construction in progress and approximately $508.5 million (including accrued interest) in mortgage financing for entertainment, recreational and specialty properties, including certain such properties under development. As of December 31, 2008, our real estate portfolio of megaplex theatre properties consisted of 6.6 million square feet and was 100% occupied, and our remaining real estate portfolio consisted of 3.9 million square feet and was 95% occupied. The combined real estate portfolio consisted of 10.5 million square feet and was 98% occupied. Our theatre properties are leased to ten different leading theatre operators. At December 31, 2008, approximately 51% of our megaplex theatre properties were leased to AMC.
Substantially all of our single-tenant properties are leased pursuant to long-term, triple-net leases, under which the tenants typically pay all operating expenses of a property, including, but not limited to, all real estate taxes, assessments and other governmental charges, insurance, utilities, repairs and maintenance. A majority of our revenues are derived from rents received or accrued under long-term, triple-net leases. Tenants at our multi-tenant properties are typically required to pay common area maintenance charges to reimburse us for their pro rata portion of these costs.
Our real estate mortgage portfolio consists of nine notes. Of the outstanding balance of $508.5 million at December 31, 2008, three notes comprise $372.4 million of the balance and the remainder relates primarily to our ski properties (see Note 4 to the consolidated financial statements included in this Annual Report on Form 10-K for more details of mortgage notes receivable). The three mortgage notes relate to development of Toronto Life Square, an entertainment retail center in Ontario, Canada that was completed in May 2008, and two projects under development at December 31, 2008; a water-park anchored entertainment village in Kansas City, Kansas and a planned resort in Sullivan County, New York. Each of these three investments is discussed in more detail under "Recent Developments" below.
We incur general and administrative expenses including compensation expense for our executive officers and other employees, professional fees and various expenses incurred in the process of identifying, evaluating, acquiring and financing additional properties and mortgage notes. We are self-administered and managed by our Board of Trustees and executive officers. Our primary non-cash expense is the depreciation of our properties. We depreciate buildings and improvements on our properties over a three-year to 40-year period for tax purposes and financial reporting purposes.
Our property acquisitions and financing commitments are financed by cash from operations, borrowings under our revolving credit facilities, term loan facilities and long-term mortgage debt, and the sale of equity securities. It has been our strategy to structure leases and financings to ensure a positive spread between our cost of capital and the rentals paid by our tenants. We have primarily acquired or developed new properties that are pre-leased to a single tenant or multi-tenant properties that have a high occupancy rate. We do not typically develop or acquire properties on a speculative basis or that are not significantly pre-leased. We have also entered into certain joint ventures and we have provided mortgage note financing as described above. We intend to continue entering into some or all of these types of arrangements in the foreseeable future, subject to our ability to do so in light of the current financial and economic environment.
Historically, our primary challenges have been locating suitable properties, negotiating favorable lease or financing terms, and managing our portfolio as we have continued to grow. Because of the knowledge and industry relationships of our management, we have enjoyed favorable

opportunities to acquire, finance and lease properties. While these opportunities are expected to continue to be available in 2009, the current economic downturn and related challenges in the credit market have increased our cost of capital and have caused us to focus more on liquidity and further strengthening our balance sheet. As a result, we expect our capital spending for 2009 to be much lower than in 2008 with a focus primarily on funding existing commitments (see "Liquidity and Capital Resources-Commitments" for more discussion regarding outstanding commitments at December 31, 2008). The economic downturn in 2008 has primarily impacted our projects under development and our non-theatre retail tenants at our entertainment retail centers. During 2009, we expect to advance up to $91.8 million to Concord Resorts, LLC (Concord Resorts), which is the remaining amount under our $225.0 million secured first mortgage loan commitment related to a planned resort development in Sullivan County, New York. Due to the economic downturn, certain other lenders on this development have either reduced their commitments or withdrawn from the project. We expect Concord Resorts to successfully restructure the development at a level requiring substantially less capital. However, there can be no assurance that Concord Resorts will be successful in achieving this restructure or in receiving the financing necessary to complete it, and, as a result, the development project could be delayed. The water-park anchored entertainment village under development has also been downsized and has risks similar to the planned resort development.
With respect to our entertainment retail centers, we currently have one lease with Circuit City and one lease with Bally's, and had leases with two corporately owned Bennigan's. Each of these tenants has either liquidated or filed bankruptcy proceedings. Revenue from these tenants totaled approximately $2.7 million for the year ended December 31, 2008, and $546 thousand of outstanding receivables at December 31, 2008 related to these tenants has been fully reserved. Other smaller tenants at our entertainment retail centers have also experienced difficulty during the economic downturn. If consumer spending continues to decline, there could be additional pressure on retailers' financial performance which could in turn affect their performance under our leases. Income from entertainment retail centers, excluding megaplex theaters, was approximately $51.0 million or 18.0 % of our total revenue for the year ended December 31, 2008; however, excluding megaplex movie theatres, no one retail tenant in aggregate represented more than $2.1 million or 0.7 % of total Company revenues for the year ended December 31, 2008.
Our business is subject to a number of risks and uncertainties, including those described in "Risk Factors" in Item 1A of this report. Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related notes. In preparing these financial statements, management has made its best estimates and assumptions that affect the reported assets and liabilities. The most significant assumptions and estimates relate to consolidation, revenue recognition, depreciable lives of the real estate, the valuation of real estate, accounting for real estate acquisitions and estimating reserves for uncollectible receivables and mortgage notes receivable. Application of these assumptions requires the exercise of judgment as to future uncertainties and, as a result, actual results could differ from these estimates.

Consolidation
We consolidate certain entities if we are deemed to be the primary beneficiary in a variable interest entity (VIE), as defined in FIN No. 46(R), "Consolidation of Variable Interest Entities" (FIN46R). The equity method of accounting is applied to entities in which we are not the primary beneficiary as defined in FIN46R, or do not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. Revenue Recognition
Rents that are fixed and determinable are recognized on a straight-line basis over the minimum terms of the leases. Base rent escalation in other leases is dependent upon increases in the Consumer Price Index (CPI) and accordingly, management does not include any future base rent escalation amounts on these leases in current revenue. Most of our leases provide for percentage rents based upon the level of sales achieved by the tenant. These percentage rents are recognized once the required sales level is achieved. Lease termination fees are recognized when the related leases are canceled and we have no continuing obligation to provide services to such former tenants.
Direct financing lease income is recognized on the effective interest method to produce a level yield on funds not yet recovered. Estimated unguaranteed residual values at the date of lease inception represent management's initial estimates of fair value of the leased assets at the expiration of the lease, not to exceed original cost. Significant assumptions used in estimating residual values include estimated net cash flows over the remaining lease term and expected future real estate values. The estimated unguaranteed residual value is reviewed on an annual basis. The Company evaluates the collectibility of its direct financing lease receivable to determine whether it is impaired. A receivable is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a receivable is considered to be 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 receivable's effective interest rate or to the value of the underlying collateral if the receivable is collateralized. Real Estate Useful Lives
We are required to make subjective assessments as to the useful lives of our properties for the purpose of determining the amount of depreciation to reflect on an annual basis with respect to those properties. These assessments have a direct impact on our net income. Depreciation and amortization are provided on the straight-line method over the useful lives of the assets, as follows:

               Buildings                           40 years
               Tenant improvements                 Base term of
                                                   lease or useful
                                                   life, whichever
                                                   is shorter
               Furniture, fixtures and equipment   3 to 25 years

Impairment of Real Estate Values
We are required to make subjective assessments as to whether there are impairments in the value of our rental properties. These estimates of impairment may have a direct impact on our consolidated financial statements.

We apply the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. We assess the carrying value of our rental properties whenever events or changes in circumstances indicate that the carrying amount of a property may not be recoverable. Certain factors that may occur and indicate that impairments may exist include, but are not limited to: underperformance relative to projected future operating results, tenant difficulties and significant adverse industry or market economic trends. If an indicator of possible impairment exists, a property is evaluated for impairment by comparing the carrying amount of the property to the estimated undiscounted future cash flows expected to be generated by the property. If the carrying amount of a property exceeds its estimated future cash flows on an undiscounted basis, an impairment charge is recognized in the amount by which the carrying amount of the property exceeds the fair value of the property. Management estimates fair value of our rental properties based on projected discounted cash flows using a discount rate determined by management to be commensurate with the risk inherent in the Company. We did not record any impairment charges for 2008. Real Estate Acquisitions
Upon acquisitions of real estate properties, we make subjective estimates of the fair value of acquired tangible assets (consisting of land, building, tenant improvements, and furniture, fixtures and equipment) and identified intangible assets and liabilities (consisting of above and below market leases, in-place leases, tenant relationships and assumed financing that is determined to be above or below market terms) in accordance with SFAS No.141, Business Combinations. We utilize methods similar to those used by independent appraisers in making these estimates. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities. These estimates have a direct impact on our net income.
Allowance for Doubtful Accounts
Management makes quarterly estimates of the collectibility of its accounts receivable related to base rents, tenant escalations (straight-line rents), reimbursements and other revenue or income. Management specifically analyzes trends in accounts receivable, historical bad debts, customer credit worthiness, current economic trends and changes in customer payment terms when evaluating the adequacy of its allowance for doubtful accounts. In addition, when customers are in bankruptcy, management makes estimates of the expected recovery of pre-petition administrative and damage claims. These estimates have a direct impact on our net income.
Mortgage Notes and Other Notes Receivable Mortgage notes and other notes receivable, including related accrued interest receivable, consist of loans that we originated and the related accrued and unpaid interest income as of the balance sheet date. Mortgage notes and other notes receivable are initially recorded at the amount advanced to the borrower and we defer certain loan origination and commitment fees, net of certain origination costs, and amortize them over the term of the related loan. We evaluate the collectibility of both interest and principal for each loan to determine whether it is impaired. A loan is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is considered to be 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 loan's effective interest rate or to the value of the underlying collateral if the loan is collateralized. Interest income on performing loans is accrued as earned. Interest income on impaired loans is recognized on a cash basis. We did not record any impairment charges for 2008.

Recent Developments
Debt Financing
On January 11, 2008, we obtained a non-recourse mortgage loan of $17.5 million. This mortgage is secured by a theatre property located in Garland, Texas. The mortgage loan bears interest at 6.19%, matures on February 1, 2018, and requires monthly principal and interest payments of $127 thousand with a final principal payment at maturity of $11.6 million.
On March 13, 2008, VinREIT, LLC (VinREIT), a subsidiary that holds our vineyard and winery assets, entered into a $65.0 million term loan and revolving credit facility that is non-recourse to us. This credit facility provided for interest at LIBOR plus 1.5% on loans secured by real property and LIBOR plus 1.75% on loans secured by fixtures and equipment. This credit facility also provided for an aggregate advance rate of 65% based on the lesser of cost or appraised value. Term loans secured by real property under this credit facility were amortized over a 25-year period and matured on the earlier of ten years after disbursement or the end of the related real property's lease term. The equipment and fixture loans had a maturity date that is the earlier of ten years or the end of the related lease term and required full principal amortization over the term of the loan. This credit facility also contained an accordion feature whereby, subject to lender approval, we may obtain additional revolving credit and term loan commitments in an aggregate principal amount not to exceed $35.0 million. On September 26, 2008, we amended the original credit facility described above. The overall size of the credit facility was increased from $65.0 million to $129.5 million and is now 30% recourse to us. Loans drawn under the amended credit facility bear interest at LIBOR plus 1.75% on loans secured by real property and LIBOR plus 2.00% on loans secured by fixtures and equipment. Term loans can be drawn through September 26, 2010 under the amended credit facility and the accordion feature was increased to $170.5 million. The revolving feature of the facility was eliminated. The amended credit facility still provides for an aggregate advance rate of 65% based on the lesser of cost or appraised value and the other terms of the original credit facility remain the same. On November 19, 2008, we again amended the credit facility to increase the overall size of the facility from $129.5 million to $160.0 million. As a result of this amendment, the accordion feature was reduced from $170.5 million to $140.0 million. All other terms of the facility remain the same.
The initial disbursement under the credit facility consisted of two term loans secured by real property with an aggregate principal amount of $9.5 million that mature on December 1, 2017 and March 5, 2018. We simultaneously entered into two interest rate swap agreements that fixed the interest rates at a weighted average of 5.77% on these loans through their maturity. On March 24, 2008 and August 20, 2008, we obtained $3.2 million and $5.1 million, respectively, of term loans secured by fixtures and equipment under the facility. These term loans mature on December 1, 2017 and will be fully amortized at maturity. On September 15, 2008, we entered into an interest rate swap agreement that fixed the interest rate on these loans at 5.63% on the outstanding principal through their maturity. Additionally, on September 26, 2008, we obtained four term loans secured by real property with an aggregate principal amount of $74.9 million under the facility that mature on June 5, 2018. We simultaneously entered into four interest rate swap agreements on these loans that fix the interest rate at 5.11% through October 7, 2013. Subsequent to the closing of these loans, approximately $67.3 million of the facility remains available. The net proceeds from the above loans were used to pay down outstanding indebtedness under our unsecured revolving credit facility.

On July 11, 2008, we paid in full our mortgage note payable which had an outstanding balance of principal and interest totaling $90.6 million. This mortgage note payable was secured by eight theatre properties and required monthly principal and interest payments of $689 thousand. The maturity date of the mortgage note payable was July 11, 2028. The mortgage agreement contained a "hyper-amortization" feature, in which the principal payment schedule was rapidly accelerated, and our principal and interest payments were substantially increased, if the balance was not paid in full on the anticipated prepayment date of July 11, 2008.
On August 20, 2008, we obtained a secured mortgage loan commitment of $112.5 million, of which $56.25 million was advanced during the year ended December 31, 2008. The mortgage is secured by the mortgage note receivable entered into with Concord Resorts, LLC in conjunction with the planned resort development as discussed below. The mortgage loan bears interest at LIBOR plus 3.5%, and in the event LIBOR is less than 2.5%, LIBOR shall be deemed to be 2.5% for purposes of calculating the applicable interest rate for the period. The loan matures on September 10, 2010, the same date the related mortgage note receivable is due, and requires monthly interest only payments. The remaining $56.25 million is expected to be advanced to us when we advance the remaining $91.8 million under our mortgage note receivable related to this project. On November 4, 2008, we exercised our option to extend the maturity date of our $235.0 million unsecured revolving credit facility by one additional year to January 31, 2010. In accordance with the credit agreement, we paid an extension fee of $470 thousand and all of the other terms remain the same. Issuance of Series E Preferred Shares
On April 2, 2008, we issued 3,450,000 (including exercise of over-allotment option of 450,000 shares) 9.00% Series E cumulative convertible preferred shares ("Series E preferred shares") at $25.00 per share in a registered public offering for net proceeds of approximately $83.4 million, after underwriting discounts and expenses. We will pay cumulative dividends on the Series E preferred shares from the date of original issuance in the amount of $2.25 per share each year, which is equivalent to 9.00% of the $25 liquidation preference per share. We do not have the right to redeem the Series E preferred shares except in limited circumstances to preserve our REIT status. The Series E preferred shares have no stated maturity and will not be subject to any sinking fund or mandatory redemption. The Series E preferred shares are convertible, at the holder's option, into our common shares at an initial conversion rate of 0.4512 common shares per Series E preferred share, which is equivalent to an initial conversion price of $55.41 per common share. This conversion ratio may increase over time upon certain specified triggering events including if our common share dividend exceeds a certain quarterly threshold which was initially set at $0.84 per common share.
Issuance of Common Shares
On April 2, 2008, we issued 2,415,000 common shares (including exercise of over-allotment option of 315,000 shares) at $48.18 per share in a registered public offering. Total net proceeds after underwriting discounts and expenses were approximately $111.2 million.
On August 5, 2008, we issued pursuant to a registered public offering 1,900,000 of common shares at a purchase price of $50.96 per share. Total net proceeds to the Company after underwriting discounts and expenses were approximately $96.5 million.

The proceeds from the above offerings were used to pay down our unsecured revolving credit facility, to fund the April 2, 2008 CS Fund I membership interest purchase, and the remaining net proceeds were invested in interest-bearing accounts and short-term interest-bearing securities which are consistent with our qualification as a REIT under the Internal Revenue Code. Dividend Reinvestment and Direct Share Purchase Plan On June 26, 2008, we filed an "automatic" shelf registration statement on Form S-3 (File No. 333-151978) covering our revised Dividend Reinvestment and Direct Share Purchase Plan (the "Plan"). The Plan supersedes and replaces our prior dividend reinvestment and direct share purchase plan. Pursuant to the Plan we may issue from time to time on the terms and conditions set forth in the Plan up to 6,000,000 common shares at prices to be determined as described in the Plan. While each capital raise is generally smaller than a typical underwritten public offering, issuing common shares under this plan allows us to access capital on a monthly basis in a cost-effective manner. We have used and intend to continue to use the proceeds from the common shares sold pursuant to the Plan for general corporate purposes. . . .