XML 120 R16.htm IDEA: XBRL DOCUMENT

Note 7 - Investment and Advances in Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2013

Investments And Advances In Real Estate Joint Ventures [Abstract]

Investments And Advances In Real Estate Joint Ventures [Text Block]

7. Investment and Advances in Real Estate Joint Ventures:

The Company and its subsidiaries have investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting. The table below presents joint venture investments for which the Company held an ownership interest at December 31, 2013 and 2012 (in millions, except number of properties):

	As of December 31, 2013										As of December 31, 2012
Venture	Average Ownership Interest		Number of Properties		GLA		Gross Real Estate		The Company's Investment		Average Ownership Interest		Number of Properties		GLA		Gross Real Estate		The Company's Investment
Prudential Investment Program (“KimPru” and “KimPru II”) (1) (2) (11)		15.0%		60		10.6	$	2,724.0	$	179.7		15.0%		61		10.7	$	2,744.9	$	170.1
Kimco Income Opportunity Portfolio (“KIR”) (2) (7) (15)		48.6%		57		12.0		1,496.0		163.6		45.0%		58		12.4		1,543.2		140.3
UBS Programs (“UBS”) (2) (8) (14)*		-		-		-		-		1.1		17.9%		40		5.7		1,260.1		58.4
Kimstone (2) (14)		33.3%		39		5.6		1,095.3		100.3		-		-		-		-		-
BIG Shopping Centers (2) (10)*		37.9%		21		3.4		520.1		29.5		37.7%		22		3.6		547.7		31.3
The Canada Pension Plan Investment Board (“CPP”) (2)		55.0%		6		2.4		437.4		144.8		55.0%		6		2.4		436.1		149.5
Kimco Income Fund (2)(6)		39.5%		12		1.5		288.7		50.6		15.2%		12		1.5		287.0		12.3
SEB Immobilien (2)		15.0%		13		1.8		361.9		0.9		15.0%		13		1.8		361.2		1.5
Other Institutional Programs (2) (9)	Various			56		2.1		385.3		16.8	Various			58		2.6		499.2		21.3
RioCan		50.0%		45		9.3		1,314.3		156.3		50.0%		45		9.3		1,379.3		111.0
Intown (3)		-		-		-		-		-		-		138	N/A			841.0		86.9
Latin America (13) (16)	Various			28		3.7		313.2		156.7	Various			131		18.0		1,198.1		334.2
Other Joint Venture Programs (4) (5) (12)	Various			75		11.5		1,548.9		256.7	Various			87		13.2		1,846.7		311.4
Total				412		63.9	$	10,485.1	$	1,257.0				671		81.2	$	12,944.5	$	1,428.2

* Ownership % is a blended rate

The table below presents the Company’s share of net income/(loss) for these investments which is included in the Company’s Consolidated Statements of Income under Equity in income of joint ventures, net for the years ended December 31, 2013, 2012 and 2011 (in millions):

	Year ended December 31,
	2013		2012			2011
KimPru and KimPru II (11) (21) (22) (23)	$	9.1	$	7.4		$	(1.6	)
KIR (15) (24)		25.3		23.4			17.3
UBS Programs (14) (25)		1.8		0.5			(0.8	)
Kimstone (14)		3.6		-			-
BIG Shopping Centers (10) (26)		3.0		(3.7	)		(2.9	)
CPP		5.8		5.3			5.2
Kimco Income Fund		3.3		1.7			1.0
SEB Immobilien		1.1		0.7			-
Other Institutional Programs (19) (27)		1.4		5.0			5.0
RioCan (20)		27.6		30.4			19.7
Intown		1.4		4.0			(1.9	)
Latin America (13) (16) (17)		103.1		15.8			12.5
Other Joint Venture Programs (12) (18) (28) (29)		22.2		22.4			10.0
Total	$	208.7	$	112.9		$	63.5

	(1)	This venture represents four separate joint ventures, with four separate accounts managed by Prudential Real Estate Investors (“PREI”), three of these ventures are collectively referred to as KimPru and the remaining venture is referred to as KimPru II.
	(2)	The Company manages these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees.
	(3)	The Company’s share of this investment was subject to fluctuation and dependent upon property cash flows. During June 2013, the Intown portfolio was sold for a sales price of $735.0 million which included the assignment of $609.2 million in debt. This transaction resulted in a deferred gain to the Company of $21.7 million. The Company maintains its guarantee on a portion of the debt ($139.7 million as of December 31, 2013) assumed by the buyer. The guarantee is collateralized by the buyer’s ownership interest in the portfolio. The Company is entitled to a guarantee fee, for the initial term of the loan, which is scheduled to mature in December 2015. The guarantee fee is calculated based upon the difference between LIBOR plus 1.15% and 5.0% per annum multiplied by the outstanding amount of the loan. Additionally, the Company has entered into a commitment to provide financing up to the outstanding amount of the guaranteed portion of the loan for five years past the date of maturity. This commitment can be in the form of extensions with the current lender, loans from a new lender or financing directly from the Company to the buyer. Due to this continued involvement, the Company deferred its gain until such time that the guarantee and commitment expire.
	(4)	During the year ended December 31, 2013, the Company amended one of its Canadian preferred equity investment agreements to restructure the investment as a pari passu joint venture in which the Company holds a noncontrolling interest. As a result of this transaction, the Company continues to account for its investment in this joint venture under the equity method of accounting and includes this investment in Investments and advances to real estate joint ventures within the Company’s Consolidated Balance Sheets.
	(5)	During the year ended December 31, 2013, two joint ventures in which the Company held noncontrolling interests sold two operating properties to the Company, in separate transactions, for an aggregate sales price of $228.8 million. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance. As such, the Company recognized an aggregate gain of $30.9 million, before income tax, from the fair value adjustment associated with its original ownership due to a change in control and now consolidates these operating properties.
	(6)	During the year ended December 31, 2013, the Company purchased an additional 24.24% interest in Kimco Income Fund for $38.3 million.
	(7)	During the year ended December 31, 2013, the Company purchased an additional 3.57% interest in KIR for $48.4 million.
	(8)	During the year ended December 31, 2013, UBS sold an operating property to the Company for a sales price of $32.7 million, which was equal to the remaining debt balance. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. As such the Company recognized no gain or loss from a change in control and now consolidates this operating property.
	(9)	During the year ended December 31, 2013, a joint venture in which the Company held a noncontrolling interest sold an operating property to the Company for a sales price of $14.2 million. The Company evaluated this transaction pursuant to the FASB’s Consolidation guidance. As such the Company recognized a gain of $0.5 million from the fair value adjustment associated with the Company’s original ownership due to a change in control and now consolidates this operating property.

	(10)	During the year ended December 31, 2013, BIG recognized a gain on early extinguishment of debt of $13.7 million related to a property that was foreclosed on by a third party lender. The Company’s share of this gain was $2.4 million.
	(11)	During the year ended December 31, 2013, the Company purchased the remaining interest in an operating property for a purchase price of $15.8 million. As a result of this transaction, KimPru recognized an impairment charge of $4.0 million, of which the Company’s share was $0.6 million.
	(12)	During the year ended December 31, 2013, joint ventures in which the Company has noncontrolling interests sold six operating properties, in separate transactions, for an aggregate sales price of $132.1 million. In connection with these transactions, the Company recognized its share of the aggregate gains of $6.1 million and aggregate impairment charges of $1.5 million.
	(13)	During the year ended December 31, 2013, joint ventures in which the Company held noncontrolling interests sold 20 operating properties located throughout Mexico and Chile for $341.9 million. These transactions resulted in an aggregate net gain to the Company of $22.9 million, after tax, which represents the Company's share.
	(14)	During June 2013, the Company increased its ownership interest in the UBS Programs to 33.3% and simultaneously UBS transferred its remaining 66.7% ownership interest in the UBS Programs to affiliates of Blackstone Real Estate Partners VII (“Blackstone”). Both of these transactions were based on a gross purchase price of $1.1 billion. Upon completion of these transactions, Blackstone and the Company entered into a new joint venture (Kimstone) in which the Company owns a 33.3% noncontrolling interest.
	(15)	During the year ended December 31, 2013, KIR sold an operating property in Cincinnati, OH for a sales price of $30.0 million and recognized a gain of $6.1 million. The Company’s share of this gain was $3.0 million.
	(16)	During the year ended December 31, 2013, the Company and its joint venture partner sold their noncontrolling ownership interest in a joint venture which held interests in 84 operating properties located throughout Mexico for $603.5 million (including debt of $301.2 million). The Company's share of the net gain of $78.2 million, before income taxes of $25.1 million.
	(17)	The Company is currently in advanced negotiations to sell 10 operating properties located throughout Mexico, which are held in unconsolidated joint ventures in which the Company holds noncontrolling interests. Based upon the allocation of the selling price, the Company has recorded its share of impairment charges of $9.4 million on six of these properties.
	(18)	During the year ended December 31, 2012, two joint ventures in which the Company holds noncontrolling interests sold two properties, in separate transactions, for an aggregate sales price of $118.0 million. The Company’s share of the aggregate gain related to these transactions was $8.3 million.
	(19)	During the year ended December 31, 2012, a joint venture in which the Company holds a noncontrolling interest sold two encumbered operating properties to the Company for an aggregate sales price of $75.5 million. As a result of this transaction, the Company recognized promote income of $2.6 million. Additionally, another joint venture in which the Company holds a noncontrolling interest sold an operating property to the Company for a sales price of $127.0 million. As a result of this transaction, the Company recognized promote income of $1.1 million.
	(20)	During the year ended December 31, 2012, the Company recognized income of $7.5 million, before taxes of $1.5 million, from the sale of certain air rights at one of the properties in the RioCan portfolio.
	(21)	KimPru recognized impairment charges of $6.5 million related to the sale of two properties and $53.6 million related to the potential foreclosure of two properties during the years ended December 31, 2012 and 2011, respectively. The Company had previously taken other-than-temporary impairment charges on its investment in KimPru and had allocated these impairment charges to the underlying assets of the KimPru joint ventures including a portion to these operating properties. As such, the Company’s share of these impairment charges for the years ended December 31, 2012 and 2011 were $0.8 million and $6.0 million, respectively.
	(22)	During 2011, a third party mortgage lender foreclosed on an operating property for which KimPru had previously taken an impairment charge during 2010. As a result of the foreclosure during 2011, KimPru recognized an aggregate gain on early extinguishment of debt of $29.6 million. The Company’s share of this gain was $4.4 million, before income taxes.
	(23)	KimPru II recognized impairment charges of $7.3 million for the year ended December 31, 2011, related to the foreclosure of one operating property. The Company had previously taken other-than-temporary impairment charges on its investment in KimPru II and had allocated these impairment charges to the underlying assets of the KimPru II joint ventures including a portion to this operating property. As such, the Company’s share of this impairment charge for the year ended December 31, 2011 was $1.0 million.
	(24)	KIR recognized an impairment charge of $4.6 million related to the sale of one operating property for the year ended December 31, 2011. The Company’s share of this impairment charge was $2.1 million for the year ended December 31, 2011.
	(25)	The UBS Program recognized impairment charges of $13.0 million related to the sale of two properties and $9.7 million related to the sale of one property, during the years ended December 31, 2012 and 2011, respectively. The Company’s share of these impairment charges for the years ended December 31, 2012 and 2011 were $2.2 million and $1.9 million, respectively. Additionally, during the year ended December 31, 2011, the UBS Program recognized an impairment charge of $5.0 million relating to a property that was anticipated to be foreclosed on by the third party lender in 2012. The Company’s share of this impairment charge was $0.8 million. A deed in lieu of foreclosure was given to the third party lender in 2012.
	(26)	During the year ended December 31, 2012, BIG recognized an impairment charge of $9.0 million on a property that was foreclosed upon in 2013. The Company’s share of this impairment charge was $0.9 million.
	(27)	During the year ended December 31, 2012, two joint ventures in which the Company has a noncontrolling interest recognized aggregate impairment charges of $6.5 million related to the sale of four operating properties. The Company’s share of these impairment charges was $0.8 million.
	(28)	During the year ended December 31, 2012, three joint ventures in which the Company has noncontrolling interests recognized aggregate impairment charges of $12.8 million related to the sale of one operating property, the pending sale of one property and the potential foreclosure of another property. The Company’s share of these impairment charges was $6.4 million.
	(29)	During the year ended December 31, 2011, the Company sold its interest in a Canadian hotel portfolio to its partner, for Canadian Dollars (“CAD”) $2.5 million (USD $2.4 million). As a result, the Company recorded its share of an impairment charge of USD $5.2 million, before income taxes.

The table below presents debt balances within the Company’s joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2013 and 2012 (dollars in millions):

	As of December 31, 2013						As of December 31, 2012
Venture	Mortgages and Notes Payable		Average Interest Rate		Average Remaining Term (months)**		Mortgages and Notes Payable		Average Interest Rate		Average Remaining Term (months)**
KimPru and KimPru II	$	923.4		5.53%		35.0	$	1,010.2		5.54%		44.5
KIR		889.1		5.05%		75.1		914.6		5.22%		78.6
UBS Programs		-		-		-		691.9		5.40%		39.1
Kimstone		749.9		4.62%		39.3		-		-		-
BIG Shopping Centers		406.5		5.39%		40.1		443.8		5.52%		45.5
CPP		138.6		5.23%		19.0		141.5		5.19%		31.0
Kimco Income Fund		158.0		5.45%		8.7		161.4		5.45%		20.7
SEB Immobilien		243.8		5.11%		43.3		243.8		5.11%		55.3
RioCan		743.7		4.59%		48.0		923.2		5.16%		41.2
Intown		-		-		-		614.4		4.46%		46.1
Other Institutional Programs		272.9		5.32%		31.0		310.5		5.24%		39.0
Other Joint Venture Programs		1,063.1		5.53%		60.6		1,612.2		5.70%		57.8
Total	$	5,589.0					$	7,067.5

** Average remaining term includes extensions

KIR -

The Company holds a 48.6% noncontrolling limited partnership interest in KIR and has a master management agreement whereby the Company performs services for fees relating to the management, operation, supervision and maintenance of the joint venture properties.

The Company’s equity in income from KIR for the year ended December 31, 2013 and 2012, exceeded 10% of the Company’s income from continuing operations before income taxes; as such the Company is providing summarized financial information for KIR as follows (in millions):

	December 31,
	2013		2012
Assets:
Real estate, net	$	1,064.2	$	1,134.2
Other assets		81.9		87.7
	$	1,146.1	$	1,221.9
Liabilities and Members’ Capital:
Mortgages payable	$	889.1	$	914.6
Other liabilities		21.8		26.8
Members’ capital		235.2		280.5
	$	1,146.1	$	1,221.9

	Year Ended December 31,
	2013			2012			2011
Revenues from rental property	$	198.2		$	191.8		$	190.0
Operating expenses		(54.2	)		(51.3	)		(52.5	)
Interest expense		(47.8	)		(54.0	)		(58.8	)
Depreciation and amortization		(39.1	)		(39.2	)		(36.8	)
Impairment charges		-			-			(0.3	)
Other expense, net		(0.6	)		(1.3	)		(2.6	)
		(141.7	)		(145.8	)		(151.0	)
Income from continuing operations		56.5			46.0			39.0
Discontinued Operations:
Income from discontinued operations		1.5			2.3			(0.1	)
Impairment on dispositions of properties		(9.8	)		(0.1	)		(4.8	)
Gain on dispositions of properties		6.1			-			-
Net income	$	54.3		$	48.2		$	34.1

RioCan Investments -

During October 2001, the Company formed three joint ventures (collectively, the "RioCan Ventures") with RioCan Real Estate Investment Trust ("RioCan"), in which the Company has 50% noncontrolling interests, to acquire retail properties and development projects in Canada. The acquisition and development projects are to be sourced and managed by RioCan and are subject to review and approval by a joint oversight committee consisting of RioCan management and the Company’s management personnel. Capital contributions will only be required as suitable opportunities arise and are agreed to by the Company and RioCan.

The Company’s equity in income from the Riocan Ventures for the year ended December 31, 2012, exceeded 10% of the Company’s income from continuing operations, as such the Company is providing summarized financial information for the RioCan Ventures as follows (in millions):

	December 31,
	2013		2012
Assets:
Real estate, net	$	1,106.2	$	1,189.9
Other assets		43.8		43.7
	$	1,150.0	$	1,233.6
Liabilities and Members' Capital:
Mortgages payable	$	743.7	$	923.2
Other liabilities		13.0		18.1
Members' capital		393.3		292.3
	$	1,150.0	$	1,233.6

	Year ended December 31,
	2013			2012			2011
Revenues from rental properties	$	209.9		$	213.3		$	209.2

Operating expenses		(76.9	)		(78.1	)		(73.0	)
Interest expense		(40.1	)		(51.9	)		(57.5	)
Depreciation and amortization		(36.0	)		(37.3	)		(36.8	)
Other (expense)/income, net		(1.8	)		14.7			(0.2	)
		(154.8	)		(152.6	)		(167.5	)
Net income	$	55.1		$	60.7		$	41.7

Summarized financial information for the Company’s investment and advances in real estate joint ventures (excluding KIR and the RioCan Ventures, which are presented above) is as follows (in millions):

	December 31,
	2013		2012
Assets:
Real estate, net	$	6,601.8	$	8,523.3
Other assets		390.1		507.7
	$	6,991.9	$	9,031.0
Liabilities and Partners’/Members’ Capital:
Notes payable	$	-	$	148.0
Mortgages payable		3,956.2		5,056.5
Construction loans		-		25.1
Other liabilities		102.0		188.5
Noncontrolling interests	19.2		19.1
Partners’/Members’ capital		2,914.5		3,593.8
	$	6,991.9	$	9,031.0

	Year Ended December 31,
	2013			2012			2011
Revenues from rental property	$	935.1		$	1,066.8		$	1,109.3
Operating expenses		(297.6	)		(348.1	)		(388.8	)
Interest expense		(253.6	)		(306.9	)		(329.4	)
Depreciation and amortization		(242.0	)		(277.6	)		(322.6	)
Impairment charges		(32.3	)		(25.9	)		(13.5	)
Other (expense)/income, net		(14.5	)		(11.3	)		7.4
		(840.0	)		(969.8	)		(1046.9	)
Income from continuing operations		95.1			97.0			62.4
Discontinued Operations:
Income/(loss) from discontinued operations		12.1			(4.0	)		30.6
Impairment on dispositions of properties		(5.0	)		(21.1	)		(75.7	)
Gain/(loss) on dispositions of properties		223.4			94.5			(0.1	)
Net income	$	325.6		$	166.4		$	17.2

Other liabilities included in the Company’s accompanying Consolidated Balance Sheets include accounts with certain real estate joint ventures totaling $41.5 million and $21.3 million at December 31, 2013 and 2012, respectively. The Company and its subsidiaries have varying equity interests in these real estate joint ventures, which may differ from their proportionate share of net income or loss recognized in accordance with GAAP.

The Company’s maximum exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments. Generally, such investments contain operating properties and the Company has determined these entities do not contain the characteristics of a VIE. As of December 31, 2013 and 2012, the Company’s carrying value in these investments is $1.3 billion.