Investments in Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2024

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 within its unconsolidated joint ventures:

On March 3, 2023, the Company’s joint venture in Scottsdale Fashion Square replaced the existing $403,931 mortgage loan on the property with a $700,000 loan that bears interest at a fixed rate of 6.21%, is interest only during the entire loan term and matures on March 6, 2028.

On April 25, 2023, the Company's joint venture in Deptford Mall closed on a three-year maturity date extension for the existing loan to April 3, 2026, including extension options. The Company's joint venture repaid $10,000 ($5,100 at the Company's pro rata share) of the outstanding loan balance at closing. The interest rate on the loan remains unchanged at 3.73%.

Effective May 9, 2023, the Company’s joint venture in Country Club Plaza defaulted on the $295,210 ($147,605 at the Company’s pro rata share) non-recourse loan on the property. The Company’s joint venture is in negotiations with the lender on the terms of this non-recourse loan. Accordingly, the joint venture shortened the holding period of the property due to the uncertainty as to the outcome of these discussions. As a result of shortening the holding period, the joint venture determined the fair value of the property was less than the carrying value and recorded an impairment loss during 2023. The Company recognized $100,997 as its share of the impairment which was limited to the extent of its investment which has been reduced to zero.

On May 18, 2023, the Company acquired Seritage Growth Properties' ("Seritage") remaining 50% ownership interest in the MS Portfolio LLC joint venture that owns five former Sears parcels, for a total purchase price of $46,687. These parcels are located at Chandler Fashion Center, Danbury Fair Mall, Freehold Raceway Mall, Los Cerritos Center and Washington Square. As a result of this transaction and the shortening of holding periods, an impairment loss was recorded by the joint venture. The Company's share of the impairment loss was $51,363. Effective as of May 18, 2023, the Company now owns and has consolidated its 100% interest in these five former Sears parcels in its consolidated financial statements (See Note 15—Acquisitions).

On December 4, 2023, the Company's joint venture in Tysons Corner Center replaced the existing $666,465 mortgage loan on the property with a new $710,000 loan that bears interest at a fixed rate of 6.60%, is interest only during the entire loan term and matures on December 6, 2028.

On December 27, 2023, the Company’s joint venture in One Westside sold the property, a 680,000 square foot office property in Los Angeles, California for $700,000. The existing $324,632 loan on the property was repaid, and $77,643 of net proceeds were generated at the Company’s 25% ownership share, which were used to reduce the Company’s revolving loan facility. As a result of this transaction, the Company recognized its share of gain on sale of assets of $8,118.

On January 10, 2024, the Company's joint venture in Boulevard Shops replaced the existing $23,000 mortgage loan on the property with a new $24,000 loan that bears interest at a variable rate of SOFR plus 2.50%, is interest only during the entire loan term and matures on December 5, 2028. The new loan has a required interest rate cap throughout the term of the loan at a strike rate of 7.5%.

The Company has a 50/50 joint venture with Simon Property Group, which was initially formed to develop Los Angeles Premium Outlets, a premium outlet center in Carson, California. In the three months ended March 31, 2024, the Company evaluated its investment and concluded that due to certain conditions, the Company should not continue to invest capital in this development project. As a result, the Company determined the investment was impaired on an other-than-temporary basis and wrote-off its entire investment of $57,686 in the first quarter of 2024 through equity in loss of unconsolidated joint ventures.

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:


	March 31, 2024		December 31, 2023
Assets(1):
Property, net	$	6,956,051	$	7,201,941
Other assets	576,535		607,864
Total assets	$	7,532,586	$	7,809,805
Liabilities and partners' capital(1):
Mortgage and other notes payable	$	5,455,824	$	5,445,411
Other liabilities	431,519		436,179
Company's capital	927,070		1,090,403
Outside partners' capital	718,173		837,812
Total liabilities and partners' capital	$	7,532,586	$	7,809,805
Investments in unconsolidated joint ventures:
Company's capital	$	927,070	$	1,090,403
Basis adjustment(2)	(325,352)		(412,425)
	$	601,718	$	677,978

Assets—Investments in unconsolidated joint ventures	$	785,588	$	852,764
Liabilities—Distributions in excess of investments in unconsolidated joint ventures	(183,870)		(174,786)
	$	601,718	$	677,978

(1) These amounts include assets of $2,495,812 and $2,613,690 of Pacific Premier Retail LLC (the "PPR Portfolio") as of March 31, 2024 and December 31, 2023, respectively, and liabilities of $1,571,675 and $1,578,328 of the PPR Portfolio as of March 31, 2024 and December 31, 2023, respectively.

4. Investments in Unconsolidated Joint Ventures: (Continued)

(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 the Company's share of net loss. The amortization of this difference was $75,183 and $12,554 for the three months ended March 31, 2024 and 2023, respectively.

Combined and Condensed Statements of Operations of Unconsolidated Joint Ventures:


	PPR Portfolio		Other Joint Ventures		Total
Three Months Ended March 31, 2024
Revenues:
Leasing revenue	$	43,011	$	150,061	$	193,072
Other	315		667		982
Total revenues	43,326		150,728		194,054
Expenses:
Shopping center and operating expenses	10,564		57,944		68,508
Leasing expenses	580		1,384		1,964
Interest expense	22,127		51,536		73,663
Depreciation and amortization	21,959		56,195		78,154
Total expenses	55,230		167,059		222,289
Loss on sale or write down of assets, net	(100,273)		(121,193)		(221,466)

Net loss	$	(112,177)	$	(137,524)	$	(249,701)
Company's equity in net loss	$	(5,986)	$	(67,290)	$	(73,276)
Three Months Ended March 31, 2023
Revenues:
Leasing revenue	$	43,070	$	163,368	$	206,438
Other	680		666		1,346
Total revenues	43,750		164,034		207,784
Expenses:
Shopping center and operating expenses	11,406		60,111		71,517
Leasing expenses	570		1,471		2,041
Interest expense	21,810		42,295		64,105
Depreciation and amortization	22,878		62,504		85,382
Total expenses	56,664		166,381		223,045
Loss on sale or write down of assets, net	—		(70,563)		(70,563)

Net loss	$	(12,914)	$	(72,910)	$	(85,824)
Company's equity in net loss	$	(5,516)	$	(56,294)	$	(61,810)

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