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Note 9 - Other Real Estate Investments | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Other Real Estate Investments and Other Assets [Text Block] | 9. Other Real Estate Investments: Preferred Equity Capital – The Company previously provided capital to owners and developers of real estate properties through its Preferred Equity program. The Company’s maximum exposure to losses associated with its preferred equity investments is primarily limited to its net investment. As of December 31, 2016, the Company’s net investment under the Preferred Equity program was $193.7 million relating to 365 properties, including 346 net leased properties which are accounted for as direct financing leases. For the year ended December 31, 2016, the Company earned $27.5 million from its preferred equity investments, including $10.5 million in profit participation earned from five capital transactions. As of December 31, 2015, the Company’s net investment under the Preferred Equity program was $199.9 million relating to 421 properties, including 385 net leased properties. For the year ended December 31, 2015, the Company earned $27.0 million from its preferred equity investments, including $9.3 million in profit participation earned from nine capital transactions. As of December 31, 2016, these preferred equity investment properties had non-recourse mortgage loans aggregating $427.4 million. These loans have scheduled maturities ranging from one month to eight years and bear interest at rates ranging from 4.19% to 10.47%. Due to the Company’s preferred position in these investments, the Company’s share of each investment is subject to fluctuation and is dependent upon property cash flows. The Company’s maximum exposure to losses associated with its preferred equity investments is limited to its invested capital. Summarized financial information relating to the Company’s preferred equity investments is as follows (in millions):
|  | December 31, |
|  | 201 6 |  |  | 2015 |
Assets: |  |  |  |  |  |  |  |
Real estate, net |  | $ | 187.0 |  |  | $ | 258.0 |
Other assets |  |  | 587.1 |  |  |  | 628.3 |
|  | $ | 774.1 |  |  | $ | 886.3 |
Liabilities and Partners’/Members’ Capital: |  |  |  |  |  |  |  |
Notes and mortgages payable |  | $ | 454.7 |  |  | $ | 563.7 |
Other liabilities |  |  | 8.3 |  |  |  | 12.9 |
Partners’/Members’ capital |  |  | 311.1 |  |  |  | 309.7 |
|  | $ | 774.1 |  |  | $ | 886.3 |
|  | Year Ended December 31, |
|  | 201 6 |  |  | 2015 |  |  | 2014 |
Revenues from rental properties |  | $ | 102.6 |  |  | $ | 122.1 |  |  | $ | 146.0 |
Operating expenses |  |  | (27.4 | ) |  |  | (35.6 | ) |  |  | (47.0 | )
Interest expense |  |  | (26.7 | ) |  |  | (35.7 | ) |  |  | (47.1 | )
Depreciation and amortization |  |  | (6.7 | ) |  |  | (11.4 | ) |  |  | (19.2 | )
Other expense, net |  |  | (11.5 | ) |  |  | (9.2 | ) |  |  | (7.2 | )
Income from continuing operations |  |  | 30.3 |  |  |  | 30.2 |  |  |  | 25.5 |
Discontinued Operations: |  |  |  |  |  |  |  |  |  |  |  |
Gain on disposition of properties |  |  | - |  |  |  | - |  |  |  | 31.5 |
|  |  | - |  |  |  | - |  |  |  | 31.5 |
Gain on sale of operating properties |  |  | 5.3 |  |  |  | 6.0 |  |  |  | - |
Net income |  | $ | 35.6 |  |  | $ | 36.2 |  |  | $ | 57.0 |
Kimsouth – Kimsouth Realty Inc. (“Kimsouth”) is a wholly-owned subsidiary of the Company. KRS AB Acquisition, LLC (the “ABS Venture”) is a subsidiary of Kimsouth that has a noncontrolling interest in AB Acquisition, LLC (“AB Acquisition”), a joint venture which owns Albertsons Inc. (“Albertsons”) and NAI Group Holdings Inc. (“NAI”). The Company holds a controlling interest in the ABS Venture and consolidates this entity. During January 2015, two new noncontrolling members were admitted into the ABS Venture, including Colony Capital, Inc. and affiliates (“Colony”), after which the Company contributed $85.3 million and the two noncontrolling members contributed an aggregate $105.0 million, of which Colony contributed $100.0 million, to the ABS Venture, which was subsequently contributed to AB Acquisition to facilitate the acquisition of all of the outstanding shares of Safeway Inc. (“Safeway”). In January 2017, Colony Capital, Inc. merged with NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. to form Colony NorthStar, Inc. (“Colony NorthStar”). As a result, the ABS Venture now holds a combined 14.35% interest in AB Acquisition, of which the Company holds a combined 9.8% ownership interest and Colony NorthStar holds a 4.3% ownership interest. Richard B. Saltzman, a member of the Board of Directors of the Company, is the chief executive officer and president of Colony NorthStar. The combined company of Albertsons, NAI and Safeway operates over 2,200 grocery stores across 33 states. The Company continues to consolidate the ABS Venture as there was no change in control following the admission of the members described above. As such, the Company recorded (i) the gross investment in Safeway of $190.3 million in Other assets on the Company’s Consolidated Balance Sheets and accounts for this investment under the cost method of accounting (ii) a noncontrolling interest of $65.0 million and (iii) an increase in Paid-in capital of $24.0 million, net of a deferred tax effect of $16.0 million, representing the amount contributed by the newly admitted members in excess of their proportionate share of the historic book value of the net assets of ABS Venture.

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