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Investments in Partially Owned Entities | 3 Months Ended
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Mar. 31, 2015
Investments in Partially Owned Entities [Abstract] |
Investments in Partially Owned Entities | 6. Investments in Partially Owned Entities The Company has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following tables and information summarize the Company’s investments in partially owned entities as of March 31, 2015 (amounts in thousands except for project and apartment unit amounts):
| Consolidated |  | Unconsolidated
| Development Projects |  |  |  |  |  |  |  |
| Held for and/or Under Development |  | Operating |  | Total |  | Operating |  | Total
Total projects (1) | — |  |  | 19 |  |  | 19 |  |  | 3 |  |  | 3 |
Total apartment units (1) | — |  |  | 3,771 |  |  | 3,771 |  |  | 1,281 |  |  | 1,281 |
Balance sheet information at 3/31/15 (at 100%): |  |  |  |  |  |  |  |  |
ASSETS |  |  |  |  |  |  |  |  |
Investment in real estate | $ | 347,809 |  |  | $ | 684,686 |  |  | $ | 1,032,495 |  |  | $ | 290,077 |  |  | $ | 290,077 |
Accumulated depreciation | (991 | ) |  | (200,002 | ) |  | (200,993 | ) |  | (21,388 | ) |  | (21,388 | )
Investment in real estate, net | 346,818 |  |  | 484,684 |  |  | 831,502 |  |  | 268,689 |  |  | 268,689 |
Cash and cash equivalents | — |  |  | 13,775 |  |  | 13,775 |  |  | 7,598 |  |  | 7,598 |
Investments in unconsolidated entities | — |  |  | 51,363 |  |  | 51,363 |  |  | — |  |  | — |
Deposits – restricted | 15,640 |  |  | 310 |  |  | 15,950 |  |  | 246 |  |  | 246 |
Deferred financing costs, net | — |  |  | 2,052 |  |  | 2,052 |  |  | 7 |  |  | 7 |
Other assets | 6,697 |  |  | 26,227 |  |  | 32,924 |  |  | 1,327 |  |  | 1,327 |
Total assets | $ | 369,155 |  |  | $ | 578,411 |  |  | $ | 947,566 |  |  | $ | 277,867 |  |  | $ | 277,867 |
LIABILITIES AND EQUITY/CAPITAL |  |  |  |  |  |  |  |  |
Mortgage notes payable (2) | $ | — |  |  | $ | 360,567 |  |  | $ | 360,567 |  |  | $ | 175,276 |  |  | $ | 175,276 |
Accounts payable & accrued expenses | 8,731 |  |  | 3,188 |  |  | 11,919 |  |  | 389 |  |  | 389 |
Accrued interest payable | — |  |  | 1,283 |  |  | 1,283 |  |  | 691 |  |  | 691 |
Other liabilities | 257 |  |  | 576 |  |  | 833 |  |  | 834 |  |  | 834 |
Security deposits | 150 |  |  | 1,976 |  |  | 2,126 |  |  | 531 |  |  | 531 |
Total liabilities | 9,138 |  |  | 367,590 |  |  | 376,728 |  |  | 177,721 |  |  | 177,721 |
Noncontrolling Interests – Partially Owned Properties/Partners' equity | 117,350 |  |  | 5,311 |  |  | 122,661 |  |  | 90,878 |  |  | 90,878 |
Company equity/General and Limited Partners' Capital | 242,667 |  |  | 205,510 |  |  | 448,177 |  |  | 9,268 |  |  | 9,268 |
Total equity/capital | 360,017 |  |  | 210,821 |  |  | 570,838 |  |  | 100,146 |  |  | 100,146 |
Total liabilities and equity/capital | $ | 369,155 |  |  | $ | 578,411 |  |  | $ | 947,566 |  |  | $ | 277,867 |  |  | $ | 277,867 |
| Consolidated |  | Unconsolidated
| Development Projects |  |  |  |  |  |  |  |
| Held for and/or Under Development |  |  |  |  |  | Operating |  |
|  | Operating |  | Total |  |  | Total
Operating information for the quarter ended 3/31/15 (at 100%): |  |  |  |  |  |  |  |  |
Operating revenue | $ | 250 |  |  | $ | 22,688 |  |  | $ | 22,938 |  |  | $ | 7,813 |  |  | $ | 7,813 |
Operating expenses | 418 |  |  | 6,875 |  |  | 7,293 |  |  | 2,443 |  |  | 2,443 |
Net operating (loss) income | (168 | ) |  | 15,813 |  |  | 15,645 |  |  | 5,370 |  |  | 5,370 |
Depreciation | 991 |  |  | 5,520 |  |  | 6,511 |  |  | 3,076 |  |  | 3,076 |
General and administrative/other | — |  |  | 15 |  |  | 15 |  |  | 56 |  |  | 56 |
Operating (loss) income | (1,159 | ) |  | 10,278 |  |  | 9,119 |  |  | 2,238 |  |  | 2,238 |
Interest and other income | — |  |  | 4 |  |  | 4 |  |  | — |  |  | — |
Other expenses | — |  |  | (50 | ) |  | (50 | ) |  | — |  |  | — |
Interest: |  |  |  |  |  |  |  |  |
Expense incurred, net | — |  |  | (3,884 | ) |  | (3,884 | ) |  | (2,346 | ) |  | (2,346 | )
Amortization of deferred financing costs | — |  |  | (89 | ) |  | (89 | ) |  | (1 | ) |  | (1 | )
(Loss) income before income and other taxes and (loss) from investments in unconsolidated entities | (1,159 | ) |  | 6,259 |  |  | 5,100 |  |  | (109 | ) |  | (109 | )
Income and other tax (expense) benefit | — |  |  | (35 | ) |  | (35 | ) |  | (18 | ) |  | (18 | )
(Loss) from investments in unconsolidated entities | — |  |  | (377 | ) |  | (377 | ) |  | — |  |  | — |
Net (loss) income | $ | (1,159 | ) |  | $ | 5,847 |  |  | $ | 4,688 |  |  | $ | (127 | ) |  | $ | (127 | )
(1) | Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
(2) | All debt is non-recourse to the Company.
Note: | The above tables exclude the Company's interests in unconsolidated joint ventures entered into with AvalonBay Communities, Inc. (“AVB”)in connection with the acquisition of certain real estate related assets from Archstone Enterprise LP (such assets are referred to herein as "Archstone"). These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities/litigation, as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests had an aggregate liquidation value of $72.6 million at March 31, 2015. The ventures are owned 60% by the Company and 40% by AVB.
The Company is the controlling partner in various consolidated partnership properties and development properties having a noncontrolling interest book value of $122.7 million at March 31, 2015. The Company does not have any variable interest entities. Operating Properties On February 27, 2013, in conjunction with the acquisition of Archstone, the Company acquired an interest in the Wisconsin Place joint venture. This project contains a mixed-use site located in Chevy Chase, Maryland consisting of residential, retail, office and accessory uses, including underground parking facilities. The Company has a 75% equity interest with an initial basis of $198.5 million in the 432 unit residential component. The Company is the managing member, was responsible for constructing the residential project and its partner does not have substantive kick-out or participating rights. As a result, the entity that owns the residential component of this mixed-use site is required to be consolidated on the Company's balance sheet. Such entity also retains an unconsolidated interest in an entity that owns the land underlying the entire project and owns and operates the parking facility. The initial fair value of this investment is $56.5 million. The Company does not have any ownership interest in the retail and office components. On February 27, 2013, in conjunction with the acquisition of Archstone, the Company acquired an interest in the Waterton Tenside joint venture. This venture was formed to develop and operate a 336 unit apartment property located in Atlanta, Georgia. The Company has a 20% equity interest with an initial basis of $5.1 million. The partner is the managing member and developed the project. The project is encumbered by a non-recourse mortgage loan that has a current outstanding balance of $29.8 million, bears interest at 3.66% and matures December 1, 2018. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting. The Company admitted an 80% institutional partner to two separate entities/transactions (Nexus Sawgrass in December 2010 and Domain in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in each of these entities. These projects are now unconsolidated. Details of these projects follow:
• | Nexus Sawgrass – This development project was completed and stabilized during the quarter ended September 30, 2014. Total project costs were approximately $78.6 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $48.7 million and a current unconsolidated outstanding balance of $48.6 million; the loan bears interest at 5.60% and matures January 1, 2021.
• | Domain – This development project was completed and stabilized during the quarter ended March 31, 2015. Total project costs were approximately $155.8 million and construction was predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $98.6 million and a current unconsolidated outstanding balance of $96.8 million; the loan bears interest at 5.75% and matures January 1, 2022.
While the Company is the managing member of both of the joint ventures, was responsible for constructing both of the projects and had given certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the ongoing projects. The Company currently has no further funding obligations related to these projects. Development Project Prism at Park Ave South – In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. The Company is the managing member and Toll Brothers does not have substantive kick-out or participating rights. Until the core and shell of the building is complete, the building and land will be owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the master condominium association has been legally established, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above, restricted deposits and taxes and fees. As of March 31, 2015, the Company's and Toll Brothers' consolidated contributions to the joint venture were approximately $339.4 million, of which Toll Brothers' noncontrolling interest balance totaled $117.4 million. Other On February 27, 2013, in connection with the acquisition of Archstone, subsidiaries of the Company and AVB entered into three limited liability company agreements (collectively, the “Residual JV”). The Residual JV owns certain non-core Archstone assets, such as interests in a three property portfolio of apartment buildings and succeeded to certain residual Archstone liabilities/litigation. The Residual JV is owned 60% by the Company and 40% by AVB and the Company's initial investment was $147.6 million. The Residual JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Residual JV is unconsolidated and recorded using the equity method of accounting. During the quarter ended March 31, 2015, the Company received approximately $19.0 million in distributions from the Residual JV as a result of the winddown/sale of remaining assets owned by the Residual JV and a partial litigation settlement received by the Residual JV. The Company's pro rata share of the distributions related to the winddown of the German dispositions that occurred in 2014 was approximately $2.0 million during the quarter ended March 31, 2015 and $100.5 million cumulatively since the acquisition of Archstone. The Company's pro rata share of the proceeds related to the sale of certain remaining assets owned by the Residual JV and the partial litigation settlement received by the Residual JV were approximately $10.4 million and $6.6 million, respectively. On February 27, 2013, in connection with the acquisition of Archstone, a subsidiary of the Company and AVB entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. At March 31, 2015, the remaining preferred interests had an aggregate liquidation value of $72.6 million, our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the Legacy JV are borne 60% by the Company and 40% by AVB. The Legacy JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Legacy JV is unconsolidated and recorded using the equity method of accounting.

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- Definition Disclosure of investments in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). + References No definition available. + Details
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