Financing Arrangement

12 Months Ended

Dec. 31, 2022

Financing Arrangement:

On September 30, 2009, the Company formed a joint venture, whereby a third party acquired a 49.9% interest in Chandler Fashion Center, a 1,320,000 square foot regional town center in Chandler, Arizona, and Freehold Raceway Mall, a 1,549,000 square foot regional town center in Freehold, New Jersey, referred to herein as Chandler Freehold. As a result of the Company having certain rights under the agreement to repurchase the assets of Chandler Freehold, the transaction did not qualify for sale treatment. The Company, however, is not obligated to repurchase the assets. The Company accounts for its investment in Chandler Freehold as a financing arrangement.

The Company recognizes interest expense on (i) the changes in fair value of the financing arrangement obligation, (ii) any payments to the joint venture partner equal to their pro rata share of net income (loss) and (iii) any payments to the joint venture partner less than or in excess of their pro rata share of net income.

During the years ended December 31, 2022, 2021 and 2020 the Company incurred interest expense (income) in connection with the financing arrangement as follows:


	2022		2021		2020
Distributions of the partner's share of net income (loss)	$	1,833	$	(2,763)	$	1,144
Distributions in excess of the partner's share of net income	8,669		14,435		3,097
Adjustment to fair value of financing arrangement obligation	24,233		(15,390)		(139,522)
	$	34,735	$	(3,718)	$	(135,281)

The fair value (Level 3 measurement) of the financing arrangement obligation at December 31, 2022 and 2021 was based upon a terminal capitalization rate of approximately 6.3% and 5.8%, respectively, a discount rate of approximately 7.8% and 7.3%, respectively, and market rents per square foot ranging from $35 to $105. The fair value of the financing arrangement obligation is sensitive to these significant unobservable inputs and a change in these inputs may result in a significantly higher or lower fair value measurement. Distributions to the partner, excluding distributions of excess loan proceeds, and changes in fair value of the financing arrangement obligation are recognized as interest expense (income) in the Company's consolidated statements of operations.