Quarterly report pursuant to Section 13 or 15(d)

Investments in Unconsolidated Real Estate Joint Ventures

v3.20.2
Investments in Unconsolidated Real Estate Joint Ventures
 9 Months Ended
Sep. 30, 2020
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 September 30, 2020
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)
Investments included in investments in unconsolidated joint ventures:
RioCan Canada Various 50.0  % 765  $ 92.5  $ — 
$ 92.5 
Investments included in other liabilities:
Columbus(2)
Columbus, OH 50.0  % 355  $ (3.6) $ 85.0 
Charlotte(2)
Charlotte, NC 50.0  % 399  (13.1) 99.6 
National Harbor(2)
National Harbor, MD 50.0  % 341  (8.7) 94.5 
Galveston/Houston (2)
Texas City, TX 50.0  % 353  (19.8) 79.9 
$ (45.2)
As of December 31, 2019
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)
Investments included in investments in unconsolidated joint ventures:
RioCan Canada Various 50.0  % 764  $ 94.7  $ 9.2 
$ 94.7 
Investments included in other liabilities:
Columbus(2)
Columbus, OH 50.0  % 355  $ (3.5) $ 85.0 
Charlotte(2)
Charlotte, NC 50.0  % 399  (13.0) 99.5 
National Harbor(2)
National Harbor, MD 50.0  % 341  (5.9) 94.4 
Galveston/Houston (2)
Texas City, TX 50.0  % 353  (19.7) 79.9 
$ (42.1)

(1)Net of debt origination costs of $1.1 million as of September 30, 2020 and net of debt origination cost and including premiums of $1.1 million as of December 31, 2019.
(2)The negative carrying value is due to distributions exceeding contributions and increases or decreases from our equity in earnings of the joint venture.

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 Nine months ended
September 30, September 30,
  2020 2019 2020 2019
Fee:    
Management and marketing $ 471  $ 567  $ 1,156  $ 1,696 
Leasing and other fees 15  32  50  71 
Expense reimbursements from unconsolidated joint ventures 708  757  2,156  2,176 
Total Fees $ 1,194  $ 1,356  $ 3,362  $ 3,943 

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 $3.6 million and $3.8 million as of September 30, 2020 and December 31, 2019, respectively) are amortized over the various useful lives of the related assets.

Galveston/Houston

In June 2020, in response to the COVID-19 impact on the property, the Galveston/Houston joint venture amended its mortgage loan. The loan modification amended the first one-year extension option to provide for two six-month options (the “First Extension” and “Second Extension”, respectively). Under the loan modification, the joint venture is prohibited from making partner distributions during the term of the First Extension.  If the joint venture exercises all available options, the loan would mature in July 2022.  The joint venture exercised its First Extension option to extend the mortgage loan for six months to January 2021.

RioCan Canada

In May 2020, the joint venture’s mortgage loan for the outlet center in Saint-Sauveur matured and the joint venture repaid the approximately $8.3 million owed in full.
During June 2020, the Rio-Can joint venture recognized an impairment charge related to its Saint-Sauveur property in Quebec. The impairment charge was primarily driven by deterioration of net operating income caused by market competition and the COVID-19 pandemic.

The table below summarizes the impairment charge taken during the second quarter of 2020 (in thousands):
Impairment Charge(1)
Outlet Center Total Our Share
2020 Saint-Sauveur $ 6,181  $ 3,091 
(1)The fair value was determined using an income approach considering the prevailing market income capitalization rates for similar 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 September 30, 2020 December 31, 2019
Assets    
Land $ 88,312  $ 90,859 
Buildings, improvements and fixtures 461,593  477,061 
Construction in progress 4,801  4,779 
554,706  572,699 
Accumulated depreciation (138,622) (132,860)
Total rental property, net 416,084  439,839 
Cash and cash equivalents 16,515  19,750 
Deferred lease costs and other intangibles, net 5,134  6,772 
Prepaids and other assets 24,355  17,789 
Total assets $ 462,088  $ 484,150 
Liabilities and Owners’ Equity    
Mortgages payable, net $ 358,940  $ 368,032 
Accounts payable and other liabilities 15,911  17,173 
Total liabilities 374,851  385,205 
Owners’ equity 87,237  98,945 
Total liabilities and owners’ equity $ 462,088  $ 484,150 
  Three months ended Nine months ended
Condensed Combined Statements of Operations September 30, September 30,
 - Unconsolidated Joint Ventures 2020 2019 2020 2019
Revenues $ 16,959  $ 23,050  $ 55,470  $ 70,088 
Expenses:  
Property operating 8,035  8,380  24,023  27,780 
General and administrative 82  19  344  171 
Asset impairment —  —  6,181  — 
Depreciation and amortization 5,877  6,051  17,686  18,478 
Total expenses 13,994  14,450  48,234  46,429 
Other income (expense):
Interest expense (3,024) (4,059) (9,991) (12,331)
Other income 104  179  165  305 
Total other income (expense) (2,920) (3,880) $ (9,826) $ (12,026)
Net income (loss) $ 45  $ 4,720  $ (2,590) $ 11,633 
The Company and Operating Partnership’s share of:    
Net income (loss) $ (42) $ 2,329  $ (1,490) $ 5,604 
Depreciation and amortization (real estate related) $ 3,003  $ 3,058  $ 9,038  $ 9,453