Financing Arrangement

3 Months Ended

Mar. 31, 2024

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 shopping center in Chandler, Arizona, and Freehold Raceway Mall, a 1,546,000 square foot regional shopping center in Freehold, New Jersey (collectively referred to herein as "Chandler Freehold"). As a result of the Company having certain rights under the agreement to repurchase the assets after the seventh year of the formation 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 fair value (Level 3 measurement) of the financing arrangement obligation at March 31, 2024 and December 31, 2023 was based upon a terminal capitalization rate of approximately 6.75% and 6.50%, respectively, a discount rate at both March 31, 2024 and December 31, 2023 of 8.00%, and market rents per square foot of $45 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 related party interest expense (income) in the Company's consolidated statements of operations.

During the three months ended March 31, 2024 and 2023, the Company recognized related party interest expense (income) in the Company's consolidated statements of operations in connection with the financing arrangement as follows:


	For the Three Months Ended March 31,
		2024		2023
Distributions equal to the partner's share of net income (loss)		$	800	$	(340)
Distributions in excess of the partner's share of net income		700		2,818
Adjustment to fair value of financing arrangement obligation		2,939		(11,885)
		$	4,439	$	(9,407)