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Investments in and Advances to Unconsolidated Affiliates | 3 Months Ended
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Mar. 31, 2021
Equity Method Investments And Joint Ventures [Abstract] |
Investments in and Advances to Unconsolidated Affiliates | 4. Investments in and Advances to Unconsolidated Affiliates The Company accounts for its investments in and advances to unconsolidated affiliates primarily 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):
|  |  |  | Ownership Interest |  |  | March 31, |  |  | December 31, |
Portfolio |  | Property |  | March 31, 2021 |  |  | 2021 |  |  | 2020 |
Core: |  | 840 N. Michigan (a) |  | 88.43% |  |  | $ | 54,924 |  |  | $ | 55,863 |
|  | Renaissance Portfolio |  | 20% |  |  |  | 28,742 |  |  |  | 29,270 |
|  | Gotham Plaza |  | 49% |  |  |  | 28,589 |  |  |  | 28,683 |
|  | Georgetown Portfolio |  | 50% |  |  |  | 3,870 |  |  |  | 4,624 |
|  | 1238 Wisconsin Avenue |  | 80% |  |  |  | 3,008 |  |  |  | 2,571 |
|  |  |  |  |  |  |  |  | 119,133 |  |  |  | 121,011 |
Mervyns I & II: |  | KLA/ABS (b) |  | 36.7% |  |  |  | 78,526 |  |  |  | 72,391 |
Fund III: |  | Self Storage Management (c) |  | 95% |  |  |  | 207 |  |  |  | 207 |
Fund IV: |  | Fund IV Other Portfolio |  | 98.57% |  |  |  | 12,394 |  |  |  | 11,719 |
|  | 650 Bald Hill Road |  | 90% |  |  |  | 12,532 |  |  |  | 12,550 |
|  |  |  |  |  |  |  |  | 24,926 |  |  |  | 24,269 |
Fund V: |  | Family Center at Riverdale (a) |  | 89.42% |  |  |  | 12,679 |  |  |  | 11,824 |
|  | Tri-City Plaza |  | 90% |  |  |  | 7,309 |  |  |  | 7,024 |
|  | Frederick County Acquisitions |  | 90% |  |  |  | 10,647 |  |  |  | 10,837 |
|  |  |  |  |  |  |  |  | 30,635 |  |  |  | 29,685 |
Various: |  | Due from (to) Related Parties |  |  |  |  |  |  | 290 |  |  |  | 363 |
|  | Other (d) |  |  |  |  |  |  | 2,615 |  |  |  | 1,881 |
|  | Investments in and advances to unconsolidated affiliates |  |  |  |  |  | $ | 256,332 |  |  | $ | 249,807 |
Core: |  | Crossroads (e) |  | 49% |  |  | $ | 15,272 |  |  | $ | 15,616 |
|  | Distributions in excess of income from, and investments in, unconsolidated affiliates |  |  |  |  |  | $ | 15,272 |  |  | $ | 15,616 |
| (a) | Represents a tenancy-in-common interest.
| (b) | Includes an interest in Albertsons (at fair value, as described below) (Note 8).
| (c) | Represents a variable interest entity for which the Company was determined not to be the primary beneficiary.
| (d) | Includes cost-method investments in Storage Post, Fifth Wall and other investments.
| (e) | Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may be required to return distributions to fund future obligations of the entity.
Core Portfolio Acquisition of Unconsolidated Investments On August 8, 2019, the Company invested $1.8 million in Fifth Wall Ventures Retail Fund, L.P. (“Fifth Wall”) Subsequent to its initial investment, the Company invested a total of $1.1 million through March 31, 2021. The Company accounts for its interest at cost less impairment given its ownership is less than five percent and the Company has no influence over the partnership’s operating and financial policies. During the fourth quarter of 2020, the Company impaired $0.4 million of this investment (Note 8) reflecting management’s estimate of fair value at that date. At March 31, 2021, the Company’s investment was $2.5 million. Town Center On April 1, 2020, the Company exchanged the remaining $38.7 million of Brandywine Notes Receivable (Note 3), plus accrued interest of $2.0 million for the remaining 24.78% interest in Town Center, thereby obtaining a 100% controlling interest in the property. The property was then consolidated (Note 2) and the Company recorded the remaining interest in the property investment at the carrying value of the notes. Fund Investments Albertsons During 2006, as part of a series of investments with a consortium of other investors known as the “RCP Venture”, Mervyns II acquired an indirect interest in Albertsons Companies, Inc. a private chain of grocery stores (“Albertsons”) through two 36.67% owned entities (KLA A Investments, LLC and ABS Opportunities, LLC, “KLA/ABS”). Its investment (the “Investment in Albertsons”) has been accounted for under the cost method as Mervyns II has no influence over operating and financial policies of KLA/ABS. Subsequent to the initial investment in 2006, Mervyns II received distributions from its Investment in Albertsons in excess of its initial contribution, which has been recognized in earnings. During the second and fourth quarters of 2020, Mervyns II realized gains of approximately $22.8 million and $0.4 million, respectively, from its Investment in Albertsons. The realized gains during the second quarter of 2020 resulted from the issuance and distribution of proceeds from a preferred equity investment and a sale of a portion of its investment in an initial public offering of Albertsons, both of which occurred in June 2020. Following these transactions, Mervyns II has retained an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons, which it has accounted for at fair value following the initial public offering given the readily determinable fair value, resulting in an unrealized gain of approximately $64.9 million during the second quarter of 2020. During the year ended December 31, 2020, the Company recorded an additional net unrealized holding gain of $7.5 million reflecting the change in fair value of its Investment in Albertsons. During the three months ended March 31, 2021, Mervyns II realized gains of $0.4 million related to distributions from its Investment in Albertsons and recorded an additional net unrealized holding gain of $6.1 million reflecting the change in fair value of its Investment in Albertsons. The Company has reflected both the realized and net unrealized gain as Realized and unrealized holding gains on investments and other within its consolidated statements of operations. The Company has an effective ownership interest of 28.33% in Mervyns II. Broughton Street Portfolio On May 26, 2020, pursuant to the buy-sell provisions of the operating agreement of the Broughton Street Portfolio, Fund IV acquired all of the third-party equity of BSP II, which underlies two properties within Broughton Street Portfolio, for $1.3 million. These two BSP II properties were consolidated during the second quarter of 2020. Fees from Unconsolidated Affiliates The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.1 million for each of the three months ended March 31, 2021 and 2020, which are included in other revenues in the consolidated statements of operations. In addition, the Company paid to certain unaffiliated partners of its joint ventures, $0.4 million and $1.0 million for the three months ended March 31, 2021 and 2020, respectively for leasing commissions, development, management, construction and overhead fees. Summarized Financial Information of Unconsolidated Affiliates The following combined and condensed Balance Sheets and Statements of operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2020, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands):
|  | March 31, 2021 |  |  | December 31, 2020 |
Combined and Condensed Balance Sheets |  |  |  |  |  |  |  |
Assets: |  |  |  |  |  |  |  |
Rental property, net |  | $ | 552,262 |  |  | $ | 563,997 |
Real estate under development |  |  | 15,907 |  |  |  | 14,517 |
Other assets |  |  | 64,358 |  |  |  | 61,969 |
Total assets |  | $ | 632,527 |  |  | $ | 640,483 |
Liabilities and partners’ equity: |  |  |  |  |  |  |  |
Mortgage notes payable |  | $ | 505,245 |  |  | $ | 512,490 |
Other liabilities |  |  | 75,268 |  |  |  | 74,872 |
Partners’ equity |  |  | 52,014 |  |  |  | 53,121 |
Total liabilities and partners’ equity |  | $ | 632,527 |  |  | $ | 640,483 |
Company's share of accumulated equity |  | $ | 100,729 |  |  | $ | 100,767 |
Basis differential |  |  | 54,582 |  |  |  | 55,017 |
Deferred fees, net of portion related to the Company's interest |  |  | 4,111 |  |  |  | 3,565 |
Amounts receivable/payable by the Company |  |  | 290 |  |  |  | 363 |
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates |  |  | 159,712 |  |  |  | 159,712 |
Investments carried at fair value or cost |  |  | 81,348 |  |  |  | 74,479 |
Company's share of distributions in excess of income from and investments in unconsolidated affiliates |  |  | 15,272 |  |  |  | 15,616 |
Investments in and advances to unconsolidated affiliates |  | $ | 256,332 |  |  | $ | 249,807 |
|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Combined and Condensed Statements of Operations |  |  |  |  |  |  |  |
Total revenues |  | $ | 17,281 |  |  | $ | 19,496 |
Operating and other expenses |  |  | (6,219 | ) |  |  | (6,579 | )
Interest expense |  |  | (4,822 | ) |  |  | (5,256 | )
Depreciation and amortization |  |  | (8,801 | ) |  |  | (6,360 | )
Gain on disposition of properties (a) |  |  | 3,206 |  |  |  | — |
Net income attributable to unconsolidated affiliates |  | $ | 645 |  |  | $ | 1,301 |
Company’s share of equity in net income of unconsolidated affiliates |  | $ | 2,699 |  |  | $ | 334 |
Basis differential amortization |  |  | (436 | ) |  |  | (324 | )
Company’s equity in earnings of unconsolidated affiliates |  | $ | 2,263 |  |  | $ | 10 |
| (a) | Represents the gain on the sale of two land parcels by the Family Center at Riverdale on January 4, 2021.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI http://asc.fasb.org/subtopic&trid=2324412 + Details
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