Investments in Unconsolidated Joint Ventures

9 Months Ended

Sep. 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 16 – 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.

On August 2, 2022, the Company acquired the remaining 50% ownership interest in two former Sears parcels (Deptford Mall and Vintage Faire Mall) in MS Portfolio LLC, the Company's joint venture with Seritage Growth Properties, for a total purchase price of approximately $24,544. As a result of this transaction and the shortening of holding periods on certain other assets in the joint venture, an impairment loss was recorded for the nine months ending September 30, 2022. The Company's share of the impairment loss was $27,054. Effective as of August 2, 2022, the Company now owns and has consolidated its 100% interest in these two former Sears parcels in its consolidated financial statements (See Note 15—Acquisitions).

The Company's joint venture in Washington Square expects to close in November 2022 a four-year extension, including options, on the $519,848 loan on the property, at a floating interest rate of SOFR plus 4.0%, subject to negotiating final loan terms and documentation and customary closing conditions.

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:


	September 30, 2022		December 31, 2021
Assets(1):
Property, net	$	8,149,910	$	8,289,412
Other assets	654,721		750,629
Total assets	$	8,804,631	$	9,040,041
Liabilities and partners' capital(1):
Mortgage and other notes payable	$	5,488,671	$	5,686,500
Other liabilities	475,780		325,115
Company's capital	1,509,376		1,638,112
Outside partners' capital	1,330,804		1,390,314
Total liabilities and partners' capital	$	8,804,631	$	9,040,041
Investments in unconsolidated joint ventures:
Company's capital	$	1,509,376	$	1,638,112
Basis adjustment(2)	(432,018)		(448,149)
	$	1,077,358	$	1,189,963

Assets—Investments in unconsolidated joint ventures	$	1,204,153	$	1,317,571
Liabilities—Distributions in excess of investments in unconsolidated joint ventures	(126,795)		(127,608)
	$	1,077,358	$	1,189,963

(1) These amounts include assets of $2,704,552 and $2,789,568 of Pacific Premier Retail LLC (the "PPR Portfolio") as of September 30, 2022 and December 31, 2021, respectively, and liabilities of $1,640,093 and $1,661,110 of the PPR Portfolio as of September 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 $2,164 and $2,768 for the three months ended September 30, 2022 and 2021, respectively, and $7,034 and $7,431 for the nine months ended September 30, 2022 and 2021, respectively.

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:


	PPR Portfolio		Other Joint Ventures		Total
Three Months Ended September 30, 2022
Revenues:
Leasing revenue	$	44,157	$	164,518	$	208,675
Other	151		1,934		2,085
Total revenues	44,308		166,452		210,760
Expenses:
Shopping center and operating expenses	10,949		59,450		70,399
Leasing expenses	424		1,203		1,627
Interest expense	15,546		37,556		53,102
Depreciation and amortization	24,269		64,002		88,271
Total expenses	51,188		162,211		213,399
Gain on sale or write down of assets, net	—		25,788		25,788

Net (loss) income	$	(6,880)	$	30,029	$	23,149
Company's equity in net income	$	1,851	$	4,471	$	6,322
Three Months Ended September 30, 2021
Revenues:
Leasing revenue	$	44,304	$	160,044	$	204,348
Other	14		6,658		6,672
Total revenues	44,318		166,702		211,020
Expenses:
Shopping center and operating expenses	10,078		67,627		77,705
Leasing expenses	332		963		1,295
Interest expense	15,801		36,483		52,284
Depreciation and amortization	24,154		61,734		85,888
Total expenses	50,365		166,807		217,172
Gain on sale or write down of assets, net	—		762		762

Net (loss) income	$	(6,047)	$	657	$	(5,390)
Company's equity in net loss	$	(1,390)	$	(343)	$	(1,733)

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
Nine Months Ended September 30, 2022
Revenues:
Leasing revenue	$	136,344	$	488,513	$	624,857
Other	269		12,040		12,309
Total revenues	136,613		500,553		637,166
Expenses:
Shopping center and operating expenses	31,807		172,681		204,488
Leasing expenses	1,258		3,724		4,982
Interest expense	46,299		109,881		156,180
Depreciation and amortization	72,760		195,408		268,168
Total expenses	152,124		481,694		633,818
Loss on sale or write down of assets, net	—		(30,870)		(30,870)

Net loss	$	(15,511)	$	(12,011)	$	(27,522)
Company's equity in net loss	$	(2,354)	$	(14,068)	$	(16,422)
Nine Months Ended September 30, 2021
Revenues:
Leasing revenue	$	122,311	$	459,826	$	582,137
Other	144		56,508		56,652
Total revenues	122,455		516,334		638,789
Expenses:
Shopping center and operating expenses	29,339		183,013		212,352
Leasing expenses	1,106		3,423		4,529
Interest expense	47,438		110,586		158,024
Depreciation and amortization	73,042		192,149		265,191
Total expenses	150,925		489,171		640,096
Gain on sale or write down of assets, net	—		581		581

Net (loss) income	$	(28,470)	$	27,744	$	(726)
Company's equity in net (loss) income	$	(10,269)	$	30,481	$	20,212