Investments in Unconsolidated Joint Ventures

6 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Joint Ventures:

The Company has made the following recent financings or other events of its unconsolidated joint ventures:

On March 29, 2021, concurrent with the sale of Paradise Valley Mall (see Note 15 – Dispositions), the Company elected to reinvest into the newly formed joint venture at a 5% ownership interest for $3,819 in cash that is accounted for under the equity method of accounting.

On October 26, 2021, the Company's joint venture in The Shops at Atlas Park replaced the existing loan on the property with a new $65,000 loan that bears interest at a floating rate of LIBOR plus 4.15% and matures on November 9, 2026, including extension options. The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 3.0% through November 7, 2023.

On December 31, 2021, the Company assigned its joint venture interest in The Shops at North Bridge in Chicago, Illinois to its partner in the joint venture. The assignment included the assumption by the joint venture partner of the Company’s share of the debt owed by the joint venture and no cash consideration was received by the Company. The Company recognized a loss of $28,276 in connection with the assignment.

On December 31, 2021, the Company sold its joint venture interest in the undeveloped property at 443 North Wabash Avenue in Chicago, Illinois to its partner in the joint venture for $21,000. The Company recognized an immaterial gain in connection with the sale.

On February 2, 2022, the Company’s joint venture in FlatIron Crossing replaced the existing $197,011 loan on the property with a new $175,000 loan that bears interest at the Secured Overnight Financing Rate ("SOFR") plus 3.70% and matures on February 9, 2025, including extension options. The loan is covered by an interest rate cap agreement that effectively prevents SOFR from exceeding 4.0% through February 15, 2024.

For the six months ended June 30, 2022, the Company’s joint venture with Seritage Growth Properties (“MS Portfolio LLC”) recorded an impairment loss as a result of shortening the holding periods on certain assets in the joint venture. The Company’s share of the impairment loss was $30,426.

Combined and condensed balance sheets and statements of operations are presented below for all unconsolidated joint ventures.

Combined and Condensed Balance Sheets of Unconsolidated Joint Ventures:


	June 30, 2022		December 31, 2021
Assets(1):
Property, net	$	8,215,389	$	8,289,412
Other assets	771,455		750,629
Total assets	$	8,986,844	$	9,040,041
Liabilities and partners' capital(1):
Mortgage and other notes payable	$	5,634,189	$	5,686,500
Other liabilities	434,599		325,115
Company's capital	1,558,737		1,638,112
Outside partners' capital	1,359,319		1,390,314
Total liabilities and partners' capital	$	8,986,844	$	9,040,041
Investments in unconsolidated joint ventures:
Company's capital	$	1,558,737	$	1,638,112
Basis adjustment(2)	(438,366)		(448,149)
	$	1,120,371	$	1,189,963

Assets—Investments in unconsolidated joint ventures	$	1,246,730	$	1,317,571
Liabilities—Distributions in excess of investments in unconsolidated joint ventures	(126,359)		(127,608)
	$	1,120,371	$	1,189,963

(1) These amounts include assets of $2,722,667 and $2,789,568 of Pacific Premier Retail LLC (the "PPR Portfolio") as of June 30, 2022 and December 31, 2021, respectively, and liabilities of $1,642,822 and $1,661,110 of the PPR Portfolio as of June 30, 2022 and December 31, 2021, respectively.

(2) The Company amortizes the difference between the cost of its investments in unconsolidated joint ventures and the book value of the underlying equity into income on a straight-line basis consistent with the lives of the underlying assets. The amortization of this difference was $2,295 and $2,420 for the three months ended June 30, 2022 and 2021, respectively, and $4,870 and $4,663 for the six months ended June 30, 2022 and 2021, respectively.

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:


	PPR Portfolio		Other Joint Ventures		Total
Three Months Ended June 30, 2022
Revenues:
Leasing revenue	$	48,339	$	168,827	$	217,166
Other	55		2,766		2,821
Total revenues	48,394		171,593		219,987
Expenses:
Shopping center and operating expenses	10,139		55,365		65,504
Leasing expenses	365		1,200		1,565
Interest expense	15,378		36,582		51,960
Depreciation and amortization	24,218		66,226		90,444
Total expenses	50,100		159,373		209,473
Gain on sale or write down of assets, net	—		2,032		2,032

Net (loss) income	$	(1,706)	$	14,252	$	12,546
Company's equity in net income	$	1,289	$	5,064	$	6,353
Three Months Ended June 30, 2021
Revenues:
Leasing revenue	$	41,234	$	150,465	$	191,699
Other	37		32,884		32,921
Total revenues	41,271		183,349		224,620
Expenses:
Shopping center and operating expenses	9,896		56,546		66,442
Leasing expenses	372		1,106		1,478
Interest expense	15,835		36,889		52,724
Depreciation and amortization	24,582		63,874		88,456
Total expenses	50,685		158,415		209,100
Loss on sale or write down of assets, net	—		(235)		(235)

Net (loss) income	$	(9,414)	$	24,699	$	15,285
Company's equity in net (loss) income	$	(3,372)	$	23,407	$	20,035

Significant accounting policies used by the unconsolidated joint ventures are similar to those used by the Company.

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:


	PPR Portfolio		Other Joint Ventures		Total
Six Months Ended June 30, 2022
Revenues:
Leasing revenue	$	92,189	$	323,993	$	416,182
Other	119		10,105		10,224
Total revenues	92,308		334,098		426,406
Expenses:
Shopping center and operating expenses	20,857		113,232		134,089
Leasing expenses	834		2,521		3,355
Interest expense	30,751		72,327		103,078
Depreciation and amortization	48,491		131,406		179,897
Total expenses	100,933		319,486		420,419
Loss on sale or write down of assets, net	—		(56,659)		(56,659)

Net loss	$	(8,625)	$	(42,047)	$	(50,672)
Company's equity in net loss	$	(503)	$	(22,241)	$	(22,744)
Six Months Ended June 30, 2021
Revenues:
Leasing revenue	$	78,008	$	299,781	$	377,789
Other	129		49,851		49,980
Total revenues	78,137		349,632		427,769
Expenses:
Shopping center and operating expenses	19,263		115,385		134,648
Leasing expenses	775		2,459		3,234
Interest expense	31,637		74,103		105,740
Depreciation and amortization	48,887		130,416		179,303
Total expenses	100,562		322,363		422,925
Loss on sale or write down of assets, net	—		(181)		(181)

Net (loss) income	$	(22,425)	$	27,088	$	4,663
Company's equity in net (loss) income	$	(8,879)	$	30,824	$	21,945