Financing Arrangement

12 Months Ended

Dec. 31, 2023

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 1,402,000 square foot regional town center in Chandler, Arizona, and Freehold Raceway Mall, a 1,546,000 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.

On November 16, 2023, the Company acquired the 49.9% ownership interest in Freehold Raceway Mall (See Note 15—Acquisitions). As a result, Freehold Raceway Mall is no longer part of the financing arrangement and is 100% owned by the Company. References to Chandler Freehold after November 16, 2023 shall be deemed to only refer to Chandler Fashion Center. In connection with the acquisition of the 49.9% ownership interest, the Company recorded the $5,587 purchase amount as a reduction to the financing arrangement obligation.

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, 2023, 2022 and 2021 the Company recognized related party interest (income) expense in connection with the financing arrangement as follows:


	2023		2022		2021
Distributions of the partner's share of net income (loss)	$	2,105	$	1,833	$	(2,763)
Distributions in excess of the partner's share of net income	8,807		8,669		14,435
Adjustment to fair value of financing arrangement obligation	(35,118)		24,233		(15,390)
	$	(24,206)	$	34,735	$	(3,718)

The fair value (Level 3 measurement) of the financing arrangement obligation at December 31, 2023 and 2022 was based upon a terminal capitalization rate of approximately 6.5% and 6.3%, respectively, a discount rate of approximately 8.0% and 7.8%, respectively, and market rents per square foot ranging from $35 to $240. 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.