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Investments in and Advances to Unconsolidated Affiliates | 3 Months Ended
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Mar. 31, 2017
Equity Method Investments and Joint Ventures [Abstract] |
Investments in and Advances to Unconsolidated Affiliates | Investments In and Advances to Unconsolidated Affiliates The Company accounts for its investments in and advances to unconsolidated affiliates under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):
|  | Nominal Ownership Interest |  | March 31, |  | December 31,
Fund | Property | at March 31, 2017 |  | 2017 |  | 2016
Core: |  |  |  |  |  |
| 840 N. Michigan (a) | 88.43% |  | $ | 73,355 |  |  | $ | 74,131 |
| Renaissance Portfolio | 20% |  | 36,097 |  |  | 36,437 |
| Gotham Plaza | 49% |  | 29,396 |  |  | 29,421 |
| Brandywine Portfolio (a) | 22.22% |  | 20,449 |  |  | 20,755 |
| Georgetown Portfolio | 50% |  | 4,237 |  |  | 4,287 |
|  |  |  | 163,534 |  |  | 165,031 |
Mervyns I & II: | KLA/Mervyn's, LLC (b) | 10.5% |  | — |  |  | — |
Fund III: |  |  |  |  |  |
| Fund III Other Portfolio | 90% |  | 225 |  |  | 8,108 |
| Self Storage Management (c) | 95% |  | 241 |  |  | 241 |
|  |  |  | 466 |  |  | 8,349 |
Fund IV: |  |  |  |  |  |
| Broughton Street Portfolio (d) | 50% |  | 56,313 |  |  | 54,839 |
| Fund IV Other Portfolio | 90% |  | 17,927 |  |  | 21,817 |
| 650 Bald Hill Road | 90% |  | 19,027 |  |  | 18,842 |
|  |  |  | 93,267 |  |  | 95,498 |
| Due from Related Parties (e) |  |  | 2,273 |  |  | 2,193 |
| Other |  |  | 957 |  |  | 957 |
| Investments in and advances to unconsolidated affiliates |  | $ | 260,497 |  |  | $ | 272,028 |
Core: |  |  |  |  |  |
| Crossroads (f) | 49% |  | $ | 15,221 |  |  | $ | 13,691 |
| Distributions in excess of income from, and investments in, unconsolidated affiliates |  | $ | 15,221 |  |  | $ | 13,691 |
__________
(a) | Represents a tenancy-in-common interest.
(b) | Distributions have exceeded the Company’s non-recourse investment, therefore the carrying value is zero.
(c) | Represents a variable interest entity.
(d) | The Company is entitled to a 15% return on its cumulative capital contribution and a 9% preferred return on the balance of the loan it converted to equity during 2016, which was $14.9 million and $46.4 million at March 31, 2017, respectively.
(e) | Represents deferred fees.
(f) | Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to fund future obligations of the entity.
Core Portfolio The Company owns a 49% interest in a 311,000 square foot shopping center located in White Plains, New York (“Crossroads”), a 50% interest in a 28,000 square foot retail portfolio located in Georgetown, Washington D.C. (the “Georgetown Portfolio”), a 88.43% tenancy-in-common interest in an 87,000 square foot retail property located in Chicago, Illinois (“840 N. Michigan”), and a 49% noncontrolling interest in an approximately 123,000 square foot retail property located in Manhattan, New York (“Gotham Plaza”). In January 2017, an entity in which the Company owns a 20% noncontrolling interest (the “Renaissance Portfolio”), acquired a 6,200 square foot property in Alexandria, Virginia referred to as (“907 King Street”) for $3.0 million. The Renaissance Portfolio is now a 213,000 square-foot portfolio of 18 mixed-use properties, 16 of which are located in Georgetown, Washington D.C. and two of which are located in Alexandria, Virginia. The Company owns a 22.22% interest in an approximately one million square foot retail portfolio (the “Brandywine Portfolio”) located in Wilmington, Delaware. Prior to the second quarter of 2016, the Company had a controlling interest in the Brandywine Portfolio, and it was therefore consolidated within the Company’s financial statements. During April 2016, the arrangement with the partners of the Brandywine Portfolio was modified to change the legal ownership from a partnership to a tenancy-in-common interest, as well as to provide certain participating rights to the outside partners. As a result of these modifications, the Company de-consolidated the Brandywine Portfolio and accounts for its interest under the equity method of accounting effective May 1, 2016. Furthermore, as the owners of the Brandywine Portfolio had consistent ownership interests before and after the modification and the underlying net assets are unchanged, the Company has reflected the change from consolidation to equity method based upon its historical cost. Additionally, in April 2016, the Company repaid the outstanding balance of $140.0 million of non-recourse debt collateralized by the Brandywine Portfolio. The Company provided a loan collateralized by the partners’ tenancy-in-common interest, as further described in Note 7, for their proportionate share of the repayment. Fund Investments Fund III Other Portfolio included the Company’s investment in Arundel Plaza through its date of sale in February 2017. Fund IV Other Portfolio includes the Company’s investment in 1701 Belmont Avenue, Promenade at Manassas, Eden Square and, through its date of sale in January 2017, an investment in 2819 Kennedy Boulevard. Self-Storage Management, a Fund III investment, was determined to be a variable interest entity. Management has evaluated the applicability of ASC Topic 810 to this joint venture and determined that the Company is not the primary beneficiary and, therefore, consolidation of this venture is not required. In January 2017, Fund IV completed the disposition of 2819 Kennedy Boulevard, for $19.0 million less $8.4 million debt repayment for a net sales price of $10.6 million, resulting in a gain on disposition of $6.3 million at the property level, of which the Fund’s share was $6.2 million, which is included in equity earnings and gains from unconsolidated affiliates in the consolidated financial statements. The Operating Partnership’s proportionate share of the gain was $1.4 million, net of noncontrolling interests. During February 2017, Fund III completed the disposition of Arundel Plaza, for $28.8 million less $10.0 million debt repayments for a net sales price of $18.8 million, resulting in a gain on disposition of $8.2 million at the property level, of which the Fund’s share was $5.3 million, which is included in equity earnings and gains from unconsolidated affiliates in the consolidated financial statements. The Operating Partnership’s proportionate share of the gain was $1.3 million, net of noncontrolling interests. During January 2016, Fund III completed the disposition of a 65% interest in Cortlandt Town Center for $107.3 million resulting in a gain of $65.4 million and the deconsolidation of its remaining interest (Note 2). During December 2016, Fund III completed the disposition of its remaining 35% interest in Cortlandt Town Center for $57.8 million less $32.6 million debt repayment for a net sales price of $25.2 million resulting in a gain on sale of $36.0 million, of which the Operating Partnership’s share was $8.8 million. Fees from Unconsolidated Affiliates The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.4 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively, which is included in other revenues in the consolidated financial statements. In addition, the Company paid $0.5 million and $0.6 million to certain unaffiliated partners of our joint ventures during the three months ended March 31, 2017 and 2016, respectively, for leasing commissions, development, management and overhead fees. Summarized Financial Information of Unconsolidated Affiliates The following combined and condensed Balance Sheets and Statements of Income, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates (in thousands):
|  | March 31, |  | December 31,
|  | 2017 |  | 2016
Combined and Condensed Balance Sheets |  |  |  |  |  |
Assets: |  |  |  |  |  |
Rental property, net |  | $ | 549,632 |  |  | $ | 576,505 |
Real estate under development |  | 16,837 |  |  | 18,884 |
Investment in unconsolidated affiliates |  | 6,853 |  |  | 6,853 |
Other assets |  | 101,144 |  |  | 75,254 |
Total assets |  | $ | 674,466 |  |  | $ | 677,496 |
Liabilities and partners’ equity: |  |  |  |  |  |
Mortgage notes payable |  | $ | 389,198 |  |  | $ | 407,344 |
Other liabilities |  | 58,909 |  |  | 30,117 |
Partners’ equity |  | 226,359 |  |  | 240,035 |
Total liabilities and partners’ equity |  | $ | 674,466 |  |  | $ | 677,496 |
Company's share of accumulated equity |  | $ | 177,805 |  |  | $ | 191,049 |
Basis differential |  | 60,520 |  |  | 61,827 |
Deferred fees, net of portion related to the Company's interest |  | 4,678 |  |  | 3,268 |
Amounts receivable by the Company |  | 2,273 |  |  | 2,193 |
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates |  | $ | 245,276 |  |  | $ | 258,337 |
|  | Three Months Ended March 31,
|  | 2017 |  | 2016
Combined and Condensed Statements of Income |  |  |  |  |  |
Total revenues |  | $ | 21,603 |  |  | $ | 13,372 |
Operating and other expenses |  | (5,866 | ) |  | (3,730 | )
Interest expense |  | (4,538 | ) |  | (2,736 | )
Depreciation and amortization |  | (6,449 | ) |  | (3,880 | )
Loss on debt extinguishment |  | (151 | ) |  | — |
Gain on disposition of properties |  | 14,446 |  |  | — |
Net income attributable to unconsolidated affiliates |  | $ | 19,045 |  |  | $ | 3,026 |
Company’s share of equity in net income of unconsolidated affiliates |  | $ | 13,569 |  |  | $ | 2,052 |
Basis differential amortization |  | (866 | ) |  | (98 | )
Company’s equity in earnings of unconsolidated affiliates |  | $ | 12,703 |  |  | $ | 1,954 |

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- Definition The entire disclosure for the information summarizing investments in and advances to majority-owned subsidiaries, other controlled companies, and other affiliates. It reflects specified information about ownership, financial results from, and financial position in such entities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -Section S99 -Paragraph 6 -Subparagraph (SX 210.12-14) -URI http://asc.fasb.org/extlink&oid=50485924&loc=d3e611322-123010 + Details
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