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:
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As of June 30, 2017 |
Joint Venture |
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Outlet Center Location |
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Ownership % |
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Square Feet
(in 000's)
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Carrying Value of Investment (in millions) |
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Total Joint Venture Debt, Net
(in millions)(1)
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Columbus |
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Columbus, OH |
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50.0 |
% |
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355 |
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$ |
6.8 |
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$ |
84.3 |
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National Harbor |
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National Harbor, MD |
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50.0 |
% |
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341 |
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2.8 |
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86.3 |
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RioCan Canada |
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Various |
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50.0 |
% |
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924 |
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121.6 |
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11.1 |
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Investments included in total assets |
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$ |
131.2 |
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Charlotte(3)
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Charlotte, NC |
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50.0 |
% |
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398 |
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$ |
(3.1 |
) |
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$ |
89.8 |
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Galveston/Houston (2)(3)
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Texas City, TX |
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50.0 |
% |
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353 |
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(4.9 |
) |
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64.9 |
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Investments included in other liabilities
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$ |
(8.0 |
) |
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As of December 31, 2016 |
Joint Venture |
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Outlet Center Location |
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Ownership % |
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Square Feet
(in 000's)
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Carrying Value of Investment (in millions) |
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Total Joint Venture Debt, Net (in millions)(1)
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Columbus |
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Columbus, OH |
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50.0 |
% |
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355 |
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$ |
6.7 |
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$ |
84.2 |
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National Harbor |
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National Harbor, MD |
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50.0 |
% |
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341 |
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4.1 |
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86.1 |
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RioCan Canada |
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Various |
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50.0 |
% |
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901 |
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117.3 |
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11.1 |
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Investments included in total assets |
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$ |
128.1 |
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Charlotte(3)
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Charlotte, NC |
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50.0 |
% |
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398 |
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$ |
(2.5 |
) |
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$ |
89.7 |
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Galveston/Houston (2)(3)
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Texas City, TX |
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50.0 |
% |
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353 |
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(3.8 |
) |
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64.9 |
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Investments included in other liabilities |
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$ |
(6.3 |
) |
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(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.
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(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 $14.5 million equally between the partners.
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(3) |
The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners. |
Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2017 |
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2016 |
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2017 |
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2016 |
Fee: |
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Management and marketing |
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$ |
570 |
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$ |
797 |
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1,112 |
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1,544 |
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Development and leasing |
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35 |
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353 |
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$ |
67 |
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$ |
545 |
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Loan guarantee |
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4 |
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182 |
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9 |
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364 |
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Total Fees |
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$ |
609 |
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$ |
1,332 |
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$ |
1,188 |
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$ |
2,453 |
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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 $3.7 million for both the period ended June 30, 2017 and the period ended December 31, 2016) are amortized over the various useful lives of the related assets.
Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
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Condensed Combined Balance Sheets - Unconsolidated Joint Ventures |
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June 30, 2017 |
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December 31, 2016 |
Assets |
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Land |
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$ |
90,741 |
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$ |
88,015 |
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Buildings, improvements and fixtures |
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520,223 |
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503,548 |
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Construction in progress, including land under development |
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8,479 |
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13,037 |
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619,443 |
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604,600 |
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Accumulated depreciation |
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(80,452 |
) |
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(67,431 |
) |
Total rental property, net |
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538,991 |
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537,169 |
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Cash and cash equivalents |
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24,610 |
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27,271 |
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Deferred lease costs, net |
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12,216 |
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13,612 |
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Prepaids and other assets |
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11,522 |
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12,567 |
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Total assets |
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$ |
587,339 |
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$ |
590,619 |
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Liabilities and Owners' Equity |
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Mortgages payable, net |
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$ |
336,387 |
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$ |
335,971 |
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Accounts payable and other liabilities |
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12,905 |
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20,011 |
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Total liabilities |
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349,292 |
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355,982 |
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Owners' equity |
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238,047 |
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234,637 |
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Total liabilities and owners' equity |
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$ |
587,339 |
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$ |
590,619 |
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Three months ended |
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Six months ended |
Condensed Combined Statements of Operations (1)
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June 30, |
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June 30, |
- Unconsolidated Joint Ventures |
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2017 |
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2016 |
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2017 |
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2016 |
Revenues |
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$ |
23,285 |
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$ |
29,341 |
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$ |
47,347 |
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$ |
57,039 |
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Expenses: |
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Property operating |
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8,877 |
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11,078 |
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18,255 |
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21,396 |
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General and administrative |
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96 |
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179 |
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216 |
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295 |
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Depreciation and amortization |
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6,943 |
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9,408 |
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14,456 |
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18,208 |
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Total expenses |
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15,916 |
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20,665 |
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32,927 |
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39,899 |
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Operating income |
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7,369 |
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8,676 |
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14,420 |
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17,140 |
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Interest expense |
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(2,460 |
) |
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(2,682 |
) |
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(4,720 |
) |
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(5,236 |
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Other non-operating income |
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1 |
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2 |
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3 |
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3 |
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Net income |
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$ |
4,910 |
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$ |
5,996 |
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$ |
9,703 |
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$ |
11,907 |
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The Company and Operating Partnership's share of: |
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Net income |
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$ |
2,374 |
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$ |
3,466 |
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$ |
4,692 |
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$ |
6,965 |
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Depreciation and amortization expense (real estate related) |
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$ |
3,550 |
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$ |
5,808 |
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$ |
7,388 |
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$ |
11,147 |
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(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. |
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