Quarterly report pursuant to Section 13 or 15(d)

Investments in Unconsolidated Real Estate Joint Ventures

v3.7.0.1
Investments in Unconsolidated Real Estate Joint Ventures
6 Months Ended
Jun. 30, 2017
Investments In Unconsolidated Real Estate Joint Ventures [Abstract]  
Investments in Unconsolidated Real Estate Joint Ventures
Investments in Unconsolidated Real Estate Joint Ventures
The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures:

As of June 30, 2017
Joint Venture
 
Outlet Center Location
 
Ownership %
 
Square Feet
(in 000's)
 
Carrying Value of Investment (in millions)
 
Total Joint Venture Debt, Net
(in millions)(1)
Columbus
 
Columbus, OH
 
50.0
%
 
355

 
$
6.8

 
$
84.3

National Harbor
 
National Harbor, MD
 
50.0
%
 
341

 
2.8

 
86.3

RioCan Canada
 
Various
 
50.0
%
 
924

 
121.6

 
11.1

Investments included in total assets
 
 
 
 
 
$
131.2

 


 
 
 
 
 
 
 
 
 
 
 
Charlotte(3)
 
Charlotte, NC
 
50.0
%
 
398

 
$
(3.1
)
 
$
89.8

Galveston/Houston (2)(3)
 
Texas City, TX
 
50.0
%
 
353

 
(4.9
)
 
64.9

Investments included in other liabilities

 
 
 
 
 
$
(8.0
)
 




As of December 31, 2016
Joint Venture
 
Outlet Center Location
 
Ownership %
 
Square Feet
(in 000's)
 
Carrying Value of Investment (in millions)
 
Total Joint Venture Debt, Net
(in millions)
(1)
Columbus
 
Columbus, OH
 
50.0
%
 
355

 
$
6.7

 
$
84.2

National Harbor
 
National Harbor, MD
 
50.0
%
 
341

 
4.1

 
86.1

RioCan Canada
 
Various
 
50.0
%
 
901

 
117.3

 
11.1

Investments included in total assets
 
 
 
 
 
$
128.1

 


 
 
 
 
 
 
 
 
 
 
 
Charlotte(3)
 
Charlotte, NC
 
50.0
%
 
398

 
$
(2.5
)
 
$
89.7

Galveston/Houston (2)(3)
 
Texas City, TX
 
50.0
%
 
353

 
(3.8
)
 
64.9

Investments included in other liabilities
 
 
 
 
 
$
(6.3
)
 


(1)
Net of debt origination costs and including premiums of $1.3 million and $1.6 million as of June 30, 2017 and December 31, 2016, respectively.
(2)
In June 2017, the joint venture exercised its extension option and extended the maturity date of the loan from July 2017 to July 2018. In July, the joint venture amended and restated the initial construction loan to increase the amount available to borrow from $70.0 million to $80.0 million and extended the maturity date until July 2020 with two one-year options. The amended and restated loan also changed the interest rate from LIBOR + 1.50% to an interest rate of LIBOR + 1.65%. At the closing of the amendment, the joint venture distributed approximately $14.5 million equally between the partners.
(3)
The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners.

Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
 
 
Three months ended

Six months ended
 
 
June 30,

June 30,
 
 
2017
 
2016

2017

2016
Fee:
 
 
 
 
 
 

 
 

Management and marketing
 
$
570

 
$
797

 
1,112

 
1,544

Development and leasing
 
35

 
353

 
$
67

 
$
545

Loan guarantee
 
4

 
182

 
9

 
364

Total Fees
 
$
609

 
$
1,332

 
$
1,188

 
$
2,453



Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary Balance Sheets - Unconsolidated Joint Ventures" shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis (totaling $3.7 million for both the period ended June 30, 2017 and the period ended December 31, 2016) are amortized over the various useful lives of the related assets.

Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
Condensed Combined Balance Sheets - Unconsolidated Joint Ventures
 
June 30, 2017
 
December 31, 2016
Assets
 
 

 
 

Land
 
$
90,741

 
$
88,015

Buildings, improvements and fixtures
 
520,223

 
503,548

Construction in progress, including land under development
 
8,479

 
13,037

 
 
619,443

 
604,600

Accumulated depreciation
 
(80,452
)
 
(67,431
)
Total rental property, net
 
538,991

 
537,169

Cash and cash equivalents
 
24,610

 
27,271

Deferred lease costs, net
 
12,216

 
13,612

Prepaids and other assets
 
11,522

 
12,567

Total assets
 
$
587,339

 
$
590,619

Liabilities and Owners' Equity
 
 

 
 

Mortgages payable, net
 
$
336,387

 
$
335,971

Accounts payable and other liabilities
 
12,905

 
20,011

Total liabilities
 
349,292

 
355,982

Owners' equity
 
238,047

 
234,637

Total liabilities and owners' equity
 
$
587,339

 
$
590,619






 
 
Three months ended
 
Six months ended
Condensed Combined Statements of Operations (1)
 
June 30,
 
June 30,
 - Unconsolidated Joint Ventures
 
2017
 
2016
 
2017
 
2016
Revenues
 
$
23,285

 
$
29,341

 
$
47,347

 
$
57,039

Expenses:
 
 
 
 
 
 

 
 
Property operating
 
8,877

 
11,078

 
18,255

 
21,396

General and administrative
 
96

 
179

 
216

 
295

Depreciation and amortization
 
6,943

 
9,408

 
14,456

 
18,208

Total expenses
 
15,916

 
20,665

 
32,927

 
39,899

Operating income
 
7,369

 
8,676

 
14,420

 
17,140

Interest expense
 
(2,460
)
 
(2,682
)
 
(4,720
)
 
(5,236
)
Other non-operating income
 
1

 
2

 
3

 
3

Net income
 
$
4,910

 
$
5,996

 
$
9,703

 
$
11,907

 
 
 
 
 
 
 
 
 
The Company and Operating Partnership's share of:
 
 

 
 

Net income
 
$
2,374

 
$
3,466

 
$
4,692

 
$
6,965

Depreciation and amortization expense (real estate related)
 
$
3,550

 
$
5,808

 
$
7,388

 
$
11,147


(1)
The three and six months ended June 30, 2017 includes results from the Columbus outlet center, which opened in June 2016. The three and six months ended June 30, 2016 includes results from our Westgate and Savannah outlet centers, which were previously held in unconsolidated joint ventures prior to acquiring our partners' interest in each venture in June 2016 and August 2016, respectively.