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Noncontrolling Interests | 9 Months Ended
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Sep. 30, 2016
Noncontrolling Interests. |
Noncontrolling Interests | 10.Noncontrolling Interests In January 2013, we completed our acquisition of ARCT. Equity issued as consideration for this transaction included common and preferred partnership units issued by Tau Operating Partnership, L.P., or Tau Operating Partnership, the consolidated subsidiary which owns properties acquired through the ARCT acquisition. We and our subsidiaries hold a 99.4% interest in Tau Operating Partnership, and consolidate the entity. In June 2013, we completed the acquisition of a portfolio of properties by issuing common partnership units in Realty Income, L.P. The units were issued as consideration for the acquisition. At September 30, 2016, the remaining units from this issuance represent a 0.4% ownership in Realty Income, L.P. We hold the remaining 99.6% interests in this entity and consolidate the entity. A.Neither of the common partnership units have voting rights. Both common partnership units are entitled to monthly distributions equal to the amount paid to common stockholders of Realty Income, and are redeemable in cash or Realty Income common stock, at our option, and at a conversion ratio of one to one, subject to certain exceptions. Noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the balance sheet was appropriate. We determined that the units meet the requirements to qualify for presentation as permanent equity. The following table represents the change in the carrying value of all noncontrolling interests through September 30, 2016 (dollars in thousands):
|  | Tau Operating |  | Realty Income, L.P. |  |  |
|  | Partnership units(1) |  | units(2) |  | Total |
Carrying value at December 31, 2015 |  | $ | 13,410 |  | $ | 8,327 |  | $ | 21,737 |
Reallocation of equity |  | 491 |  | 52 |  | 543 |
Redemptions |  | - |  | (6,161 | ) | (6,161 | )
Distributions |  | (570 | ) | (406 | ) | (976 | )
Allocation of net income |  | 204 |  | 419 |  | 623 |
Carrying value at September 30, 2016 |  | $ | 13,535 |  | $ | 2,231 |  | $ | 15,766 |
| (1) |  | 317,022 Tau Operating Partnership units were issued on January 22, 2013 and remained outstanding as of September 30, 2016 and December 31, 2015.
| (2) |  | 534,546 Realty Income, L.P. units were issued on June 27, 2013, 331,364 units were outstanding as of December 31, 2015, and 88,182 remain outstanding as of September 30, 2016.
B. The Tau Operating Partnership preferred units were recorded at fair value as of the date of acquisition. Since they were redeemable at a fixed price on a determinable date, we initially classified them in other liabilities on our consolidated balance sheets. Payments on these preferred units were made monthly at a rate of 2% per annum and were included in interest expense. In January 2015, we redeemed all 6,750 Tau Operating Partnership preferred units for $1,000 per unit, plus accrued and unpaid distributions. C. During the first quarter of 2016, we adopted ASU 2015-02, which amends Topic 810, Consolidation. This ASU amended the criteria used to evaluate whether an entity is a variable interest entity, or VIE, resulting in the conclusion that all limited partnerships are considered VIEs, unless substantive kick-out rights or participating rights exist. Accordingly, we determined that both Tau Operating Partnership and Realty Income, L.P. are VIEs. We have also concluded that we are the primary beneficiary of these VIEs, based on our controlling financial interests. We evaluated the minority unitholder rights noting that they do not hold substantive kick-out rights or participating rights. These conclusions did not result in changes to our historical accounting for these partnerships. Below is a summary of selected financial data of consolidated VIEs for which we are the primary beneficiary included in the consolidated balance sheets at September 30, 2016 and December 31, 2015 (in thousands):
|  | September 30, 2016 |  | December 31, 2015 |
Net real estate |  | $ | 3,003,824 |  | $ | 3,033,180 |
Total assets |  | 3,466,298 |  | 3,529,667 |
Total debt |  | 241,176 |  | 389,105 |
Total liabilities |  | 327,826 |  | 478,955 |

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- Definition The entire disclosure for noncontrolling interest in consolidated subsidiaries, which could include the name of the subsidiary, the ownership percentage held by the parent, the ownership percentage held by the noncontrolling owners, the amount of the noncontrolling interest, the location of this amount on the balance sheet (when not reported separately), an explanation of the increase or decrease in the amount of the noncontrolling interest, the noncontrolling interest share of the net Income or Loss of the subsidiary, the location of this amount on the income statement (when not reported separately), the nature of the noncontrolling interest such as background information and terms, the amount of the noncontrolling interest represented by preferred stock, a description of the preferred stock, and the dividend requirements of the preferred stock. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.31) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=64809438&loc=SL4573702-111684 + Details
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