts are allocated to goodwill as required, based on the remaining purchase price in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed. The allocation of the purchase price is an area that requires judgment and significant estimates.




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We expense acquisition costs of all transactions as incurred. All costs related to finding, analyzing and negotiating a transaction are expensed as incurred as a general and administrative expense, whether or not the acquisition is completed.  These expenses would include acquisition fees, if any, paid to an affiliate of our business manager.


Goodwill


We evaluate goodwill for impairment at least annually. The goodwill impairment test is a two-step test. Under the first step, the fair value of the reporting unit is compared with its carrying value (including goodwill). If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for the reporting unit and the enterprise must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill.


Impairment


We conduct an analysis on a quarterly basis to determine if indicators of impairment exist to ensure that the property's carrying value is recoverable. If it is determined that the carrying value is not recoverable because the undiscounted cash flows do not exceed carrying value, we are required to record an impairment loss to the extent that the carrying value exceeds fair value. The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on our continuous process of analyzing each property and reviewing assumptions about uncertain inherent factors, as well as the economic condition of the property at a particular point in time.


We also evaluate our equity method investments for impairment indicators. The valuation analysis considers the investment positions in relation to the underlying business and activities of our investment and identities potential declines in fair value. An impairment loss should be recognized if a decline in value of the investment has occurred that is considered to be other than temporary, without ability to recover or sustain operations that would support the value of the investment.


We evaluate the collectability of both interest and principal of each of our notes receivable to determine whether it is impaired. A note receivable is considered to be impaired when management determines that it is probable that we will not be able to collect all amounts due under the contractual terms of the note receivable. When a note receivable is considered impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the note’s effective interest rate or to the fair value of the underlying collateral if the note receivable is collateral dependent.


Cost Capitalization and Depreciation Policies


Our policy is to review all expenses paid and capitalize any items exceeding $5 thousand which are deemed to be an upgrade or a tenant improvement. These costs are capitalized and included in the investment properties classification as an addition to buildings and improvements.


Buildings and improvements are depreciated on a straight-line basis based upon estimated useful lives of 30 years for buildings and improvements, and five to 15 years for site improvements. Furniture, fixtures and equipment are depreciated on a straight-line basis over five to ten years. Tenant improvements are depreciated on a straight-line basis over the life of the related lease as a component of depreciation and amortization expense. The portion of the purchase price allocated to acquired above market costs and acquired below market costs is amortized on a straight-line basis over the life of the related lease as an adjustment to net rental income. Acquired in-place lease costs, customer relationship value and other leasing costs are amortized on a straight-line basis over the life of the related lease as a component of amortization expense.


Cost capitalization and the estimate of useful lives requires our judgment and includes significant estimates that can and do change based on our process which periodically analyzes each property and on our assumptions about uncertain inherent factors.


Investment in Marketable Securities


We classify our investment in securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which we have the ability and intent to hold the security until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale. Investment in securities at December 31, 2009 and 2008 consists of common stock investments and investments in commercial mortgage backed securities that are all classified as available-for-sale securities and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. A decline in the market value of any available-for-sale security below cost that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. When a security is impaired, management considers whether we have the ability and intent to hold the investment for a time sufficient to allow for any anticipated recovery in market value and considers whether




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evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to period end and forecasted performance of the investee.


Revenue Recognition


We commence revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If we are the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If we conclude we are not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded under the lease are treated as lease incentives which reduces revenue recognized over the term of the lease. In these circumstances, we begin revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. We consider a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. These factors include:

 

·

whether the lease stipulates how and on what a tenant improvement allowance may be spent;


·

whether the tenant or landlord retains legal title to the improvements;


·

the uniqueness of the improvements;


·

the expected economic life of the tenant improvements relative to the length of the lease; and


·

who constructs or directs the construction of the improvements.


The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making that determination, we consider all of the above factors. No one factor, however, necessarily establishes its determination.


We recognize rental income on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying consolidated balance sheets. Due to the impact of the straight-line basis, rental income generally is greater than the cash collected in the early years and decreases in the later years of a lease. We periodically review the collectability of outstanding receivables. Allowances are taken for those balances that we deem to be uncollectible, including any amounts relating to straight-line rent receivables.


Reimbursements from tenants for recoverable real estate tax and operating expenses are accrued as revenue in the period the applicable expenses are incurred. We make certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. We do not expect the actual results to differ from the estimated reimbursement.


In conjunction with certain acquisitions, we may receive payments under master lease agreements pertaining to certain non-revenue producing spaces either at the time of, or subsequent to the purchase of some of our properties. Upon receipt of the payments, the receipts will be recorded as a reduction in the purchase price of the related properties rather than as rental income. These master leases may be established at the time of purchase in order to mitigate the potential negative effects of loss of rent and expense reimbursements. Master lease payments are received through a draw of funds escrowed at the time of purchase and may cover a period from six months to three years. These funds may be released to either us or the seller when certain leasing conditions are met. Funds received by third party escrow agents, from sellers, pertaining to master lease agreements are included in restricted cash. We record such escrows as both an asset and a corresponding liability, until certain leasing conditions are met. As of December 31, 2009, there were no material adjustments for master lease agreements.


We will recognize lease termination income if there is a signed termination letter agreement, all of the conditions of the agreement have been met, collectability is reasonably assured and the tenant is no longer occupying the property. Upon early lease termination, we will provide for losses related to unrecovered intangibles and other assets.


We recognize lodging operating revenue on an accrual basis consistent with operations.


Partially-Owned Entities


We evaluate our investments in limited liability companies and partnerships to determine whether such entities may be a variable interest entity (“VIE”).  If the entity is a VIE, the determination of whether we are the primary beneficiary must be made. We will consolidate a VIE if we are deemed to be the primary beneficiary, as defined in Financial Accounting Standards Board (FASB)




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Accounting Standards Codification (ASC) Topic on Consolidation. The equity method of accounting is applied to entities in which we are not the primary beneficiary as defined in the Consolidation Topic of the FASB ASC, or the entity is not a VIE and we do not have effective control, but can exercise influence over the entity with respect to its operations and major decisions.


Income Taxes


We and MB REIT operate in a manner intended to enable each entity to qualify as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. Under those sections, a REIT that distributes at least 90% of its "REIT taxable income" determined without regard to the deduction for dividends paid and by excluding any net capital gain to its stockholders each year and that meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its stockholders. If we or MB REIT fail to distribute the required amount of income to our stockholders, or fail to meet the various REIT requirements, without the benefit of certain relief provisions, we or MB REIT may fail to qualify as a REIT and substantial adverse tax consequences may result. Even if we and MB REIT qualify for taxation as a REIT, we and MB REIT may be subject to certain state and local taxes on our income, property, or net worth, and to federal income and excise taxes on our undistributed taxable income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state and local income taxes.


In 2007, we formed the following wholly-owned taxable REIT subsidiaries in connection with the acquisition of the lodging portfolios and student housing: Barclay Holdings, Inc., Inland American Holding TRS, Inc., and Inland American Communities Third Party, Inc. In 2008, we formed Inland American Lodging Garden Grove Harbor TRS, LLC in connection with an addition to the lodging portfolio. Taxable income from non-REIT activities managed through these taxable REIT subsidiaries is subject to federal, state, and local income taxes. As such, our taxable REIT subsidiaries are required to pay income taxes at the applicable rates.


Liquidity and Capital Resources


We continually evaluate the economic and credit environment and its impact on our business.  Maintaining significant capital reserves has become a priority for all companies. At this juncture we believe we are appropriately positioned to have significant cash to utilize in executing our strategy.  Our objectives are to invest in real estate assets that produce attractive current yield and long-term risk-adjusted returns to our stockholders and to generate sustainable and predictable cash flow from our operations to distribute to our stockholders.


For 2010, we believe that our acquisitions will be fewer than prior years as our primary capital raise was completed in April 2009.


Our principal demands for funds will be:


·

to service or pay-down our debt;


·

to pay our expenses and the operating expenses of our properties;


·

to make distributions to our stockholders;


·

to invest in properties;


·

to fund joint ventures and development commitments;


·

to fund capital expenditures; and


·

to invest in REIT marketable securities.


Generally, our cash needs will be funded from:


·

income earned on our investment properties;


·

interest income on investments and dividend and gain on sale income earned on our investment in marketable securities;


·

proceeds from borrowings on properties;


·

distributions from our joint venture investments; and


·

issuance of shares under our distribution reinvestment plan.


Acquisitions and Investments





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We completed approximately $1.1 billion of real estate acquisitions in 2009 and $1.9 billion in 2008. These acquisitions were consummated through our subsidiaries and were funded with available cash, mortgage indebtedness, and the proceeds from the primary offering of our shares of common stock.


Investments in Unconsolidated Joint Ventures


We have entered into a number of joint ventures that invest in operating properties, developments and real estate loans. The joint ventures that are focused on operating properties continue to generate positive cash flows. Certain of our development joint ventures are experiencing longer lease-up timelines and could be leased at rates less than originally projected. The development joint ventures also have construction loans from third parties that could mature before the completion of the development. These lenders might not be willing to extend their loans or extend on terms acceptable to us or our partners. Although we have no additional obligation to fund these ventures, other than noted below, our investment could be at risk without the funding of additional capital. It is anticipated that the entities will be able to repay or refinance all of their debt on a timely basis, however, the debt maturities of the entities are not recourse to us and we have no obligation to fund, other than the remaining commitment listed below.


Joint Venture

Description

 

Investment at December 31, 2009

(000s) (a)

 

Remaining Commitment

(000s)

 

 

 

 

 

 

Primarily Development

 

 

 

 

 

Weber/Inland American Lewisville TC, LP

Retail Center Development

$

7,992 

$

-

 

 

 

 

 

 

Primarily Operating

 

 

 

 

 

D.R. Stephens Institutional Fund, LLC

Industrial and R&D Assets

$

70,752 

$

10,900

Cobalt Industrial REIT II

Industrial Portfolio

 

79,511 

 

55,278

Net Lease Strategic Asset Fund L.P.

Net Lease Assets

 

180,304 

 

-

Wakefield Capital, LLC

Senior Housing Portfolio

 

94,872 

 

-

Other operating joint ventures

Lodging Facilities

 

30,291 

 

-

 

 

$

455,730 

$

66,178

Real Estate Loan Fund

 

 

 

 

 

Concord Debt Holdings, LLC

Real Estate Loan Fund

$

(9,940)

$

13,637

 

 

 

 

 

 

Total

 

$

453,782 

$

79,815

 

 

 

 

 

 

(a)  Represents our investment balance as reported for GAAP purposes on our balance sheet at December 31, 2009.


Concord Debt Holdings, LLC


On August 2, 2008, we entered into the Concord Debt Holdings, LLC joint venture (“Concord”) with Lex-Win Concord LLC, which originates and acquires real estate securities and real estate related loans.  We have invested $77.4 million in the venture as of December 31, 2009 and have accounted for this investment under the equity method.  During 2009, Concord received margin calls on certain of its loan facilities that required the entity to identify certain loans that will be disposed of to provide liquidity to meet the required pay down requirements.  In addition, Concord has recorded impairment losses and loan loss reserves of $225.1 million for the year ended December 31, 2009.  The carrying value of ($9.9) million reflects the reduction in our investment in Concord from our share of the net loss at the venture level and distributions. The carrying value of this investment is recorded up to the amount at which the Company approximately believes it is obligated to fund.


On May 22, 2009, Inland American Concord (Sub), LLC (“IA Sub”) filed an action against Lex-Win Concord LLC (“Concord”) in the Delaware Court of Chancery seeking a declaration in connection with certain of our rights/obligations under the Limited Liability Company Agreement (“Agreement”) that governs this venture.


On December 22, 2009, Lexington, Winthrop, Inland, and their respective subsidiaries entered into a settlement agreement to resolve and settle the IA Sub v. Concord action. The settlement agreement provides for, among other things, the termination of any party’s obligation to contribute capital to Concord, the allocation of distributions equally among Inland, Lexington and Winthrop in Concord, and the formation of a new entity to be owned by subsidiaries of Inland, Lexington and Winthrop. The effectiveness of the settlement agreement is conditioned on certain conditions, including the cancellation of certain CDO bonds held by Concord Debt Funding Trust. A lawsuit has been filed in the Delaware Court of Chancery, by Concord to effect such cancellation. The bonds must be cancelled by August 14, 2010, or the settlement agreement becomes null and void.








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Investments in Consolidated Developments


We have entered into certain development projects that are in various stages of pre-development and development. We fund cash needs for these development activities from our working capital and by borrowings secured by the properties. Specifically identifiable direct development and construction costs are capitalized, including, where applicable, salaries and related costs, real estate taxes and interest incurred in developing the property. In addition, we have purchased land and incurred pre-development costs of $114 million for an additional five multi-family projects. We will most likely not commence construction until construction financing becomes available at appropriate rates and terms, however it is still our intent to develop these projects.


The overall economic difficulties continue to impact the real estate industry and developments in particular. The current and projected slow-down in consumer spending has negatively impacted the retail environment and is causing many retailers to pull back from new leasing and expansion plans. While the overall retail sector will be negatively impacted, retail development will be particularly exposed. Our retail developments could experience longer lease-up timelines and future leasing could be at leasing rates less than originally underwritten.


The properties under development and all amounts set forth below are as of December 31, 2009. (Dollar amounts stated in thousands)


Name

Location

(City, State)

Property Type

Square Feet

Costs Incurred to Date ($)

Total Estimated Costs ($) (a)

Estimated Placed in Service

 Date (b)

Note Payable as of December 31, 2009 ($)

Percentage Pre-Leased as of December 31, 2009 (d)

Cityville Carlisle

Dallas, TX

Multi-family

211,512

21,458

40,775

Q3 2010

13,454

0% (e)

Cityville Block 121

Birmingham, AL

Multi-family

272,960

18,294

37,314

Q3 2010

2,420

0% (e)

Aloft Hotel

Chapel Hill, NC

Hotel

130 rooms

17,565

22,891

Q2 2010

-

-

Stone Creek

San Marcos, TX

Retail

469,741

47,454

68,836

 (c)

9,068

64%

Woodbridge

Wylie, TX

Retail

519,745

35,673

71,638

 (c)

8,906

42%

 

 

 

 

140,444

241,454

 

33,848

 


(a)

The Total Estimated Costs represent 100% of the development's estimated costs, including the acquisition cost of the land and building, if any. The Total Estimated Costs are subject to change upon, or prior to, the completion of the development and include amounts required to lease the property.


(b)

The Estimated Placed in Service Date represents the date the certificate of occupancy is currently anticipated to be obtained. Subsequent to obtaining the certificate of occupancy, each property will go through a lease-up period.


(c)

Stone Creek and Woodbridge are retail shopping centers and development is planned to be completed in phases. As the construction and lease-up of individual phases are completed, the respective phase will be placed in service resulting in a range of estimated placed in service dates through 2016. The occupancy presented includes anchor tenants for the project who own their respective square feet.


(d)

The Percentage Pre-Leased represents the percentage of square feet leased of the total projected square footage of the entire development.


(e)

Leasing activities related to multi-family properties do not begin until six to nine months prior to the placed in service date.


Notes Receivable


Our notes receivable balance was $423.5 million and $480.8 million as of December 31, 2009 and 2008, respectively, and consisted of installment notes from unrelated parties that mature on various dates through July 2012 and installment notes assumed in the Winston acquisition. The notes are secured by mortgages on land, shopping centers and hotel properties and certain loans guaranteed by the borrowers. Interest only is due each month at rates ranging from 1.86% to 9.50% per annum. For the years ended December 31, 2009 and 2008, we recorded interest income from notes receivable of $26.4 million and $27.6 million, respectively, which is included in the interest and dividend income on the consolidated statement of operations and other comprehensive income.


Ten of our notes receivable with an aggregate book value (after impairment) of $243.0 million are considered impaired. We evaluate the collectability of the notes, including an evaluation of the fair value of the collateral, which includes the review of third party appraisals. We recorded $74.1 million of impairment on six of these notes.  The remaining book value of these six notes receivable, after impairment charges, aggregates to $11.5 million.  We determined the amount of impairment to recognize based on a determination of the fair value of the underlying collateral based on appraisals as of or near December 31, 2009 or an estimate of expected discounted cash flows. The impaired notes receivable generated $14.5 million of interest income for the year ended December 31, 2009.




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Our investments in notes receivable consisted primarily of an aggregate $214.6 million in loans secured by three parcels of land held for development in Florida and California and a $140.8 million loan participation secured by a portfolio of 25 retail centers located in 13 states.  The remaining $68.1 million, of which $28.4 million is considered impaired, represents loans to various third parties secured by operating retail and lodging properties as well as land held for development.


Our aggregate $214.6 million loans are secured by three land parcels held for development. Two of the land sites are located in Florida and are currently held for future multi-use development with active development not likely in the near term. The third land site is located in Sacramento, California and is currently under development. All the land parcels will require substantial development and investment over a long term investment horizon before material cash-flows will be realized.  These loans are currently considered impaired as the borrower has not made the required interest payments since July of 2009.  We have not recorded any impairment losses on these loans as the estimated fair value of the underlying collateral is substantially greater than our book value for these loans.  Our analysis of the fair value of the collateral includes the review of third party appraisals as of or near December 31, 2009.  These fair value estimates are calculated using significant judgments of future long-term real estate, governmental and economic conditions to develop cash-flowing investments from these land parcels.  The primary inputs are conditioned on a long-term recovery of these real estate markets so that development will deliver positive risk-adjusted returns and to the extent economic conditions do not improve, we could see decreases in the fair value of our collateral and notes.  We are also subject to near-term risk of continued non-performance of the borrower or actions from other stake-holders in these projects, which could materially impact the fair value of our collateral.


We have also invested in a $141 million loan participation secured by a portfolio of 25 retail centers located in 13 states. Our $141 million loan participation is the junior participation in an approximately $424.0 million first mortgage.  This loan matures in October of 2010 and our loan pays 5.4% over LIBOR.  These loans are current in their payments and the underlying properties are generating sufficient cash flow to service the current debt service.


If we consider a loan to be non-performing or the collectability is uncertain based on the underlying collateral, we will place the loan on non-accrual status. We recognize interest income on a cash basis, as received. If the fair value of the loan collateral decreases to less than the amortized cost basis of the loan, any interest received will be recorded as a reduction of the loan basis. If the fair value of the collateral subsequently recovers to greater than the cost basis of the loan, and if the loan is not otherwise in default, any interest payment will be recognized as interest income.


Distributions


We declared cash distributions to our stockholders per weighted average number of shares outstanding during the period from January 1, 2009 to December 31, 2009 totaling $405.3 million or $.50 per share. These cash distributions were paid with $369 million from our cash flow from operations, $32 million provided by distributions from unconsolidated entities, as well as excess cash flow from prior years.


The following chart presents a historical view of our distribution coverage.


 

 

2009

2008

2007

2006

2005

Cash flow provided by operations

$

369,031 

384,365 

263,420 

65,883 

11,498 

Distributions from unconsolidated entities

$

32,081 

41,704 

Distributions Declared

$

(405,337)

(418,694)

(242,606)

(41,178)

(438)

Excess (deficiency)

$

(4,225)

7,375 

20,814 

24,705 

11,060 


On January 20, 2009, our board of directors voted unanimously to determine each monthly distribution rate on an adjustable basis, with a floor of $.50/share, which equates to a 5% annualized yield on a share purchase of $10 (the price at which we last offered shares of our common stock in the primary offering completed in April 2009).


Financing Activities and Contractual Obligations


Stock Offering


Our initial offering of shares of common stock terminated as of the close of business on July 31, 2007. We had sold a total of 469,598,762 shares in the primary offering and approximately 9,720,991 shares pursuant to the offering of shares through the dividend reinvestment plan. A follow-on registration statement for an offering of up to 500,000,000 shares of common stock at $10.00 each and up to 40,000,000 shares at $9.50 each pursuant to our distribution reinvestment plan was declared effective by the SEC on August 1, 2007 and terminated on April 6, 2009. On March 31, 2009, we filed a registration statement to register 50,000,000 shares to be issued under the distribution reinvestment plan. As of December 31, 2009, we had sold a total of 320,634,706 shares in the follow-on offering and 56,191,861 shares pursuant to the offering of shares through the dividend reinvestment plan. Our total offering costs for both our initial and follow on-offering as of December 31, 2009 were approximately $828 million.





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Under rules published by the Financial Industry Regulatory Authority (“FINRA”), registered broker-dealers must disclose in a customer’s account statement an estimated value for a REIT’s securities if the annual report of that REIT discloses a per share estimated value. The FINRA rules prohibit broker-dealers from using a per share estimated value developed from data that is more than eighteen months old. We are currently evaluating the method that we will use to assist broker-dealers with this requirement. Because of the uncertainties in the marketplace generally and the factors described herein and in our other reports filed under the Exchange Act, which could continue to impact our results of operations and financial condition, we expect that the future per share estimated value of our shares will be less than the price at which we last offered shares in a primary offering or the price of our shares currently offered through our distribution reinvestment plan.


Share Repurchase Program


As of December 31, 2009, we had repurchased 32,527,130 shares for $304 million under the share repurchase program. Our board of directors voted to suspend the share repurchase program until further notice, effective March 30, 2009.


Borrowings


During 2009, we repaid $10 million of amounts borrowed against our portfolio of marketable securities. During the year ended December 31, 2008, we repaid approximately $35.1 million of amounts borrowed against our portfolio of marketable securities. We borrowed approximately $371 million secured by mortgages on our properties and assumed $626.2 million of debt at acquisition for the year ended December 31, 2009. We borrowed approximately $1.0 billion secured by mortgages on our properties for the year ended December 31, 2008.


Our interest rate risk is monitored using a variety of techniques, including periodically evaluating fixed interest rate quotes on all variable rate debt and the costs associated with converting the debt to fixed rate debt. Also, existing fixed and variable rate loans that are scheduled to mature in the next year or two are evaluated for possible early refinancing and or extension due to consideration given to current interest rates. The table below presents, on a consolidated basis, the principal amount, weighted average interest rates and maturity date (by year) on our mortgage debt as of December 31, 2009 (dollar amounts are stated in thousands).


 

 

2010

2011

2012

2013

2014

Thereafter

Total

Maturing debt :

 

 

 

 

 

 

 

 

  Fixed rate debt (mortgage     loans)

$

66,193

114,963

115,410

542,227

248,612

2,428,173

3,515,578

  Variable rate debt (mortgage     loans)

$

485,594

540,703

273,239

195,874

15,400

30,010

1,540,820

 

 

 

 

 

 

 

 

 

Weighted average interest rate   on debt:

 

 

 

 

 

 

 

 

  Fixed rate debt (mortgage     loans)

 

5.95%

5.11%

5.37%

5.70%

5.49%

5.69%

5.66%

  Variable rate debt (mortgage     loans)

 

2.40%

3.64%

3.49%

2.55%

5.50%

5.29%

3.13%


The debt maturity excludes mortgage discounts associated with debt assumed at acquisition of which a premium of $1.2 million, net of accumulated amortization, is outstanding as of December 31, 2009.


We have entered into eight interest rate swap agreements that have converted $401.8 million of our mortgage loans from variable to fixed rates. The pay rates range from 1.62% to 4.75% with maturity dates from January 29, 2010 to March 27, 2013.


The table below represents the breakdown of our 2010 maturities (in thousands):


2010 maturities

$

551.8

Extended or refinanced through March 15, 2010

$

209.6

LIP-H and other consolidated joint ventures

$

131.5

 

 

 

Remaining 2010 maturities

$

210.7


As of December 31, 2009, we had approximately $551.8 million and $655.7 million in mortgage debt maturing in 2010 and 2011, respectively. Of the $551.8 million maturing in 2010, $131.5 million is from certain of our consolidated joint ventures, including LIP-H, which is not recourse to us. We have addressed $209.6 million through refinancing or extensions in the first quarter of 2010. We are currently negotiating refinancing the remaining debt with the existing lenders at terms that will most likely be at higher credit spreads and lower loan to value. We currently anticipate that we will be able to repay or refinance all of our debt on a timely basis, and believe we have adequate sources of funds to meet our short term cash needs. However, there can be no assurance that we can obtain




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such refinancing on satisfactory terms. Continued volatility in the capital markets could expose us to the risk of not being able to borrow on terms and conditions acceptable to us for future acquisitions or refinancings.  


Summary of Cash Flows


 

 

Year ended December 31,

 

 

2009

 

2008

 

2007

 

 

(In thousands)

Cash provided by operating activities

$

369,031 

$

384,365 

$

263,420 

Cash used in investing activities

 

(563,163)

 

(2,484,825)

 

(4,873,404)

Cash provided by (used in) financing activities

 

(250,602)

 

2,636,325 

 

4,716,852 

Increase (decrease) in cash and cash equivalents

 

(444,734)

 

535,865 

 

106,868 

Cash and cash equivalents, at beginning of year

 

945,225 

 

409,360 

 

302,492 

Cash and cash equivalents, at end of year

$

500,491 

$

945,225 

$

409,360 


Cash provided by operating activities was $369 million, $384 million and $263 million for the years ended December 31, 2009, 2008 and 2007, respectively, and was generated primarily from operating income from property operations and interest and dividends. The decrease in cash flows from the year ended December 31, 2009 was due to decreases in net lodging income, interest and dividend income, and increase in business management fees and interest expenses. The increase in cash flows in 2008 over the year ended December 31, 2007 was primarily due to the 187 properties acquired during the year ended December 31, 2008.


Cash used in investing activities was $563 million, $2.5 billion and $4.9 billion for years ended December 31, 2009, 2008 and 2007, respectively. During the year ended December 31, 2009, cash was used primarily for purchases of investment properties and investment in developments and capital expenditures as well as used for funding of our unconsolidated joint ventures and notes receivable. We used less cash in our investing activities during the year ended December 31, 2009 than the year ended December 31, 2008 primarily due to the decrease in acquisitions from 187 in 2008 to 48 for the year ended December 31, 2009.


Cash provided by (used in) financing activities was $(251) million, $2.6 billion and $4.7 billion for the years ended December 31, 2009, 2008 and 2007, respectively. During the years ended December 31, 2009, 2008 and 2007, we generated proceeds from the sale of shares, net of offering costs paid and share repurchases, of approximately $263 million, $2.2 billion and $3.4 billion, respectively. We generated approximately $370 million from borrowings secured by mortgages on our properties for the year ended December 31, 2009. During the years ended December 31, 2008 and 2007, we generated approximately $1.0 billion and $1.6 billion, respectively, from borrowings secured by mortgages on our properties. During the years ended December 31, 2009, 2008 and 2007, we paid approximately $412, $406 and $223 million, respectively, in distributions to our common stockholders. We also paid off mortgage debt in the amount of $436, $139 and $20 million for the years ended December 31, 2009, 2008 and 2007.


We consider all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements with a maturity of six months or less, at the date of purchase, to be cash equivalents. We maintain our cash and cash equivalents at financial institutions. The combined account balances at one or more institutions periodically exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage.


Contractual Obligations


The table below presents, on a consolidated basis, obligations and commitments to make future payments under debt obligations (including interest), and lease agreements as of December 31, 2009 (dollar amounts are stated in thousands).


 

Payments due by period

 

 

 

Less than

 

 

More than

 

 

Total

1 year

1-3 years

3-5 years

5 years

Long-Term Debt Obligations

$

6,963,062

790,237

2,367,504

1,425,398

2,379,923

 

 

 

 

 

 

 

Ground Lease Payments

$

61,552

1,071

3,279

3,427

53,775


We have acquired several properties subject to the obligation to pay the seller additional monies depending on the future leasing and occupancy of the property. These earnout payments are based on a predetermined formula. Each earnout agreement has a time limit regarding the obligation to pay any additional monies. If at the end of the time period, certain space has not been leased and occupied, we will not have any further obligation. Assuming all the conditions are satisfied, as of December 31, 2009, we would be obligated to pay as much as $32.4 million in the future as vacant space covered by these earnout agreements is occupied and becomes rent producing. The information in the above table does not reflect these contractual obligations.


As of December 31, 2009, we had outstanding commitments to purchase approximately $543 million of real estate properties through 2010 and fund approximately $79.8 million into joint ventures. As of December 31, 2009, we had commitments totaling $95 million




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for various development projects.  We intend on funding these acquisitions with cash on hand of approximately $500 million and financing from assuming debt related to some of the acquisitions in the amount above of $418 million.


As part of our consolidated MB REIT joint venture with Minto Delaware, we could be required to redeem Minto Delaware’s interest in MB REIT beginning on October 11, 2011 subject to the terms and conditions below:


·

On or after October 11, 2011 until October 11, 2012, Minto Holdings, an affiliate of Minto Delaware, has the option to require us to purchase, in whole, but not in part, 100% of the Minto Delaware's investment in the MB REIT (consisting of the series A preferred stock and common stock) for a price equal to (A) if our shares of common stock are not listed, on the earlier of (x) the date we purchase Minto Delaware's investment or (y) 150 days after the date written notice of the exercise of the initial purchase right is given, the sum of (1) the series A liquidation preference, payable in cash and (2) $29.3 million or (B) if the shares of our stock are listed, on the earlier of (x) the date we purchase Minto Delaware's investment or (y) 150 days after the date written notice of the exercise of the initial purchase right is given, the sum of (1) the series A liquidation preference, payable in cash and (2) 2,934,800 shares of our common stock.  The series A liquidation preference is equal to $1,276 per share for 207,000 shares of series A preferred stock plus accrued and unpaid dividends.


·

On or after October 11, 2012, Minto Holdings has an option to require us to purchase, in whole, but not in part, 100% of the Minto Delaware investment for a price equal to (A) if the shares of our common stock are not listed, on the earlier of (x) the date we purchase the Minto Delaware investment or (y) 150 days after written notice of a subsequent purchase right is given, the sum of (1) the series A liquidation preference, payable in cash and (2) the fair market value (pursuant to a specified formula) of the common stock held by Minto Delaware on the date written notice of the subsequent purchase right is given, payable in cash, or (B) if the shares of our common stock are listed, on the earlier of (x) the date we purchase the Minto Delaware equity or (y) 150 days after written notice of the subsequent purchase right is given, the sum of (1) the series A liquidation preference, payable in cash and (2) 2,934,800 shares of our common stock.


·

On or after October 11, 2015, so long as the MB REIT qualifies as a “domestically controlled REIT,” MB REIT has the right to purchase, in whole, but not in part, 100% of Minto Delaware's investment for a price equal to (A) if the shares of our common stock are not listed, the sum of (1) the series A liquidation preference, payable in cash and (2) the fair market value (pursuant to a specified formula) of the common stock of MB REIT held by Minto Delaware or (B) if the shares of our common stock are listed, the sum of (1) the series A liquidation preference, payable in cash and (2) 2,934,800 shares of our common stock.


Off Balance Sheet Arrangements


Unconsolidated Real Estate Joint Ventures


Unconsolidated joint ventures are those where we have substantial influence over but do not control the entity. We account for our interest in these ventures using the equity method of accounting. For additional discussion of our investments in joint ventures, please refer to the liquidity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations and our Notes to Consolidated Financial Statements. Our ownership percentage and related investment in each joint venture is summarized in the following table. (Dollar amounts stated in thousands).


Joint Venture

Ownership %

 

Investment at December 31, 2009

Net Lease Strategic Asset Fund L.P.

85%

$

180,304 

 

 

 

 

Cobalt Industrial REIT II

28%

 

79,511 

 

 

 

 

D.R. Stephens Institutional Fund, LLC

90%

 

70,752 

 

 

 

 

Concord Debt Holdings, LLC

(a)

 

(9,940)

 

 

 

 

Wakefield Capital, LLC

(b)

 

94,872 

 

 

 

 

Other Unconsolidated Joint Ventures

Various

 

38,283 

 

 

 

 

 

 

$

453,782 


(a)

We have contributed $77,400 to the venture in exchange for a 10% preferred membership interests in the venture.


(b)

We invested $100,000 in Wakefield Capital, LLC in exchange for a Series A Convertible Preferred Membership interest and are entitled to a 10.5% preferred dividend.




-61-



Subsequent Events


We paid distributions to our stockholders of $34.3 million in January 2010, $34.4 million in February 2010 and $34.5 million in March 2010.


Subsequent to year end, we purchased 24 properties for $543.1 million. We financed these acquisitions by securing a new loan of $31.8 million and assuming debt of $386.4 million. The remaining $124.9 million was funded from cash balances.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk


We are subject to market risk associated with changes in interest rates both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt and for acquisitions. We are also subject to market risk associated with our marketable securities investments.  


Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. If market rates of interest on all of the floating rate debt as of December 31, 2009 permanently increased by 1%, the increase in interest expense on the floating rate debt would decrease future earnings and cash flows by approximately $15.4 million. If market rates of interest on all of the floating rate debt as of December 31, 2009 permanently decreased by 1%, the decrease in interest expense on the floating rate debt would increase future earnings and cash flows by approximately $15.4 million.


With regard to variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on our future cash flows.


We monitor interest rate risk using a variety of techniques, including periodically evaluating fixed interest rate quotes on all variable rate debt and the costs associated with converting the debt to fixed rate debt. Also, existing fixed and variable rate loans that are scheduled to mature in the next year or two are evaluated for possible early refinancing and or extension due to consideration given to current interest rates. The table below presents mortgage debt principal amounts and weighted average interest rates by year and expected maturity to evaluate the expected cash flows and sensitivity to interest rate changes (dollar amounts are stated in thousands).


 

 

2010

2011

2012

2013

2014

Thereafter

Total

Maturing debt :

 

 

 

 

 

 

 

 

  Fixed rate debt (mortgage     loans)

$

66,193

114,963

115,410

542,227

248,612

2,428,173

3,515,578

  Variable rate debt (mortgage     loans)

$

485,594

540,703

273,239

195,874

15,400

30,010

1,540,820

 

 

 

 

 

 

 

 

 

Weighted average interest rate   on debt:

 

 

 

 

 

 

 

 

  Fixed rate debt (mortgage     loans)

 

5.95%

5.11%

5.37%

5.70%

5.49%

5.69%

5.66%

  Variable rate debt (mortgage     loans)

 

2.40%

3.64%

3.49%

2.55%

5.50%

5.29%

3.13%


The debt maturity excludes mortgage discounts associated with debt assumed at acquisition of which a premium of $1.2 million, net of accumulated amortization, is outstanding as of December 31, 2009.


We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our properties. To the extent we do, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative contract is negative, we owe the counterparty and, therefore, it does not possess credit risk. It is our policy to enter into these transactions with the same party providing the financing. In the alternative, we will seek to minimize the credit risk in derivative instruments by entering into transactions with what we believe are high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.


We have, and may in the future enter into, derivative positions that do not qualify for hedge accounting treatment. If these derivatives do not qualify for hedge accounting treatment, the gains or losses resulting from their mark-to-market at the end of each reporting




-62-


period are recognized as an increase or decrease in “interest expense” on our consolidated statements of income. In addition, we are, and may in the future be, subject to additional expense based on the notional amount of the derivative positions and a specified spread over LIBOR.


Equity Price Risk


We are exposed to equity price risk as a result of our investments in marketable equity securities. Equity price risk changes as the volatility of equity prices changes or the values of corresponding equity indices change.


Other than temporary impairments were $4 million and $246.2 million for the year ended December 31, 2009 and 2008, respectively. The overall stock market and REIT stocks, including our REIT stock investments, have declined since mid-2007, which have resulted in our recognizing impairments. We believe that our investments will continue to generate dividend income and, if the REIT market recovers, we could continue to recognize gains on sale. However, due to general economic and credit market uncertainties it is difficult to project where the REIT market and our portfolio value will be in 2010.


While it is difficult to project what factors may affect the prices of equity sectors and how much the effect might be, the table below illustrates the impact of a 10% increase and a 10% decrease in the price of the equities held by us would have on the value of the total assets and the book value of the Company as of December 31, 2009 (dollar amounts stated in thousands).


 

 

 

 

Hypothetical 10% Decrease in

Hypothetical 10% Increase in

 

 

Cost

Fair Value

Market Value

Market Value

Marketable securities

$

298,190

205,615

185,054

226,177


Derivatives


The following table summarizes our interest rate swap contracts outstanding as of December 31, 2009 (dollar amounts stated in thousands):


Date Entered

Effective Date

End Date

Pay Fixed Rate

Receive Floating Rate Index

Notional Amount($)

Fair Value of December 31, 2009 (1) ($)

November 16, 2007

November 20, 2007

April 1, 2011

4.45%

1 month LIBOR

24,425

(1,116)

February 6, 2008

February 6, 2008

January 29, 2010

4.39%

1 month LIBOR

200,000

(373)

March 28, 2008

March 28, 2008

March 27, 2013

3.32%

1 month LIBOR

33,062

(1,299)

March 28, 2008

March 28, 2008

March 31, 2011

2.81%

1 month LIBOR

50,000

(1,268)

March 28, 2008

March 28, 2008

March 27, 2010

2.40%

1 month LIBOR

35,450

(178)

December 12, 2008

January 1, 2009

December 12, 2011

(2)

(2)

20,245

24 

December 23, 2008

January 5, 2009

December 22, 2011

1.86%

1 month LIBOR

16,637

(185)

January 16, 2009

January 13, 2009

January 13, 2012

1.62%

1 month LIBOR

22,000

(138)

 

 

 

 

 

 

 

 

 

 

 

 

$401,819

$(4,533)


(1) The fair value was determined by a discounted cash flow model based on changes in interest rates.

 

(2) Interest rate cap at 4.75%.

 

 

 

 


We and MB REIT entered into a put/call agreement as a part of the MB REIT transaction. This agreement is considered a derivative instrument and is accounted for pursuant to ASC 815. Derivatives are required to be recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. The fair value of the put/call agreement is estimated using the Black-Scholes model.




-63-


INLAND AMERICAN REAL ESTATE TRUST, INC.


(A Maryland Corporation)



Index


Item 8. Consolidated Financial Statements and Supplementary Data


 

Page

 

 

Report of Independent Registered Public Accounting Firm

65

 

 

Financial Statements:

 

 

 

Consolidated Balance Sheets at December 31, 2009 and 2008

66

 

 

Consolidated Statements of Operations and Other Comprehensive Income for the years ended December 31,

  2009, 2008 and 2007

67

 

 

Consolidated Statement of Changes in Equity for the years ended December 31, 2009, 2008 and 2007

69

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007

72

 

 

Notes to Consolidated Financial Statements

75

 

 

Real Estate and Accumulated Depreciation (Schedule III)

105



Schedules not filed:


All schedules other than the one listed in the Index have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.












-64-







Report of Independent Registered Public Accounting Firm



The Board of Directors and Stockholders

Inland American Real Estate Trust, Inc.:


We have audited the accompanying consolidated balance sheets of Inland American Real Estate Trust, Inc. (the Company) as of December 31, 2009 and 2008, and the related consolidated statements of operations and other comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2009. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule III. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Inland American Real Estate Trust, Inc. as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.  Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.


As discussed in note 5 to the consolidated financial statements, the Company has changed their method of accounting for noncontrolling interests due to the adoption of a new accounting pronouncement for noncontrolling interests, as of January 1, 2009.



/s/ KPMG LLP



Chicago, Illinois

March 15, 2010





-65-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Balance Sheets

(Dollar amounts in thousands, except share amounts)


Assets

 

December 31, 2009

 

December 31, 2008

Assets:

 

 

 

 

Investment properties:

 

 

 

 

  Land

$

1,684,793 

$

1,481,920 

  Building and other improvements

 

7,866,633 

 

6,735,022 

  Construction in progress

 

278,096 

 

318,440 

    Total

 

9,829,522 

 

8,535,382 

  Less accumulated depreciation

 

(717,547)

 

(406,235)

    Net investment properties

 

9,111,975 

 

8,129,147 

Cash and cash equivalents

 

500,491 

 

945,225 

Restricted cash and escrows (Note 2)

 

71,187 

 

72,704 

Investment in marketable securities (Note 9)

 

217,061 

 

229,149 

Investment in unconsolidated entities (Note 4)

 

453,782 

 

742,510 

Accounts and rents receivable (net of allowance of $7,853 and $3,064)

 

80,145 

 

70,212 

Notes receivable (Note 8)

 

423,478 

 

480,774 

Due from related parties (Note 7)

 

 

750 

Intangible assets, net (Note 2)

 

389,136 

 

383,509 

Deferred costs, net

 

47,429 

 

45,323 

Other assets

 

31,292 

 

34,585 

Deferred tax asset

 

2,235 

 

2,978 

Total assets

$

11,328,211 

$

11,136,866 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

Mortgages, notes and margins payable (Note 11)

$

5,085,899 

$

4,437,997 

Accounts payable and accrued expenses

 

43,861 

 

49,305 

Distributions payable

 

34,317 

 

40,777 

Accrued real estate taxes

 

46,805 

 

31,371 

Advance rent and other liabilities

 

81,477 

 

82,568 

Intangible liabilities, net (Note 2)

 

76,379 

 

43,722 

Other financings (Note 1)

 

47,762 

 

47,762 

Due to related parties (Note 7)

 

14,012 

 

4,607 

Deferred income tax liability

 

1,385 

 

1,470 

Total liabilities

 

5,431,897 

 

4,739,579 

 

 

 

 

 

Noncontrolling redeemable interests (Note 5)

 

264,132 

 

264,132 

Commitments and contingencies (Note 16)

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock, $.001 par value, 40,000,000 shares authorized, none

  outstanding

 

 

Common stock, $.001 par value, 1,460,000,000 shares authorized,

  823,619,190 and 794,574,007 shares issued and outstanding

 

824 

 

795 

Additional paid in capital (net of offering costs of $828,434 and $800,019,

  of which $788,272 and $762,612 was paid or accrued to affiliates)

 

7,397,831 

 

7,129,945 

Accumulated distributions in excess of net income (loss)

 

(1,815,054)

 

(1,011,757)

Accumulated other comprehensive income (loss)

 

29,712 

 

(6,421)

 

 

 

 

 

Total Company stockholders' equity

 

5,613,313 

 

6,112,562 

 

 

 

 

 

Noncontrolling interests (Note 5)

 

18,869 

 

20,593 

 

 

 

 

 

Total equity

 

5,632,182 

 

6,133,155 

 

 

 

 

 

Total liabilities and equity

$

11,328,211 

$

11,136,866 




See accompanying notes to the consolidated financial statements.

-66-


 INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Operations and Other Comprehensive Income

(Dollar amounts in thousands, except per share amounts)


 

 

Year ended

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

 

 

 

 

 

 

 

Income:

 

 

 

 

 

 

  Rental income

$

547,246 

$

418,282 

$

280,736 

  Tenant recovery income

 

84,237 

 

74,169 

 

59,587 

  Other property income

 

18,778 

 

26,703 

 

12,021 

  Lodging income

 

479,887 

 

531,584 

 

126,392 

 

 

 

 

 

 

 

Total income

 

1,130,148 

 

1,050,738 

 

478,736 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

  General and administrative expenses to

    related parties

 

10,788 

 

9,651 

 

6,412 

  General and administrative expenses to

    non-related parties

 

32,711 

 

24,436 

 

13,054 

  Property and lodging operating expenses to

    related parties

 

25,513 

 

19,753 

 

14,328 

  Property operating expenses to non-related

    parties

 

90,345 

 

64,861 

 

45,350 

  Lodging operating expenses

 

304,795 

 

313,939 

 

75,412 

  Real estate taxes

 

85,850 

 

71,142 

 

39,665 

  Depreciation and amortization

 

395,501 

 

320,792 

 

174,163 

  Business manager management fee

 

39,000 

 

18,500 

 

9,000 

  Provision for asset impairment

 

34,051 

 

33,809 

 

  Provision for goodwill impairment

 

26,676 

 

11,199 

 

  Impairment of notes receivable

 

74,136 

 

 

 

 

 

 

 

 

 

Total expenses

 

1,119,366 

 

888,082 

 

377,384 

 

 

 

 

 

 

 

Operating income

$

10,782 

$

162,656 

$

101,352 

 

 

 

 

 

 

 

Interest and dividend income

 

55,189 

 

81,274 

 

84,288 

Other income (loss)

 

617 

 

211 

 

(2,145)

Interest expense

 

(254,308)

 

(231,822)

 

(108,060)

Loss on consolidated investment

 

(148,887)

 

 

Gain on extinguishment of debt

 

 

7,760 

 

Equity in earnings (loss) of unconsolidated

  entities

 

(78,487)

 

(46,108)

 

4,477 

Impairment of investment in unconsolidated

  entities

 

(7,443)

 

(61,993)

 

(10,084)

Realized gain (loss) and impairment on

  securities, net

 

34,155 

 

(262,105)

 

(2,466)

 

 

 

 

 

 

 

Income (loss) before income taxes

$

(388,382)

$

(350,127)

$

67,362 

 

 

 

 

 

 

 

Income tax expense (Note 13)

 

(627)

 

(6,124)

 

(2,093)

 

 

 

 

 

 

 

Net income (loss)

 

(389,009)

 

(356,251)

 

65,269 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling

  interests

 

(8,951)

 

(8,927)

 

(9,347)

 

 

 

 

 

 

 

Net income (loss) applicable to Company

$

(397,960)

$

(365,178)

$

55,922 



See accompanying notes to the consolidated financial statements.

-67-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Operations and Other Comprehensive Income

(Dollar amounts in thousands, except per share amounts)


 

 

Year ended

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain (loss) on investment securities

 

65,068 

 

(195,194)

 

(87,214)

Reversal of unrealized (gain) loss to realized gain

  (loss) on investment securities

 

(34,155)

 

262,105 

 

2,466 

Unrealized gain (loss) on derivatives

 

5,220 

 

(9,054)

 

 

 

 

 

 

 

 

Comprehensive loss

$

(361,827)

$

(307,321)

$

(28,826)

Net income (loss) available to common

  stockholders per common share, basic and diluted

  (Note 15)

$

(0.49)

$

(0.54)

$

0.14 

Weighted average number of common shares

  outstanding, basic and diluted

 

811,400,035 

 

675,320,438 

 

396,752,280 




































See accompanying notes to the consolidated financial statements.

-68-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Changes in Equity

(continued)

(Dollar amounts in thousands)


For the years ended December 31, 2009, 2008 and 2007


 

Number of Shares

 

Common

Stock

 

Additional Paid-in

Capital

 

Accumulated

Distributions in excess of Net Income (Loss)

 

Accumulated Other Comprehensive Income (Loss)

 

Noncontrolling Interests

 

Total

 

Noncontrolling Redeemable Interests

Balance at

  January 1, 2007

168,620,150 

$

169 

$

1,504,503 

$

(41,201)

$

20,470 

$

24,167 

$

1,508,108 

$

264,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

55,922 

 

 

102 

 

56,024 

 

9,245 

Unrealized loss on

  investment securities

 

 

 

 

(87,214)

 

 

(87,214)

 

Reversal of unrealized

  loss to realized loss on

  investment securities

 

 

 

 

2,466 

 

 

2,466 

 

Distributions declared

 

 

 

(242,606)

 

 

(1,806)

 

(244,412)

 

(9,245)

Acquisition of

  noncontrolling interest

 

 

 

 

 

1,320 

 

1,320 

 

Proceeds from offering

366,968,611 

 

364 

 

3,659,182 

 

 

 

 

3,659,546 

 

Offering costs

 

 

(379,110)

 

 

 

 

(379,110)

 

Proceeds from distribution

  reinvestment program

13,869,258 

 

16 

 

131,748 

 

 

 

 

131,764 

 

Shares repurchased

(1,289,030)

 

(1)

 

(11,924)

 

 

 

 

(11,925)

 

Issuance of stock options

  and discounts on shares

  issued to affiliates

 

 

1,311 

 

 

 

 

1,311 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

  December 31, 2007

548,168,989 

$

548 

$

4,905,710 

$

(227,885)

$

(64,278)

$

23,783 

$

4,637,878 

$

264,132



See accompanying notes to the consolidated financial statements.

-69-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Changes in Equity

(continued)

(Dollar amounts in thousands)


For the years ended December 31, 2009, 2008 and 2007



 

Number of Shares

 

Common

Stock

 

Additional Paid-in

Capital

 

Accumulated

Distributions in excess of Net Income (Loss)

 

Accumulated Other Comprehensive Income (Loss)

 

Noncontrolling Interests

 

Total

 

Noncontrolling Redeemable Interests

Balance at

  January 1, 2008

548,168,989 

$

548 

$

4,905,710 

$

(227,885)

$

(64,278)

$

23,783 

$

4,637,878 

$

264,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

(365,178)

 

 

(318)

 

(365,496)

 

9,245 

Unrealized loss on

  investment securities

 

 

 

 

(195,194)

 

 

(195,194)

 

Reversal of unrealized

  loss to realized loss on   investment securities

 

 

 

 

262,105 

 

 

262,105 

 

Unrealized loss on

  derivatives

 

 

 

 

(9,054)

 

 

(9,054)

 

Distributions declared

 

 

 

(418,694)

 

 

(2,872)

 

(421,566)

 

(9,245)

Proceeds from offering

231,961,443 

 

232 

 

2,327,910 

 

 

 

 

2,328,142 

 

Offering costs

 

 

(242,897)

 

 

 

 

(242,897)

 

Proceeds from distribution

  reinvestment program

25,485,006 

 

26 

 

242,087 

 

 

 

 

242,113 

 

Shares repurchased

(11,041,431)

 

(11)

 

(102,993)

 

 

 

 

(103,004)

 

Issuance of stock options

  and discounts on shares

  issued to affiliates

 

 

128 

 

 

 

 

128 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31,

  2008

794,574,007 

$

795 

$

7,129,945 

$

(1,011,757)

$

(6,421)

$

20,593 

$

6,133,155 

$

264,132




See accompanying notes to the consolidated financial statements.

-70-


INLAND AMERICAN REAL ESTATE TRUST, INC.

 (A Maryland Corporation)


Consolidated Statements of Changes in Equity

(continued)

(Dollar amounts in thousands)


For the years ended December 31, 2009, 2008 and 2007


 

Number of Shares

 

Common

Stock

 

Additional Paid-in

Capital

 

Accumulated

Distributions in excess of Net Income (Loss)

 

Accumulated Other Comprehensive Income (Loss)

 

Noncontrolling Interests

 

Total

 

Noncontrolling Redeemable Interests

Balance at

  January 1, 2009

794,574,007 

$

795 

$

7,129,945 

$

(1,011,757)

$

(6,421)

$

20,593 

$

6,133,155 

$

264,132 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

(397,960)

 

 

(294)

 

(398,254)

 

9,245 

Unrealized gain  on

  investment securities

 

 

 

 

65,068 

 

 

65,068 

 

Reversal of unrealized

  gain to realized gain on

  investment securities

 

 

 

 

(34,155)

 

 

(34,155)

 

Unrealized gain on

  derivatives

 

 

 

 

5,220 

 

 

5,220 

 

Distributions declared

 

 

 

(405,337)

 

 

(2,732)

 

(408,069)

 

(9,245)

Contributions from

  noncontrolling interests

 

 

 

 

 

1,302 

 

1,302 

 

Proceeds from offering

24,869,350 

 

25 

 

253,961 

 

 

 

 

253,986 

 

Offering costs

 

 

(28,415)

 

 

 

 

(28,415)

 

Proceeds from distribution

  reinvestment program

24,347,096 

 

24 

 

231,282 

 

 

 

 

231,306 

 

Shares repurchased

(20,171,263)

 

(20)

 

(188,956)

 

 

 

 

(188,976)

 

Issuance of stock options

  and discounts on shares

  issued to affiliates

 

 

14 

 

 

 

 

14 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31,

  2009

823,619,190 

$

824 

$

7,397,831 

$

(1,815,054)

$

29,712 

$

18,869 

$

5,632,182 

$

264,132 




See accompanying notes to the consolidated financial statements.

-71-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Cash Flows

(Dollar amounts in thousands)

 

 

Year ended

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

$

(389,009)

$

(356,251)

$

65,269 

Adjustments to reconcile net income (loss) to net

  cash provided by operating activities:

 

 

 

 

 

 

  Depreciation and amortization

 

395,501 

 

320,792 

 

174,163 

  Amortization of above and below market leases,

    net

 

(1,688)

 

(2,408)

 

(156)

  Amortization of debt premiums, discounts, and

    financing costs

 

10,032 

 

11,419 

 

6,661 

  Amortization of note receivable discount

 

(8,107)

 

(3,208)

 

  Straight-line rental income

 

(16,329)

 

(17,457)

 

(12,764)

  Extinguishment of debt

 

 

(7,760)

 

  Loss on consolidated investment

 

148,887 

 

 

  Provision for asset impairment

 

34,051 

 

33,809 

 

  Provision for goodwill impairment

 

26,676 

 

11,199 

 

  Impairment of notes receivable

 

74,136 

 

 

  Equity in loss (earnings) of unconsolidated

    entities

 

78,487 

 

46,108 

 

(4,477)

  Distributions from unconsolidated entities

 

9,040 

 

2,522 

 

7,529 

  Impairment of investment in unconsolidated

    entities

 

7,443 

 

61,993 

 

10,084 

  Realized (gain) loss on investments in securities

 

(38,193)

 

15,941 

 

(19,280)

  Impairment of investments in securities

 

4,038 

 

246,164 

 

21,746 

  Other non-cash adjustments

 

319 

 

228 

 

1,466 

Changes in assets and liabilities:

 

 

 

 

 

 

  Accounts and rents receivable

 

6,769 

 

542 

 

(17,641)

  Prepaid rental and recovery income

 

8,389 

 

8,954 

 

7,991 

  Other assets

 

3,521 

 

2,987 

 

(10,392)

  Accounts payable and other liabilities

 

(8,906)

 

4,549 

 

36,705 

  Accrued real estate taxes

 

12,560 

 

3,334 

 

(3,484)

  Due to related parties

 

11,414 

 

908 

 

 

 

 

 

 

 

 

Net cash flows provided by operating activities

 

369,031 

 

384,365 

 

263,420 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

  Purchase of Winston Hotels

 

 

 

(532,022)

  Purchase of Apple Five

 

 

 

(617,175)

  Purchase of RLJ Hotels

 

 

(503,065)

 

  Consolidation of LIP-H

 

1,757 

 

 

  Purchase of investment properties

 

(376,387)

 

(981,183)

 

(2,423,853)

  Acquired in-place and market-lease intangibles, net

 

(63,777)

 

(53,095)

 

(170,740)

  Capital expenditures and tenant improvements

 

(72,076)

 

(83,618)

 

(26,415)

  Investment in development projects

 

(134,453)

 

(137,187)

 

(196,628)

  Sale of investment properties

 

 

27,659 

 

  Acquisition of joint venture interest

 

 

(10,823)

 

  Purchase of investment securities

 

(53,861)

 

(228,411)

 

(266,950)

  Sale of investment securities

 

131,017 

 

47,464 

 

75,115 

  Investment in unconsolidated entities

 

(27,909)

 

(411,961)

 

(448,727)

  Distributions from unconsolidated entities

 

32,081 

 

41,704 

 

  Payment of leasing fees and franchise fees

 

(4,137)

 

(3,693)

 

(3,262)

  Payments from (funding of) notes receivable, net

 

417 

 

(196,345)

 

(210,917)

  Restricted escrows

 

2,983 

 

(41,446)

 

2,453 

  Other assets

 

1,182 

 

49,175 

 

(54,283)

 

 

 

 

 

 

 

Net cash flows used in investing activities

 

(563,163)

 

(2,484,825)

 

(4,873,404)



See accompanying notes to the consolidated financial statements.

-72-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Cash Flows

(continued)

(Dollar amounts in thousands)

 

 

Year ended

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

Cash flows from financing activities:

 

 

 

 

 

 

  Proceeds from offering

 

253,986 

 

2,328,142 

 

3,659,546 

  Proceeds from the dividend reinvestment program

 

231,306 

 

242,113 

 

131,764 

  Shares repurchased

 

(192,548)

 

(103,004)

 

(11,925)

  Payment of offering costs

 

(29,616)

 

(246,777)

 

(379,418)

  Distributions paid

 

(411,797)

 

(405,925)

 

(222,697)

  Proceeds from mortgage debt and notes payable

 

370,555 

 

1,021,844 

 

1,566,482 

  Payoffs of mortgage debt

 

(435,540)

 

(138,707)

 

(20,194)

  Principal payments of mortgage debt

 

(6,708)

 

(3,375)

 

(929)

  Proceeds from (paydown of) margin securities

    debt, net

 

(10,044)

 

(35,113)

 

25,529 

  Payment of loan fees and deposits

 

(9,353)

 

(11,032)

 

(18,618)

  Distributions paid to noncontrolling interests

 

(2,732)

 

(2,872)

 

(1,805)

  Distributions paid to noncontrolling redeemable

    interests

 

(9,245)

 

(9,245)

 

(9,245)

  Contributions from noncontrolling interests

 

1,302 

 

 

  Due from related parties, net

 

(168)

 

276 

 

(1,638)

 

 

 

 

 

 

 

Net cash flows provided by (used in) financing

  activities

 

(250,602)

 

2,636,325 

 

4,716,852 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(444,734)

 

535,865 

 

106,868 

Cash and cash equivalents, at beginning of period

 

945,225 

 

409,360 

 

302,492 

 

 

 

 

 

 

 

Cash and cash equivalents, at end of period

$

500,491 

$

945,225 

$

409,360 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of investment properties

$

(1,021,008)

$

(1,131,748)

 

(2,593,881)

Tenant and real estate tax liabilities assumed at

  acquisition

 

13,440 

 

1,972 

 

15,612 

Assumption of mortgage debt at acquisition

 

626,174 

 

147,423 

 

137,210 

Non-cash discount/premium

 

5,007 

 

205 

 

2,128 

Assumption of lender held escrows at acquisition

 

 

 

1,175 

Other financings

 

 

965 

 

13,903 

 

 

 

 

 

 

 

 

 

(376,387)

 

(981,183)

 

(2,423,853)

 

 

 

 

 

 

 

Purchase of Winston Hotels

 

 

 

(843,137)

Assumption of mortgage debt at acquisition

 

 

 

209,952 

Assumption of noncontrolling interest at acquisition

 

 

 

1,320 

Cash assumed at acquisition

 

 

 

65,978 

Net liabilities assumed at acquisition

 

 

 

33,865 

 

 

 

 

 

 

 

 

 

 

 

(532,022)

 

 

 

 

 

 

 

Purchase of Apple Five

 

 

 

(699,345)

Cash assumed at acquisition

 

 

 

78,898 

Net liabilities assumed at acquisition

 

 

 

3,272 

 

 

 

 

 

 

 

 

 

 

 

(617,175)



See accompanying notes to the consolidated financial statements.

-73-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Consolidated Statements of Cash Flows

(continued)

(Dollar amounts in thousands)


 

 

Year ended

 

Year ended

 

Year ended

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

 

 

 

 

 

 

 

Purchase of RLJ Hotels

 

 

(932,200)

 

Assumption of mortgage debt at acquisition

 

 

426,654 

 

Liabilities assumed at acquisition

 

 

2,481 

 

 

 

 

 

 

 

 

 

 

 

(503,065)

 

 

 

 

 

 

 

 

Cash paid for interest, net capitalized interest of

  $9,648, $7,032 and $2,488 for 2009, 2008 and

  2007

$

245,912 

$

219,419 

$

99,553 

 

 

 

 

 

 

 

Supplemental schedule of non-cash investing and

  financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidation of LIP-H assets

$

135,686 

$

$

 

 

 

 

 

 

 

Assumption of mortgage debt at consolidation of

  LIP-H

$

(96,763)

$

$

 

 

 

 

 

 

 

Liabilities assumed at consolidation of LIP-H

$

(3,584)

 

 




See accompanying notes to the consolidated financial statements.

-74-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



 (1)  Organization


Inland American Real Estate Trust, Inc. (the "Company") was formed on October 4, 2004 (inception) to acquire and manage a diversified portfolio of commercial real estate, primarily retail properties and multi-family (both conventional and student housing), office, industrial and lodging properties, located in the United States and Canada. The Business Management Agreement (the "Agreement") provides for Inland American Business Manager & Advisor, Inc. (the "Business Manager"), an affiliate of the Company's sponsor, to be the business manager to the Company. On August 31, 2005, the Company commenced an initial public offering (the "Initial Offering") of up to 500,000,000 shares of common stock ("Shares") at $10.00 each and the issuance of 40,000,000 shares at $9.50 per share available to be distributed pursuant to the Company's distribution reinvestment plan. On August 1, 2007, the Company commenced a second public offering (the "Second Offering") of up to 500,000,000 shares of common stock at $10.00 per share and up to 40,000,000 shares at $9.50 per share available to be distributed through the Company’s distribution reinvestment plan. On March 31, 2009, the Company filed a registration statement to register 50,000,000 shares to be issued under the distribution reinvestment plan. Effective April 6, 2009, the Company elected to terminate the Second Offering.


The Company is qualified and has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ended December 31, 2005. Since the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property, or net worth and federal income and excise taxes on its undistributed income.


The Company has elected to treat certain of its consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as taxable REIT subsidiaries pursuant to the Internal Revenue Code. Taxable REIT subsidiaries may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates. The Company’s hotels are leased to certain of the Company’s taxable REIT subsidiaries. Lease revenue from these taxable REIT subsidiaries and its wholly-owned subsidiaries is eliminated in consolidation.


The accompanying consolidated financial statements include the accounts of the Company, as well as all wholly owned subsidiaries and consolidated joint venture investments. Wholly owned subsidiaries generally consist of limited liability companies (LLCs) and limited partnerships (LPs). The effects of all significant intercompany transactions have been eliminated.


At December 31, 2009, the Company owned a portfolio of 952 commercial real estate properties, compared to 904 and properties at December 31, 2008. The breakdown by segment is as follows:


Segment

Property Count

Square Ft/Rooms/Units

Retail

713

16,643,477 square feet

Lodging

 99

15,121 rooms

Office

 40

10,061,182 square feet

Industrial

 65

15,659,041 square feet

Multi-Family

 27

9,481 units

LIP-Holdings, LLC

   8

     487,038 square feet


Consolidated entities


Minto Builders (Florida), Inc.


On October 11, 2005, the Company entered into a joint venture with Minto (Delaware), LLC, or Minto Delaware who owned all of the outstanding equity of Minto Builders (Florida), Inc. (“MB REIT”) prior to October 11, 2005. Pursuant to the terms of the purchase agreement, the Company purchased 920,000 shares of common stock of MB REIT at a price of $1,276 per share for a total investment of approximately $1,172,000 in MB REIT. MB REIT is not considered a Variable Interest Entity (“VIE”) as defined in Financial Accounting Standards Board (“FASB”) Account Standards Codification (“ASC”) 810, Consolidation, (previously FASB Interpretation 46R), however the Company has a controlling financial interest in MB REIT, has the direct ability to make major decisions for MB REIT through its voting interests, and holds key management positions in MB REIT. Therefore this entity is



-75-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



consolidated by the Company and the outside ownership interests are reflected as noncontrolling interests in the accompanying consolidated financial statements.


A put/call agreement that was entered into by the Company and MB REIT as a part of the MB REIT transaction on October 11, 2005 grants Minto (Delaware), LLC, referred to herein as MD, certain rights to sell its shares of MB REIT stock back to MB REIT. The agreement is considered a free standing financial instrument and is accounted for pursuant to ASC 480, Distinguishing Liabilities from Equity, (previously Statement of Financial Accounting Standard (“SFAS”) 150) and ASC 815, Derivatives and Hedging, (previously SFAS 133). Derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. This derivative was not designated as a hedge and the change in fair value is recorded in other income (loss) in the accompanying consolidated statements of operations and other comprehensive income.


Consolidated Developments


The Company has ownership interests in three consolidated development joint ventures. Village at Stonebriar, LLC is a retail shopping center development in Plano, Texas, which the Company contributed $20,000 and is entitled to receive a 12% preferred distribution. Stone Creek Crossing, L.P. is a retail shopping center development in San Marcos, Texas, which the Company contributed $26,790 and is entitled to receive an 11% preferred return. Woodbridge Crossing, L.P. is a retail shopping center development in Wylie, Texas. As of December 31, 2009, the Company has contributed approximately $19,500 to the venture and is entitled to receive an 11% preferred return. Village at Stonebriar, LLC, Stone Creek Crossing, L.P. and Woodbridge Crossing, L.P. are considered VIEs as defined in ASC 810, and the Company is considered the primary beneficiary for the joint ventures. Therefore, these entities are consolidated by the Company and the outside interests are reflected as noncontrolling interests in the accompanying consolidated financial statements.


Other


The Company has ownership interests of 67% in various limited liability companies which own nine shopping centers. These entities are considered VIEs as defined in ASC 810, and the Company is considered the primary beneficiary of each of these entities. Therefore, these entities are consolidated by the Company. The entities agreements contain put/call provisions which grant the right to the outside owners and the Company to require these entities to redeem the ownership interests of the outside owners during future periods. Because the outside ownership interests are subject to a put/call arrangement requiring settlement for a fixed amount, the these entities are treated as 100% owned subsidiaries by the Company with the amount due the outside owners reflected as a financing and included within other financings in the accompanying consolidated financial statements. Interest expense is recorded on these liabilities in an amount generally equal to the preferred return due to the outside owners as provided in the entities agreements.


(2)  Summary of Significant Accounting Policies


The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.


Revenue Recognition


The Company commences revenue recognition on its leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. Generally, this occurs on the lease commencement date. The determination of who is the owner, for accounting purposes, of the tenant improvements determines the nature of the leased asset and when revenue recognition under a lease begins. If the Company is the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete. If the Company concludes it is not the owner, for accounting purposes, of the tenant improvements (the lessee is the owner), then the leased asset is the unimproved space and any tenant improvement allowances funded under the lease are treated as lease incentives which reduces revenue recognized over the term of the lease. In these circumstances, the Company begins revenue recognition when the lessee takes possession of the unimproved space for the lessee to construct their own improvements. The Company considers a number of different factors to evaluate whether it or the lessee is the owner of the tenant improvements for accounting purposes. These factors include:




-76-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



·

whether the lease stipulates how and on what a tenant improvement allowance may be spent;


·

whether the tenant or landlord retains legal title to the improvements;


·

the uniqueness of the improvements;


·

the expected economic life of the tenant improvements relative to the length of the lease; and


·

who constructs or directs the construction of the improvements.


The determination of who owns the tenant improvements, for accounting purposes, is subject to significant judgment. In making that determination, the Company considers all of the above factors. No one factor, however, necessarily establishes its determination.


Rental income is recognized on a straight-line basis over the term of each lease. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of accounts and rents receivable in the accompanying consolidated balance sheets.


Revenue for lodging facilities is recognized when the services are provided. Additionally, the Company collects sales, use, occupancy and similar taxes at its lodging facilities which it presents on a net basis (excluded from revenues) on the consolidated statements of operations and other comprehensive income.


The Company records lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, the tenant is no longer occupying the property and amounts due are considered collectible.


The Company defers recognition of contingent rental income (i.e. percentage/excess rent) until the specified target that triggers the contingent rental income is achieved.


Consolidation


The Company evaluates its investments in limited liability companies and partnerships to determine whether such entities may be a variable interest entity (“VIE”).  If the entity is a VIE, the determination of whether the Company is the primary beneficiary must be made. The Company will consolidate a VIE if it is deemed to be the primary beneficiary, as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic on Consolidation. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary as defined in the Consolidation Topic of the FASB ASC, or the entity is not a VIE and the Company does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions.


Reclassifications


Certain reclassifications have been made to the 2008 and 2007 consolidated financial statements to conform to the 2009 presentations.


Capitalization and Depreciation


Real estate acquisitions are recorded at cost less accumulated depreciation. Ordinary repairs and maintenance are expensed as incurred.


Depreciation expense is computed using the straight line method. Building and other improvements are depreciated based upon estimated useful lives of 30 years for building and improvements and 5-15 years for furniture, fixtures and equipment and site improvements.


Tenant improvements are amortized on a straight line basis over the life of the related lease as a component of depreciation and amortization expense.


Leasing fees are amortized on a straight-line basis over the life of the related lease as a component of depreciation and amortization.




-77-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



Loan fees are amortized on a straight-line basis, which approximates the effective interest method, over the life of the related loans as a component of interest expense.


Direct and indirect costs that are clearly related to the construction and improvements of investment properties are capitalized. Costs incurred for property taxes and insurance are capitalized during periods in which activities necessary to get the property ready for its intended use are in progress. Interest costs are also capitalized during such periods. Additionally, the Company treats investments accounted for by the equity method as assets qualifying for interest capitalization provided (1) the investee has activities in progress necessary to commence its planned principal operations and (2) the investee’s activities include the use of such funds to acquire qualifying assets.


Impairment


The Company assesses the carrying values of the respective long-lived assets, whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Recoverability of the assets is measured by comparison of the carrying amount of the asset to the estimated future undiscounted cash flows. In order to review its assets for recoverability, the Company considers current market conditions, as well as its intent with respect to holding or disposing of the asset. If the Company’s analysis indicates that the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, the Company recognizes an impairment charge for the amount by which the carrying value exceeds the current estimated fair value of the real estate property. Fair value is determined through various valuation techniques; including discounted cash flow models, quoted market values and third party appraisals, where considered necessary.


The use of projected future cash flows is based on assumptions that are consistent with the estimates of future expectations and the strategic plan the Company uses to manage its underlying business. However assumptions and estimates about future cash flows and capitalization rates are complex and subjective. Changes in economic and operating conditions and the Company’s ultimate investment intent that occur subsequent to the impairment analyses could impact these assumptions and result in future impairment charges of the real estate properties.


During the year ended December 31, 2009, the Company determined that one development was impaired and recorded an impairment of $19,090. Additionally, the Company recorded an impairment charge of $14,961 in relation to six properties. The fair values were determined based on a combination of appraisals at or near December 31, 2009 and offers received on certain properties. These impairments were a result of a change in the Company’s estimated holding period. The impairments are included in provision for asset impairment on the consolidated statements of operations and other comprehensive income. The Company recorded impairment of $33,809 for the year ended December 31, 2008. No impairment was recognized during 2007.


On a periodic basis, management assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated entities may be other than temporarily impaired. To the extent impairment has occurred, the loss is measured as the excess of the carrying value of the investment over the fair-value of the investment.  For the year ended December 31, 2009, management determined that two of its unconsolidated entities were impaired.  The Company recorded impairment of $7,443 for the year ended December 31, 2009. The Company recorded its investment in these two unconsolidated entities at zero based on an evaluation of fair value of the underlying investment which includes a review of expected cash flows to be received from the investee. Impairment of $61,993 and $10,084 was recorded for the years ended December 31, 2008 and 2007.


Derivative Instruments


In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company limits these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

 

The Company has a policy of only entering into contracts with established financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.


The Company recognizes all derivatives in the balance sheet at fair value. Additionally, the fair value adjustments will affect either equity or net income depending on whether the derivative instruments qualify as a hedge for accounting purposes and, if so, the nature of the hedging activity. When the terms of an underlying transaction are modified, or when the underlying transaction is terminated or



-78-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



completed, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income each period until the instrument matures. Any derivative instrument used for risk management that does not meet the criteria for hedge accounting is marked-to-market each period. The Company does not use derivatives for trading or speculative purposes.


Marketable Securities


The Company classifies its investment in securities in one of three categories: trading, available-for-sale, or held-to-maturity. Trading securities are bought and held principally for the purpose of selling them in the near term. Held-to-maturity securities are those securities in which the Company has the ability and intent to hold the security until maturity. All securities not included in trading or held-to-maturity are classified as available-for-sale. Investment in securities at December 31, 2009 and 2008 consists of common stock investments and investments in commercial mortgage backed securities that are all classified as available-for-sale securities and are recorded at fair value. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific identification basis. A decline in the market value of any available-for-sale security below cost that is deemed to be other than temporary, results in a reduction in the carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. When a security is impaired, the Company considers whether it has the ability and intent to hold the investment for a time sufficient to allow for any anticipated recovery in market value and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to period end and forecasted performance of the investee. For the years ended December 31, 2009, 2008 and 2007, the Company recorded $4,038, $246,164 and $21,746, respectively, in other than temporary impairments.


Notes Receivable


The Company evaluates the collectability of both interest and principal of each of its notes receivable to determine whether it is impaired. A note receivable is considered to be impaired when the Company determines that it is probable that it will not be able to collect all amounts due under the contractual terms of the note receivable. When a note receivable is considered impaired, the amount of loss is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the note receivable’s effective interest rate or to the fair value of the underlying collateral if the note is collateral dependent. Provision of $74,136 for impairment was recorded for the year ended December 31, 2009.  No provision was recorded for the year ended December 31, 2008 and 2007.


If the Company considers a note receivable to be non-performing or the collectability is uncertain based on the underlying collateral, it will place the note receivable on non-accrual status. The Company will recognize interest income on a cash basis, as received. If the fair value of the note receivable collateral decreases to less than the amortized cost basis of the note receivable, any interest received will be recorded as a reduction of the note receivable basis. If the fair value of the collateral subsequently recovers to greater than the cost basis of the note receivable, and if the note receivable is not otherwise in default, any interest payment will be recognized as interest income.


Acquisition of Real Estate


The Company allocates the purchase price of each acquired business (as defined in the accounting guidance related to business combinations) between tangible and intangible assets at full fair value at the date of the transaction. Such tangible and intangible assets include land, building and improvements, acquired above market and below market leases, in-place lease value, customer relationships (if any), and any assumed financing that is determined to be above or below market terms. Any additional amounts are allocated to goodwill as required, based on the remaining purchase price in excess of the fair value of the tangible and intangible assets acquired and liabilities assumed. The allocation of the purchase price is an area that requires judgment and significant estimates.


The Company uses the information contained in the independent appraisal obtained at acquisition as the primary basis for the allocation to land and building and improvements. The Company determines whether any financing assumed is above or below market based upon comparison to similar financing terms for similar investment properties. The Company allocates a portion of the purchase price to the estimated acquired in-place lease costs based on estimated lease execution costs for similar leases as well as lost rent payments during assumed lease up period when calculating as if vacant fair values. The Company also evaluates each acquired lease based upon current market rates at the acquisition date and we consider various factors including geographical location, size and location of leased space within the investment property, tenant profile, and the credit risk of the tenant in determining whether the acquired lease is above or below market lease costs. After an acquired lease is determined to be above or below market, the Company



-79-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



allocates a portion of the purchase price to such above or below acquired lease costs based upon the present value of the difference between the contractual lease rate and the estimated market rate. For below market leases with fixed rate renewals, renewal periods are included in the calculation of below market in-place lease values. The determination of the discount rate used in the present value calculation is based upon the "risk free rate" and current interest rates. This discount rate is a significant factor in determining the market valuation which requires our judgment of subjective factors such as market knowledge, economics, demographics, location, visibility, age and physical condition of the property.


The Company expenses acquisition costs of all transactions as incurred. All costs related to finding, analyzing and negotiating a transaction are expensed as incurred as a general and administrative expense, whether or not the acquisition is completed.  These expenses would include acquisition fees, if any, paid to an affiliate of the business manager.


The portion of the purchase price allocated to acquired above market lease costs and acquired below market lease costs are amortized on a straight line basis over the life of the related lease, including the respective renewal period for below market lease costs with fixed rate renewals, as an adjustment to rental income. Amortization pertaining to the above market lease costs of $3,052, $2,777 and $2,373 was applied as a reduction to rental income for the years ended December 31, 2009, 2008 and 2007, respectively. Amortization pertaining to the below market lease costs of $4,740, $5,185 and $2,674 was applied as an increase to rental income for the years ended December 31, 2009, 2008 and 2007, respectively.


The portion of the purchase price allocated to acquired in-place lease intangibles is amortized on a straight line basis over the life of the related lease. The Company incurred amortization expense pertaining to acquired in-place lease intangibles of $76,750, $68,444 and $50,394 for the years ended December 31, 2009, 2008 and 2007, respectively. The portion of the purchase price allocated to customer relationship value is amortized on a straight line basis over the life of the related lease. As of December 31, 2009, no amount has been allocated to customer relationship value.


The following table summarizes the Company’s identified intangible assets, intangible liabilities and goodwill as of December 31, 2009 and December 31, 2008.


 

 

Balance as of December 31, 2009

 

Balance as of December 31 ,2008

Intangible assets:

 

 

 

 

  Acquired in-place lease

$

541,259 

$

447,740 

  Acquired above market lease

 

30,422 

 

15,687 

  Acquired below market ground lease

 

8,825 

 

8,825 

  Advance bookings

 

5,782 

 

5,782 

  Accumulated amortization

 

(204,913)

 

(128,962)

  Net intangible assets

 

381,375 

 

349,072 

  Goodwill, net

 

7,761 

 

34,437 

 

 

 

 

 

Total intangible assets, net

$

389,136 

$

383,509 

 

 

 

 

 

Intangible liabilities:

 

 

 

 

  Acquired below market lease

$

81,425 

$

44,354 

  Acquired above market ground lease

 

5,840 

 

5,581 

  Other intangible liabilities

 

 

258 

  Accumulated amortization

 

(10,886)

 

(6,471)

 

 

 

 

 

Net intangible liabilities

$

76,379 

$

43,722 


The following table presents the amortization during the next five years related to intangible assets and liabilities at December 31, 2009.

 

 

2010

2011

2012

2013

2014

Thereafter

Total

Amortization of:

 

 

 

 

 

 

 

 

Acquired above

 

 

 

 

 

 

 

 

  market lease costs

$

(3,454)

(3,123)

(2,513)

(2,322)

(2,243)

(8,598)

(22,253)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



-80-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007






 

 

2010

2011

2012

2013

2014

Thereafter

Total

Acquired below

 

 

 

 

 

 

 

 

  market lease costs

$

5,001 

4,838 

4,505 

4,228 

3,907 

48,435 

70,914 

 

 

 

 

 

 

 

 

 

Net rental income

 

 

 

 

 

 

 

 

  increase

$

1,547 

1,715 

1,992 

1,906 

1,664 

39,837 

48,661 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquired in-place lease

 

 

 

 

 

 

 

 

  intangibles

$

64,485 

51,184 

46,506 

39,773 

30,011 

116,924 

348,883 

 

 

 

 

 

 

 

 

 

Advance bookings

$

1,817 

50 

1,867 

 

 

 

 

 

 

 

 

 

Acquired below

 

 

 

 

 

 

 

 

  market ground lease

$

(228)

(228)

(228)

(228)

(228)

(7,232)

(8,372)

 

 

 

 

 

 

 

 

 

Acquired above

 

 

 

 

 

 

 

 

  market ground lease

$

191 

191 

187 

140 

140 

4,616 

5,465 


Goodwill


The excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed was recorded as goodwill. Goodwill has been recognized and allocated to specific properties in our lodging segment since each individual hotel property is an operating segment and considered a reporting unit. The Company tests goodwill for impairment annually or more frequently if events or changes in circumstances indicate impairment.


The Company tested goodwill for impairment by first comparing the estimated fair value of each property with goodwill to the carrying value of the property’s assets, including goodwill. The fair value is based on estimated future cash flow projections that utilize discount and capitalization rates, which are generally unobservable in the market place (Level 3 inputs), but approximate the inputs the Company believes would be utilized by market participants in assessing fair value. The estimates of future cash flows are based on a number of factors including the historical operating results, known trends, and market/economic conditions. If the carrying amount of the property’s assets, including goodwill, exceeds its estimated fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.


In this second step, if the implied fair value of goodwill is less than the carrying amount of goodwill, an impairment charge is recorded in an amount equal to that excess.


For the year ended December 31, 2009 and 2008, the Company recorded an impairment charge of $26,676 of its goodwill as a result of the effect of the slowdown in the economy and its impact on the property, resulting in increases in the capitalization and discount rates used for these properties. Each of the three properties with goodwill recorded an impairment. As a result, goodwill on each property is stated at fair value as of December 31, 2009. The changes in the carrying amount of goodwill for the years ended December 31, 2009 and 2008 are in the table below.


 

 

2009

 

2008

Balance at beginning of year

 

 

 

 

Goodwill

$

45,636 

$

Accumulated impairment losses

 

(11,199)

 

 

 

34,437 

 

Goodwill acquired

 

 

45,636 

Impairment losses

 

(26,676)

 

(11,199)

Balance at end of year

$

7,761 

$

34,437 


Cash and Cash Equivalents


The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains



-81-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



its cash and cash equivalents at financial institutions. The combined account balances at one or more institutions periodically exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant, as the Company does not anticipate the financial institutions' non-performance.


Restricted Cash and Escrows


Restricted escrows primarily consist of cash held in escrow comprised of lenders' restricted escrows of $22,790 and $23,518, earnout escrows of $3,398 and $4,406, and lodging furniture, fixtures and equipment reserves of $41,465 and $37,941 as of December 31, 2009 and December 31, 2008, respectively. Earnout escrows are established upon the acquisition of certain investment properties for which the funds may be released to the seller when certain space has become leased and occupied.


Restricted cash consists of funds received from investors that have not been executed to purchase shares and funds contributed by sellers held by third party escrow agents pertaining to master leases, tenant improvements and other closing items.


Income Taxes


Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.


(3)  Investment Properties


Acquisitions


The table below reflects acquisition activity for the year ended December 31, 2009.


Segment

Property

Date

 

Gross Acquisition Price

Sq Ft/Units

Retail

Macquarie Portfolio

01/14/09-  4/29/09

$

275,400

2,126,074

 

Alcoa Exchange II

01/29/09

 

7,300

43,750

 

Fultondale Promenade

02/02/09

 

30,700

249,554

 

Pavilion at La Quinta

02/18/09

 

41,200

166,039

 

Dothan Pavilion

02/18/09

 

42,600

327,555

 

Grafton Commons

12/17/09

 

37,000

238,816

 

Woodlake

12/31/09

 

28,400

159,703

Office

Sanofi-aventis

01/28/09

 

230,000

736,572

 

AmEx Service Center – Greensboro

04/30/09

 

53,000

389,377

 

AmEx Service Center – Taylorsville

04/30/09

 

46,000

395,787

 

Computershare

06/24/09

 

62,600

185,171

Multi-Family

Brazos Ranch

01/13/09

 

27,700

308 units

 

Woodlands Portfolio

07/08/09-  10/02/09

 

143,000

2,097 units

 

Malibu Lakes

12/30/09

 

31,000

356 units

 

 

 

 

 

 

Total

 

 

$

1,055,900

 


During the year ended December 31, 2009, the Company incurred $9,617 of acquisition and transaction costs that were recorded in general and administrative expenses on the consolidated statements of operations and other comprehensive income.





-82-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



LIP-H Consolidation


On June 8, 2007, the Company, through a 100% owned subsidiary, entered into the LIP Holdings, LLC (LIP-H) operating agreement for the purpose of funding the development and ownership of real estate projects in the office, distribution, retail, healthcare and mixed-use markets. The Company’s subsidiary invested $227,000 in exchange for the Class A Participating Preferred Interests of LIP-H, which entitles the Company’s subsidiary to a 9.5% preferred dividend and two of the five board seats of LIP-H. The Company’s investment was used to acquire eight operating properties and funding for a mezzanine loan to LIP Development. As of December 31, 2008, the Company accounted for this investment as an unconsolidated entity.


On January 6, 2009, the Company’s subsidiary was granted a third seat on the board of LIP-H. The third board seat gave effective control over LIP-H to the Company’s subsidiary, resulting in the consolidation of LIP-H as of January 6, 2009. The assets of LIP-H consist of eight operating office and retail projects and a mezzanine loan to LIP Development (LIP-D), an entity related to Lauth (the other venture partner of LIP-H). The mezzanine loan to LIP-D was secured primarily by partnership interests owning development projects at various stages of completion, including vacant land.


On April 27, 2009, the Company took actions through LIP-H to secure the collateral and protect LIP-H’s rights under the mezzanine loan. On May 1, 2009, the borrowers under the mezzanine loan filed for bankruptcy protection. LIP-H is in the process of asserting its rights under the mezzanine loan and initiating actions to protect its collateral.


The Company’s control of LIP-H was accounted as a business combination, which required the Company to record the assets and liabilities of LIP-H at fair value. The Company valued the eight operating properties using a discounted cash flow model, including discount rates and capitalization rates on the expected future cash flows of the properties. The Company estimated fair value of the debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments. The mezzanine loan was based on the expected contractual cash flows discounted using a rate adjusted for the risks associated with the bankruptcy and litigation process and time and effort in working through a bankruptcy to access the collateral under the mezzanine loan. The bankruptcy will most likely extend the development and leasing timeline and cost for the collateral as third party lenders, contractors and potential tenants are expected to not be willing to transact with an entity during the bankruptcy process or will need significant cost concessions as additional risk consideration. These factors resulted in the valuation of the mezzanine loan at $10,200 and loss on a consolidated investment of $148,887. The Company also valued the non-controlling interest in LIP-H at zero. No consideration was given by the Company as part of this consolidation.


The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:


Investments in properties

$

124,187

Notes receivable

 

10,200

Cash

 

1,757

Other assets

 

1,299

Total assets acquired

$

137,443

Debt

 

96,763

Other liabilities

 

3,584

Net assets acquired

$

37,096


The following table summarizes the investment in LIP-H from December 31, 2008 to January 6, 2009.


Investments in unconsolidated entities at December 31, 2008

$

185,983 

Loss on consolidated investment

$

(148,887)

Net assets acquired at January 6, 2009

$

37,096 


RLJ Acquisition


On February 8, 2008, the Company consummated the merger among its wholly-owned subsidiary, Inland American Urban Hotels, Inc., and RLJ Urban Lodging Master, LLC and related entities, referred to herein as "RLJ." RLJ owned twenty-two full and select service lodging properties at the time of the merger. This portfolio includes, among others, four Residence Inn® by Marriott hotels,



-83-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



four Courtyard by Marriott® hotels, four Hilton Garden Inn® hotels and two Embassy Suites® hotels, containing an aggregate of 4,059 rooms.


The transaction valued RLJ at approximately $932,200 which included (i) the purchase of 100% of the outstanding membership interests of RLJ for $466,419; (ii) an acquisition fee paid to the Business Manager of $22,326; (iii) professional fees and other transactional costs of $1,944; (iv) the assumption of $426,654 of mortgages payable; (v) the assumption of $2,481 accounts payable and accrued liabilities; and (vi) interest rate swap breakage and loan fees of $12,376. The Company also funded $22,723 in working capital and lender escrows. Goodwill related to the acquisition was $38,170 and was allocated to three of the twenty-two hotels. Goodwill was tested for impairment under ASC 350 (formerly SFAS 142), and an impairment charge of $11,199 was recorded for the year ended December 31, 2008. At December 31, 2007, the Company had deposited $45,000 in an earnest money deposit that was included in other assets. The deposit was used to complete the RLJ merger.


The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:


Investments in properties

$

888,062

Goodwill

$

38,170

Other assets

$

5,968

Total assets acquired

$

932,200

Debt

$

426,654

Other liabilities

$

2,481

Net assets acquired

$

503,065


 (4)  Investment in Unconsolidated Entities


The entities listed below are owned by the Company and other unaffiliated parties in joint ventures. Net income, cash flow from operations and capital transactions for these properties are allocated to the Company and its joint venture partners in accordance with the respective partnership agreements. The Company's partners manage the day-to-day operations of the properties and hold key management positions. These entities are not consolidated by the Company and the equity method of accounting is used to account for these investments. Under the equity method of accounting, the net equity investment of the Company and the Company's share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and other comprehensive income.


Entity

Description

Ownership %

 

Investment at December 31, 2009

 

Investment at December 31, 2008

Net Lease Strategic Asset Fund   L.P.

Diversified portfolio of net lease   assets

85%

$

180,304 

$

201,798

 

 

 

 

 

 

 

Cobalt Industrial REIT II

Industrial portfolio

28%

 

79,511 

 

66,217

 

 

 

 

 

 

 

LIP Holdings, LLC

Diversified real estate fund

(a)

 

 

185,983

 

 

 

 

 

 

 

D.R. Stephens Institutional   Fund, LLC

Industrial and R&D assets

90%

 

70,752 

 

76,258

 

 

 

 

 

 

 

Concord Debt Holdings, LLC

Real estate loan fund

(b)

 

(9,940)

 

67,859

 

 

 

 

 

 

 

Wakefield Capital, LLC

Senior housing portfolio

(c)

 

94,872 

 

97,267

 

 

 

 

 

 

 

Other Unconsolidated Entities

Various Real Estate   Investments

Various

 

38,283 

 

47,128

 

 

 

 

 

 

 

 

 

 

$

453,782 

$

742,510


(a)

On June 8, 2007, the Company entered into the venture for the purpose of funding the development and ownership of real estate projects in the office, distribution, retail, healthcare and mixed-use markets. On January 6, 2009, the Company was



-84-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



granted a third board seat of five on the LIP Holdings, LLC board of managers. As of December 31, 2009, this joint venture is consolidated into the financial statements of the Company (See Note 3).


(b)

On August 2, 2008, the Company entered into a joint venture with Lex-Win Concord LLC, for the purpose of originating and acquiring real estate securities and real estate related loans. The carrying value of this investment is recorded up to the amount at which the Company approximately believes it is obligated to fund. See Note 16.


(c)

On July 9, 2008, the Company invested $100,000 in Wakefield Capital, LLC in exchange for a Series A Convertible Preferred Membership interest and is entitled to a 10.5% preferred dividend. Wakefield owns 117 senior living properties containing 7,298 operating units/beds, one medical office building and a research campus totaling 313,204 square feet.


Combined Financial Information


The Company's carrying value of its investment in unconsolidated entities differs from its share of the partnership or members equity reported in the combined balance sheet of the unconsolidated entities because the Company's cost of its investment exceeds the historical net book values of the unconsolidated entities. The Company's additional basis allocated to depreciable assets is recognized on a straight-line basis over 30 years.


 

 

December 31,

 

 

2009

 

2008

Balance Sheets:

 

 

 

 

Assets:

 

 

 

 

Real estate, net of accumulated depreciation

$

2,208,528

$

2,354,601 

Real estate debt and securities investments

 

599,617

 

984,158 

Other assets

 

313,381

 

481,621 

 

 

 

 

 

Total Assets

$

3,121,526

$

3,820,380 

 

 

 

 

 

Liabilities and Equity:

 

 

 

 

 

 

 

 

 

Mortgage debt

$

2,014,152

$

2,210,938 

Other liabilities

 

113,637

 

129,360 

Equity

 

993,737

 

1,480,082 

 

 

 

 

 

Total Liabilities and Equity

$

3,121,526

$

3,820,380 

 

 

 

 

 

Company’s share of equity

$

437,671

$

724,197 

Net excess of cost of investments over the net book   value of underlying net assets (net of accumulated   depreciation of $1,362 and $775, respectively)

 

16,111

 

18,313 

 

 

 

 

 

Carrying value of investments in unconsolidated entities

$

453,782

$

742,510 


 

 

December 31,

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

Statements of Operations:

 

 

 

 

 

 

Revenues

$

282,708 

$

248,406 

$

115,518 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Interest expense and loan cost amortization

$

104,854 

$

82,381 

$

31,137 

Depreciation and amortization

 

111,389 

 

85,279 

 

31,684 

Operating expenses, ground rent and general and   administrative expenses

 

125,247 

 

89,283 

 

63,657 

Impairments

 

197,949 

 

67,614 

 



-85-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007






 

 

December 31,

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

Total expenses

$

539,439 

$

324,557 

$

126,478 

 

 

 

 

 

 

 

Net income (loss) before gain on sale of real estate

$

(256,731)

$

(76,151)

$

(10,960)

Gain on sale of real estate

 

13,799 

 

 

15,866 

 

 

 

 

 

 

 

Net income (loss)

$

(242,932)

$

(76,151)

$

4,906 

 

 

 

 

 

 

 

Company’s share of:

 

 

 

 

 

 

Net income (loss), net of excess basis depreciation   of $587, $381 and $394

$

(78,487)

$

(46,108)

$

4,477 

Depreciation and amortization (real estate   related)

$

41,300 

$

53,761 

$

6,538 


Feldman is included in the results of 2007, but not in the 2008 or 2009 results, as the value of the Company’s investment was reduced to $0 during the year ended December 31, 2008.


In the table above, the balances as of December 31, 2008 and for the year ended December 31, 2008 include amounts for LIP-H, which has been consolidated as of January 6, 2009 (See Note 3).


The unconsolidated entities had total third party debt of $2,014,152 at December 31, 2009 that matures as follows:


2010

$

354,064

2011

 

139,771

2012

 

405,714

2013

 

145,449

2014

 

145,530

Thereafter

 

823,624

 

 

 

 

$

2,014,152


The debt maturities of the unconsolidated entities are not recourse to the Company and the Company has no obligation to fund, except for remaining commitments (Note 16), however, it is anticipated that the ventures will be able to repay or refinance all of their debt on a timely basis.


 (5) Noncontrolling Interests


On January 1, 2009, the Company adopted the new requirements of ASC 810 as it relates to noncontrolling interests (formerly SFAS No. 160 Noncontrolling Interests in Consolidated Financial Statements — an amendment of Accounting Research Bulletin (ARB) No. 51). The new requirements of ASC 810 amend prior accounting and reporting standards for the noncontrolling interest (previously referred to as a minority interest) in a subsidiary. ASC 810 generally requires noncontrolling interests to be treated as a separate component of equity (not as a liability or other item outside of permanent equity) and consolidated net income and comprehensive income to include the noncontrolling interest’s share. The calculation of earnings per share continues to be based on income amounts attributable to the parent. ASC 810 also contains a single method of accounting for transactions that change a parent’s ownership interest in a subsidiary by requiring that all such transactions be accounted for as equity transactions if the parent retains its controlling financial interest in the subsidiary.


The consolidated financial statements presented include reclassifications to previously reported amounts to conform to the new presentation requirements of ASC 810. These reclassifications did not affect the amounts previously reported as net income attributable to common shareowners or earnings per share.


As of December 31, 2009 and 2008, noncontrolling interests in the Company are comprised of the ownership interests of (1) noncontrolling redeemable interests (Series A Preferred Interest) and other interests in Minto Builders (Florida), Inc. (MB REIT), and (2) noncontrolling interests in various joint ventures controlled by the Company through ownership or contractual arrangements.



-86-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



Balances attributable to these noncontrolling interests are reclassified either as a separate component of equity or outside of permanent equity, as appropriate, as of all dates presented.


The Series A Preferred Interest in MB REIT is subject to redemption features outside of the Company's control that results in presentation outside of permanent equity, reported at greater of carrying value or redemption value. The noncontrolling interest is reported at its redemption value as noncontrolling redeemable interests in the Company's consolidated financial statements with a balance of $264,132 as of December 31, 2009 and December 31, 2008.


 (6)  Fair Value of Financial Instruments


The table below represents the fair value of financial instruments as of December 31, 2009 and 2008.


 

 

December 31, 2009

 

December 31, 2008

 

 

Carrying Value

 

Estimated Fair Value

 

Carrying Value

 

Estimated Fair Value

Mortgages payable

$

5,056,398

$

4,872,189

$

4,405,558

$

4,268,709

Margins payable

$

28,302

$

28,302

$

38,346

$

38,346

Notes receivable

$

423,478

$

416,520

$

480,774

$

478,561


The Company estimates the fair value of its mortgages and margins payable by discounting the future cash flows of each instrument at rates currently offered to the Company for similar debt instruments of comparable maturities by the Company's lenders. The Company estimates the fair value of its notes receivable by discounting the future cash flows of each instrument at rates currently available to the Company for similar instruments or in the case of certain impaired loans, by determining the fair value of the collateral supporting the loan. At December 31, 2009 and 2008, the carrying amounts of certain of the Company’s other financial instruments were representative of their fair values due to the short-term nature of these instruments.  


 (7)  Transactions with Related Parties


The following table summarizes the Company’s related party transactions for the years ended December 31, 2009, 2008 and 2007.


 

 

For the years ended

 

Unpaid amount as of

 

 

December 31, 2009

December 31, 2008

December 31, 2007

 

December 31, 2009

December 31, 2008

General and administrative:

 

 

 

 

 

 

 

General and administrative   reimbursement

(a)

$8,975 

$7,020

$2,812

 

$1,876 

$2,401 

Loan servicing

(b)

480 

343

169

 

Affiliate share purchase   discounts

(c)

14 

126

1,311

 

Investment advisor fee

(d)

1,319 

2,162

2,120

 

118 

197 

Total general and administrative   to related parties

 

$10,788 

$9,651

$6,412

 

$1,994 

$2,598 


 

 

 

For the years ended

 

 

Unpaid amount as of

 

 

 

December 31, 2009

 

December 31, 2008

 

December 31, 2007

 

 

December 31, 2009

 

December 31, 2008

Property management fees

(e)

$

26,413 

$

20,553

$

15,128

 

$

18 

$

Business manager fee

(f)

$

39,000 

$

18,500

$

9,000

 

$

12,000 

$

Acquisition reimbursements   capitalized

(a)

$

$

1,370

$

2,536

 

$

$

Acquisition fees

(g)

$

$

22,326

$

37,060

 

$

$

Loan placement fees

(h)

$

2,483 

$

1,798

$

2,739

 

$

$

Offering costs

(i)

$

25,660 

$

232,090

$

371,165

 

$

$

693 




-87-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



(a)

The Business Manager and its related parties are entitled to reimbursement for general and administrative expenses of the Business Manager and its related parties relating to the Company's administration.


(b)

A related party of the Business Manager provides loan servicing to the Company for an annual fee. Effective May 1, 2009, the loan servicing fees were reduced to 200 dollars per month, per loan for the Company’s non-lodging properties. The Company’s lodging properties will continue to be billed at 225 dollars per month, per loan and MB REIT properties at 200 dollars per month, per loan.


(c)

The Company established a discount stock purchase policy for related parties and related parties of the Business Manager that enables the related parties to purchase shares of common stock at either $8.95 or $9.50 a share depending on when the shares are purchased. The Company sold 18,067, 142,396 and 2,078,364 shares to related parties and recognized an expense related to these discounts of $14, $126 and $1,311 for the years ended December 31, 2009, 2008 and 2007, respectively.


(d)

The Company pays a related party of the Business Manager to purchase and monitor its investment in marketable securities.


(e)

The property manager, an entity owned principally by individuals who are related parties of the Business Manager, is entitled to receive property management fees up to 4.5% of gross operating income (as defined), for management and leasing services. Of the $26,413 paid for the year ended December 31, 2009, $900 was capitalized for certain services provided by the leasing department and is included in deferred costs, net on the consolidated balance sheet. Of the $20,553 and $14,328 paid for the years ended December 31, 2008 and 2007, $800 and $0 was capitalized, respectively. In addition, the property manager is entitled to receive an oversight fee of 1% of gross operating income (as defined) in operating companies purchased by the Company.


(f)

After the Company's stockholders have received a non-cumulative, non-compounded return of 5% per annum on their "invested capital," the Company pays its Business Manager an annual business management fee of up to 1% of the "average invested assets," payable quarterly in an amount equal to 0.25% of the average invested assets as of the last day of the immediately preceding quarter. For these purposes, "invested capital" means the original issue price paid for the shares of the common stock reduced by prior distributions from the sale or financing of properties. For these purposes, "average invested assets" means, for any period, the average of the aggregate book value of assets, including lease intangibles, invested, directly or indirectly, in financial instruments, debt and equity securities and equity interests in and loans secured by real estate assets, including amounts invested in REITs and other real estate operating companies, before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the period.  The Company will pay this fee for services provided or arranged by the Business Manager, such as managing day-to-day business operations, arranging for the ancillary services provided by other related parties and overseeing these services, administering bookkeeping and accounting functions, consulting with the board, overseeing  real estate assets and providing other services as the board deems appropriate. This fee terminates if the Company acquires the Business Manager. Separate and distinct from any business management fee, the Company also will reimburse the Business Manager or any related party for all expenses that it, or any related party including the sponsor, pays or incurs on its behalf including the salaries and benefits of persons employed by the Business Manager or its related parties and performing services for the Company except for the salaries and benefits of persons who also serve as one of the executive officers of the Company or as an executive officer of the Business Manager.  For any year in which the Company qualifies as a REIT, its Business Manager must reimburse it for the amounts, if any, by which the total operating expenses paid during the previous fiscal year exceed the greater of: 2% of the average invested assets for that fiscal year; or 25% of net income for that fiscal year, subject to certain adjustments described herein. For these purposes, items such as organization and offering expenses, property expenses, interest payments, taxes, non-cash charges, any incentive fees payable to the Business Manager and acquisition fees and expenses are excluded from the definition of total operating expenses. For the years ended December 31, 2009, 2008 and 2007, average invested assets were $10,358,444, $8,445,009 and $4,587,822 and operating expenses, as defined, were $72,882, $45,860 and $24,553 or .70%, .54% and .54%, respectively, of average invested assets. The Company incurred fees of $39,000, $18,500 and $9,000 for the years ended December 31, 2009, 2008, 2007, respectively, of which $12,000 and $0 remained unpaid as of December 31, 2009 and December 31, 2008, respectively. The Business Manager has agreed to waive all fees allowed but not taken, except for the $39,000, $18,500 and $9,000 for the years ended December 31, 2009, 2008 and 2007.


(g)

The Company pays the Business Manager a fee for services performed in connection with acquiring a controlling interest in a REIT or other real estate operating company. Acquisition fees, however, are not paid for acquisitions solely of a fee interest in a property. The amount of the acquisition fee is equal to 2.5% of the aggregate purchase price paid to acquire the controlling interest and, prior to 2009, is capitalized as part of the purchase price of the company.



-88-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007




(h)

The Company pays a related party of the Business Manager 0.2% of the principal amount of each loan placed for the Company. Such costs are capitalized as loan fees and amortized over the respective loan term.


(i)

The Business Manager and its related parties are entitled to reimbursement for salaries and expenses of employees of the Business Manager and its related parties relating to the offerings. In addition, a related party of the Business Manager is entitled to receive selling commissions, and the marketing contribution and due diligence expense allowance from the Company in connection with the offerings. Such costs are offset against the stockholders' equity accounts.


As of December 31, 2009, the Company had deposited $25,311 in Inland Bank and Trust, a subsidiary of Inland Bancorp, Inc., an affiliate of The Inland Real Estate Group, Inc.


On February 24, 2009, the Company purchased 35,000 Inland Real Estate Corporation (IRC) convertible bonds for $24,959 with a face value of $35,000 from an unaffiliated third party. The Company sold these bonds in the third quarter of 2009 for a total gain of $6,000.


On April 30, 2009, the Company purchased two properties from Inland Western Retail Real Estate Trust, Inc. (“Inland Western”), another REIT previously sponsored by Inland Real Estate Investment Corporation, for approximately $99,000. The Company assumed debt of $63,100, with a rate of 4.3% per annum in the transaction. On June 24, 2009, the Company purchased a property from Inland Western for approximately $62,600. The Company assumed debt of $44,500, with a rate of 5.34% per annum in the transaction.


 (8)  Notes Receivable


The Company's notes receivable balance was $423,478 and $480,774 as of December 31, 2009 and December 31, 2008, respectively, and consisted of installment notes from unrelated parties that mature on various dates through July 2012. The notes are secured by mortgages on vacant land, shopping centers and hotel properties and certain loans guaranteed by the owners. Interest is due each month at rates ranging from 1.86% to 9.50% per annum. For the years ended December 31, 2009, 2008 and 2007, the Company recorded interest income from notes receivable of $26,355, $27,614 and $18,423, which is included in the interest and dividend income on the consolidated statements of operations and other comprehensive income.


Ten of the Company’s mortgage notes receivable, with an aggregate book value (after impairment) of $243,009 are considered impaired. The Company evaluates the collectibility of the notes, including an evaluation of the fair value of the collateral, which includes the review of third party appraisals. The Company recorded $74,136 of impairment on six of these notes receivable for the year ended December 31, 2009. The remaining book value of these six notes receivable, after impairment charges, aggregates to $11,500. The Company determined the amount of impairment to recognize based on a determination of the fair value of the underlying collateral based on appraisals as of or near December 31, 2009 or an estimate of expected discounted cash flows. No impairment was recorded on the remaining impaired notes receivable of $231,509, as the fair value of the underlying collateral was in excess of the carrying value, based on appraisals at or near December 31, 2009. The impaired loans generated $14,479 of interest income for the year ended December 31, 2009.  


(9)  Investment in Marketable Securities


Investment in marketable securities of $217,061 and $229,149 at December 31, 2009 and 2008 consists of primarily preferred and common stock investments in other REITs and certain real estate related bonds which are classified as available-for-sale securities and recorded at fair value.


The Company also has investments in commercial mortgage backed securities that have a fair value of $9,551 as of December 31, 2009 and are included in investment in marketable securities balance of $217,061. The balance as of December 31, 2008 was $22,615.


Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported as a separate component of comprehensive income until realized. Of the investment securities held on December 31, 2009, the Company has accumulated other comprehensive gain of $39,753, which includes gross unrealized losses of $3,696. All such unrealized losses on investments have been in an unrealized loss position for less than twelve months and such investments have a related fair value of $58,462 as of December 31, 2009.




-89-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



During the year ended December 31, 2009, the Company recorded an impairment of $4,038 compared to $246,164 for the year ended December 31, 2008 for other-than-temporary declines on certain available-for-sale securities, which is included as a component of realized gain (loss) and impairment on securities, net on the consolidated statements of operations and other comprehensive income.


Dividend income is recognized when earned. During the years ended December 31, 2009, 2008 and 2007, dividend income of $17,977, $30,942 and $22,742 was recognized and is included in interest and dividend income on the consolidated statements of operations and other comprehensive income.


 (10) Leases


Operating Leases


Minimum lease payments to be received under operating leases, excluding multi-family and lodging properties and rental income under master lease agreements and assuming no expiring leases are renewed, are as follows:


 

 

Minimum Lease

 

 

 

Payments

 

2010

$

483,925

 

2011

 

464,948

 

2012

 

435,324

 

2013

 

401,295

 

2014

 

374,928

 

Thereafter

 

1,994,821

 

 

 

 

 

Total

$

4,155,241

 


The remaining lease terms range from one year to 31 years. The majority of the revenue from the Company's properties consists of rents received under long-term operating leases. Some leases provide for the payment of fixed base rent paid monthly in advance, and for the reimbursement by tenants to the Company for the tenant's pro rata share of certain operating expenses including real estate taxes, special assessments, insurance, utilities, common area maintenance, management fees, and certain building repairs paid by the landlord and recoverable under the terms of the lease. Under these leases, the landlord pays all expenses and is reimbursed by the tenant for the tenant's pro rata share of recoverable expenses paid. Certain other tenants are subject to net leases which provide that the tenant is responsible for fixed based rent as well as all costs and expenses associated with occupancy. Under net leases where all expenses are paid directly by the tenant rather than the landlord, such expenses are not included in the consolidated statements of operations and other comprehensive income. Under leases where all expenses are paid by the landlord, subject to reimbursement by the tenant, the expenses are included within property operating expenses and reimbursements are included in tenant recovery income on the consolidated statements of operations and other comprehensive income.


Ground Leases


The Company leases land under noncancelable operating leases at certain of the properties which expire in various years from 2020 to 2084. Ground lease rent is recorded on a straight-line basis over the term of each lease. For the years ended December 31, 2009, 2008 and 2007, ground lease rent was $1,872, $1,729 and $926, respectively. Minimum future rental payments to be paid under the ground leases are as follows:


 

 

Minimum Lease

 

 

 

Payments

 

2010

 

1,071

 

2011

 

1,076

 

2012

 

1,092

 

2013

 

1,111

 

2014

 

1,138

 

Thereafter

 

56,064

 

 

 

 

 

Total

$

61,552

 




-90-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



(11) Mortgages, Notes and Margins Payable


During the year ended December 31, 2009, the following debt transactions occurred:


Property

Date of Financing

Interest per Annum

 

Amount of Loan

Maturity Date

United Healthcare Cypress

01/15/09

LIBOR + 280 bps

$

22,000

01/13/12

Brazos Ranch

01/21/09

5.67%

 

15,200

02/01/14

Sanofi-aventis (1)

01/28/09

5.75%

 

190,000

12/06/15

Fultondale Promenade

02/02/09

5.6%

 

16,900

02/01/14

Pavilions at La Quinta (1)

02/18/09

LIBOR + 185 bps

 

24,000

04/28/12

Dothan Pavilion (1)

02/18/09

LIBOR + 170 bps

 

37,200

12/18/12

Macquarie (1)

03/25/09

4.44%-5.05%

 

36,700

05/01/10-01/08/12

The Radian Apartments

04/15/09

5.85%

 

58,500

05/01/14

Home Depot – Valdosta

04/15/09

LIBOR + 350 bps (floor of 5%)

 

15,500

04/05/12

Home Depot – Birmingham

04/15/09

LIBOR + 350 bps (floor of 5%)

 

17,100

04/15/12

Macquarie (1)

04/30/09

4.44%-7.00%

 

109,500

07/01/10-05/01/28

AmEx Service Center – Greensboro (1)

04/30/09

4.27%

 

33,000

01/01/15

AmEx Service Center – Taylorsville (1)

04/30/09

4.30%

 

30,100

04/01/15

Computershare (1)

06/24/09

5.34%

 

44,500

10/02/35

McKinney Outlots

06/25/09

6.50%

 

3,400

06/25/14

Coweta Crossing

06/29/09

6.35%

 

3,100

05/29/12

Woodlands

07/08/09

5.24%

 

56,400

08/01/14

Woodlands (Parkside) (1)

09/25/09

5.15%

 

18,000

09/30/15

Macquarie

09/29/09

LIBOR + 325 bps (floor of 5.5%)

 

39,100

09/29/12

Woodlands Portfolio (Woodridge) (1)

10/02/09

5.17%

 

13,500

11/11/15

United Health Care - Fredrick, MD

12/18/09

LIBOR + 450 bps (floor of 6%)

 

18,200

12/18/16

University House - Birmingham

12/21/09

Freddie Reference Bill Index + 412 bps

 

11,800

01/01/17

Hilton Garden Inn – Morrisville, NC

12/23/09

LIBOR + 400 bps (floor of 6.5%)

 

8,000

01/01/13

Malibu Lakes

12/30/09

4.75%

 

17,900

12/30/14

Grafton Commons

12/30/09

6.10%

 

18,500

12/30/14

Woodlake Shopping Center

12/31/09

LIBOR + 350 bps (floor of 5.5%)

 

15,400

12/31/14

Total

 

 

$

873,500

 


(1)

Debt was assumed at acquisition of property


Mortgage loans outstanding as of December 31, 2009 and 2008 were $5,056,398 and $4,405,558 and had a weighted average interest rate of 4.9% and 4.97%, respectively. Mortgage premium and discount, net was a premium of $1,199 and a discount of $5,909 as of December 31, 2009 and 2008. As of December 31, 2009, scheduled maturities for the Company's outstanding mortgage indebtedness had various due dates through December 2047.



-91-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007




 

 

As of

December 31, 2009

 

Weighted average interest rate

2010

$

551,787

 

2.82%

2011

$

655,666

 

3.90%

2012

$

388,649

 

4.05%

2013

$

738,101

 

4.86%

2014

$

264,012

 

5.49%

Thereafter

$

2,458,183

 

5.69%


The Company is negotiating refinancing certain debt maturing in 2010 with the existing lenders at terms that will most likely be at higher credit spreads and lower loan to value. It is anticipated that the Company will be able to repay, refinance or extend the maturities of all of the debt on a timely basis, and the Company believes it has adequate sources of funds to meet short term cash needs related to these refinancings. Of the outstanding debt, approximately $500,000 is recourse to the Company.


Some of the mortgage loans require compliance with certain covenants, such as debt service ratios, investment restrictions and distribution limitations. Although all of the mortgage loans are current with payments, as of December 31, 2009, the Company was in default on eight loans in its LIP-H segment, with a carrying value of $77,329, which have 2010 maturities, and one loan for a consolidated joint venture with a carrying value of $27,363.


The Company has purchased a portion of its securities through margin accounts. As of December 31, 2009 and December 31, 2008, the Company has recorded a payable of $28,302 and $38,346, respectively, for securities purchased on margin. This debt bears a variable interest rate of the LIBOR plus 50 basis points. At December 31, 2009 and December 31, 2008, this rate was .585% and 1.777%. Interest expense in the amount of $168, $3,776 and $5,479 was recognized in interest expense on the consolidated statements of operations and other comprehensive income for the years ended December 31, 2009, 2008 and 2007, respectively.


(12) Derivatives


As of December 31, 2009, in connection with eight mortgages payable that have variable interest rates, the Company has entered into interest rate swap and cap agreements, with a notional value of $401,819. The Company’s interest rate swaps involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up front premium. The interest rate swaps and cap were considered highly effective as of December 31, 2009. The fair value of the Company’s swaps increased $5,220 during the year ended December 31, 2009 and is reflected in other comprehensive income (loss) on the consolidated statements of operations and other comprehensive income.


The following table summarizes interest rate swap contracts outstanding as of December 31, 2009:


Date Entered

Effective Date

End Date

Pay Fixed Rate

Receive Floating Rate Index

 

Notional Amount

 

Fair Value as of December 31, 2009

November 16, 2007

November 20, 2007

April 1, 2011

4.45%

1 month LIBOR

$

24,425

$

(1,116)

February 6, 2008

February 6, 2008

January 29, 2010

4.39%

1 month LIBOR

 

200,000

 

(373)

March 28, 2008

March 28, 2008

March 27, 2013

3.32%

1 month LIBOR

 

33,062

 

(1,299)

March 28, 2008

March 28, 2008

March 31, 2011

2.81%

1 month LIBOR

 

50,000

 

(1,268)

March 28, 2008

March 28, 2008

March 27, 2010

2.40%

1 month LIBOR

 

35,450

 

(178)

December 12, 2008

January 1, 2009

December 12, 2011

(1)    

(1)

 

20,245

 

24 

December 23, 2008

January 5, 2009

December 22, 2011

1.86%

1 month LIBOR

 

16,637

 

(185)

January 16, 2009

January 13, 2009

January 13, 2012

1.62%

1 month LIBOR

 

22,000

 

(138)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

401,819

$

(4,533)


(1) Interest rate cap at 4.75%.

 

 

 

 





-92-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



Derivative Instruments and Hedging Activities


The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.


Risk Management Objective of Using Derivatives


The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its debt funding and through the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings.


Cash Flow Hedges of Interest Rate Risk


The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company has elected to designate the interest rate swaps as cash flow hedging relationships.


The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the years ended December 31, 2009 and 2008, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the year ended December 31, 2009, the Company recorded $262 of ineffectiveness, which is included in interest expense on the consolidated statements of operations and other comprehensive income. The Company recorded $242 of ineffectiveness during the year ended December 31, 2008, which is included in interest expense on the consolidated statements of operations and other comprehensive income.


Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $3,774 will be reclassified to interest expense.


The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheet as of December 31, 2009 and December 31, 2008.




-93-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007




 

Liability Derivatives

 

As of December 31, 2009

 

As of December 31, 2008

 

Balance Sheet Location

Fair Value

  

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments   under ASC 815:

 

 

  

 

 

 

 

 

 

 

 

Interest Rate Products

Advance rent and other liabilities

$4,533

  

Advance rent and other liabilities

$9,753


The derivative instruments were reported at their fair value of $4,533 and $9,753 in advance rent and other liabilities at December 31, 2009 and December 31, 2008, respectively, with a corresponding adjustment to other comprehensive income for the unrealized gains and losses. Over time, the unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings. This reclassification will correlate with the recognition of the hedged interest payments in earnings.


The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations and other comprehensive income for the years ended December 31, 2009, 2008 and 2007:


Derivatives in ASC 815 Cash Flow Hedging Relationships

Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)

 

Location of Gain or (Loss) Reclassified from Accumulated OCI into Income

(Effective Portion)

Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)

 

Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

 

December 31,

 

 

December 31,

 

 

December 31,

  

2009

2008

2007

 

  

2009

2008

2007

 

  

2009

2008

2007

  

  

  

 

 

  

  

  

 

 

  

  

  

 

Interest Rate Products

$ 5,220

$ (9,054)

 

Interest expense

$ (8,766)

$ (3,254)

 

Interest expense

$ (262)

$ (242)

$ (1,464)


During the year ended December 31, 2009, the Company recognized additional other comprehensive gain of $5,220 to adjust the carrying amount of the interest rate swaps to fair values at December 31, 2009. During the year ended December 31, 2008, the Company recognized additional other comprehensive loss of $9,054 to adjust the carrying amount of the interest rate swaps to fair values at December 31, 2008. The interest rate swap settlements were offset by a corresponding adjustment in interest expense related to the interest payments being hedged.


Non-designated Hedges


The Company has entered into a put/call agreement as a part of the MB REIT transaction. This agreement is considered a derivative instrument and is accounted for as such. The fair value of the put/call agreement is estimated using the Black-Scholes model. The fair value of the option was $1,950 and $3,000 and is included as a liability in advance rent and other liabilities on the consolidated balance sheets as of December 31, 2009 and December 31, 2008, respectively, with $1,050 included in other income on the consolidated statements of operations and other comprehensive income at December 31, 2009. For the years ended December 31, 2008 and 2007, expense of $651 and $2,065 was included in other income on the consolidated statements of operations and other comprehensive income.


The Company does not use derivatives for trading or speculative purposes.  


 (13) Income Taxes


The Company is qualified and has elected to be taxed as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended, for federal income tax purposes commencing with the tax year ending December 31, 2005. Since the Company



-94-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



qualifies for taxation as a REIT, the Company generally will not be subject to federal income tax on taxable income that is distributed to stockholders. A REIT is subject to a number of organizational and operational requirements, including a requirement that it currently distributes at least 90% of its REIT taxable income (subject to certain adjustments) to its stockholders. If the Company fails to qualify as a REIT in any taxable year, without the benefit of certain relief provisions, the Company will be subject to federal and state income tax on its taxable income at regular corporate tax rates. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income, property or net worth and federal income and excise taxes on its undistributed income.


In 2007, the Company formed the following wholly-owned taxable REIT subsidiaries in connection with the acquisition of the lodging portfolios and student housing: Barclay Holdings, Inc., Inland American Holding TRS, Inc., and Inland American Communities Third Party, Inc. In 2008, the Company formed Inland American Lodging Garden Grove Harbor TRS, LLC in connection with an addition to the lodging portfolio. Taxable income from non-REIT activities managed through these taxable REIT subsidiaries is subject to federal, state, and local income taxes. As such, the Company’s taxable REIT subsidiaries are required to pay income taxes at the applicable rates. In addition, the Company is also subject to certain state and local taxes.


The components of income tax expense for the years ended December 31:


 

 

2009

 

 

2008

 

 

2007

 

  

Federal

 

State

 

Total

 

  

Federal

 

State

 

Total

 

 

Federal

 

State

 

Total

Current

$

(2,043)

$

1,728

$

(315)

 

$

3,216

$

2,370

$

5,586

 

$

409

$

1,127

$

1,536

Deferred

  

859

  

83

  

942

 

  

601

  

(63)

  

538

 

 

404

 

153

 

557

 

  

 

  

 

  

 

 

  

 

  

 

  

 

 

 

 

 

 

 

 

Total income tax expense (benefit)

$

(1,184)

$

1,811

$

627

 

$

3,817

$

2,307

$

6,124

 

$

813

$

1,280

$

2,093

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The components of the deferred tax assets and liabilities at December 31, 2009 and 2008 were as follows:


 

 

2009

 

2008

Net operating loss – Barclay Holding, Inc.

$

4,168 

$

4,429 

Net operating loss - Inland American Holding TRS, Inc.

 

2,736 

 

Lease acquisition costs - Barclay Holding, Inc.

 

1,883 

 

2,511 

Depreciation expense – Barclay Holding, Inc.

 

459 

 

313 

 

 

 

 

 

           Total deferred tax assets

 

9,246 

 

7,253 

 

 

 

 

 

Less:  Valuation allowance

 

(7,011)

 

(4,275)

 

 

 

 

 

Net deferred tax assets

$

2,235 

$

2,978 


Gain on sales of real estate, net of depreciation effect

$

1,408 

 

1,408 

Straight-line rents

 

 

Others

 

(30)

 

55

 

 

 

 

 

Deferred tax liabilities

$

1,385 

 

1,470 


Federal net operating loss carryforwards amounting to $18,509 begin to expire in 2023, if not utilized by then.


Deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversal of existing taxable temporary difference, future projected taxable income, and tax planning strategies. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company has



-95-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



considered various factors, including future reversals of existing taxable temporary differences, projected future taxable income and tax-planning strategies in making this assessment.


Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowance of $7,011 at December 31, 2009. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.


Uncertain Tax Positions


The Company had no unrecognized tax benefits as of or during the three year period ended December 31, 2009. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2009. The Company has no material interest or penalties relating to income taxes recognized in the consolidated statements of operations and other comprehensive income for the years ended December 31, 2009, 2008, and 2007 or in the consolidated balance sheets as of December 31, 2009 and 2008. As of December 31, 2009, all of the Company’s tax years remain subject to examination by U.S. and various state tax jurisdictions.


Distributions


For federal income tax purposes, distributions may consist of ordinary income, qualifying dividends, return of capital, capital gains or a combination thereof. Distributions to the extent of the Company’s current and accumulated earnings and profits for federal income tax purposes are taxable to the recipient as ordinary income. Distributions in excess of these earnings and profits will constitute a non-taxable return of capital rather than a dividend and will reduce the recipient’s basis in the shares.


A summary of the average taxable nature of the Company's common distributions paid for each of the years in the three year period ended December 31, 2009 is as follows:


 

 

2009

 

2008

 

2007

Ordinary income

$

0.14 

$

0.32 

$

0.33

Capital gains

 

 

 

0.06

Return of capital

 

0.37 

 

0.30 

 

0.22

 

 

 

 

 

 

 

Total distributions per share

$

0.51 

$

0.62 

$

0.61


(14)  Segment Reporting


The Company has six business segments: Office, Retail, Industrial, Lodging, Multi-family and LIP-H. The Company evaluates segment performance primarily based on net property operations. Net property operations of the segments do not include interest expense, depreciation and amortization, general and administrative expenses, noncontrolling interest expense or interest and other investment income from corporate investments.  The non-segmented assets primarily include the Company’s cash and cash equivalents, investment in marketable securities, construction in progress, investment in unconsolidated entities and notes receivable.


The Company considers LIP-H a reportable segment as of January 6, 2009 (Note 3) as the operating results of LIP-H are reviewed by the Company’s chief operating decision maker for performance and strategic decisions. The Company previously accounted for its investment in LIP-H under the equity method and as such has not revised prior period segment disclosures.


For the year ended December 31, 2009, approximately 10% of the Company’s rental revenue was generated by over 400 retail banking properties leased to SunTrust Banks, Inc  Also, as of December 31, 2009, approximately 8% of the Company’s rental revenue was generated by three properties leased to AT&T, Inc. As a result of the concentration of revenue generated from these properties, if SunTrust or AT&T were to cease paying rent or fulfilling its other monetary obligations, the Company could have significantly reduced rental revenues or higher expenses until the defaults were cured or the properties were leased to a new tenant or tenants.





-96-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



The following table summarizes net property operations income by segment for the year ended December 31, 2009.

 

 

Total

 

Office

 

Retail

 

Industrial

 

Lodging

 

Multi-Family

 

LIP-H

Property rentals

$

529,230 

$

143,210 

$

235,267 

$

71,743 

$

$

65,957 

$

13,053 

Straight-line rents

 

16,328 

 

5,693 

 

5,740 

 

4,093 

 

 

411 

 

391 

Amortization of acquired   above and below market   leases, net

 

1,688 

 

(447)

 

2,712 

 

(387)

 

 

 

(190)

Total rental income

$

547,246 

$

148,456 

$

243,719 

$

75,449 

$

$

66,368 

$

13,254 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant recovery income

 

84,237 

 

28,437 

 

50,042 

 

4,106 

 

 

295 

 

1,357 

Other property income

 

18,778 

 

6,070 

 

6,374 

 

1,083 

 

 

5,166 

 

85 

Lodging income

 

479,887 

 

 

 

 

479,887 

 

 

Total income

$

1,130,148 

$

182,963 

$

300,135 

$

80,638 

$

479,887 

$

71,829 

$

14,696 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

$

506,503 

$

45,626 

$

78,505 

$

8,170 

$

332,455 

$

36,826 

$

4,921 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

$

623,645 

$

137,337 

$

221,630 

$

72,468 

$

147,432 

$

35,003 

$

9,775 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

$

(395,501)

 

 

 

 

 

 

 

 

 

 

 

 

Business manager   management fee

$

(39,000)

 

 

 

 

 

 

 

 

 

 

 

 

General and   administrative

$

(43,499)

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other   investment income

$

55,189 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(254,308)

 

 

 

 

 

 

 

 

 

 

 

 

Loss on consolidated   investment

$

(148,887)

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

$

(627)

 

 

 

 

 

 

 

 

 

 

 

 

Other income (loss)

$

617 

 

 

 

 

 

 

 

 

 

 

 

 

Realized gain (loss) and   impairment on securities,   net

$

34,155 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of notes   receivable

$

(74,136)

 

 

 

 

 

 

 

 

 

 

 

 

Equity in loss of   unconsolidated entities

$

(78,487)

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of investment   in unconsolidated entities

$

(7,443)

 

 

 

 

 

 

 

 

 

 

 

 

Provision for asset   impairment

$

(34,051)

 

 

 

 

 

 

 

 

 

 

 

 

Provision for goodwill   impairment

$

(26,676)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(389,009)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to   noncontrolling interests

$

(8,951)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss applicable to    Company

$

(397,960)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Real estate assets, net

$

9,223,015 

$

1,741,907 

$

3,233,696 

$

921,209 

$

2,456,454 

$

747,094 

$

122,655 

  Non-segmented assets

 

2,105,196 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets

$

11,328,211 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Capital expenditures

 

48,995 

 

8,167 

 

4,090 

 

85 

 

34,929 

 

795 

 

929 



-97-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



The following table summarizes net property operations income by segment for the year ended December 31, 2008.

 

 

Total

 

Office

 

Retail

 

Industrial

 

Lodging

 

Multi-Family

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

$

398,417 

$

104,900 

$

196,060 

$

66,887 

$

$

30,570 

Straight-line rents

 

17,457 

 

5,259 

 

6,986 

 

5,015 

 

 

197 

Amortization of acquired above   and below market leases, net

 

2,408 

 

(749)

 

3,545 

 

(388)

 

 

Total rentals

$

418,282 

$

109,410 

$

206,591 

$

71,514 

$

$

30,767 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant recoveries

 

74,169 

 

27,034 

 

43,411 

 

3,759 

 

 

(35)

Other income

 

26,703 

 

5,733 

 

3,322 

 

15,133 

 

 

2,515 

Lodging operating income

 

531,584 

 

 

 

 

531,584 

 

Total revenues

$

1,050,738 

$

142,177 

$

253,324 

$

90,406 

$

531,584 

$

33,247 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

469,695 

 

41,959 

 

65,722 

 

7,095 

 

337,888 

 

17,031 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

$

581,043 

$

100,218 

$

187,602 

$

83,311 

$

193,696 

$

16,216 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

$

(320,792)

 

 

 

 

 

 

 

 

 

 

Business manager management   fee

$

(18,500)

 

 

 

 

 

 

 

 

 

 

General and administrative

$

(34,087)

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

$

81,274 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(231,822)

 

 

 

 

 

 

 

 

 

 

Income tax expense

$

(6,124)

 

 

 

 

 

 

 

 

 

 

Other income

$

211 

 

 

 

 

 

 

 

 

 

 

Realized loss and impairment on   securities, net

$

(262,105)

 

 

 

 

 

 

 

 

 

 

Provision for asset impairment

$

(33,809)

 

 

 

 

 

 

 

 

 

 

Provision for goodwill   impairment

$

(11,199)

 

 

 

 

 

 

 

 

 

 

Gain on extinguishment of debt

$

7,760

 

 

 

 

 

 

 

 

 

 

Equity in loss of unconsolidated   entities

$

(46,108)

 

 

 

 

 

 

 

 

 

 

Impairment of investment in   unconsolidated entities

$

(61,993)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(356,251)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to   noncontrolling interests

$

(8,927)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss applicable to Company

$

(365,178)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

    Real estate assets, net

$

8,204,466 

$

1,407,113 

$

2,849,229 

$

863,938 

$

2,565,472 

$

518,714 

    Non-segmented assets

 

2,932,400 

 

 

 

 

 

 

 

 

 

 

Total assets

$

11,136,866 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Capital expenditures

 

94,171 

 

11,741 

 

2,260 

 

520 

 

79,647 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



-98-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



The following table summarizes net property operations income by segment for the year ended December 31, 2007.


 

 

Total

 

Office

 

Retail

 

Industrial

 

Lodging

 

Multi-Family

 

 

 

 

 

 

 

 

 

 

 

 

 

Property rentals

$

267,816 

$

93,965 

$

116,557 

$

43,789 

$

$

13,505 

Straight-line rents

 

12,765 

 

5,513 

 

3,670 

 

3,582 

 

 

Amortization of acquired above   and below market leases, net

 

155 

 

(714)

 

1,201 

 

(332)

 

 

Total rentals

$

280,736 

$

98,764 

$

121,428 

$

47,039 

$

$

13,505 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tenant recoveries

 

59,587 

 

25,027 

 

32,210 

 

2,350 

 

 

Other income

 

12,021 

 

4,782 

 

1,021 

 

4,797 

 

 

1,421 

Lodging operating income

 

126,392 

 

 

 

 

126,392 

 

Total revenues

$

478,736 

$

128,573 

$

154,659 

$

54,186 

$

126,392 

$

14,926 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

174,755 

 

37,336 

 

44,708 

 

5,017 

 

80,628 

 

7,066 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net property operations

$

303,981 

$

91,237 

$

109,951 

$

49,169 

$

45,764 

$

7,860 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

$

(174,163)

 

 

 

 

 

 

 

 

 

 

Business manager management   fee

$

(9,000)

 

 

 

 

 

 

 

 

 

 

General and administrative

$

(19,466)

 

 

 

 

 

 

 

 

 

 

Interest and dividend income

$

84,288 

 

 

 

 

 

 

 

 

 

 

Interest expense

$

(108,060)

 

 

 

 

 

 

 

 

 

 

Income tax expense

$

(2,093)

 

 

 

 

 

 

 

 

 

 

Other income (loss)

$

(4,611)

 

 

 

 

 

 

 

 

 

 

Equity in earnings of   unconsolidated entities

$

4,477 

 

 

 

 

 

 

 

 

 

 

Impairment of investment in   unconsolidated entities

 

(10,084)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

65,269 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

$

(9,347)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to   Company

$

55,922 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 






-99-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



 (15) Earnings (loss) per Share


Basic earnings (loss) per share ("EPS") are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the "common shares"). Diluted EPS is computed by dividing net income (loss) by the common shares plus potential common shares issuable upon exercising options or other contracts. There are an immaterial amount of potentially dilutive common shares.


The basic and diluted weighted average number of common shares outstanding was 811,400,035, 675,320,438 and 396,752,280 for the years ended December 31, 2009, 2008 and 2007.


(16)  Commitments and Contingencies


The Company has closed on several properties which have earnout components, meaning the Company did not pay for portions of these properties that were not rent producing. The Company is obligated, under certain agreements, to pay for those portions when the tenant moves into its space and begins to pay rent. The earnout payments are based on a predetermined formula. Each earnout agreement has a limited obligation period to pay any additional monies. If at the end of the time period allowed certain space has not been leased and occupied, the Company will own that space without any further obligation. Based on pro forma leasing rates, the Company may pay as much as $32,404 in the future as vacant space covered by earnout agreements is occupied and becomes rent producing.


As of December 31, 2009, the Company had outstanding commitments to fund approximately $79,815 into joint ventures. The Company intends on funding these commitments with cash on hand of $500,491.


Additionally, as of December 31, 2009, the Company has commitments totaling $94,916 for various development projects.


Certain leases and operating agreements within the lodging segment require the Company to reserve funds relating to replacements and renewals of the hotels’ furniture, fixtures and equipment. As of December 31, 2009, the Company has funded $41,465 in reserves for future improvements. This amount is included in restricted cash and escrows on the consolidated balance sheet as of December 31, 2009.


Contemporaneous with the Company’s merger with Winston Hotels, Inc., its wholly-owned subsidiary, Inland American Winston Hotels, Inc., referred to herein as “Inland American Winston,” WINN Limited Partnership, or “WINN,” and Crockett Capital Corporation, or “Crockett,” memorialized in a development memorandum their intentions to subsequently negotiate and enter into a series of contracts to develop certain hotel properties, including without limitation a Westin Hotel in Durham, North Carolina, a Hampton Inn & Suites/Aloft Hotel in Raleigh, North Carolina, an Aloft Hotel in Chapel Hill, North Carolina and an Aloft Hotel in Cary, North Carolina (collectively referred to herein as the “development hotels”).


On March 6, 2008, Crockett filed an amended complaint in the General Court of Justice of the State of North Carolina against Inland American Winston and WINN. The amended complaint alleges that the development memorandum reflecting the parties’ intentions regarding the development hotels was instead an agreement that legally bound the parties. The amended complaint further claims that Inland American Winston and WINN breached the terms of the alleged agreement by failing to take certain actions to develop the Cary, North Carolina hotel and by refusing to convey their rights in the three other development hotels to Crockett. The amended complaint seeks, among other things, monetary damages in an amount not less than $4,800 with respect to the Cary, North Carolina property. With respect to the remaining three development hotels, the amended complaint seeks specific performance in the form of an order directing Inland American Winston and WINN to transfer their rights in the hotels to Crockett or, alternatively, monetary damages in an amount not less than $20,100. Inland American Winston and WINN deny these claims and, on March 26, 2008, filed a motion to dismiss the amended complaint. On March 13, 2009, the court denied the motion to dismiss. Inland American Winston and WINN have filed answers and affirmative defenses to the amended complaint as well as counter claims against Crockett. Contemporaneously with the close of fact discovery, Crockett sought leave to amend its complaint to add another cause of action and to seek treble damages and attorneys fees. The court has not yet ruled on this request. Expert discovery has commenced, but has not yet been completed. Based upon an expert report recently received from Crockett, it is believed that Crockett’s maximum claim, without the inclusion of treble damages or attorneys fees, is approximately $16,800. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate an amount or range of potential loss that could result if an unfavorable outcome occurs.




-100-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



On May 22, 2009, Inland American Concord (Sub), LLC (“IA Sub”) filed an action against Lex-Win Concord LLC (“Concord”) in the Delaware Court of Chancery seeking a declaration in connection with certain of the Company’s rights/obligations under the Limited Liability Company Agreement (“Agreement”) that governs this venture. IA Sub filed this action, in part, due to a capital call demanded by Concord, which was, in purpose or effect, directed toward satisfying a lender’s concerns about the venture’s ability to perform under its existing credit facilities. IA Sub claimed, as a result of the foregoing, that it was not required to fund the capital call. In response to this action, Concord has answered and filed counterclaims against IA Sub. It claimed that IA Sub was required to fund the additional capital and it also claimed damages against IA Sub for not contributing the additional capital.  


On December 22, 2009, Lexington Realty Trust, Winthrop Realty Trust, the Company, and their respective subsidiaries entered into a settlement agreement to resolve and settle the IA Sub v. Concord action. The settlement agreement provides for, among other things, the termination of any party’s obligation to contribute capital to Concord, the allocation of distributions equally among Inland, Lexington and Winthrop in Concord, and the formation of a new entity to be owned by subsidiaries of Inland, Lexington and Winthrop. The effectiveness of the settlement agreement is conditioned on certain conditions, including the cancellation of certain CDO bonds held by Concord Debt Funding Trust. A lawsuit has been filed in the Delaware Court of Chancery, by Concord to effect such cancellation. The bonds must be cancelled by August 14, 2010, or the settlement agreement becomes null and void. If the settlement agreement becomes null and void, the Concord lawsuit set forth above will become reinstated.


On July 21 2009, Inland American (LIP) Sub, L.L.C., (“IA LIP Sub”) filed an action against Robert Lauth, Michael Curless, Gregory Gurnick, Lawrence Palmer, (collectively “the Defendants”) and Thomas Peck (the “Peck Defendant”) for civil fraud, deception, racketeering, conspiracy and other violations of law (the “Lawsuit”) in order to recover damages with regard to certain losses of IA LIP Sub which occurred as a result with IA LIP Sub’s investment LIP Holdings, L.L.C.(“Holdings”)  On September 10, 2009, the Defendants filed answers and counterclaims against IA LIP Sub claiming breach of contract, promissory estoppel, constructive fraud, and breach of duty of good faith and fair dealing, claiming that IA LIP Sub promised to contribute additional funds to Holdings.  IA LIP Sub denies all aspects of this counterclaim, and believes that it was filed, without basis in fact, in an attempt to gain leverage over IA LIP Sub in connection with the Lawsuit. On September 16, 2009, the Peck Defendant filed answers and counterclaims against IA LIP Sub claiming, inter alia, that the Lawsuit was filed against Peck for the purpose of inducing Peck to cooperate with IA LIP Sub in its prosecution of its claims against the Defendants. IA LIP Sub denies all aspects of this counterclaim. The parties are now engaged in various pre-trial motions and are undertaking discovery. The outcome of this lawsuit cannot be predicted with any certainty and management is currently unable to estimate an amount or range of potential loss that could result if an unfavorable outcome occurs.


IA LIP Sub is also a member of Holdings, an entity formed by Inland American with regard to its investment in Lauth. Lauth has defaulted in its obligation to pay dividends to IA LIP Sub, and as a result thereof, has recently received approval from the Bankruptcy Court of the Southern District of Indiana, which is administering a bankruptcy proceeding filed by various subsidiaries of Holdings that are being prosecuted by Lauth principals, that the bankruptcy stay does not apply to Holdings, and granting the right to Holdings to begin the process of liquidating Holdings in connection with the terms of the Holdings LLC agreement.  Shortly after that ruling, Lauth representatives served a notice of a claim against Holdings relating to allegations and assertions in connection with a liquidation of Holdings. Holdings believes the claim has no merit. To IA LIP Sub’s knowledge, no lawsuit has yet been filed.  


While management does not believe that an adverse outcome in the above lawsuits would have a material adverse effect on the Company’s financial condition, there can be no assurance that an adverse outcome would not have a material effect on the Company’s results of operations for any particular period.


The Company has also filed a number of eviction actions against tenants and is involved in a number of tenant bankruptcies. The tenants in some of the eviction cases may file counterclaims against the Company in an attempt to gain leverage against the Company in connection with the eviction. In the opinion of the Company, none of these counterclaims is likely to result in any material losses to the Company.


(17) Fair Value Measurements


The Company has estimated the fair value of its financial and non-financial instruments using available market information and valuation methodologies the Company believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition.


The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value



-101-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007



hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:


·

Level 1 - Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.


·

Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.


·

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.


For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of the fair value for each major category of assets and liabilities is presented below:


 

 

Fair Value Measurements at December 31, 2009

 

 

Using Quoted Prices in Active Markets for Identical Assets

 

Using Significant Other Observable Inputs

 

Using Significant Other Unobservable Inputs

Description

 

(Level 1)

 

(Level 2)

 

(Level 3)

Available-for-sale real estate equity   securities

$

207,510

 

 

Commercial mortgage backed   securities

$

 

 

9,551

    Total assets

$

207,510

 

 

9,551

 

 

 

 

 

 

 

Put/call agreement in MB REIT

$

 

 

1,950 

Derivative interest rate instruments

$

 

4,533

 

     Total liabilities

$

 

4,533

 

1,950 


At December 31, 2009 and 2008, the fair value of the available for sale real estate equity securities have been estimated based upon quoted market prices for the same or similar issues when current quoted market prices are available (Level 1). To calculate the fair value of the derivative contracts, the Company primarily uses quoted prices for similar contracts (Level 2). The fair value of the commercial mortgage backed securities (“CMBS”) that do not have current quoted market prices available has been estimated by discounting the estimated future cash flows. The lack of activity in the CMBS market has resulted in a lack of observable market inputs to use in determining fair value. The Company incorporated its own assumptions about future cash flows and the appropriate discount rate adjusted for credit and liquidity factors. In developing these assumptions, the Company incorporated the contractual terms of the securities, the type of collateral, any credit enhancements available, and relevant market data, where available (Level 3). The Company’s valuation of its put/call agreement in MB REIT is determined using present value estimates of the put liability based on probable dividend yields (Level 3).


The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements.


Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by itself and its counterparties. However, as of December 31, 2009, the Company has assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.


The following table summarizes activity for the Company’s assets measured at fair value on a recurring basis using level 3 inputs as of December 31, 2009:



-102-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007




Balance, December 31, 2008

$

22,615 

Purchases

 

2,447 

Sales

 

(16,934)

Realized gains

 

3,447 

Unrealized losses

 

(2,024) 

 

 

 

Balance, December 31, 2009

$

9,551 


Unrealized gains on investment are reflected in unrealized gain (loss) on investment securities in other comprehensive income on the consolidated statements of operations and other comprehensive income.


The Company recognized certain non-cash impairment charges to write the investments to their fair values in the year ended December 31, 2009. The fair values were determined based on discounted future cash flows, using management’s estimates of cash flows, any collateral considerations, the eventual disposition of the investments and appropriate discount and capitalization rates.


The asset groups that were impaired to fair value through this evaluation are:


 

 

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

 

Total Impairment Losses

Investment properties

$

25,218

$

34,051

Notes receivable

 

11,500

 

74,136

Investment in unconsolidated entities

 

-

 

7,443

Consolidated investment

 

137,443

 

148,887

Goodwill

 

7,761

 

26,676

 

 

 

 

 

Total

$

181,922

$

291,193


(18)  New Accounting Pronouncements


In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement No. 167 “Amendments to FASB Interpretation No. 46(R).” This Statement amends Interpretation 46(R) to eliminate certain scope exceptions previously permitted, provide additional guidance for determining whether an entity is a variable interest entity, and require companies to more frequently reassess whether they must consolidate variable interest entities. Statement No. 167 also replaces the previously required quantitative approach to determining the primary beneficiary of a variable interest entity with a requirement for an enterprise to perform a qualitative analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. Statement No. 167 is effective as of the beginning of the first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently evaluating the application of this Statement and does not expect the adoption to have a material impact on the financial position and results of operations.


 (19)  Subsequent Events


The Company paid distributions to its stockholders of $.04167 per share totaling $34,317, $34,397 and $34,476 in January, February and March 2010.


Subsequent to year end, the Company purchased 24 properties for $543,100. The Company financed these acquisitions by securing a new loan of $31,800 and assuming debt of $386,400. The remaining $124,900 was funded from cash balances.





-103-


INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Notes To Consolidated Financial Statements

(Dollar amounts in thousands, except per share amounts)


December 31, 2009, 2008 and 2007




(20) Quarterly Supplemental Financial Information (unaudited)


The following represents the results of operations, for each quarterly period, during 2009 and 2008.


 

 

2009

 

 

Dec. 31

Sept. 30

June 30

March 31

 

 

 

 

 

 

Total income

$

280,919 

286,915 

288,038 

274,276 

 

 

 

 

 

 

Net loss

 

(157,594)

(27,049)

(37,333)

(167,033)

 

 

 

 

 

 

Net loss applicable to Company

 

(159,755)

(29,458)

(39,505)

(169,242)

 

 

 

 

 

 

Net loss, per common share, basic and diluted (1)

 

(.19)

(.04)

(.05)

(.21)

 

 

 

 

 

 

Weighted average number of common shares   outstanding, basic and diluted (1)

 

821,020,633 

815,129,571 

808,952,703 

800,227,755 




 

 

2008

 

 

Dec. 31

Sept. 30

June 30

March 31

 

 

 

 

 

 

Total income

$

280,285 

263,237 

271,694 

235,522 

 

 

 

 

 

 

Net income (loss)

 

(325,486)

(12,296)

(31,905)

13,436 

 

 

 

 

 

 

Net income (loss) applicable to Company

 

(327,446)

(14,572)

(34,217)

11,057 

 

 

 

 

 

 

Net income (loss), per common share, basic and   diluted (1)

 

(.42)

(.02)

(.05)

.02 

 

 

 

 

 

 

Weighted average number of common shares   outstanding, basic and diluted (1)

 

775,350,274 

703,516,765 

637,875,067 

575,543,596 


(1)

Quarterly income per common share amounts may not total to the annual amounts due to rounding and the changes in the number of weighted common shares outstanding









-104-




INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Schedule III

Real Estate and Accumulated Depreciation


December 31, 2009


 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Retail

 

 

 

 

 

 

 

 

 

14th STREET MARKET

7,712

3,500

9,241

8

3,500

9,249

12,749

889

2007

Plano, TX

 

 

 

 

 

 

 

 

 

24 HOUR FITNESS - 249 & JONES

-

2,650

7,079

-

2,650

7,079

9,729

1,103

2005

Houston, TX

 

 

 

 

 

 

 

 

 

24 HOUR FITNESS -THE WOODLANDS

-

1,540

11,287

-

1,540

11,287

12,827

1,679

2005

Woodlands, TX

 

 

 

 

 

 

 

 

 

6101 RICHMOND AVENUE

-

1,700

1,264

-

1,700

1,264

2,964

197

2005

Houston, TX

 

 

 

 

 

 

 

 

 

825 RAND

5,767

1,700

7,931

-

1,700

7,931

9,631

703

2005

Lake Zurich, IL

 

 

 

 

 

 

 

 

 

95th and CICERO

8,949

4,500

9,910

54

4,500

9,964

14,464

465

2008

Oak Lawn, IL

 

 

 

 

 

 

 

 

 

ALCOA EXCHANGE

12,810

4,900

15,577

20

4,900

15,598

20,498

897

2008

Bryant, AR

 

 

 

 

 

 

 

 

 

ALCOA EXCHANGE II

-

1,300

5,511

-

1,300

5,511

6,811

186

2009

Benton, AR

 

 

 

 

 

 

 

 

 

ANTOINE TOWN CENTER

-

1,645

7,343

58

1,645

7,401

9,046

1,075

2005

Houston, TX

 

 

 

 

 

 

 

 

 

ASHFORD PLAZA

-

900

2,440

204

900

2,645

3,545

412

2005

Houston, TX

 

 

 

 

 

 

 

 

 

ATASCOCITA SHOPPING CENTER

-

1,550

7,994

41

1,550

8,036

9,586

1,212

2005

Humble, TX

 

 

 

 

 

 

 

 

 

BAY COLONY

-

3,190

30,828

5,291

3,190

36,119

39,309

4,709

2005

League City, TX

 

 

 

 

 

 

 

 

 

BEAR CREEK VILLAGE CENTER

15,065

3,523

12,384

-

3,523

12,384

15,907

307

2009

Wildomar, CA

 

 

 

 

 

 

 

 

 

BELLERIVE PLAZA

6,092

2,400

7,749

56

2,400

7,805

10,205

756

2007

Nicholasville, KY

 

 

 

 

 

 

 

 

 

BENT TREE PLAZA

5,453

1,983

7,093

-

1,983

7,093

9,076

263

2009

Raleigh, NC

 

 

 

 

 

 

 

 

 

BI-LO - GREENVILLE

4,286

1,400

5,503

-

1,400

5,503

6,903

690

2006

Greenville, SC

 

 

 

 

 

 

 

 

 

BLACKHAWK TOWN CENTER

-

1,645

19,982

-

1,645

19,982

21,627

2,912

2005

Houston, TX

 

 

 

 

 

 

 

 

 



-105-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

BRANDON CENTRE SOUTH

16,133

5,720

19,500

102

5,720

19,602

25,322

1,884

2007

Brandon, FL

 

 

 

 

 

 

 

 

 

BROOKS CORNER

14,276

10,600

13,648

2,564

10,600

16,212

26,812

2,002

2006

San Antonio, TX

 

 

 

 

 

 

 

 

 

BUCKHEAD CROSSING

33,215

7,565

27,104

-

7,565

27,104

34,669

670

2009

Atlanta, GA

 

 

 

 

 

 

 

 

 

BUCKHORN PLAZA

9,025

1,651

11,770

710

1,651

12,479

14,130

1,493

2006

Bloomsburg, PA

 

 

 

 

 

 

 

 

 

CAMPUS MARKETPLACE

785

6,723

27,462

-

6,723

27,462

34,185

670

2009

San Marcos, CA

 

 

 

 

 

 

 

 

 

CANFIELD PLAZA

7,575

2,250

10,339

516

2,250

10,855

13,105

1,474

2006

Canfield, OH

 

 

 

 

 

 

 

 

 

CARVER CREEK

-

650

560

739

650

1,299

1,949

182

2005

Dallas, TX

 

 

 

 

 

 

 

 

 

CENTERPLACE OF GREELEY

17,175

3,904

14,715

-

3,904

14,715

18,619

407

2009

Greeley, CO

 

 

 

 

 

 

 

 

 

CHESAPEAKE COMMONS

8,950

2,669

10,839

-

2,669

10,839

13,508

1,093

2007

Chesapeake, VA

 

 

 

 

 

 

 

 

 

CHEYENNE MEADOWS

4,890

2,023

6,991

-

2,023

6,991

9,014

195

2009

Colorado Springs, CO

 

 

 

 

 

 

 

 

 

CHILI'S - HUNTING BAYOU

-

400

-

-

400

-

400

-

2005

Jacinto City, TX

 

 

 

 

 

 

 

 

 

CINEMARK - JACINTO CITY

-

1,160

10,540

-

1,160

10,540

11,700

1,603

2005

Jacinto City, TX

 

 

 

 

 

 

 

 

 

CINEMARK - WEBSTER

-

1,830

12,094

-

1,830

12,094

13,924

1,808

2005

Webster, TX

 

 

 

 

 

 

 

 

 

CINEMARK 12 - SILVERLAKE

-

1,310

7,496

-

1,310

7,496

8,806

1,100

2005

Pearland, TX

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

678

525

737

(2)

525

735

1,260

70

2007

Hamden, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

1,095

450

1,191

(4)

450

1,187

1,637

112

2007

Colchester, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

2,018

480

2,194

(7)

480

2,187

2,667

207

2007

Deep River, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

1,142

430

1,242

(4)

430

1,238

1,668

117

2007

East Lyme, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

2,435

111

2,648

(9)

111

2,640

2,751

250

2007

Montville, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

1,123

450

1,221

(4)

450

1,217

1,667

115

2007

Stonington, CT

 

 

 

 

 

 

 

 

 



-106-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) CONNECTICUT

1,150

420

1,251

(4)

420

1,247

1,667

118

2007

Stonington, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) CONNECTICUT

808

490

879

(3)

490

876

1,366

83

2007

East Hampton, CT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) DELAWARE

653

525

353

(4)

525

349

874

33

2007

Lewes, DE

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) DELAWARE

467

275

252

(3)

275

250

525

24

2007

Wilmington, DE

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) DELAWARE

393

485

212

(2)

485

210

695

20

2007

Wilmington, DE

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

3,260

1,870

2,414

(6)

1,870

2,408

4,278

228

2007

Orland Hills, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

361

450

267

(1)

450

267

717

25

2007

Calumet City, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

179

815

133

(0)

815

132

947

13

2007

Chicago, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

512

575

379

(1)

575

378

953

36

2007

Villa Park, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

786

725

582

(1)

725

580

1,305

55

2007

Westchester, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

1,443

375

1,069

(2)

375

1,066

1,441

101

2007

Olympia Fields, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) ILLINOIS

1,221

290

904

(2)

290

902

1,192

85

2007

Chicago Heights, IL

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MELLON BANK BLD

2,205

725

2,255

143

725

2,399

3,124

216

2007

Georgetown, DE

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MICHIGAN

640

500

174

-

500

174

674

16

2007

Farmington, MI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MICHIGAN

803

1,100

219

-

1,100

219

1,319

21

2007

Troy, MI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

2,407

1,050

2,121

-

1,050

2,121

3,171

201

2007

Keene, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

1,270

554

1,119

-

554

1,119

1,673

106

2007

Manchester, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

1,420

618

1,251

-

618

1,251

1,869

118

2007

Manchester, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

1,472

641

1,297

-

641

1,297

1,938

123

2007

Salem, NH

 

 

 

 

 

 

 

 

 



-107-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) NEW HAMPSHIRE

17,744

9,620

15,633

-

9,620

15,633

25,253

1,479

2007

Manchester, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

319

172

281

-

172

281

453

27

2007

Hinsdale, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

284

111

250

-

111

250

361

24

2007

Ossipee, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW HAMPSHIRE

294

176

259

-

176

259

435

25

2007

Pelham, NH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW JERSEY

821

500

466

-

500

466

966

44

2007

Haddon Heights, NJ

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW JERSEY

824

850

468

-

850

468

1,318

44

2007

Marlton, NJ

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) NEW YORK

1,156

70

1,342

-

70

1,342

1,412

127

2007

Plattsburgh, NY

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

2,333

400

1,736

-

400

1,736

2,136

164

2007

Fairlawn, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

565

450

420

-

450

420

870

40

2007

Bedford, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

641

625

477

-

625

477

1,102

45

2007

Parma, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

678

900

505

-

900

505

1,405

48

2007

Parma, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

683

750

508

-

750

508

1,258

48

2007

Parma Heights, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) OHIO

1,178

850

876

-

850

876

1,726

83

2007

South Russell, OH

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

689

50

771

(0)

50

771

821

73

2007

Altoona, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,013

85

1,134

(0)

85

1,133

1,218

107

2007

Ashley, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,022

675

1,144

(0)

675

1,144

1,819

108

2007

Brodheadsville, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,282

75

1,434

(0)

75

1,434

1,509

136

2007

Butler, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,269

1,150

1,420

(0)

1,150

1,419

2,569

134

2007

Camp Hill, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,199

500

1,342

(0)

500

1,342

1,842

127

2007

Camp Hill, PA

 

 

 

 

 

 

 

 

 



-108-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) PENNSYLVANIA

1,636

125

1,830

(0)

125

1,830

1,955

173

2007

Carnegie, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,390

40

1,555

(0)

40

1,555

1,595

147

2007

Charlerol, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,275

325

1,427

(0)

325

1,427

1,752

135

2007

Dallas, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

860

150

962

(0)

150

962

1,112

91

2007

Dallastown, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,303

260

1,458

(0)

260

1,458

1,718

138

2007

Dillsburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,479

485

1,655

(0)

485

1,655

2,140

157

2007

Drexel Hill, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

988

50

1,106

(0)

50

1,106

1,156

105

2007

Ford City, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,544

385

1,727

(0)

385

1,727

2,112

163

2007

Glenside, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

813

125

909

(0)

125

909

1,034

86

2007

Greensburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

975

300

1,092

(0)

300

1,091

1,391

103

2007

Highspire, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

902

100

1,009

(0)

100

1,009

1,109

95

2007

Homestead, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,516

300

1,697

(0)

300

1,696

1,996

161

2007

Kingston, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,240

50

1,388

(0)

50

1,388

1,438

131

2007

Kittanning, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,625

330

1,819

(0)

330

1,819

2,149

172

2007

Matamoras, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,034

100

1,157

(0)

100

1,157

1,257

109

2007

McKees Rocks, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

2,619

250

2,931

(0)

250

2,931

3,181

277

2007

Mechanicsburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

465

40

521

(0)

40

520

560

49

2007

Mercer, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,450

275

1,623

(0)

275

1,623

1,898

154

2007

Milford, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,105

600

1,237

(0)

600

1,237

1,837

117

2007

Philadelphia, PA

 

 

 

 

 

 

 

 

 



-109-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) PENNSYLVANIA

942

245

1,054

(0)

245

1,054

1,299

100

2007

Philadelphia, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,200

700

1,342

(0)

700

1,342

2,042

127

2007

Philadelphia, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,011

75

1,131

(0)

75

1,131

1,206

107

2007

Pitcairn, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

3,278

75

3,668

(1)

75

3,668

3,743

347

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,849

100

2,069

(0)

100

2,069

2,169

196

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

2,811

900

3,146

(1)

900

3,145

4,045

298

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

922

150

1,032

(0)

150

1,032

1,182

98

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

2,969

75

3,322

(1)

75

3,322

3,397

314

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,414

75

1,583

(0)

75

1,582

1,657

150

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,364

50

1,527

(0)

50

1,527

1,577

145

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

2,024

165

2,265

(0)

165

2,265

2,430

214

2007

Reading, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,194

120

1,336

(0)

120

1,336

1,456

126

2007

Reading, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,116

650

1,249

(0)

650

1,249

1,899

118

2007

Souderton, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,494

400

1,672

(0)

400

1,671

2,071

158

2007

State College, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,094

730

1,225

(0)

730

1,224

1,954

116

2007

Tannersville, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,123

150

1,257

(0)

150

1,257

1,407

119

2007

Turtle Creek, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

821

50

919

(0)

50

919

969

87

2007

Tyrone, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,152

530

1,289

(0)

530

1,289

1,819

122

2007

Upper Darby, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

861

115

964

(0)

115

964

1,079

91

2007

West Chester, PA

 

 

 

 

 

 

 

 

 



-110-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) PENNSYLVANIA

2,481

125

2,776

(0)

125

2,776

2,901

263

2007

West Hazelson, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

2,695

400

3,016

(0)

400

3,015

3,415

285

2007

York, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

597

150

668

(0)

150

668

818

63

2007

Aliquippa, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

680

750

761

(0)

750

761

1,511

72

2007

Allison Park, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

512

100

573

(0)

100

573

673

54

2007

Altoona, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

451

350

504

(0)

350

504

854

48

2007

Beaver Falls, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

506

350

567

(0)

350

567

917

54

2007

Carlisle, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

431

100

483

(0)

100

483

583

46

2007

Cranberry, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

545

275

610

(0)

275

610

885

58

2007

Erie, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

343

90

383

(0)

90

383

473

36

2007

Grove City, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

547

40

612

(0)

40

612

652

58

2007

Grove City, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

604

625

676

(0)

625

676

1,301

64

2007

Harrisburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

699

690

782

(0)

690

782

1,472

74

2007

Haertown, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

655

50

733

(0)

50

733

783

69

2007

Hollidaysburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

526

420

589

(0)

420

589

1,009

56

2007

Kutztown, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

548

650

614

(0)

650

614

1,264

58

2007

Lancaster, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

599

500

671

(0)

500

671

1,171

63

2007

Lancaster, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

481

200

538

(0)

200

538

738

51

2007

Latrobe, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

493

175

552

(0)

175

552

727

52

2007

Lititz, PA

 

 

 

 

 

 

 

 

 



-111-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) PENNSYLVANIA

575

225

644

(0)

225

644

869

61

2007

Lower Burrell, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

484

210

542

(0)

210

542

752

51

2007

Mountain Top, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

246

125

275

(0)

125

275

400

26

2007

Munhall, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

615

500

688

(0)

500

688

1,188

65

2007

New Stanton, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

863

225

966

(0)

225

966

1,191

91

2007

Oakmont, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

479

50

536

(0)

50

536

586

51

2007

Oil City, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

609

225

682

(0)

225

682

907

65

2007

Philadelphia, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,540

500

1,723

(0)

500

1,723

2,223

163

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,292

300

1,446

(0)

300

1,446

1,746

137

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,002

275

1,121

(0)

275

1,121

1,396

106

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

836

250

936

(0)

250

936

1,186

89

2007

Pittsburgh, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

714

75

799

(0)

75

799

874

76

2007

Saxonburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

373

225

417

(0)

225

417

642

39

2007

Shippensburg, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

215

200

241

(0)

200

241

441

23

2007

Slovan, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

478

325

535

(0)

325

535

860

51

2007

State College, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

581

245

650

(0)

245

650

895

62

2007

Temple, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

578

300

647

(0)

300

647

947

61

2007

Verona, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

971

1,250

1,086

(0)

1,250

1,086

2,336

103

2007

Warrendale, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

589

390

659

(0)

390

659

1,049

62

2007

West Grove, PA

 

 

 

 

 

 

 

 

 



-112-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) PENNSYLVANIA

578

600

647

(0)

600

646

1,246

61

2007

Wexford, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

865

225

968

(0)

225

968

1,193

92

2007

Wilkes-Barre, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

628

700

703

(0)

700

703

1,403

67

2007

York, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) PENNSYLVANIA

1,950

250

2,182

(0)

250

2,181

2,431

206

2007

Mount Lebanon, PA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,006

438

1,095

(2)

438

1,093

1,531

104

2007

Coventry, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,476

643

1,607

(3)

643

1,604

2,247

152

2007

Cranston, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,236

538

1,346

(3)

538

1,343

1,881

127

2007

Johnston, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,818

821

1,980

(4)

821

1,976

2,797

187

2007

North Providence, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,072

600

1,168

(2)

600

1,166

1,766

110

2007

Providence, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

1,338

666

1,457

(3)

666

1,455

2,121

138

2007

Wakefield, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

3,506

1,278

3,817

(7)

1,278

3,810

5,088

361

2007

Providence, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

14,561

2,254

15,856

(30)

2,254

15,826

18,080

1,498

2007

Warwick, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

586

375

639

(1)

375

637

1,012

60

2007

East Greenwich, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

719

472

783

(1)

472

781

1,253

74

2007

North Providence, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

647

366

705

(1)

366

703

1,069

67

2007

Rumford, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) RHODE ISLAND

603

353

657

(1)

353

655

1,008

62

2007

Warren, RI

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) VERMONT

1,013

1,270

153

-

1,270

153

1,423

14

2007

Middlebury, VT

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,210

400

1,002

(1)

400

1,001

1,401

95

2007

Ludlow, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

2,175

1,263

1,802

(2)

1,263

1,800

3,063

170

2007

Malden, MA

 

 

 

 

 

 

 

 

 



-113-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CITIZENS (CFG) MASSACHUSETTS

976

607

809

(1)

607

808

1,415

76

2007

Malden, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,518

952

1,258

(2)

952

1,256

2,208

119

2007

Medford, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

2,760

1,431

2,287

(3)

1,431

2,284

3,715

216

2007

Milton, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,719

998

1,424

(2)

998

1,422

2,420

135

2007

Randolph, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,421

743

1,177

(1)

743

1,176

1,919

111

2007

South Dennis, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,034

310

856

(1)

310

855

1,165

81

2007

Springfield, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,309

1,050

1,085

(1)

1,050

1,083

2,133

102

2007

Woburn, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

512

300

424

(1)

300

424

724

40

2007

Dorchester, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

668

440

553

(1)

440

553

993

52

2007

Needham, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

640

450

530

(1)

450

530

980

50

2007

New Bedford, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

725

595

601

(1)

595

600

1,195

57

2007

Somerville, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

293

300

243

(0)

300

242

542

23

2007

Springfield, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

859

621

712

(1)

621

711

1,332

67

2007

Tewksbury, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

636

552

527

(1)

552

526

1,078

50

2007

Watertown, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

482

350

399

(0)

350

399

749

38

2007

Wilbraham, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

994

541

824

(1)

541

823

1,364

78

2007

Winthrop, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

995

379

824

(1)

379

823

1,202

78

2007

Dedham, MA

 

 

 

 

 

 

 

 

 

CITIZENS (CFG) MASSACHUSETTS

1,246

542

1,032

(1)

542

1,031

1,573

97

2007

Hanover, MA

 

 

 

 

 

 

 

 

 

COWETA CROSSING

3,143

1,143

4,590

-

1,143

4,590

5,733

126

2009

Newnan, GA

 

 

 

 

 

 

 

 

 



-114-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

CROSS TIMBERS COURT

8,193

3,300

9,939

35

3,300

9,974

13,274

962

2007

Flower Mound, TX

 

 

 

 

 

 

 

 

 

CROSSROADS AT CHESAPEAKE SQUARE

11,210

3,970

13,732

120

3,970

13,852

17,822

1,392

2007

Chesapeake, VA

 

 

 

 

 

 

 

 

 

CUSTER CREEK VILLAGE

10,149

4,750

12,245

15

4,750

12,259

17,009

1,177

2007

Richardson, TX

 

 

 

 

 

 

 

 

 

CYFAIR TOWN CENTER

-

1,800

13,093

7

1,800

13,100

14,900

1,562

2006

Cypress, TX

 

 

 

 

 

 

 

 

 

CYPRESS TOWN CENTER

-

1,850

11,630

-

1,850

11,630

13,480

1,699

2005

Houston, TX

 

 

 

 

 

 

 

 

 

DONELSON PLAZA

2,315

1,000

3,147

-

1,000

3,147

4,147

317

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

DOTHAN PAVILION

37,165

8,200

38,759

-

8,200

38,759

46,959

1,124

2009

Dothan, AL

 

 

 

 

 

 

 

 

 

EAST GATE

6,800

2,000

10,305

-

2,000

10,305

12,305

1,033

2007

Aiken, SC

 

 

 

 

 

 

 

 

 

ELDRIDGE LAKES TOWN CENTER

-

1,400

14,048

28

1,400

14,076

15,476

1,683

2006

Houston, TX

 

 

 

 

 

 

 

 

 

ELDRIDGE TOWN CENTER

-

3,200

16,663

143

3,200

16,806

20,006

2,546

2005

Houston, TX

 

 

 

 

 

 

 

 

 

FABYAN RANDALL PLAZA

13,405

2,400

22,198

(113)

2,400

22,085

24,485

2,704

2006

Batavia, IL

 

 

 

 

 

 

 

 

 

FAIRVIEW MARKET

2,692

1,140

5,241

-

1,140

5,241

6,381

128

2009

Simpsonville, SC

 

 

 

 

 

 

 

 

 

FLOWER MOUND CROSSING

8,342

4,500

9,049

-

4,500

9,049

13,549

910

2007

Flower Mound, TX

 

 

 

 

 

 

 

 

 

FOREST PLAZA

2,142

3,400

14,550

161

3,400

14,711

18,111

1,210

2007

Fond du Lac, WI

 

 

 

 

 

 

 

 

 

FRIENDSWOOD SHOPPING CENTER

-

1,550

10,887

1,276

1,550

12,163

13,713

1,786

2005

Friendswood, TX

 

 

 

 

 

 

 

 

 

FURY'S FERRY

6,381

1,600

9,783

49

1,600

9,832

11,432

990

2007

Augusta, GA

 

 

 

 

 

 

 

 

 

GARDEN VILLAGE

-

3,188

16,522

-

3,188

16,522

19,710

445

2009

San Pedro, CA

 

 

 

 

 

 

 

 

 

GLENDALE HEIGHTS  I, II, III

4,705

2,220

6,399

94

2,220

6,493

8,713

772

2006

Glendale Heights, IL

 

 

 

 

 

 

 

 

 

GRAFTON COMMONS SHOPPING CENTER

18,516

7,200

26,984

-

7,200

26,984

34,184

-

2009

Grafton, WI

 

 

 

 

 

 

 

 

 



-115-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

GRAVOIS DILLON PLAZA

12,630

7,300

-

15,714

7,300

15,714

23,014

1,471

2007

High Ridge, MO

 

 

 

 

 

 

 

 

 

HERITAGE HEIGHTS

10,719

4,600

13,502

-

4,600

13,502

18,102

1,297

2007

Grapevine, TX

 

 

 

 

 

 

 

 

 

HERITAGE PLAZA - CHICAGO

15,243

6,368

8,831

(28)

6,368

8,803

15,171

220

2009

Carol Stream, IL

 

 

 

 

 

 

 

 

 

HIGHLAND PLAZA

-

2,450

15,642

-

2,450

15,642

18,092

2,235

2005

Katy, TX

 

 

 

 

 

 

 

 

 

HUNTER'S GLEN CROSSING

9,790

4,800

11,719

10

4,800

11,729

16,529

1,125

2007

Plano, TX

 

 

 

 

 

 

 

 

 

HUNTING BAYOU

-

2,400

16,265

753

2,400

17,018

19,418

2,383

2006

Jacinto City, TX

 

 

 

 

 

 

 

 

 

JAMES CENTER

12,368

4,497

16,219

-

4,497

16,219

20,716

601

2009

Tacoma, WA

 

 

 

 

 

 

 

 

 

JOSEY OAKS CROSSING

9,346

2,620

13,989

5

2,620

13,993

16,613

1,343

2007

Carrollton, TX

 

 

 

 

 

 

 

 

 

LAKEPORT COMMONS

-

7,800

39,984

1,929

7,800

41,912

49,712

3,208

2007

Sioux City, IA

 

 

 

 

 

 

 

 

 

LAKEWOOD SHOPPING CENTER

11,715

4,115

20,646

(1)

4,115

20,646

24,761

2,971

2006

Margate, FL

 

 

 

 

 

 

 

 

 

LAKEWOOD SHOPPING CTR PHASE II

-

6,340

6,996

(39)

6,340

6,957

13,297

658

2007

Margate, FL

 

 

 

 

 

 

 

 

 

LEGACY CROSSING

10,890

4,280

13,896

33

4,280

13,929

18,209

1,357

2007

Marion, OH

 

 

 

 

 

 

 

 

 

LEXINGTON ROAD

5,454

1,980

7,105

-

1,980

7,105

9,085

825

2006

Athens, GA

 

 

 

 

 

 

 

 

 

LINCOLN MALL

33,835

11,000

50,395

418

11,000

50,812

61,812

6,342

2006

Lincoln, RI

 

 

 

 

 

 

 

 

 

LINCOLN VILLAGE

22,035

13,600

25,053

251

13,600

25,304

38,904

2,919

2006

Chicago, IL

 

 

 

 

 

 

 

 

 

LORD SALISBURY CENTER

12,600

11,000

9,567

-

11,000

9,567

20,567

875

2007

Salisbury, MD

 

 

 

 

 

 

 

 

 

MARKET AT MORSE / HAMILTON

7,893

4,490

8,734

9

4,490

8,742

13,232

947

2007

Columbus, OH

 

 

 

 

 

 

 

 

 

MARKET AT WESTLAKE

4,803

1,200

6,274

79

1,200

6,353

7,553

610

2007

Westlake Hills, TX

 

 

 

 

 

 

 

 

 

MCKINNEY TC OUTLOTS

3,400

6,260

12

-

6,260

12

6,272

1

2007

McKinney, TX

 

 

 

 

 

 

 

 

 



-116-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

MERCHANTS CROSSING

11,816

3,404

11,281

-

3,404

11,281

14,685

287

2009

Englewood, FL

 

 

 

 

 

 

 

 

 

MIDDLEBURG CROSSING

6,432

2,760

7,145

46

2,760

7,192

9,952

626

2007

Middleburg, FL

 

 

 

 

 

 

 

 

 

MONADNOCK MARKETPLACE

26,785

7,000

39,008

159

7,000

39,166

46,166

5,461

2006

Keene, NH

 

 

 

 

 

 

 

 

 

NEW FOREST CROSSING II

3,438

1,490

3,922

421

1,490

4,342

5,832

461

2006

Houston, TX

 

 

 

 

 

 

 

 

 

NEWTOWN ROAD

968

574

877

(877)

574

-

574

-

2006

Virginia Beach, VA

 

 

 

 

 

 

 

 

 

NORTHWEST MARKETPLACE

19,965

2,910

30,340

31

2,910

30,371

33,281

2,747

2007

Houston, TX

 

 

 

 

 

 

 

 

 

NTB ELDRIDGE

-

960

-

-

960

-

960

-

2005

Houston, TX

 

 

 

 

 

 

 

 

 

PALM HARBOR SHOPPING CENTER

12,100

2,836

10,927

-

2,836

10,927

13,763

268

2009

Palm Coast, FL

 

 

 

 

 

 

 

 

 

PARADISE SHOPS OF LARGO

7,325

4,640

7,483

(27)

4,640

7,456

12,096

1,145

2005

Largo, FL

 

 

 

 

 

 

 

 

 

PARK WEST PLAZA

7,532

4,250

8,186

-

4,250

8,186

12,436

822

2007

Grapevine, TX

 

 

 

 

 

 

 

 

 

PARKWAY CENTRE NORTH

13,892

4,680

16,046

1,798

4,680

17,844

22,524

1,807

2007

Grove City, OH

 

 

 

 

 

 

 

 

 

PARKWAY CENTRE NORTH OUTLOT B

2,198

900

2,590

-

900

2,590

3,490

263

2007

Grove City, OH

 

 

 

 

 

 

 

 

 

PAVILION AT LAQUINTA

23,976

15,200

20,947

-

15,200

20,947

36,147

611

2009

LaQuinta, CA

 

 

 

 

 

 

 

 

 

PAVILIONS AT HARTMAN HERITAGE

23,450

9,700

28,849

1,999

9,700

30,848

40,548

2,768

2007

Independence, MO

 

 

 

 

 

 

 

 

 

PEACHLAND PROMENADE

4,791

1,742

6,502

-

1,742

6,502

8,244

240

2009

Port Charlotte, FL

 

 

 

 

 

 

 

 

 

PENN PARK

31,000

6,260

29,424

(73)

6,260

29,351

35,611

2,435

2007

Oklahoma City, OK

 

 

 

 

 

 

 

 

 

PINEHURST SHOPPING CENTER

-

625

2,157

252

625

2,409

3,034

364

2005

Humble, TX

 

 

 

 

 

 

 

 

 

PIONEER PLAZA

2,250

373

3,099

-

373

3,099

3,472

313

2007

Mesquite, TX

 

 

 

 

 

 

 

 

 

PLAZA AT EAGLE'S LANDING

5,310

1,580

7,002

1

1,580

7,003

8,583

776

2006

Stockbridge, GA

 

 

 

 

 

 

 

 

 



-117-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

POPLIN PLACE

24,586

6,100

27,790

-

6,100

27,790

33,890

1,297

2008

Monroe, NC

 

 

 

 

 

 

 

 

 

PROMENADE FULTONDALE

16,870

5,540

22,414

-

5,540

22,414

27,954

720

2009

Fultondale, AL

 

 

 

 

 

 

 

 

 

RALEIGH HILLSBOROUGH

-

2,605

-

-

2,605

-

2,605

-

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

RIVERSTONE SHOPPING CENTER

21,000

12,000

26,395

(26)

12,000

26,368

38,368

2,417

2007

Missouri City, TX

 

 

 

 

 

 

 

 

 

RIVERVIEW VILLAGE

10,121

6,000

9,649

16

6,000

9,665

15,665

930

2007

Arlington, TX

 

 

 

 

 

 

 

 

 

ROSE CREEK

3,968

1,443

5,630

-

1,443

5,630

7,073

207

2009

Woodstock, GA

 

 

 

 

 

 

 

 

 

ROSEWOOD SHOPPING CENTER

3,131

1,138

3,946

-

1,138

3,946

5,084

147

2009

Columbia, SC

 

 

 

 

 

 

 

 

 

SALTGRASS RESTAURANT-HUNTING BAYOU

-

540

-

-

540

-

540

-

2005

Jacinto City, TX

 

 

 

 

 

 

 

 

 

SARATOGA TOWN CENTER

-

1,500

12,971

101

1,500

13,071

14,571

1,874

2005

Corpus Christi, TX

 

 

 

 

 

 

 

 

 

SCOFIELD CROSSING

8,435

8,100

4,992

-

8,100

4,992

13,092

503

2007

Austin, TX

 

 

 

 

 

 

 

 

 

SHAKOPEE SHOPPING CENTER

8,800

6,900

8,583

-

6,900

8,583

15,483

1,180

2006

Shakopee, MN

 

 

 

 

 

 

 

 

 

SHALLOTTE COMMONS

6,078

1,650

9,028

58

1,650

9,086

10,736

821

2007

Shallotte, NC

 

 

 

 

 

 

 

 

 

SHERMAN PLAZA

30,275

9,655

30,982

8,343

9,655

39,324

48,979

3,880

2006

Evanston, IL

 

 

 

 

 

 

 

 

 

SHERMAN TOWN CENTER

36,191

4,850

49,273

-

4,850

49,273

54,123

5,751

2006

Sherman, TX

 

 

 

 

 

 

 

 

 

SHILOH SQUARE

3,238

1,025

3,946

-

1,025

3,946

4,971

380

2007

Garland, TX

 

 

 

 

 

 

 

 

 

SIEGEN PLAZA

35,853

9,340

20,251

55

9,340

20,306

29,646

914

2008

East Baton Rouge, LA

 

 

 

 

 

 

 

 

 

SILVERLAKE

4,750

2,031

6,975

-

2,031

6,975

9,006

195

2009

Erlanger, KY

 

 

 

 

 

 

 

 

 

SOUTHGATE VILLAGE

4,921

1,789

6,266

-

1,789

6,266

8,055

185

2009

Pelham, AL

 

 

 

 

 

 

 

 

 

SPRING TOWN CENTER

-

3,150

12,433

33

3,150

12,466

15,616

1,565

2006



-118-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Spring, TX

 

 

 

 

 

 

 

 

 

SPRING TOWN CENTER III

-

1,320

3,070

866

1,320

3,936

5,256

342

2007

Spring, TX

 

 

 

 

 

 

 

 

 

STABLES TOWN CENTER I and II

-

4,650

19,006

2,314

4,650

21,320

25,970

2,805

2005

Spring, TX

 

 

 

 

 

 

 

 

 

STATE STREET MARKET

10,450

3,950

14,184

402

3,950

14,586

18,536

1,649

2006

Rockford, IL

 

 

 

 

 

 

 

 

 

STONE CREEK

-

-

-

2,317

-

2,317

2,317

-

 

San Marcos, TX

 

 

 

 

 

 

 

 

 

STOP & SHOP - SICKLERVILLE

8,535

2,200

11,559

-

2,200

11,559

13,759

1,450

2006

Sicklerville, NJ

 

 

 

 

 

 

 

 

 

STOP N SHOP - BRISTOL

8,368

1,700

11,830

-

1,700

11,830

13,530

1,484

2006

Bristol, RI

 

 

 

 

 

 

 

 

 

STOP N SHOP - CUMBERLAND

11,531

2,400

16,196

-

2,400

16,196

18,596

2,031

2006

Cumberland, RI

 

 

 

 

 

 

 

 

 

STOP N SHOP - FRAMINGHAM

9,269

6,500

8,517

-

6,500

8,517

15,017

1,068

2006

Framingham, MA

 

 

 

 

 

 

 

 

 

STOP N SHOP - HYDE PARK

8,100

2,000

12,274

-

2,000

12,274

14,274

1,697

2006

Hyde Park, NY

 

 

 

 

 

 

 

 

 

STOP N SHOP - MALDEN

12,753

6,700

13,828

-

6,700

13,828

20,528

1,734

2006

Malden, MA

 

 

 

 

 

 

 

 

 

STOP N SHOP - SOUTHINGTON

11,145

4,000

13,938

-

4,000

13,938

17,938

1,748

2006

Southington, CT

 

 

 

 

 

 

 

 

 

STOP N SHOP - SWAMPSCOTT

11,066

4,200

13,613

-

4,200

13,613

17,813

1,707

2006

Swampscott, MA

 

 

 

 

 

 

 

 

 

STREETS OF CRANBERRY

24,425

4,300

20,215

8,181

4,300

28,396

32,696

1,951

2007

Cranberry Township, PA

 

 

 

 

 

 

 

 

 

STREETS OF INDIAN LAKES

40,800

8,825

48,679

3,278

8,825

51,957

60,782

1,978

2008

Hendersonville, TN

 

 

 

 

 

 

 

 

 

SUNCREEK VILLAGE

2,683

900

3,155

-

900

3,155

4,055

318

2007

Plano, TX

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I AL

806

675

1,018

(1)

675

1,017

1,692

78

2007

Muscle Shoals, AL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I AL

356

633

449

(0)

633

449

1,082

34

2007

Killen, AL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I DC

1,068

500

2,082

(1)

500

2,081

2,581

159

2007

Brightwood, DC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

690

1,200

603

(0)

1,200

603

1,803

46

2007



-119-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Panama City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

900

1,400

786

(0)

1,400

786

2,186

60

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

709

1,276

620

(0)

1,276

620

1,896

47

2007

Apopka, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

668

1,285

584

(0)

1,285

584

1,869

45

2007

Bayonet Point, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,006

800

879

(0)

800

879

1,679

67

2007

West Palm Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

779

600

681

(0)

600

681

1,281

52

2007

Daytona Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

611

900

534

(0)

900

534

1,434

41

2007

Sarasota, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

486

759

425

(0)

759

425

1,184

32

2007

Dade City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

410

725

359

(0)

725

359

1,084

27

2007

Pensacola, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,306

1,100

1,142

(0)

1,100

1,142

2,242

87

2007

New Smyrna Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,067

1,700

933

(0)

1,700

933

2,633

71

2007

Clearwater, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

688

1,218

601

(0)

1,218

601

1,819

46

2007

Daytona Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

662

950

579

(0)

950

579

1,529

44

2007

Deltona, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

971

1,900

849

(0)

1,900

849

2,749

65

2007

Boca Raton, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

917

900

802

(0)

900

801

1,701

61

2007

Clearwater, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

656

1,476

574

(0)

1,476

574

2,050

44

2007

Ocala, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

611

1,100

534

(0)

1,100

534

1,634

41

2007

Palm Coast, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

398

650

348

(0)

650

348

998

27

2007

Tampa, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

814

1,400

712

(0)

1,400

712

2,112

54

2007

Fort Meade, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

367

575

321

(0)

575

321

896

25

2007



-120-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Fruitland Park, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

582

953

509

(0)

953

509

1,462

39

2007

Ocala, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

882

950

771

(0)

950

771

1,721

59

2007

Ormond Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

614

1,100

537

(0)

1,100

537

1,637

41

2007

Gainesville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

419

625

366

(0)

625

366

991

28

2007

Lakeland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

733

950

641

(0)

950

641

1,591

49

2007

Hobe Sound, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

359

600

314

(0)

600

314

914

24

2007

Mulberry, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

633

1,060

553

(0)

1,060

553

1,613

42

2007

Indian Harbour Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

818

500

715

(0)

500

715

1,215

55

2007

Inverness, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,627

2,100

1,422

(0)

2,100

1,422

3,522

109

2007

Lake Mary, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

751

910

656

(0)

910

656

1,566

50

2007

Melbourne, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

600

1,000

525

(0)

1,000

524

1,524

40

2007

St. Petersburg, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

542

1,100

474

(0)

1,100

473

1,573

36

2007

Lutz, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

962

275

841

(0)

275

841

1,116

64

2007

Marianna, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

389

730

340

(0)

730

340

1,070

26

2007

Gainesville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,120

900

979

(0)

900

979

1,879

75

2007

Vero Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

883

500

772

(0)

500

772

1,272

59

2007

Mount Dora, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

972

1,800

850

(0)

1,800

850

2,650

65

2007

Sarasota, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

461

300

403

(0)

300

403

703

31

2007

New Smyrna Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

806

1,700

705

(0)

1,700

705

2,405

54

2007



-121-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Lakeland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

670

1,300

585

(0)

1,300

585

1,885

45

2007

North Palm Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

631

900

552

(0)

900

551

1,451

42

2007

Port St. Lucie, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

469

1,100

410

(0)

1,100

410

1,510

31

2007

Clearwater, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

709

1,200

620

(0)

1,200

620

1,820

47

2007

Okeechobee, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

983

650

859

(0)

650

859

1,509

66

2007

Ormond Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

823

1,100

719

(0)

1,100

719

1,819

55

2007

Osprey, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

346

601

303

(0)

601

303

904

23

2007

Panama City Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

526

975

459

(0)

975

459

1,434

35

2007

New Port Richey, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

810

1,750

708

(0)

1,750

708

2,458

54

2007

Pembroke Pines, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

823

1,023

719

(0)

1,023

719

1,742

55

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,025

1,800

896

(0)

1,800

896

2,696

68

2007

Pompano Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

537

1,030

469

(0)

1,030

469

1,499

36

2007

Jacksonville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

178

298

155

(0)

298

155

453

12

2007

Brooksville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,595

2,803

1,394

(0)

2,803

1,394

4,197

107

2007

Miami, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

660

490

577

(0)

490

577

1,067

44

2007

Rockledge, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

465

812

406

(0)

812

406

1,218

31

2007

Tampa, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,305

1,565

1,141

(0)

1,565

1,141

2,706

87

2007

Seminole, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

816

1,430

714

(0)

1,430

713

2,143

55

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

493

861

431

(0)

861

430

1,291

33

2007



-122-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Jacksonville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

874

1,500

764

(0)

1,500

764

2,264

58

2007

Ocala, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,306

2,200

1,142

(0)

2,200

1,142

3,342

87

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

383

600

335

(0)

600

335

935

26

2007

Brooksville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

871

600

761

(0)

600

761

1,361

58

2007

Spring Hill, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

867

1,000

758

(0)

1,000

758

1,758

58

2007

St. Augustine, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

789

1,050

689

(0)

1,050

689

1,739

53

2007

Port St. Lucie, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

505

850

441

(0)

850

441

1,291

34

2007

Vero Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

659

1,150

576

(0)

1,150

576

1,726

44

2007

Gulf Breeze, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,044

2,400

913

(0)

2,400

912

3,312

70

2007

Casselberry, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

1,229

2,700

1,075

(0)

2,700

1,074

3,774

82

2007

Winter Park, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

789

1,500

690

(0)

1,500

690

2,190

53

2007

Fort Pierce, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

521

600

456

(0)

600

456

1,056

35

2007

Plant City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

757

1,540

662

(0)

1,540

662

2,202

51

2007

St. Petersburg, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

756

580

661

(0)

580

660

1,240

50

2007

Ormond Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

900

1,840

786

(0)

1,840

786

2,626

60

2007

West St. Cloud, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I FL

746

1,450

652

(0)

1,450

652

2,102

50

2007

Tamarac, FL

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

562

1,050

584

0

1,050

584

1,634

45

2007

Brunswick, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

919

2,100

955

0

2,100

955

3,055

73

2007

Kennesaw, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

821

675

852

0

675

852

1,527

65

2007



-123-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Columbus, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

690

925

716

0

925

716

1,641

55

2007

Austell, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

3,207

7,184

3,329

0

7,184

3,330

10,514

254

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

728

1,375

756

0

1,375

756

2,131

58

2007

Chambleee, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

758

525

787

0

525

787

1,312

60

2007

Conyers, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,167

1,750

1,211

0

1,750

1,212

2,962

93

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

465

300

483

0

300

483

783

37

2007

Savannah, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,146

1,325

1,190

0

1,325

1,190

2,515

91

2007

Dunwoody, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

594

800

617

0

800

617

1,417

47

2007

Douglasville, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

243

325

253

0

325

253

578

19

2007

Albany, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

449

865

466

0

865

466

1,331

36

2007

Athens, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

393

250

408

0

250

408

658

31

2007

Macon, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

628

500

652

0

500

653

1,153

50

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,127

1,275

1,171

0

1,275

1,171

2,446

89

2007

Duluth, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

544

360

565

0

360

565

925

43

2007

Thomson, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

592

90

614

0

90

614

704

47

2007

Madison, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

649

325

674

0

325

674

999

51

2007

Savannah, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,079

2,025

1,120

0

2,025

1,120

3,145

86

2007

Marietta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

955

1,200

992

0

1,200

992

2,192

76

2007

Marietta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,099

1,000

1,141

0

1,000

1,141

2,141

87

2007



-124-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Cartersville, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

2,176

4,539

2,259

0

4,539

2,259

6,798

173

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

448

300

465

0

300

465

765

36

2007

Lithonia, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

995

1,500

1,034

0

1,500

1,034

2,534

79

2007

Peachtree City, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

663

575

688

0

575

688

1,263

53

2007

Stone Mountain, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,523

1,600

1,581

0

1,600

1,582

3,182

121

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

633

175

658

0

175

658

833

50

2007

Waycross, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

334

475

347

0

475

347

822

26

2007

Union City, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

445

650

462

0

650

462

1,112

35

2007

Savannah, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

846

525

878

0

525

878

1,403

67

2007

Morrow, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

381

575

396

0

575

396

971

30

2007

Norcross, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

581

869

603

0

869

603

1,472

46

2007

Stockbridge, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

433

250

449

0

250

449

699

34

2007

Stone Mountain, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

374

575

388

0

575

388

963

30

2007

Sylvester, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

1,026

1,100

1,065

0

1,100

1,065

2,165

81

2007

Evans, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I GA

283

200

294

0

200

294

494

22

2007

Thomson, GA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

1,148

1,000

1,925

(1)

1,000

1,924

2,924

147

2007

Annapolis, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

700

800

1,174

(0)

800

1,173

1,973

90

2007

Landover, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

843

600

1,414

(1)

600

1,413

2,013

108

2007

Avondale, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

872

800

1,462

(1)

800

1,461

2,261

112

2007



-125-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Cambridge, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

939

800

1,575

(1)

800

1,574

2,374

120

2007

Cockeysville, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

1,329

700

2,229

(1)

700

2,228

2,928

170

2007

Glen Burnie, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

1,475

100

2,473

(1)

100

2,473

2,573

189

2007

Annapolis, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I MD

1,036

1,100

1,737

(1)

1,100

1,737

2,837

133

2007

Prince Frederick, MD

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

522

600

844

0

600

844

1,444

64

2007

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

444

550

719

0

550

719

1,269

55

2007

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

554

190

896

0

190

896

1,086

68

2007

Apex, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

295

450

477

0

450

477

927

36

2007

Arden, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

427

400

690

0

400

690

1,090

53

2007

Asheboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

373

75

604

0

75

604

679

46

2007

Bessemer City, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

274

500

444

0

500

444

944

34

2007

Durham, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

434

550

701

0

550

702

1,252

54

2007

Charlotte, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

551

200

891

0

200

891

1,091

68

2007

Charlotte, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

566

425

915

0

425

915

1,340

70

2007

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

316

320

512

0

320

512

832

39

2007

Creedmoor, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

493

280

796

0

280

797

1,077

61

2007

Durham, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

508

400

821

0

400

822

1,222

63

2007

Dunn, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

241

550

389

0

550

389

939

30

2007

Harrisburg, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

575

450

929

0

450

929

1,379

71

2007



-126-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Hendersonville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

438

230

708

0

230

709

939

54

2007

Cary, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

640

300

1,034

0

300

1,035

1,335

79

2007

Mebane, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

1,472

175

2,380

1

175

2,381

2,556

182

2007

Lenoir, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

462

130

747

0

130

748

878

57

2007

Roxboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

382

300

617

0

300

617

917

47

2007

Winston-Salem, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

720

280

1,164

0

280

1,165

1,445

89

2007

Oxford, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

252

25

408

0

25

408

433

31

2007

Pittsboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

656

500

1,061

0

500

1,061

1,561

81

2007

Charlotte, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

347

500

561

0

500

561

1,061

43

2007

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

253

350

410

0

350

410

760

31

2007

Stanley, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

236

275

382

0

275

382

657

29

2007

Salisbury, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

295

250

477

0

250

477

727

36

2007

Stokesdale, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

276

600

446

0

600

446

1,046

34

2007

Sylva, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

147

150

237

0

150

237

387

18

2007

Lexington, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

417

140

674

0

140

674

814

51

2007

Walnut Cove, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

391

200

632

0

200

632

832

48

2007

Waynesville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

468

550

757

0

550

757

1,307

58

2007

Concord, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

582

250

941

0

250

941

1,191

72

2007

Yadkinville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

220

275

356

0

275

356

631

27

2007



-127-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Rural Hall, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I NC

296

450

479

0

450

479

929

37

2007

Summerfield, NC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

695

260

1,255

(1)

260

1,254

1,514

96

2007

Greenville, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

500

36

904

(1)

36

903

939

69

2007

Fountain Inn, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

420

80

758

(0)

80

758

838

58

2007

Liberty, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

486

350

878

(1)

350

878

1,228

67

2007

Mauldin, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

452

160

816

(0)

160

815

975

62

2007

Greenville, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

342

360

618

(0)

360

617

977

47

2007

Greenville, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I SC

660

800

1,192

(1)

800

1,192

1,992

91

2007

Greenville, SC

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

284

240

319

(0)

240

319

559

24

2007

Kingsport, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

208

370

234

(0)

370

233

603

18

2007

Morristown, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

924

1,110

1,036

(1)

1,110

1,035

2,145

79

2007

Brentwood, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

831

1,100

932

(1)

1,100

931

2,031

71

2007

Brentwood,  TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

917

1,450

1,028

(1)

1,450

1,027

2,477

78

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

312

675

350

(0)

675

350

1,025

27

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

357

250

400

(0)

250

400

650

31

2007

East Ridge, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

778

735

872

(1)

735

872

1,607

67

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

365

370

409

(0)

370

408

778

31

2007

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

756

675

848

(1)

675

847

1,522

65

2007

Lebanon, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

562

425

630

(1)

425

630

1,055

48

2007



-128-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

438

185

491

(0)

185

491

676

37

2007

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

342

410

383

(0)

410

383

793

29

2007

Loudon, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

598

1,400

671

(1)

1,400

671

2,071

51

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

351

150

394

(0)

150

393

543

30

2007

Soddy Daisy, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

647

660

725

(1)

660

725

1,385

55

2007

Oak Ridge, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

575

335

645

(1)

335

644

979

49

2007

Savannah, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

335

550

375

(0)

550

375

925

29

2007

Signal Mountain, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

528

870

593

(1)

870

592

1,462

45

2007

Smyrna, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

473

1,000

530

(1)

1,000

530

1,530

40

2007

Murfreesboro, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

237

391

265

(0)

391

265

657

20

2007

Murfreesboro, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

150

180

168

(0)

180

168

348

13

2007

Johnson City, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

248

453

278

(0)

453

278

730

21

2007

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I TN

405

620

454

(0)

620

454

1,074

35

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

193

30

260

(0)

30

260

290

20

2007

Accomac, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

226

300

306

(0)

300

306

606

23

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

1,220

1,000

1,647

(0)

1,000

1,647

2,647

126

2007

Fairfax, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

750

1,000

1,012

(0)

1,000

1,012

2,012

77

2007

Fredericksburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

217

500

292

(0)

500

292

792

22

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

285

140

384

(0)

140

384

524

29

2007



-129-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Collinsville, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

256

150

346

(0)

150

346

496

26

2007

Doswell, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

732

380

988

(0)

380

987

1,367

75

2007

Lynchburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

1,098

2,200

1,482

(0)

2,200

1,482

3,682

113

2007

Stafford, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

846

760

1,142

(0)

760

1,142

1,902

87

2007

Gloucester, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

538

450

726

(0)

450

725

1,175

55

2007

Chesapeake, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

169

310

228

(0)

310

228

538

17

2007

Lexington, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

137

90

185

(0)

90

185

275

14

2007

Radford, Va

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

405

530

547

(0)

530

547

1,077

42

2007

Williamsburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

355

860

479

(0)

860

479

1,339

37

2007

Salem, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

1,006

1,170

1,357

(0)

1,170

1,357

2,527

104

2007

Roanoke, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

470

150

634

(0)

150

634

784

48

2007

New Market, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

740

200

999

(0)

200

999

1,199

76

2007

Onancock, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

130

120

176

(0)

120

176

296

13

2007

Painter, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

686

260

926

(0)

260

926

1,186

71

2007

Stuart, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

369

450

498

(0)

450

498

948

38

2007

Roanoke, VA

 

 

 

 

 

 

 

 

 

SUNTRUST BANK I VA

180

399

243

(0)

399

243

642

19

2007

Vinton, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,537

1,533

893

3

1,533

896

2,429

66

2007

Miami, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,396

1,392

811

2

1,392

813

2,206

60

2007

Destin, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,466

1,463

852

2

1,463

855

2,318

63

2007



-130-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Dunedin, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,085

1,082

630

2

1,082

632

1,715

46

2007

Palm Harbor FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,679

1,675

976

3

1,675

979

2,654

72

2007

Tallahassee, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,224

1,221

711

2

1,221

713

1,935

52

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,432

1,429

832

2

1,429

835

2,264

61

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,130

1,127

656

2

1,127

658

1,785

48

2007

Melbourne, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,322

1,319

768

2

1,319

770

2,089

56

2007

Coral Springs, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,040

1,038

604

2

1,038

606

1,644

44

2007

Lakeland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,224

1,221

711

2

1,221

713

1,935

52

2007

Palm Coast, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,531

1,527

890

3

1,527

892

2,420

65

2007

Plant City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,391

1,388

808

2

1,388

811

2,198

59

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,028

1,026

598

2

1,026

599

1,625

44

2007

South Daytona, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,199

1,196

697

2

1,196

699

1,895

51

2007

Fort Lauderdale, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

984

982

572

2

982

574

1,556

42

2007

Pensacola, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,243

1,240

722

2

1,240

724

1,965

53

2007

West Palm Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

817

815

475

1

815

476

1,292

35

2007

Lake Wells, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

340

339

198

1

339

198

537

15

2007

Dunnellon, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,182

1,180

687

2

1,180

689

1,869

51

2007

Kissimmee, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,133

1,131

659

2

1,131

660

1,791

48

2007

Port Orange, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,121

1,119

652

2

1,119

654

1,772

48

2007



-131-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

North Port, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,098

1,095

638

2

1,095

640

1,735

47

2007

Hudson, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II FLORIDA

1,032

1,030

600

2

1,030

602

1,632

44

2007

Port Orange, FL

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,525

1,399

1,057

(37)

1,399

1,021

2,420

75

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

981

900

680

(24)

900

657

1,557

48

2007

Bowden, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

480

440

333

(12)

440

321

761

24

2007

Cedartown, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,225

1,124

849

(29)

1,124

820

1,944

60

2007

St. Simons Island, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,890

1,734

1,310

(45)

1,734

1,264

2,998

93

2007

Dunwoody, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,114

1,022

772

(27)

1,022

745

1,767

55

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,101

1,010

763

(26)

1,010

737

1,747

54

2007

Jessup, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

173

159

120

(4)

159

116

274

8

2007

Brunswick, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,382

1,268

958

(33)

1,268

924

2,192

68

2007

Roswell, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

1,516

1,391

1,051

(36)

1,391

1,014

2,406

74

2007

Norcross, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II GEORGIA

662

607

459

(16)

607

443

1,050

32

2007

Augusta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST II MARYLAND

2,924

1,747

2,890

2

1,747

2,892

4,639

212

2007

Annapolis, MD

 

 

 

 

 

 

 

 

 

SUNTRUST II MARYLAND

1,207

721

1,193

1

721

1,194

1,915

88

2007

Frederick, MD

 

 

 

 

 

 

 

 

 

SUNTRUST II MARYLAND

2,123

1,269

2,099

1

1,269

2,100

3,369

154

2007

Waldorf, MD

 

 

 

 

 

 

 

 

 

SUNTRUST II MARYLAND

1,610

962

1,591

1

962

1,592

2,554

117

2007

Ellicott City, MD

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

940

453

1,038

1

453

1,039

1,492

76

2007

Belmont, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

625

301

690

1

301

691

992

51

2007



-132-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Carrboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

1,246

601

1,375

2

601

1,377

1,978

101

2007

Monroe, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

780

376

861

1

376

862

1,238

63

2007

Lexington, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

605

292

668

1

292

669

961

49

2007

Burlington, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

2,395

1,155

2,645

3

1,155

2,648

3,803

194

2007

Mocksville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

1,299

627

1,434

2

627

1,436

2,063

105

2007

Durham, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

550

265

607

1

265

608

873

45

2007

Oakboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

862

416

951

1

416

953

1,368

70

2007

Concord, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

800

386

883

1

386

884

1,270

65

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

700

338

773

1

338

774

1,111

57

2007

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

220

106

243

0

106

243

349

18

2007

Pittsboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

348

168

385

0

168

385

553

28

2007

Yadkinville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

468

226

517

1

226

517

743

38

2007

Matthews, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

379

183

419

1

183

420

603

31

2007

Burlington, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II NORTH CAROLINA

700

338

773

1

338

774

1,111

57

2007

Zebulon, NC

 

 

 

 

 

 

 

 

 

SUNTRUST II SOUTH CAROLINA

642

220

798

0

220

798

1,018

59

2007

Belton, SC

 

 

 

 

 

 

 

 

 

SUNTRUST II SOUTH CAROLINA

1,000

343

1,243

1

343

1,244

1,587

91

2007

Anderson, SC

 

 

 

 

 

 

 

 

 

SUNTRUST II SOUTH CAROLINA

910

312

1,132

1

312

1,132

1,444

83

2007

Travelers Rest, SC

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

1,764

1,190

1,619

3

1,190

1,623

2,812

119

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

232

156

213

0

156

213

369

16

2007



-133-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Lavergne, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

750

506

689

1

506

690

1,196

51

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

533

360

489

1

360

490

850

36

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

922

622

847

2

622

848

1,470

62

2007

Chatanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II TENNESSEE

870

587

798

2

587

800

1,387

59

2007

Madison, TN

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

1,371

759

1,423

(1)

759

1,422

2,181

104

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

425

235

441

(0)

235

441

676

32

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

667

369

692

(0)

369

692

1,061

51

2007

Norfolk, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

437

242

454

(0)

242

453

695

33

2007

Lynchburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

367

203

382

(0)

203

381

585

28

2007

Cheriton, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

1,107

613

1,149

(1)

613

1,149

1,761

84

2007

Rocky Mount, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II VIRGINIA

251

139

260

(0)

139

260

399

19

2007

Petersburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III DISTRICT OF COLUMBIA

1,730

800

1,986

-

800

1,986

2,786

127

2008

Washington, DC

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,216

1,199

729

-

1,199

729

1,928

47

2008

Avon Park, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

631

622

378

-

622

378

1,000

24

2008

Bartow, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

625

616

374

-

616

374

991

24

2008

Belleview, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,035

1,020

620

-

1,020

620

1,640

40

2008

Beverly Hills, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,495

1,474

896

-

1,474

896

2,370

57

2008

Boca Raton, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,004

990

602

-

990

602

1,592

39

2008

Bradenton, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,209

1,192

724

-

1,192

724

1,916

46

2008



-134-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Cape Coral, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

567

559

340

-

559

340

898

22

2008

Clearwater, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,669

1,646

1,000

-

1,646

1,000

2,645

64

2008

Crystal River, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

671

661

402

-

661

402

1,063

26

2008

Daytona Beach Shores, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

988

975

592

-

975

592

1,567

38

2008

Deland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

988

975

592

-

975

592

1,567

38

2008

Deland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,058

1,043

634

-

1,043

634

1,677

41

2008

Edgewater, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

938

924

562

-

924

562

1,486

36

2008

Flager Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

688

678

412

-

678

412

1,090

26

2008

Fort Myers, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,097

1,081

657

-

1,081

657

1,738

42

2008

Fort Myers, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,446

1,426

867

-

1,426

867

2,293

56

2008

Greenacres City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,803

1,778

1,080

-

1,778

1,080

2,859

69

2008

Gulf Breeze, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,122

1,106

672

-

1,106

672

1,778

43

2008

Haines City, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

2,209

2,178

1,323

-

2,178

1,323

3,501

85

2008

Hallandale, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

690

680

413

-

680

413

1,093

27

2008

Hamosassa, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

2,146

2,115

1,285

-

2,115

1,285

3,401

82

2008

Hilaleah, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

585

577

350

-

577

350

927

22

2008

Inverness, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

874

862

524

-

862

524

1,385

34

2008

Jacksonville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,095

1,080

656

-

1,080

656

1,736

42

2008

Jacksonville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,312

1,294

786

-

1,294

786

2,080

50

2008



-135-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Jupiter, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,140

1,124

683

-

1,124

683

1,806

44

2008

Lady Lake, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,301

1,283

779

-

1,283

779

2,062

50

2008

Lady Lake, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,067

1,052

639

-

1,052

639

1,692

41

2008

Lake Placid, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

806

795

483

-

795

483

1,278

31

2008

Lakeland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

716

706

429

-

706

429

1,135

28

2008

Largo, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

876

863

525

-

863

525

1,388

34

2008

Lynn Haven, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

886

874

531

-

874

531

1,405

34

2008

Melbourne, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,656

1,633

992

-

1,633

992

2,624

64

2008

Miami, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

970

956

581

-

956

581

1,538

37

2008

Miami Beach, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

949

935

568

-

935

568

1,503

36

2008

New Port Richey, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,519

1,498

910

-

1,498

910

2,408

58

2008

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,425

1,405

854

-

1,405

854

2,259

55

2008

Orlando, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

580

572

348

-

572

348

920

22

2008

Palm Harbor, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,371

1,352

821

-

1,352

821

2,173

53

2008

Palm Harbor, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

942

928

564

-

928

564

1,492

36

2008

Port St. Lucie, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,719

1,695

1,030

-

1,695

1,030

2,724

66

2008

Punta Gorda, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

988

974

592

-

974

592

1,567

38

2008

Roseland, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

798

787

478

-

787

478

1,265

31

2008

Sebring, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

754

743

452

-

743

452

1,195

29

2008



-136-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Seminole, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

832

820

498

-

820

498

1,319

32

2008

Spring Hill, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,380

1,360

827

-

1,360

827

2,187

53

2008

Spring Hill, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,349

1,330

808

-

1,330

808

2,138

52

2008

Spring Hill, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

949

936

569

-

936

569

1,505

36

2008

St. Petersburg, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,933

1,906

1,158

-

1,906

1,158

3,063

74

2008

Stuart, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

2,041

2,013

1,223

-

2,013

1,223

3,236

78

2008

Sun City Center, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,539

1,518

922

-

1,518

922

2,440

59

2008

Tamarac, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

613

605

367

-

605

367

972

24

2008

Valrico, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

770

760

462

-

760

462

1,221

30

2008

Wildwood, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

814

802

488

-

802

488

1,290

31

2008

Zephyhills, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III FLORIDA

1,943

1,916

1,164

-

1,916

1,164

3,080

75

2008

Zephyhills, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

655

564

482

-

564

482

1,046

31

2008

Albany, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,909

1,642

1,404

-

1,642

1,404

3,046

90

2008

Alpharetta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,433

1,233

1,054

-

1,233

1,054

2,287

68

2008

Alpharetta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,233

1,061

907

-

1,061

907

1,968

58

2008

Athens, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

2,331

2,005

1,714

-

2,005

1,714

3,719

110

2008

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

496

427

365

-

427

365

791

23

2008

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,032

888

759

-

888

759

1,647

49

2008

Augusta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

503

432

370

-

432

370

802

24

2008



-137-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Augusta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

677

582

498

-

582

498

1,080

32

2008

Augusta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,050

904

772

-

904

772

1,676

50

2008

Baxley, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

608

523

447

-

523

447

970

29

2008

Columbus, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

528

454

389

-

454

389

843

25

2008

Conyers, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

715

615

526

-

615

526

1,141

34

2008

Douglas, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,305

1,122

959

-

1,122

959

2,081

62

2008

Duluth, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

932

802

686

-

802

686

1,488

44

2008

Jonesboro, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,852

1,593

1,362

-

1,593

1,362

2,955

87

2008

Lawrenceville, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

846

728

622

-

728

622

1,351

40

2008

Marietta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

745

641

548

-

641

548

1,189

35

2008

Norcross, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

903

777

664

-

777

664

1,441

43

2008

Tucker, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,454

1,251

1,069

-

1,251

1,069

2,320

69

2008

Warner Robins, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

1,220

1,050

897

-

1,050

897

1,947

58

2008

Woodstock, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III GEORGIA

386

332

284

-

332

284

615

18

2008

Macon, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III MARYLAND

1,250

563

1,427

-

563

1,427

1,989

91

2008

Bladensburg, MD

 

 

 

 

 

 

 

 

 

SUNTRUST III MARYLAND

818

368

933

-

368

933

1,301

60

2008

Chestertown, MD

 

 

 

 

 

 

 

 

 

SUNTRUST III MARYLAND

1,710

770

1,952

-

770

1,952

2,721

125

2008

Upper Marlboro, MD

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

985

617

953

-

617

953

1,570

61

2008

Black Mountain, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

436

273

422

-

273

422

695

27

2008



-138-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Butner, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

871

546

843

-

546

843

1,389

54

2008

Cary, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

552

346

534

-

346

534

880

34

2008

Chapel Hill, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

958

600

928

-

600

928

1,528

60

2008

Denton, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

511

320

495

-

320

495

815

32

2008

Erwin, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

613

384

594

-

384

594

978

38

2008

Greensboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

498

312

482

-

312

482

794

31

2008

Hudson, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

531

333

514

-

333

514

847

33

2008

Huntersville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

1,264

792

1,224

-

792

1,224

2,016

78

2008

Kannapolis, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

649

407

628

-

407

628

1,035

40

2008

Kernersville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

357

224

345

-

224

345

569

22

2008

Marshville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

701

439

678

-

439

678

1,118

44

2008

Mocksville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

534

335

517

-

335

517

852

33

2008

Monroe, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

630

395

610

-

395

610

1,004

39

2008

Monroe, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

564

354

546

-

354

546

900

35

2008

Norwood, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

1,462

916

1,415

-

916

1,415

2,332

91

2008

Raleigh, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

971

608

940

-

608

940

1,548

60

2008

Roxboro, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

545

342

528

-

342

528

869

34

2008

Spencer, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

1,342

841

1,299

-

841

1,299

2,139

83

2008

Wake Forest, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III NORTH CAROLINA

267

167

259

-

167

259

426

17

2008



-139-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Youngsville, NC

 

 

 

 

 

 

 

 

 

SUNTRUST III SOUTH CAROLINA

787

422

836

-

422

836

1,258

54

2008

Anderson, SC

 

 

 

 

 

 

 

 

 

SUNTRUST III SOUTH CAROLINA

518

278

550

-

278

550

828

35

2008

Spartanburg, SC

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

582

597

343

-

597

343

940

22

2008

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

762

783

449

-

783

449

1,232

29

2008

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

520

533

306

-

533

306

839

20

2008

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

698

716

411

-

716

411

1,127

26

2008

Chattanooga, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

344

353

203

-

353

203

556

13

2008

Cleveland, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

112

115

66

-

115

66

180

4

2008

Johnson City, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

231

237

136

-

237

136

373

9

2008

Jonesborough, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

561

576

330

-

576

330

907

21

2008

Lake City, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

302

310

178

-

310

178

488

11

2008

Lawrenceburg, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

578

593

340

-

593

340

934

22

2008

Murfreesboro, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

948

973

558

-

973

558

1,531

36

2008

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

748

768

441

-

768

441

1,209

28

2008

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III TENNESSEE

711

730

419

-

730

419

1,148

27

2008

Nashville, TN

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

1,801

1,518

1,370

-

1,518

1,370

2,888

88

2008

Alexandria, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

1,565

1,319

1,190

-

1,319

1,190

2,508

76

2008

Arlington, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

324

273

246

-

273

246

520

16

2008

Beaverdam, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

544

458

413

-

458

413

871

27

2008



-140-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Franklin, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

729

614

554

-

614

554

1,169

36

2008

Gloucester, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

437

368

332

-

368

332

701

21

2008

Harrisonburg, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

397

335

302

-

335

302

637

19

2008

Lightfoot, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

368

310

280

-

310

280

590

18

2008

Madison Heights, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

2,049

1,727

1,558

-

1,727

1,558

3,285

100

2008

Manassas, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

569

479

433

-

479

433

912

28

2008

Mechanicsville, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

302

254

229

-

254

229

484

15

2008

Nassawadox, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

367

309

279

-

309

279

589

18

2008

Radford, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

1,408

1,186

1,070

-

1,186

1,070

2,257

69

2008

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

307

259

234

-

259

234

493

15

2008

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

896

755

681

-

755

681

1,437

44

2008

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

594

501

452

-

501

452

952

29

2008

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

403

339

306

-

339

306

646

20

2008

Roanoke, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

177

149

135

-

149

135

284

9

2008

Roanoke, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

850

716

646

-

716

646

1,362

41

2008

South Boston, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

1,348

1,136

1,025

-

1,136

1,025

2,160

66

2008

Spotsylvania, VA

 

 

 

 

 

 

 

 

 

SUNTRUST III VIRGINIA

662

558

504

-

558

504

1,062

32

2008

Virginia Beach, VA

 

 

 

 

 

 

 

 

 

THE CENTER AT HUGH HOWELL

7,722

2,250

11,091

348

2,250

11,438

13,688

1,137

2007

Tucker, GA

 

 

 

 

 

 

 

 

 

THE HIGHLANDS

9,745

5,500

9,589

23

5,500

9,612

15,112

922

2006



-141-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Flower Mound, TX

 

 

 

 

 

 

 

 

 

THE MARKET AT HILLIARD

11,205

4,432

13,308

3,009

4,432

16,317

20,748

1,851

2005

Hilliard, OH

 

 

 

 

 

 

 

 

 

THOMAS CROSSROADS

4,460

1,622

8,322

-

1,622

8,322

9,944

300

2009

Newnan, GA

 

 

 

 

 

 

 

 

 

TOMBALL TOWN CENTER

-

1,938

14,233

3,312

1,938

17,545

19,483

2,200

2005

Tomball, TX

 

 

 

 

 

 

 

 

 

TRIANGLE CENTER

23,600

12,770

24,556

1,339

12,770

25,895

38,665

3,425

2005

Longview, WA

 

 

 

 

 

 

 

 

 

WALGREENS - SPRINGFIELD

-

855

2,530

-

855

2,530

3,385

371

2007

Springfield, MO

 

 

 

 

 

 

 

 

 

WASHINGTON PARK PLAZA

30,600

6,500

33,912

(318)

6,500

33,594

40,094

2,910

2005

Homewood, IL

 

 

 

 

 

 

 

 

 

WEST END SQUARE

-

675

2,784

51

675

2,835

3,510

392

2007

Houston, TX

 

 

 

 

 

 

 

 

 

WILLIS TOWN CENTER

-

1,550

1,820

652

1,550

2,472

4,022

286

2005

Willis, TX

 

 

 

 

 

 

 

 

 

WINCHESTER TOWN CENTER

-

495

3,966

45

495

4,011

4,506

587

2005

Houston, TX

 

 

 

 

 

 

 

 

 

WINDERMERE VILLAGE

-

1,220

6,331

796

1,220

7,127

8,347

1,005

2005

Houston, TX

 

 

 

 

 

 

 

 

 

WOODFOREST SQUARE

-

300

2,136

666

300

2,803

3,103

397

2005

Houston, TX

 

 

 

 

 

 

 

 

 

WOODLAKE CROSSING

15,400

3,420

14,153

(750)

3,420

13,403

16,823

-

2009

San Antonio, TX

 

 

 

 

 

 

 

 

 

LIP.H

 

 

 

 

 

 

 

 

 

INTECH RETAIL

2,787

819

2,038

-

819

2,038

2,858

78

2009

Indianapolis, IN

 

 

 

 

 

 

 

 

 

MCP ONE

6,967

451

2,861

-

451

2,861

3,311

125

2009

Indianapolis, IN

 

 

 

 

 

 

 

 

 

MCP TWO

14,681

1,990

9,820

-

1,990

9,820

11,810

509

2009

Indianapolis, IN

 

 

 

 

 

 

 

 

 

MIDLOTHIAN MEDICAL

12,350

-

9,041

-

-

9,041

9,041

353

2009

Midlothian, VA

 

 

 

 

 

 

 

 

 

SELECT MED TALLAHASSEE

20,505

3,225

21,549

-

3,225

21,549

24,773

977

2009

Tallahassee, FL

 

 

 

 

 

 

 

 

 

SELECT MEDICAL AUGUSTA

15,175

3,173

21,344

-

3,173

21,344

24,516

1,142

2009

Augusta, GA

 

 

 

 

 

 

 

 

 



-142-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

SELECT MEDICAL DALLAS

9,200

2,311

15,430

-

2,311

15,430

17,741

654

2009

Dallas, TX

 

 

 

 

 

 

 

 

 

SELECT MEDICAL ORLANDO

13,626

2,838

18,908

-

2,838

18,908

21,746

918

2009

Edgewood, FL

 

 

 

 

 

 

 

 

 

Office

 

 

 

 

 

 

 

 

 

11500 MARKET STREET

-

140

346

-

140

346

486

53

2005

Jacinto City, TX

 

 

 

 

 

 

 

 

 

6234 RICHMOND AVENUE

-

500

970

912

500

1,882

2,382

242

2006

Houston, TX

 

 

 

 

 

 

 

 

 

AMERICAN EXPRESS - GREENSBORO

33,040

8,850

39,527

-

8,850

39,527

48,377

943

2009

Greensboro, NC

 

 

 

 

 

 

 

 

 

AMERICAN EXPRESS - SALT LAKE CITY

30,149

9,000

45,415

-

9,000

45,415

54,415

1,067

2009

Salt Lake City, UT

 

 

 

 

 

 

 

 

 

AT&T - ST LOUIS

112,695

8,000

170,169

12

8,000

170,181

178,181

17,869

2007

St Louis, MO

 

 

 

 

 

 

 

 

 

AT&T CLEVELAND

29,242

870

40,033

-

870

40,033

40,903

3,914

2005

Cleveland, OH

 

 

 

 

 

 

 

 

 

BRIDGESIDE POINT OFFICE BLDG

17,325

1,525

28,609

-

1,525

28,609

30,134

4,088

2006

Pittsburg, PA

 

 

 

 

 

 

 

 

 

COMMONS DRIVE

3,663

1,600

5,746

1

1,600

5,747

7,347

667

2007

Aurora, IL

 

 

 

 

 

 

 

 

 

COMPUTERSHARE/EQUISERVE

44,500

6,481

51,701

-

6,481

51,701

58,182

913

2009

Canton, MA

 

 

 

 

 

 

 

 

 

DENVER HIGHLANDS

10,500

1,700

11,839

-

1,700

11,839

13,539

1,266

2006

Highlands Ranch, CO

 

 

 

 

 

 

 

 

 

DULLES EXECUTIVE PLAZA

68,750

15,500

96,083

3,065

15,500

99,148

114,648

12,292

2006

Herndon, VA

 

 

 

 

 

 

 

 

 

HOUSTON LAKES

8,988

3,000

12,950

334

3,000

13,284

16,284

1,427

2006

Houston, TX

 

 

 

 

 

 

 

 

 

IDS CENTER

125,000

24,900

202,016

14,913

24,900

216,929

241,829

25,272

2007

Minneapolis, MN

 

 

 

 

 

 

 

 

 

KINROSS LAKES

10,065

825

14,639

48

825

14,687

15,512

1,537

2005

Richfield, OH

 

 

 

 

 

 

 

 

 

LAKE VIEW TECHNOLOGY CENTER

14,470

884

22,072

-

884

22,072

22,956

3,154

2006

Suffolk, VA

 

 

 

 

 

 

 

 

 

REGIONAL ROAD

8,679

950

10,501

122

950

10,623

11,573

1,222

2006

Greensboro, NC

 

 

 

 

 

 

 

 

 

SANOFI AVENTIS

190,000

16,900

192,987

1,213

16,900

194,200

211,100

6,218

2009



-143-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Bridgewater, NJ

 

 

 

 

 

 

 

 

 

SANTEE - CIVIC CENTER

12,023

-

17,838

18

-

17,856

17,856

1,927

2005

Santee, CA

 

 

 

 

 

 

 

 

 

SBC CENTER

200,472

35,800

287,424

230

35,800

287,653

323,453

41,927

2007

Hoffman Estates, IL

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I FL

3,175

5,700

2,417

(3)

5,700

2,414

8,114

184

2007

Bal Harbour, FL

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I FL

477

315

363

(1)

315

363

678

28

2007

Bushnell, FL

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I FL

870

1,260

662

(1)

1,260

661

1,921

51

2007

Melbourne, FL

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I GA

399

275

675

(0)

275

675

950

52

2007

Douglas, GA

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I MD

2,212

650

4,617

(2)

650

4,614

5,264

352

2007

Bethesda, MD

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I NC

793

400

1,471

(1)

400

1,470

1,870

112

2007

Winston-Salem, NC

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I NC

916

500

1,700

(1)

500

1,699

2,199

130

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

SUNTRUST OFFICE I VA

3,194

1,360

6,272

(3)

1,360

6,269

7,629

479

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

SUNTRUST II OFFICE GEORGIA

4,402

2,625

4,355

(3)

2,625

4,352

6,977

319

2008

Atlanta, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III OFFICE FLORIDA

1,345

1,667

457

-

1,667

457

2,124

29

2008

Gainesville, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III OFFICE FLORIDA

854

1,058

290

-

1,058

290

1,348

19

2008

Holy Hill, FL

 

 

 

 

 

 

 

 

 

SUNTRUST III OFFICE GEORGIA

1,499

676

1,703

-

676

1,703

2,379

109

2008

Brunswick, GA

 

 

 

 

 

 

 

 

 

SUNTRUST III OFFICE GEORGIA

1,774

799

2,016

-

799

2,016

2,815

129

2008

Gainesville, GA

 

 

 

 

 

 

 

 

 

UNITED HEALTH - CYPRESS

22,000

10,000

30,547

2

10,000

30,549

40,549

1,120

2008

Cypress, CA

 

 

 

 

 

 

 

 

 

UNITED HEALTH - FREDERICK

18,240

5,100

26,303

2

5,100

26,305

31,405

921

2008

Frederick, MD

 

 

 

 

 

 

 

 

 

UNTIED HEALTH - GREEN BAY

-

4,250

45,725

23

4,250

45,748

49,998

1,601

2008

Green Bay, WI

 

 

 

 

 

 

 

 

 

UNITED HEALTH - INDIANAPOLIS

16,545

3,500

24,248

2

3,500

24,250

27,750

849

2008



-144-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Indianapolis, IN

 

 

 

 

 

 

 

 

 

UNITED HEALTH - ONALASKA

4,149

4,090

2,794

2

4,090

2,796

6,886

103

2008

Onalaska, WI

 

 

 

 

 

 

 

 

 

UNITED HEALTH - WAUWATOSA

10,050

1,800

14,930

2

1,800

14,932

16,732

523

2006

Wauwatosa, WI

 

 

 

 

 

 

 

 

 

WASHINGTON MUTUAL - ARLINGTON

20,115

4,870

30,915

3

4,870

30,918

35,788

3,589

2007

Arlington, TX

 

 

 

 

 

 

 

 

 

WORLDGATE PLAZA

59,950

14,000

79,048

1,974

14,000

81,021

95,021

7,607

2007

Herndon, VA

 

 

 

 

 

 

 

 

 

Apartment

 

 

 

 

 

 

 

 

 

14th STREET - UAB

11,770

4,250

27,458

-

4,250

27,458

31,708

2,385

2007

Birmingham, AL

 

 

 

 

 

 

 

 

 

ALDEN LANDING APARTMENTS

11,237

4,550

14,255

-

4,550

14,255

18,805

276

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

BRAZOS RANCH APARTMENTS

15,246

4,000

22,246

-

4,000

22,246

26,246

843

2009

Rosenberg, TX

 

 

 

 

 

 

 

 

 

ENCINO CANYON APARTMENTS

12,000

1,700

16,443

-

1,700

16,443

18,143

1,486

2007

San Antonio, TX

 

 

 

 

 

 

 

 

 

FIELDS APARTMENT HOMES

18,700

1,850

29,783

-

1,850

29,783

31,633

3,150

2007

Bloomington, IN

 

 

 

 

 

 

 

 

 

GROGANS LANDING APARTMENTS

9,705

4,380

10,533

-

4,380

10,533

14,913

217

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

LAKE WYNDEMERE APARTMENTS

13,067

3,320

19,022

5

3,320

19,027

22,347

366

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

LANDINGS AT CLEARLAKE

18,590

3,770

27,843

-

3,770

27,843

31,613

2,913

2007

Webster, TX

 

 

 

 

 

 

 

 

 

LEGACY AT ART QUARTER

29,645

1,290

35,031

123

1,290

35,153

36,443

1,539

2008

Oklahoma City, OK

 

 

 

 

 

 

 

 

 

LEGACY CORNER

14,630

1,600

23,765

-

1,600

23,765

25,365

1,047

2008

Midwest City, OK

 

 

 

 

 

 

 

 

 

LEGACY CROSSING

23,700

1,110

29,297

18

1,110

29,315

30,425

1,278

2008

Oklahoma City, OK

 

 

 

 

 

 

 

 

 

LEGACY WOODS

21,190

2,500

31,505

8

2,500

31,514

34,014

1,388

2007

Edmond, OK

 

 

 

 

 

 

 

 

 

MALIBU LAKES APARTMENTS

17,929

4,800

24,186

(21)

4,800

24,165

28,965

-

2009

Naples, FL

 

 

 

 

 

 

 

 

 

OAK PARK

27,696

9,738

39,958

(0)

9,738

39,958

49,695

311

2009

Dallas, TX

 

 

 

 

 

 

 

 

 



-145-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

PARKSIDE APARTMENTS

18,000

5,500

15,623

-

5,500

15,623

21,123

153

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

SEVEN PALMS APARTMENTS

18,750

3,550

24,348

5

3,550

24,353

27,903

2,182

2006

Webster, TX

 

 

 

 

 

 

 

 

 

SOUTHGATE APARTMENTS

10,725

1,730

16,356

-

1,730

16,356

18,086

2,356

2007

Louisville, KY

 

 

 

 

 

 

 

 

 

STERLING RIDGE ESTATES

14,324

4,140

20,550

-

4,140

20,550

24,690

387

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

THE RADIAN (PENN)

58,500

-

79,997

10,110

-

90,107

90,107

4,115

2007

Radian, PA

 

 

 

 

 

 

 

 

 

UNIV HOUSE AT GAINESVILLE

23,460

6,561

36,879

973

6,561

37,852

44,413

2,063

2007

Gainesville, FL

 

 

 

 

 

 

 

 

 

UNIV HOUSE AT HUNTSVILLE

15,387

1,351

26,308

1,214

1,351

27,522

28,872

1,663

2007

Huntsville, TX

 

 

 

 

 

 

 

 

 

UNIV HOUSE AT LAFAYETTE

9,306

-

16,357

1,665

-

18,022

18,022

1,054

2007

Lafayette, AL

 

 

 

 

 

 

 

 

 

VILLAGES AT KITTY HAWK

11,550

2,070

17,397

-

2,070

17,397

19,467

1,746

2007

Universal City, TX

 

 

 

 

 

 

 

 

 

VILLAGE SQUARE APARTMENTS

8,112

3,335

9,601

-

3,335

9,601

12,936

192

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

VILLAS AT SHADOW CREEK

16,117

3,690

24,142

-

3,690

24,142

27,832

1,070

2007

Pearland, TX

 

 

 

 

 

 

 

 

 

WATERFORD PLACE AT SHADOW CREEK

16,500

2,980

24,573

-

2,980

24,573

27,553

2,596

2007

Pearland, TX

 

 

 

 

 

 

 

 

 

WOODRIDGE APARTMENTS

13,399

3,680

11,235

-

3,680

11,235

14,915

108

2009

The Woodlands, TX

 

 

 

 

 

 

 

 

 

Industrial

 

 

 

 

 

 

 

 

 

11500 MELROSE AVE -294 TOLLWAY

4,561

2,500

5,071

-

2,500

5,071

7,571

449

2006

Franklin Park, IL

 

 

 

 

 

 

 

 

 

1800 BRUNING

10,156

10,000

7,971

32

10,000

8,002

18,002

904

2006

Itasca, IL

 

 

 

 

 

 

 

 

 

500 HARTLAND

5,860

1,200

7,459

-

1,200

7,459

8,659

866

2006

Hartland, WI

 

 

 

 

 

 

 

 

 

55th STREET

7,351

1,600

11,115

-

1,600

11,115

12,715

1,290

2007

Kenosha, WI

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #10

2,042

600

2,861

-

600

2,861

3,461

275

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #11

1,539

400

2,120

-

400

2,120

2,520

204

2007



-146-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #15

1,203

200

1,651

-

200

1,651

1,851

166

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #16

2,714

600

3,750

-

600

3,750

4,350

362

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #18

1,007

200

1,317

27

200

1,344

1,544

140

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #19

2,546

600

3,866

-

600

3,866

4,466

372

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #2

1,734

400

2,282

-

400

2,282

2,682

220

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #4

1,287

300

1,662

-

300

1,662

1,962

160

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #7

699

200

832

-

200

832

1,032

84

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #8

448

100

630

-

100

630

730

63

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

AIRPORT DISTRIB CENTER #9

811

200

948

-

200

948

1,148

96

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

ANHEUSER BUSCH

7,549

2,200

13,598

-

2,200

13,598

15,798

1,110

2007

Devens, MA

 

 

 

 

 

 

 

 

 

ATLAS - BELVIDERE

11,329

1,600

15,521

-

1,600

15,521

17,121

1,225

2007

Belvidere, IL

 

 

 

 

 

 

 

 

 

ATLAS - CARTERSVILLE

8,273

900

13,112

(39)

900

13,073

13,973

1,030

2007

Cartersville, GA

 

 

 

 

 

 

 

 

 

ATLAS - DOUGLAS

3,432

75

6,681

-

75

6,681

6,756

526

2007

Douglas, GA

 

 

 

 

 

 

 

 

 

ATLAS - GAFFNEY

3,350

950

5,114

-

950

5,114

6,064

403

2007

Gaffney, SC

 

 

 

 

 

 

 

 

 

ATLAS - GAINESVILLE

7,731

550

12,783

-

550

12,783

13,333

1,007

2007

Gainesville, GA

 

 

 

 

 

 

 

 

 

ATLAS - PENDERGRASS

14,919

1,250

24,259

-

1,250

24,259

25,509

1,910

2007

Pendergrass, GA

 

 

 

 

 

 

 

 

 

ATLAS - PIEDMONT

13,563

400

23,113

7

400

23,120

23,520

1,820

2007

Piedmont, SC

 

 

 

 

 

 

 

 

 

ATLAS - ST PAUL

8,226

3,890

10,093

-

3,890

10,093

13,983

795

2007

St. Paul, MN

 

 

 

 

 

 

 

 

 

ATLAS-BROOKLYN PARK

7,407

2,640

8,934

-

2,640

8,934

11,574

704

2007



-147-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Brooklyn Park, MN

 

 

 

 

 

 

 

 

 

ATLAS-NEW ULM

6,015

900

9,359

-

900

9,359

10,259

738

2007

New Ulm, MN

 

 

 

 

 

 

 

 

 

ATLAS-ZUMBROA

10,242

1,300

16,437

-

1,300

16,437

17,737

1,294

2006

Zumbrota, MN

 

 

 

 

 

 

 

 

 

BAYMEADOW - GLEN BURNIE

13,824

1,225

23,407

24

1,225

23,431

24,656

2,528

2006

Glen Burnie, MD

 

 

 

 

 

 

 

 

 

C&S - ABERDEEN

22,720

4,650

33,276

13

4,650

33,289

37,939

3,495

2006

Aberdeen, MD

 

 

 

 

 

 

 

 

 

C&S - BIRMINGHAM

-

3,400

40,373

-

3,400

40,373

43,773

2,119

2008

Birmingham, AL

 

 

 

 

 

 

 

 

 

C&S - NORTH HATFIELD

20,280

4,800

30,103

14

4,800

30,117

34,917

3,162

2006

Hatfield, MA

 

 

 

 

 

 

 

 

 

C&S - SOUTH HATFIELD

10,000

2,500

15,251

11

2,500

15,262

17,762

1,602

2006

Hatfield, MA

 

 

 

 

 

 

 

 

 

C&S - WESTFIELD

29,500

3,850

45,906

13

3,850

45,919

49,769

4,821

2006

Westfield, MA

 

 

 

 

 

 

 

 

 

CLARION

3,172

87

4,790

63

87

4,853

4,940

523

2007

Clarion, IA

 

 

 

 

 

 

 

 

 

COLOMA

10,017

410

17,110

85

410

17,195

17,605

1,397

2006

Coloma, MI

 

 

 

 

 

 

 

 

 

DEER PARK SEACO

2,965

240

5,271

-

240

5,271

5,511

612

2007

Deer Park, TX

 

 

 

 

 

 

 

 

 

DELP DISTRIBUTION CENTER #2

1,623

280

2,282

-

280

2,282

2,562

247

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

DELP DISTRIBUTION CENTER #5

1,623

390

2,050

-

390

2,050

2,440

197

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

DELP DISTRIBUTION CENTER #8

1,399

760

1,388

-

760

1,388

2,148

139

2006

Memphis, TN

 

 

 

 

 

 

 

 

 

DORAL - WAUKESHA

1,364

240

2,013

-

240

2,013

2,253

234

2006

Waukesha, WI

 

 

 

 

 

 

 

 

 

HASKELL-ROLLING PLAINS FACILITY

-

45

19,733

-

45

19,733

19,778

1,059

2008

Haskell, TX

 

 

 

 

 

 

 

 

 

HOME DEPOT - LAKE PARK

15,469

1,350

24,770

4

1,350

24,774

26,124

867

2008

Valdosta, GA

 

 

 

 

 

 

 

 

 

HOME DEPOT - MACALLA

17,094

2,800

26,067

4

2,800

26,071

28,871

914

2008

MaCalla, AL

 

 

 

 

 

 

 

 

 

HUDSON CORRECTIONAL FACILITY

-

812

-

91,822

812

91,822

92,634

-

2009



-148-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Hudson, CO

 

 

 

 

 

 

 

 

 

INDUSTRIAL DRIVE

3,709

200

6,812

-

200

6,812

7,012

755

2007

Horican, WI

 

 

 

 

 

 

 

 

 

KINSTON

8,930

460

14,837

-

460

14,837

15,297

1,340

2006

Kinston, NC

 

 

 

 

 

 

 

 

 

KIRK ROAD

7,863

2,200

11,413

42

2,200

11,455

13,655

1,328

2007

St. Charles, IL

 

 

 

 

 

 

 

 

 

LIBERTYVILLE ASSOCIATES

14,807

3,600

20,563

-

3,600

20,563

24,163

2,099

2005

Libertyville, IL

 

 

 

 

 

 

 

 

 

McKESSON DISTRIBUTION CENTER

5,760

345

8,952

-

345

8,952

9,297

1,367

2007

Conroe, TX

 

 

 

 

 

 

 

 

 

MOUNT ZION ROAD

24,632

2,570

41,667

-

2,570

41,667

44,237

4,253

2007

Lebanon, IN

 

 

 

 

 

 

 

 

 

OTTAWA

1,768

200

2,905

-

200

2,905

3,105

319

2007

Ottawa, IL

 

 

 

 

 

 

 

 

 

SCHNEIDER ELECTRIC

11,000

2,150

14,720

-

2,150

14,720

16,870

1,460

2007

Loves Park, IL

 

 

 

 

 

 

 

 

 

SOUTHWIDE INDUSTRIAL CENTER #5

392

122

425

-

122

425

547

43

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

SOUTHWIDE INDUSTRIAL CENTER #6

1,007

248

1,361

-

248

1,361

1,609

137

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

SOUTHWIDE INDUSTRIAL CENTER #7

2,014

483

2,792

-

483

2,792

3,275

282

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

SOUTHWIDE INDUSTRIAL CENTER #8

196

42

286

-

42

286

328

29

2007

Memphis, TN

 

 

 

 

 

 

 

 

 

STONE FORT DISTRIB CENTER #1

6,770

1,910

9,264

(52)

1,910

9,212

11,122

930

2007

Chattanooga, TN

 

 

 

 

 

 

 

 

 

STONE FORT DISTRIB CENTER #4

1,399

490

1,782

-

490

1,782

2,272

180

2006

Chattanooga, TN

 

 

 

 

 

 

 

 

 

THERMO PROCESS SYSTEMS

8,201

1,202

11,995

-

1,202

11,995

13,197

1,722

2007

Sugar Land, TX

 

 

 

 

 

 

 

 

 

TRI-STATE HOLDINGS I

4,665

4,700

3,973

-

4,700

3,973

8,673

425

2007

Wood Dale, IL

 

 

 

 

 

 

 

 

 

TRI-STATE HOLDINGS II

6,372

1,630

11,252

-

1,630

11,252

12,882

1,149

2007

Houston, TX

 

 

 

 

 

 

 

 

 

TRI-STATE HOLDINGS III

4,334

650

8,083

-

650

8,083

8,733

825

2007

Mosinee, WI

 

 

 

 

 

 

 

 

 

UNION VENTURE

36,426

4,600

54,292

-

4,600

54,292

58,892

4,120

2007



-149-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

West Chester, OH

 

 

 

 

 

 

 

 

 

UPS E-LOGISTICS

9,249

950

18,453

-

950

18,453

19,403

1,507

2006

Elizabethtown, KY

 

 

 

 

 

 

 

 

 

WESTPORT - MECHANICSBURG

4,029

1,300

6,185

486

1,300

6,671

7,971

718

2006

Mechanicsburg, PA

 

 

 

 

 

 

 

 

 

Hotel

 

 

 

 

 

 

 

 

 

COMFORT INN - RIVERVIEW

-

2,220

7,421

(3,614)

2,220

3,808

6,028

42

2007

Charleston, SC

 

 

 

 

 

 

 

 

 

COMFORT INN - UNIVERSITY

-

2,137

6,652

(3,316)

2,137

3,337

5,474

41

2007

Durham, NC

 

 

 

 

 

 

 

 

 

COMFORT INN - CROSS CREEK

-

571

8,789

613

571

9,402

9,973

1,334

2007

Fayetteville, NC

 

 

 

 

 

 

 

 

 

COMFORT INN - ORLANDO

-

722

5,278

(2,465)

722

2,812

3,535

47

2007

Orlando, FL

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT QUORUM

18,860

4,000

26,141

972

4,000

27,114

31,114

2,784

2007

Addison, TX

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT

12,225

4,989

18,988

1,044

4,989

20,032

25,021

2,499

2007

Ann Arbor, MI

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT DUNN LORING-FAIRFAX

30,810

12,100

40,242

420

12,100

40,663

52,763

5,014

2007

Vienna, VA

 

 

 

 

 

 

 

 

 

COURTYARD - DOWNTOWN AT UAB

6,378

-

20,810

145

-

20,955

20,955

2,554

2008

Birmingham, AL

 

 

 

 

 

 

 

 

 

COURTYARD - FORT MEADE AT NBP

14,400

1,611

22,622

169

1,611

22,791

24,402

2,518

2008

Annapolis Junction, MD

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - WEST LANDS END

7,550

1,500

13,416

218

1,500

13,633

15,133

1,598

2007

Fort Worth, TX

 

 

 

 

 

 

 

 

 

COURTYARD - FT WORTH

14,984

774

45,820

466

774

46,286

47,060

5,128

2008

Fort Worth, TX

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT

6,790

1,600

13,247

2,688

1,600

15,935

17,535

1,737

2007

Harlingen, TX

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - NORTHWEST

7,263

1,428

15,085

1,041

1,428

16,126

17,554

1,998

2007

Houston, TX

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - WESTCHASE

16,680

4,400

22,626

565

4,400

23,191

27,591

2,503

2007

Houston, TX

 

 

 

 

 

 

 

 

 



-150-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

COURTYARD BY MARRIOTT WEST UNIVERSITY

10,980

2,200

16,408

141

2,200

16,549

18,749

1,864

2007

Houston, TX

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - COUNTRY CLUB PLAZA

9,610

3,426

16,349

401

3,426

16,749

20,175

2,630

2007

Kansas City, MO

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT

10,320

3,200

19,009

1,075

3,200

20,084

23,284

2,185

2007

Lebanon, NJ

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT

-

5,272

12,778

626

5,272

13,404

18,675

1,954

2007

Houston, TX

 

 

 

 

 

 

 

 

 

COURTYARD - NEWARK ELIZABETH

9,737

-

35,177

2,184

-

37,361

37,361

4,009

2008

Elizabeth, NJ

 

 

 

 

 

 

 

 

 

COURTYARD - RICHMOND

11,800

2,173

-

17,649

2,173

17,649

19,822

1,976

2007

Richmond, VA

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - ROANOKE AIRPORT

14,651

3,311

22,242

1,759

3,311

24,001

27,311

2,470

2007

Roanoke, VA

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT SEATTLE - FEDERAL WAY

22,830

7,700

27,167

541

7,700

27,707

35,407

2,821

2007

Federal Way, WA

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT CHICAGO- ST.CHARLES

-

1,685

9,355

781

1,685

10,136

11,821

1,159

2007

St. Charles, IL

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT - WILLIAM CENTER

16,030

4,000

20,942

3,063

4,000

24,005

28,005

2,528

2007

Tucson, AZ

 

 

 

 

 

 

 

 

 

COURTYARD BY MARRIOTT

-

2,397

18,560

801

2,397

19,361

21,759

2,230

2007

Wilmington, NC

 

 

 

 

 

 

 

 

 

DOUBLETREE - ATLANTA GALLERIA

6,116

1,082

20,397

1,087

1,082

21,484

22,565

2,458

2008

Alpharetta, GA

 

 

 

 

 

 

 

 

 

DOUBLETREE - WASHINGTON DC

26,398

25,857

56,964

2,773

25,857

59,736

85,594

5,550

2008

Washington, DC

 

 

 

 

 

 

 

 

 

EMBASSY SUITES - BEACHWOOD

14,752

1,732

42,672

422

1,732

43,094

44,826

4,422

2008

Beachwood, OH

 

 

 

 

 

 

 

 

 

EMBASSY SUITES - BALTIMORE

12,661

2,429

38,927

1,051

2,429

39,978

42,408

4,668

2008

Hunt Valley, MD

 

 

 

 

 

 

 

 

 

FAIRFIELD INN

-

1,981

6,353

367

1,981

6,720

8,701

1,037

2007

Ann Arbor, MI

 

 

 

 

 

 

 

 

 



-151-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

HAMPTON INN SUITES - DENVER

7,216

6,144

26,472

264

6,144

26,736

32,879

2,976

2008

Colorado Springs, CO

 

 

 

 

 

 

 

 

 

HAMPTON INN ATLANTA - PERIMETER CENTER

8,450

2,768

14,072

1,273

2,768

15,345

18,113

1,658

2007

Atlanta, GA

 

 

 

 

 

 

 

 

 

HAMPTON INN BALTIMORE-INNER HARBOR

13,700

1,700

21,067

930

1,700

21,997

23,697

2,234

2007

Baltimore, MD

 

 

 

 

 

 

 

 

 

HAMPTON INN RALEIGH-CARY

7,024

2,268

10,503

1,922

2,268

12,426

14,694

1,334

2007

Cary, NC

 

 

 

 

 

 

 

 

 

HAMPTON INN UNIVERSITY PLACE

8,164

3,509

11,335

1,565

3,509

12,900

16,409

1,455

2007

Charlotte, NC

 

 

 

 

 

 

 

 

 

HAMPTON INN SUITES DULUTH-GWINNETT

9,585

488

12,991

1,917

488

14,907

15,395

1,618

2007

Duluth, GA

 

 

 

 

 

 

 

 

 

HAMPTON INN

-

1,228

7,049

(3,300)

1,228

3,749

4,976

45

2007

Durham, NC

 

 

 

 

 

 

 

 

 

HAMPTON INN WHITE PLAINS-TARRYTOWN

15,643

3,200

26,160

3,218

3,200

29,378

32,578

2,870

2007

Elmsford, NY

 

 

 

 

 

 

 

 

 

HAMPTON INN

-

2,753

3,782

1,553

2,753

5,335

8,088

579

2007

Jacksonville, NC

 

 

 

 

 

 

 

 

 

HAMPTON INN CRABTREE VALLEY

-

1,168

6,415

(2,824)

1,168

3,591

4,759

55

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

HGI - BOSTON BURLINGTON

5,871

4,095

25,556

425

4,095

25,980

30,075

2,858

2008

Burlington, MA

 

 

 

 

 

 

 

 

 

HGI - COLORADO SPRINGS

8,570

1,400

17,522

2,161

1,400

19,683

21,083

1,778

2008

Colorado Springs, CO

 

 

 

 

 

 

 

 

 

HGI - SAN ANTONIO AIRPORT

6,085

1,498

19,484

150

1,498

19,634

21,131

2,226

2008

San Antonio, TX

 

 

 

 

 

 

 

 

 

HGI - WASHINGTON DC

61,000

18,800

64,359

692

18,800

65,051

83,851

7,113

2008

Washington, DC

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN - CHELSEA

30,250

16,095

39,804

(330)

16,095

39,474

55,570

4,280

2007

New York, NY

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN TAMPA YBOR

9,460

2,400

16,159

641

2,400

16,800

19,200

1,810

2007

Tampa, FL

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN - AKRON

7,164

900

11,556

(470)

900

11,086

11,986

1,336

2007

Akron, OH

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN ALBANY AIRPORT

12,050

1,645

20,263

2,298

1,645

22,561

24,206

2,333

2007



-152-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Albany, NY

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN ATLANTA WINWARD

10,503

1,030

18,206

1,048

1,030

19,253

20,284

2,023

2007

Alpharetta, GA

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN

19,928

2,920

27,995

1,679

2,920

29,674

32,594

3,106

2007

Evanston, IL

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN RALEIGH -DURHAM

8,000

2,754

26,050

1,456

2,754

27,506

30,260

2,882

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN

21,680

8,900

25,156

1,058

8,900

26,214

35,114

2,819

2007

Westbury, NY

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN

9,530

6,354

10,328

115

6,354

10,443

16,797

1,748

2007

Wilmington, NC

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN HARTFORD NORTH

10,384

5,606

13,892

1,242

5,606

15,135

20,740

1,667

2007

Windsor, CT

 

 

 

 

 

 

 

 

 

HILTON GARDEN INN PHOENIX

22,062

5,114

57,105

442

5,114

57,548

62,662

5,613

2008

Phoenix, AZ

 

 

 

 

 

 

 

 

 

HILTON - UNIVERSITY OF FLORIDA

27,775

-

50,407

4,667

-

55,074

55,074

6,409

2007

Gainesville, FL

 

 

 

 

 

 

 

 

 

HOLIDAY INN EXPRESS - CLEARWATER GATEWAY

-

2,283

6,202

2,194

2,283

8,395

10,678

1,284

2007

Clearwater, FL

 

 

 

 

 

 

 

 

 

HOLIDAY INN HARMON MEADOW SECAUCUS

-

-

23,291

3,970

-

27,261

27,261

2,916

2007

Secaucus, NJ

 

 

 

 

 

 

 

 

 

HOMEWOOD - HOUSTON GALLERIA

9,415

1,655

30,587

72

1,655

30,659

32,313

3,917

2008

Houston, TX

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

10,160

2,400

18,071

2,673

2,400

20,744

23,144

2,534

2007

Albuquerque, NM

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

12,930

4,300

15,629

2,433

4,300

18,062

22,362

2,154

2007

Baton Rouge, LA

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

12,747

1,478

19,404

4,699

1,478

24,103

25,581

2,809

2007

Cary, NC

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES HOUSTON - CLEARLAKE

7,222

1,235

12,655

2,233

1,235

14,888

16,123

1,556

2007

Houston, TX

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

7,950

2,403

10,441

2,627

2,403

13,068

15,471

1,561

2007

Durham, NC

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

9,900

721

9,592

2,549

721

12,142

12,862

1,579

2007



-153-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

Lake Mary, FL

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES METRO CENTER

6,330

2,684

9,740

3,108

2,684

12,848

15,532

1,579

2007

Phoenix, AZ

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES

11,800

3,203

21,300

306

3,203

21,606

24,809

2,968

2007

Princeton, NJ

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES CRABTREE VALLEY

12,869

2,194

21,292

2,329

2,194

23,621

25,815

2,690

2007

Raleigh, NC

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES CLEVELAND SOLON

5,490

1,900

10,757

1,671

1,900

12,428

14,328

1,480

2007

Solon, OH

 

 

 

 

 

 

 

 

 

HOMEWOOD SUITES COLORADO SPRINGS NORTH

7,830

2,900

14,011

2,481

2,900

16,492

19,392

2,203

2007

Colorado Springs, CO

 

 

 

 

 

 

 

 

 

HYATT REGENCY - OC

-

18,688

93,384

14,412

18,688

107,796

126,484

5,212

2008

Orange County, CA

 

 

 

 

 

 

 

 

 

HYATT - BOSTON/MEDFORD

8,142

2,766

29,141

89

2,766

29,230

31,996

3,660

2008

Medford, MA

 

 

 

 

 

 

 

 

 

MARRIOTT - ATL CENTURY CENTER

9,628

-

36,571

1,670

-

38,241

38,241

5,237

2008

Atlanta, GA

 

 

 

 

 

 

 

 

 

MARRIOTT - CHICAGO - MED DIST UIC

7,896

8,831

17,911

4,667

8,831

22,578

31,409

2,278

2008

Chicago, IL

 

 

 

 

 

 

 

 

 

Marriott - WOODLANDS WATERWAY

-

5,500

98,886

18,093

5,500

116,978

122,478

11,199

2007

Woodlands, TX

 

 

 

 

 

 

 

 

 

QUALITY SUITES

10,350

1,331

13,709

1,374

1,331

15,083

16,414

1,679

2007

Charleston, SC

 

 

 

 

 

 

 

 

 

RESIDENCE INN - BALTIMORE

40,040

-

55,410

831

-

56,242

56,242

5,960

2008

Baltimore, MD

 

 

 

 

 

 

 

 

 

RESIDENCE INN

6,900

1,700

12,629

770

1,700

13,400

15,100

1,484

2007

Brownsville, TX

 

 

 

 

 

 

 

 

 

RESIDENCE INN - CAMBRIDGE

26,726

10,346

72,735

278

10,346

73,013

83,358

7,408

2008

Cambridge, MA

 

 

 

 

 

 

 

 

 

RESIDENCE INN SOUTH BRUNSWICK-CRANBURY

10,000

5,100

15,368

2,071

5,100

17,440

22,540

1,964

2007

Cranbury, NJ

 

 

 

 

 

 

 

 

 

RESIDENCE INN CYPRESS - LOS ALAMITS

20,650

9,200

25,079

3,102

9,200

28,181

37,381

3,165

2007

Cypress, CA

 

 

 

 

 

 

 

 

 

RESIDENCE INN DFW AIRPORT NORTH

9,560

2,800

14,782

525

2,800

15,306

18,106

1,658

2007

Dallas-Fort Worth, TX

 

 

 

 

 

 

 

 

 

RESIDENCE INN PARK CENTRAL

8,970

2,600

17,322

2,514

2,600

19,835

22,435

2,290

2007

Dallas , TX

 

 

 

 

 

 

 

 

 



-154-







 

 

Initial Cost (A)

 

Gross amount at which carried at end of period

 

 

 

Encumbrance

Land

Buildings and Improvements

Adjustments to Basis (C)

Land and Improvements

Buildings and Improvements(D)

Total (D,E)

Accumulated Depreciation (D,F)

Date of Completion of Construction or Acquisition

RESIDENCE INN SOMERSET-FRANKLIN

9,890

3,100

14,322

1,772

3,100

16,094

19,194

1,821

2007

Franklin, NJ

 

 

 

 

 

 

 

 

 

RESIDENCE INN

10,810

5,300

14,632

2,107

5,300

16,740

22,040

1,851

2007

Hauppauge, NY

 

 

 

 

 

 

 

 

 

RESIDENCE INN WESTCHASE

12,550

4,300

16,969

595

4,300

17,564

21,864

1,903

2007

Westchase, TX

 

 

 

 

 

 

 

 

 

RESIDENCE INN WEST UNIVERSITY

13,100

3,800

18,834

302

3,800

19,136

22,936

2,167

2007

Houston, TX

 

 

 

 

 

 

 

 

 

RESIDENCE INN NASHVILLE AIRPORT

12,120

3,500

14,147

1,094

3,500

15,241

18,741

1,636

2007

Nashville, TN

 

 

 

 

 

 

 

 

 

RESIDENCE INN

7,500

1,688

10,812

2,390

1,688

13,202

14,890

2,241

2007

Phoenix, AZ

 

 

 

 

 

 

 

 

 

RESIDENCE INN - POUGHKEEPSIE

8,109

1,003

24,590

223

1,003

24,813

25,815

2,831

2008

Poughkeepsie, NY

 

 

 

 

 

 

 

 

 

RESIDENCE INN ROANOKE AIRPORT

5,122

500

9,499

87

500

9,586

10,086

1,253

2007

Roanoke, VA

 

 

 

 

 

 

 

 

 

RESIDENCE INN WILLIAMS CENTRE

12,770

3,700

17,601

400

3,700

18,001

21,701

2,063

2007

Tucson, AZ

 

 

 

 

 

 

 

 

 

RESIDENCE INN - NEWARK ELIZABETH

10,297

-

41,096

1,835

-

42,931

42,931

4,772

2008

Elizabeth, NJ

 

 

 

 

 

 

 

 

 

SPRINGHILL SUITES

9,130

3,200

14,833

139

3,200

14,972

18,172

1,606

2007

Danbury, CT

 

 

 

 

 

 

 

 

 

TOWNEPLACE SUITES NORTHWEST

7,082

5,332

8,301

1,386

5,332

9,687

15,020

1,459

2007

Austin, TX

 

 

 

 

 

 

 

 

 

TOWNEPLACE SUITES BIRMINGHAM-HOMEWOOD

-

2,220

7,307

1,098

2,220

8,405

10,624

1,374

2007

Birmingham, AL

 

 

 

 

 

 

 

 

 

TOWNEPLACE SUITES NORTHWEST

4,900

2,065

5,223

994

2,065

6,217

8,282

1,026

2007

College Station, TX

 

 

 

 

 

 

 

 

 

TOWNEPLACE SUITES NORTHWEST - CLEARLAKES

5,815

2,267

9,037

1,051

2,267

10,088

12,356

1,381

2007

Houston, TX

 

 

 

 

 

 

 

 

 

TOWNEPLACE SUITES NORTHWEST

-

1,607

11,644

1,329

1,607

12,974

14,581

1,669

2007

Houston, TX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total (1)

4,895,088

1,684,793

7,509,212

357,421

1,684,793

7,866,633

9,551,426

717,547

 


(1) Amounts in this table may not tie to the total due to rounding.




-155-




INLAND AMERICAN REAL ESTATE TRUST, INC.

(A Maryland Corporation)


Schedule III (continued)

Real Estate and Accumulated Depreciation


December 31, 2009


Notes:


(A)

The initial cost to the Company represents the original purchase price of the property, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.


(B)

The aggregate cost of real estate owned at December 31, 2009 for Federal income tax purposes was approximately $9,544,951 (unaudited).


(C)

Cost capitalized subsequent to acquisition includes payments under master lease agreements as well as additional tangible costs associated with investment properties, including any earnout of tenant space.


(D)

Reconciliation of real estate owned:


 

 

2009

2008

2007

 

 

 

 

 

Balance at January 1,

$

8,216,942 

6,167,090 

2,245,907 

Acquisitions and capital improvements

 

1,378,465 

2,184,330 

4,089,650 

Intangible assets

 

(81,052)

(93,870)

(190,681)

Intangible liabilities

 

37,071 

5,968 

22,214 

Sales

 

(46,576)

 

 

 

 

 

Balance at December 31,

$

9,551,426 

8,216,942 

6,167,090 

 

 

 

 

 


(E)

Reconciliation of accumulated depreciation:


Balance at January 1,

$

406,235 

160,046 

38,983 

Depreciation expense

 

311,312 

246,189 

121,063 

 

 

 

 

 

Balance at December 31,

$

717,547 

406,235 

160,046 

 

 

 

 

 


(F)

Depreciation is computed based upon the following estimated lives:


Buildings and improvements

 

5-30 years

Tenant improvements

 

Life of the lease

Furniture, fixtures & equipment

 

5-10 years



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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


Not applicable.


Item 9A(T). Controls and Procedures


As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our principal executive officer and our principal financial officer evaluated as of December 31, 2009, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures, as of December 31, 2009, were effective for the purpose of ensuring that information required to be disclosed by us in this report is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the principal executive officer and our principal financial officer as appropriate to allow timely decisions regarding required disclosures.


Management's Annual Report on Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our management, including our principal executive officer and principal financial officer, evaluated as of December 31, 2009, the effectiveness of our internal control over financial reporting based on the framework in "Internal Control-Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation, our management has concluded that we maintained effective internal control over financial reporting as of December 31, 2009.


This annual report does not include an attestation report of the company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.


Changes in Internal Control over Financial Reporting


There has been no change in our internal control over financial reporting during the fourth quarter of 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


Item 9B. Other Information


None.


Part III


Item 10. Directors, Executive Officers and Corporate Governance


The information required by this Item will be presented in our definitive proxy statement for our 2010 annual meeting of stockholders which we anticipate filing with the SEC no later than April 30, 2010, and is incorporated by reference into this Item 10.


We have adopted a code of ethics, which is available on our website free of charge at http://www.inlandamerican.com. We will provide the code of ethics free of charge upon request to our customer relations group.


Item 11. Executive Compensation


The information required by this Item will be presented in our definitive proxy statement for our 2010 annual meeting of stockholders which we anticipate filing with the SEC no later than April 30, 2010, and is incorporated by reference into this Item 11.



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


The information required by this Item will be presented in our definitive proxy statement for our 2010 annual meeting of stockholders which we anticipate filing with the SEC no later than April 30, 2010, and is incorporated by reference into this Item 12.






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Item 13. Certain Relationships and Related Transactions, and Director Independence


The information required by this Item will be presented in our definitive proxy statement for our 2010 annual meeting of stockholders which we anticipate filing with the SEC no later than April 30, 2010, and is incorporated by reference into this Item 13.


Item 14. Principal Accounting Fees and Services


The information required by this Item will be presented in our definitive proxy statement for our 2010 annual meeting of stockholders which we anticipate filing with the SEC no later than April 30, 2010, and is incorporated by reference into this Item 14.


Part IV


Item 15. Exhibits and Financial Statement Schedules


(a)

List of documents filed:


(1)

Financial Statements:


Report of Independent Registered Public Accounting Firm


The consolidated financial statements of the Company are set forth in the report in Item 8.  


(2)

Financial Statement Schedules:


Financial statement schedule for the year ended December 31, 2009 is submitted herewith.


Real Estate and Accumulated Depreciation (Schedule III)

 


(3)

Exhibits:


The list of exhibits filed as part of this Annual Report is set forth on the Exhibit Index attached hereto.


(b)

Exhibits:


The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.


(c)

Financial Statement Schedules


All schedules other than those indicated in the index have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes.




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SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


INLAND AMERICAN REAL ESTATE TRUST, INC.


 

 

 

 

 

/s/ Brenda G. Gujral

By:

Brenda G. Gujral

 

President and Director

Date:

March 15, 2010


Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


 

Signature

 

Title

Date

 

 

 

 

 

By:

/s/ Robert D. Parks

 

 

March 15, 2010

Name:

Robert D. Parks

 

Director and chairman of the board

 

 

 

 

 

 

By:

/s/ Brenda G. Gujral

 

 

March 15, 2010

Name:

Brenda G. Gujral

 

Director and president (principal executive officer)

 

 

 

 

 

 

By:

/s/ Lori J. Foust

 

 

March 15, 2010

Name:

Lori J. Foust

 

Treasurer and principal financial officer

 

 

 

 

 

 

By:

/s/ Jack Potts

 

 

 

Name:

Jack Potts

 

Principal accounting officer

March 15, 2010

 

 

 

 

 

By:

/s/ J. Michael Borden

 

 

 

Name:

J. Michael Borden

 

Director

March 15, 2010

 

 

 

 

 

By:

/s/ David Mahon

 

 

 

Name:

David Mahon

 

Director

March 15, 2010

 

 

 

 

 

By:

/s/ Thomas F. Meagher

 

 

 

Name:

Thomas F. Meagher

 

Director

March 15, 2010

 

 

 

 

 

By:

/s/ Paula Saban

 

 

 

Name:

Paula Saban

 

Director

March 15, 2010

 

 

 

 

 

By:

/s/ William J. Wierzbicki

 

 

 

Name:

William J. Wierzbicki

 

Director

March 15, 2010

 

 

 

 

 

By:

/s/ Thomas F. Glavin

 

 

 

Name:

Thomas F. Glavin

 

Director

March 15, 2010




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EXHIBIT INDEX

EXHIBIT NO.

DESCRIPTION

 

 

2.1

 

Agreement and Plan of Merger, dated as of April 2, 2007, by and between Inland American Real Estate Trust, Inc., Winston Hotels, Inc., Winn Limited Partnership and Inland American Acquisition (Winston), LLC (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on April 6, 2007)

 

 

 

2.2

 

Agreement and Plan of Merger, dated as of July 25, 2007, by and between Inland American Real Estate Trust, Inc., Apple Hospitality Five, Inc. and Inland American Orchard Hotels, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on July 27, 2007)

 

 

 

2.3

 

Agreement and Plan of Merger, dated as of August 12, 2007, by and among Inland American Real Estate Trust, Inc., RLJ Urban Lodging Master, LLC, RLJ Urban Lodging REIT, LLC and RLJ Urban Lodging REIT (PF#1), LLC, as amended (incorporated by reference to Exhibit 2.3 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on January 25, 2008)

 

 

 

3.1

 

Fifth Articles of Amendment and Restatement of Inland American Real Estate Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on June 19, 2007)

 

 

 

3.2

 

Amended and Restated Bylaws of Inland American Real Estate Trust, Inc., effective as of April 1, 2008 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on April 1, 2008), as amended by the Amendment to the Amended and Restated Bylaws of Inland American Real Estate Trust, Inc., effective as of January 20, 2009 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on January 23, 2009)

 

 

 

4.1

 

Distribution Reinvestment Plan (incorporated by reference to Exhibit 4.1 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on March 31, 2009 (file number 333-158338))

 

 

 

4.2

 

Share Repurchase Program (incorporated by reference to Exhibit 4.2 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on December 20, 2006 (file number 333-139504))

 

 

 

4.3

 

Independent Director Stock Option Plan (incorporated by reference to Exhibit 4.3 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on February 11, 2005 (file number 333-122743))

 

 

 

4.4

 

Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.4 to the Registrant’s Amendment No. 1 to Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on July 31, 2007 (file number 333-139504))

 

 

 

10.1

 

First Amended and Restated Business Management Agreement, dated as of July 30, 2007, by and between Inland American Real Estate Trust, Inc. and Inland American Business Manager & Advisor, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on August 3, 2009)

 

 

 

10.2.1

 

Master Management Agreement, dated as of August 31, 2005, by and between Inland American Real Estate Trust, Inc. and Inland American Retail Management LLC (incorporated by reference to Exhibit 10.2.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 7, 2005), as amended by the First Amendment to Master Management Agreement, dated September 10, 2008, by and between Inland American Real Estate Trust, Inc. and Inland American Retail Management LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 16, 2008)

 

 

 

10.2.2

 

Master Management Agreement, dated as of August 31, 2005, by and between Inland American Real Estate Trust, Inc. and Inland American Apartment Management LLC (incorporated by reference to Exhibit 10.2.2 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 7, 2005), as amended by the First Amendment to Master Management Agreement, dated September 10, 2008, by and between Inland American Real Estate Trust, Inc. and Inland American Apartment Management LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 16, 2008)



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10.2.3

 

Master Management Agreement, dated as of August 31, 2005, by and between Inland American Real Estate Trust, Inc. and Inland American Industrial Management LLC (incorporated by reference to Exhibit 10.2.3 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 7, 2005), as amended by the First Amendment to Master Management Agreement, dated September 10, 2008, by and between Inland American Real Estate Trust, Inc. and Inland American Industrial Management LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 16, 2008)

 

 

 

10.2.4

 

Master Management Agreement, dated as of August 31, 2005, by and between Inland American Real Estate Trust, Inc. and Inland American Office Management LLC (incorporated by reference to Exhibit 10.2.4 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 7, 2005), as amended by the First Amendment to Master Management Agreement, dated September 10, 2008, by and between Inland American Real Estate Trust, Inc. and Inland American Office Management LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on September 16, 2008)

 

 

 

10.3

 

First Amended and Restated Property Acquisition Agreement, dated as of July 30, 2007, by and between Inland American Real Estate Trust, Inc. and Inland American Real Estate Acquisitions, Inc. (incorporated by reference to Exhibit 10.3.1 to the Registrant’s Amendment No. 1 to Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on July 31, 2007 (file number 333-139504))

 

 

 

10.4

 

Form of Indemnification Agreement (previously filed and incorporated by reference to Exhibit 10.5 to the Registrant’s Amendment No. 4 to Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on August 18, 2005 (file number 333-122743))

 

 

 

10.5

 

Securities Purchase And Subscription Agreement among Minto Builders (Florida), Inc., Minto (Delaware), LLC, Minto Holdings Inc. and Inland American Real Estate Trust, Inc. dated as of October 11, 2005 (incorporated by reference to Exhibit 10.5 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

10.6

 

Put/Call Agreement, dated as of October 11, 2005, by and among Minto Builders (Florida), Inc., Inland American Real Estate Trust, Inc., Minto Holdings Inc. and Holders of Common Stock and Series A Preferred Stock as Listed on Schedule A Thereto (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

10.7

 

Shareholders Agreement, dated as of October 11, 2005, by and among Minto Builders (Florida), Inc., Minto Holdings Inc., Inland American Real Estate Trust, Inc. and Holders of Common Stock and Series A Preferred Stock as Listed on Schedule A Thereto (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

10.8

 

Supplemental Shareholders Agreement, dated as of October 11, 2005 by and among Inland American Real Estate Trust, Inc. and Holders of Common Stock and Series A Preferred Stock as Listed on Schedule A Thereto (incorporated by reference to Exhibit 10.8 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

10.9

 

Indemnity Agreement, dated as of June 9, 2008, by Inland American Real Estate Trust, Inc. in favor of and for the benefit of Inland Real Estate Acquisitions, Inc. (incorporated by reference to Exhibit 10.177 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on June 13, 2008)

 

 

 

21.1

 

Subsidiaries of the Registrant*

 

 

 

23.1

 

Consent of KPMG LLP*

 

 

 

31.1

 

Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

31.2

 

Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

32.1

 

Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

 

 

32.2

 

Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

 

 



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99.1

 

Non-Retaliation Policy (incorporated by reference to Exhibit 99.1 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on February 11, 2005 (file number 333-122743))

 

 

 

99.2

 

Responsibilities of the Compliance Officer of the Company (incorporated by reference to Exhibit 99.2 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on February 11, 2005 (file number 333-122743))

 

 

 

99.3

 

First Amended and Restated Articles of Incorporation of Minto Builders (Florida), Inc. (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

99.4

 

Articles of Amendment to the First Amended and Restated Articles of Incorporation of Minto Builders (Florida), Inc. with Respect to 3.5% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 99.2 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

99.5

 

Second Amended and Restated Articles of Incorporation of Minto Builders (Florida), Inc. (incorporated by reference to Exhibit 99.3 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

99.6

 

Articles of Amendment to the Second Amended and Restated Articles of Incorporation of Minto Builders (Florida), Inc. with Respect to Convertible Special Voting Stock (incorporated by reference to Exhibit 99.4 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)

 

 

 

99.7

 

Articles of Amendment to the Second Amended and Restated Articles of Incorporation of Minto Builders (Florida), Inc. with Respect to 125 Shares of 12.5% Series B Cumulative Non-Voting Preferred Stock (incorporated by reference to Exhibit 99.5 to the Registrant’s Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on October 17, 2005)


*

Filed as part of this Annual Report on Form 10-K.





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