| 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, 2020 |
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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Investments included in investments in unconsolidated joint ventures: |
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RioCan Canada |
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Various |
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50.0 |
% |
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765 |
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$ |
92.1 |
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$ |
— |
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$ |
92.1 |
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Investments included in other liabilities: |
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Columbus(2)
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Columbus, OH |
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50.0 |
% |
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355 |
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$ |
(3.9 |
) |
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$ |
85.0 |
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Charlotte(2)
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Charlotte, NC |
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50.0 |
% |
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399 |
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(13.1 |
) |
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99.6 |
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National Harbor(2)
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National Harbor, MD |
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50.0 |
% |
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341 |
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(7.8 |
) |
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94.5 |
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Galveston/Houston (2)
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Texas City, TX |
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50.0 |
% |
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353 |
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(20.0 |
) |
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79.9 |
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$ |
(44.8 |
) |
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As of December 31, 2019 |
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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Investments included in investments in unconsolidated joint ventures: |
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RioCan Canada |
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Various |
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50.0 |
% |
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764 |
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$ |
94.7 |
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$ |
9.2 |
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$ |
94.7 |
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Investments included in other liabilities: |
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Columbus(2)
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Columbus, OH |
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50.0 |
% |
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355 |
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$ |
(3.5 |
) |
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$ |
85.0 |
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Charlotte(2)
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Charlotte, NC |
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50.0 |
% |
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399 |
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(13.0 |
) |
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99.5 |
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National Harbor(2)
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National Harbor, MD |
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50.0 |
% |
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341 |
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(5.9 |
) |
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94.4 |
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Galveston/Houston (2)
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Texas City, TX |
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50.0 |
% |
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353 |
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(19.7 |
) |
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79.9 |
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$ |
(42.1 |
) |
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(1) |
Net of debt origination costs of $1.1 million as of June 30, 2020 and net of debt origination cost and including premiums of $1.1 million as of December 31, 2019.
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(2) |
The negative carrying value is due to distributions exceeding contributions and increases or decreases from our equity in earnings of the joint venture. |
Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
Fee: |
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Management and marketing |
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$ |
143 |
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$ |
561 |
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$ |
685 |
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$ |
1,128 |
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Leasing and other fees |
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15 |
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9 |
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35 |
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40 |
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Expense reimbursements from unconsolidated joint ventures |
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566 |
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675 |
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1,448 |
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1,419 |
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Total Fees |
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$ |
724 |
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$ |
1,245 |
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$ |
2,168 |
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$ |
2,587 |
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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 $8.3 million owed in full.
During June 2020, the Rio-Can joint venture recognized an impairment charge related to its Saint-Sauveur property in Quebec. The impairment charge was primarily driven by deterioration of net operating income caused by market competition and the COVID-19 pandemic.
The table below summarizes the impairment charge taken during the second quarter of 2020 (in thousands):
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Impairment Charge(1)
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Outlet Center |
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Total |
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Our Share |
2020 |
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Saint-Sauveur |
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$ |
6,181 |
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$ |
3,091 |
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(1) |
The fair value was determined using an income approach considering the prevailing market income capitalization rates for similar assets. |
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 and $3.8 million as of June 30, 2020 and December 31, 2019, respectively) are amortized over the various useful lives of the related assets.
Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
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Condensed Combined Balance Sheets - Unconsolidated Joint Ventures |
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June 30, 2020 |
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December 31, 2019 |
Assets |
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Land |
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$ |
87,402 |
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$ |
90,859 |
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Buildings, improvements and fixtures |
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457,969 |
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477,061 |
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Construction in progress |
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4,495 |
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4,779 |
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549,866 |
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572,699 |
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Accumulated depreciation |
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(133,199 |
) |
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(132,860 |
) |
Total rental property, net |
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416,667 |
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439,839 |
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Cash and cash equivalents |
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9,274 |
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19,750 |
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Deferred lease costs and other intangibles, net |
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5,554 |
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6,772 |
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Prepaids and other assets |
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26,888 |
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17,789 |
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Total assets |
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$ |
458,383 |
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$ |
484,150 |
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Liabilities and Owners’ Equity |
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Mortgages payable, net |
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$ |
358,923 |
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$ |
368,032 |
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Accounts payable and other liabilities |
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15,627 |
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17,173 |
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Total liabilities |
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374,550 |
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385,205 |
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Owners’ equity |
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83,833 |
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98,945 |
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Total liabilities and owners’ equity |
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$ |
458,383 |
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$ |
484,150 |
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Three months ended |
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Six months ended |
Condensed Combined Statements of Operations |
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June 30, |
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June 30, |
- Unconsolidated Joint Ventures |
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2020 |
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2019 |
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2020 |
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2019 |
Revenues |
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$ |
16,475 |
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$ |
23,575 |
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$ |
38,512 |
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$ |
47,038 |
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Expenses: |
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Property operating |
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6,860 |
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9,611 |
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15,989 |
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19,400 |
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General and administrative |
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123 |
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62 |
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262 |
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152 |
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Asset impairment |
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6,181 |
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— |
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6,181 |
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— |
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Depreciation and amortization |
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5,903 |
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6,317 |
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11,809 |
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12,427 |
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Total expenses |
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19,067 |
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15,990 |
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34,241 |
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31,979 |
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Other income (expense): |
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Interest expense |
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(3,232 |
) |
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(4,138 |
) |
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(6,967 |
) |
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(8,272 |
) |
Other income |
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6 |
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60 |
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61 |
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126 |
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Total other income (expense) |
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(3,226 |
) |
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(4,078 |
) |
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$ |
(6,906 |
) |
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$ |
(8,146 |
) |
Net income (loss) |
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$ |
(5,818 |
) |
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$ |
3,507 |
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$ |
(2,635 |
) |
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$ |
6,913 |
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The Company and Operating Partnership’s share of: |
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Net income (loss) |
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$ |
(2,975 |
) |
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$ |
1,646 |
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$ |
(1,448 |
) |
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$ |
3,275 |
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Depreciation and amortization (real estate related) |
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$ |
3,017 |
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$ |
3,265 |
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$ |
6,035 |
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$ |
6,395 |
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