Real Estate and Other, Net
Real estate and other consists of ongoing operating income from our real estate subsidiaries whose investments are in REITs, as well as investments in joint ventures that own regional mall properties. Real estate and other also includes net gains from the sale of facilities and equipment that are no longer used in operations, asset impairments and other non-operating charges and credits.
The composition of Real estate and other, net was as follows:
|
| | | | | | | | | | | | |
($ in millions) | | 2013 | | 2012 | | 2011 |
Gain on sale or redemption of non-operating assets, net: | | |
| | |
| | |
|
Sale or Redemption of Simon Property Group, L.P. (SPG) REIT units | | $ | (24 | ) | | $ | (200 | ) | | $ | — |
|
Sale of CBL & Associates Properties, Inc. (CBL) REIT shares | | — |
| | (15 | ) | | — |
|
Sale of leveraged lease assets | | — |
| | (28 | ) | | — |
|
Sale of investments in joint ventures | | (85 | ) | | (151 | ) | | — |
|
Sale of non-operating assets | | (23 | ) | | (3 | ) | | — |
|
Net gain on sale or redemption of non-operating assets | | (132 | ) | | (397 | ) | | — |
|
Dividend income from REITs | | (1 | ) | | (6 | ) | | (10 | ) |
Investment income from joint ventures | | (6 | ) | | (11 | ) | | (13 | ) |
Net gain from sale of operating assets | | (17 | ) | | — |
| | (6 | ) |
Store impairments | | 18 |
| | 26 |
| | 58 |
|
Intangible asset impairment | | 9 |
| | — |
| | — |
|
Operating asset impairments | | — |
| | 60 |
| | — |
|
Other | | (26 | ) | | 4 |
| | (8 | ) |
Real estate and other (income)/expense, net | | $ | (155 | ) | | $ | (324 | ) | | $ | 21 |
|
REIT Assets
On July 20, 2012, SPG redeemed two million of our REIT units at a price of $124.00 per unit for a total redemption price of $246 million, net of fees. As of the market close on July 19, 2012, the SPG REIT units had a fair market value of $158.13 per unit. In connection with the redemption, we realized a net gain of $200 million determined using the first-in-first-out method for determining the cost of REIT units sold. Following the transaction, we continued to hold approximately 205,000 REIT units in SPG. In November 2013, we converted our remaining 205,000 REIT units into SPG shares, which were sold in December 2013 at an average price of $151.97 per share for a total price of $31 million, net of fees, and a realized net gain of $24 million.
On October 23, 2012, we sold all of our CBL REIT shares at a price of $21.35 per share for a total price of $40 million, net of fees. In connection with the sale, we realized a net gain of $15 million.
See Note 9 for the related fair value disclosures and Note 12 for the net unrealized gains on our REIT assets.
Leveraged Leases
During the third quarter of 2012, we sold all of our leveraged lease assets for $146 million, net of fees. The investments in the leveraged lease assets as of the dates of the sales were $118 million and were recorded in Other assets in the Consolidated Balance Sheets. In connection with the sales, we recorded a net gain of $28 million.
Joint Ventures
During the third quarter of 2013, we sold our investment in three joint ventures for $32 million, resulting in a net gain of $23 million. During the second quarter of 2013, we sold our investment in one joint venture for $55 million, resulting in a net gain of $62 million. The gain for this transaction exceeded the cash proceeds as a result of distributions of cash related to refinancing activities in prior periods that were recorded as net reductions in the carrying amount of the investment. The net book value of the joint venture investment was a negative $7 million and was included in Other liabilities in the Consolidated Balance Sheets.
During the third quarter of 2012, we sold our investments in four joint ventures that own regional mall properties for $90 million, resulting in net gains totaling $151 million. The gain exceeded the cash proceeds as a result of distributions of cash related to refinancing activities in prior periods that were recorded as net reductions in the carrying amount of the investments. The cumulative net book value of the joint venture investments was a negative $61 million and was included in Other liabilities in the Consolidated Balance Sheets.
Non-operating Assets
During the fourth quarter of 2013, we sold 10 properties used in our former auto center operations for net proceeds of $25 million, resulting in net gains totaling $22 million. During the third quarter of 2013, we sold approximately 10 acres of excess land for net proceeds and gain of $1 million.
During the third quarter of 2012, we sold a building used in our former drugstore operations with a net book value of zero for $3 million resulting in a net gain of $3 million.
Operating Assets
During the first quarter of 2013, we sold our leasehold interest of a former department store location with a net book value of $2 million for net proceeds of $18 million, realizing a gain of $16 million. During the second quarter of 2013, we sold two properties for total net proceeds and gain of $1 million.
Impairments
In 2013, store impairments totaled $18 million and related to 25 underperforming department stores that continued to operate. In addition, during the fourth quarter of 2013, we recorded a $9 million impairment charge for our ownership of the U.S. and Puerto Rico rights of the monet trade name. (See Note 9).
In 2012, store impairments totaled $26 million and related to 13 underperforming department stores that continued to operate (See Note 9). In addition, during the fourth quarter of 2012, we wrote off $60 million of store-related operating assets that were no longer being used in our operations.
In 2011, store impairments totaled $58 million and related to eight underperforming department stores of which seven continued to operate.
