As the REITs review their fourth quarter activities and prepare to announce their results in the next couple of weeks, they're taking a hard look at their balance sheets. And they're finding the need to take impairments. Just this week, AIMCO, an apartment REIT based in Denver, and Camden Property Trust in Houston, announced they were shelving projects and taking charges for those actions.

After announcing a pre-tax restructuring charge of $21 million to $28 million at the beginning of the month, AIMCO announced yesterday that it's taking charges for stopping work on three California assets. The company determined it would need to take impairment losses of $85.4 million for the Lincoln Place property, in Venice, Calif.; $5.7 million for Treetops, a vacant property located in San Bruno, Calif.; and $16.3 million for Casden Properties, a Southern California development in which AIMCO had a 20 percent interest.

"The bulk of AIMCO's impairments stemmed from assets they acquired to reposition," says Taylor Schimkat, senior associate for Green Street Advisors, a Newport Beach, Calif.-based REIT consulting and research firm.

Earlier in the week, Camden announced that it would halt five development projects and that it has eliminated additional construction and development employee positions. Altogether, the REIT reduced its workforce by approximately 3 percent and the number of development personnel by 50 percent.

As a result of these moves, the company will take a fourth quarter non-cash charge of approximately $51.3 million, which reflects a $48.6 million impairment in the carrying value of land holdings for the development projects; a $1.6 million charge for a land parcel held for investment; and a $1.1 million charge associated with abandoning a potential joint venture development project. It will also take a $1 million charge for severance costs during the first quarter of 2009.

Camden still has 12 wholly owned land parcels held for future development with a total cost basis of about $184 million. Though the REIT doesn't expect to start new construction in the first half of 2009, it plans to complete construction on one wholly owned apartment community and four joint venture apartment communities this year.

The good news is that Camden saw this coming and adjusted its pipeline, according to CEO Ric Campo. "Several of Camden's markets began to experience signs of stress in mid-2007 from job losses related to dislocation in the housing industry," he said in a statement. "As a result, we have been and remain cautious regarding new development starts. Other than through our joint ventures, we did not initiate any development starts in 2008, leaving us with very little remaining to fund on our current development pipeline. We believe we have adequate liquidity to fund our remaining construction obligations and meet our near-term debt maturities."