Investment in Unconsolidated Entities

12 Months Ended

Dec. 31, 2020

Investment in Partially Owned Entities [Abstract]

Joint Venture Interests

IAGM

As of December 31, 2020 and 2019, the Company owned a 55% interest in one unconsolidated entity, IAGM Retail Fund I, LLC ("IAGM"), a joint venture partnership between the Company and PGGM Private Real Estate Fund ("PGGM"). As of December 31, 2020 and 2019, the carrying value of the Company's investment in IAGM was $109,051 and $118,861, respectively.

IAGM was formed on April 17, 2013 for the purpose of acquiring, owning, managing, supervising and disposing of retail properties and sharing in the profits and losses from those retail properties and their activities. The Company contributed 14 properties to IAGM during the year ended December 31, 2013, and treated the contributions as partial sales under FASB Topic 360-20, "Property, Plant and Equipment - Real Estate Sales." The resulting deferred aggregate gain of $15,625 was reflected as a basis adjustment and subsequently amortized over 30 years, consistent with the depreciation period of the investee's underlying assets. The Company's adoption of ASU No. 2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets on January 1, 2018, resulted in the remaining $12,756 of the aforementioned deferred gain being recognized through beginning distributions in excess of accumulated net income.

The Company analyzed the joint venture agreement and determined that IAGM was not a VIE. The Company also considered the joint venture partners' participating rights under the joint venture agreement and determined that the joint venture partners have the ability to participate in major decisions, which equates to shared decision making. Accordingly, the Company has significant influence but does not control IAGM. Therefore, IAGM was not consolidated by the Company, and the equity method of accounting was applied. Under the equity method of accounting, the net equity investment of the Company and the Company's share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and comprehensive (loss) income.

During the year ended December 31, 2020, the Company acquired Antoine Town Center from IAGM for $22,254, an estimated fair value determined by independent appraisal, which resulted in IAGM recognizing a gain on sale of $1,741. The Company deferred its share of IAGM's gain on sale of $958 and began amortizing the gain over 30 years as an increase to equity in earnings. Subsequent to purchasing Antoine Town Center, the Company completed a sale of an outparcel at this retail property to an unrelated third party which resulted in recognizing $54 of previously deferred gain.

During the year ended December 31, 2020, IAGM recognized a provision for asset impairment of $11,015 on one retail property, of which the Company's share of this provision for asset impairment was $6,059, as disclosed in "Note 9. Fair Value Measurements".

During the year ended December 31, 2020, IAGM prepaid a $14,872 mortgage payable with cash on hand.

During the year ended December 31, 2019, IAGM disposed of Rockwell Plaza, a 255,000 square foot retail property, for a gross disposition price of $20,500 and recognized a provision for asset impairment of $1,443 and a loss on sale of $559. The Company's share of IAGM's provision for asset impairment was $794, and its share of the loss on sale was $307. Proceeds from the sale were used to extinguish the related $16,250 non-recourse mortgage loan.

During the year ended December 31, 2018, IAGM recognized a provision for asset impairment of $3,673 on three retail properties and a loss on sale of $4,135 on two retail properties. For the year ended December 31, 2018, the Company's share of IAGM's provision for asset impairment and loss on sale was $2,020 and $2,274, respectively.

During the year ended December 31, 2020, IAGM entered into two interest rate swap agreements to achieve fixed interest rates on its senior secured term loan facility previously subject to variability in the London Inter-bank Offered Rate ("LIBOR"). Each of the interest rate swaps have an effective date of April 1, 2020 and a termination date of November 2, 2023. One interest rate swap has a notional amount of $45,000 and achieves a fixed interest rate of 1.979%. The other interest rate swap has a notional amount of $30,000 and achieves a fixed interest rate of 1.956%. The Company recognizes its share of gains or losses resulting from IAGM's interest rate swaps as an adjustment to the Company's investment in IAGM and an increase or decrease in comprehensive income. As of December 31, 2020, the interest rate swaps were recorded as a liability with a fair value of $525 on IAGM's consolidated balance sheet, of which the Company's share was $289.

Downtown Railyard Ventures, LLC

On September 30, 2015, the Company was admitted as a member to Downtown Railyard Venture, LLC ("DRV"), which was a joint venture established for the purpose of developing and selling a land development in Sacramento, California. During the year ended December 31, 2018, the Company recorded an other-than-temporary impairment of $29,933 on DRV due to a reduction in the expected hold period, thereby reducing the investment to an estimated fair value that the Company believed would be most probable of realization if the investment was liquidated. On June 24, 2019, the Company liquidated all interests in DRV in exchange for $30,000 of cash consideration. As a result of the other-than-temporary impairment recorded in 2018, the liquidation of interests resulted in no gain or loss being recognized in 2019. The Company has no continuing involvement with DRV.

Condensed Financial Information

The following table presents condensed balance sheet information for IAGM.


	As of
	December 31, 2020		December 31, 2019
Assets:
Net investment properties	$	387,394	$	425,585
Other assets	72,453		66,437
Total assets	459,847		492,022
Liabilities and equity:
Mortgage debt, net	242,388		256,732
Other liabilities	19,144		20,765
Equity	198,315		214,525
Total liabilities and equity	459,847		492,022
Company's share of equity	109,928		118,861
Outside basis difference, net (a)	(877)		—
Carrying value of investments in unconsolidated entities	$	109,051	$	118,861

(a)The outside basis difference relates to the unamortized deferred gain on sale of Antoine Town Center.

The following table presents condensed income statement information of IAGM and disposed joint ventures.


	Year ended December 31,
IAGM	2020		2019		2018
Total income	$	46,259	$	53,396	$	57,649
Depreciation and amortization	(16,303)		(20,135)		(21,001)
Property operating	(7,143)		(8,372)		(8,898)
Real estate taxes	(8,687)		(9,426)		(9,891)
Asset management fees	(1,098)		(1,073)		(1,080)
Interest expense, net	(7,455)		(10,882)		(13,193)
Other (expense) and income, net	(307)		157		237
Loss on debt extinguishment	(8)		—		(20)
Gain (loss) on sale of real estate, net	1,741		(559)		(4,135)
Provision for asset impairment	(11,016)		(1,443)		(3,673)
Net (loss) income	(4,017)		1,663		(4,005)
Disposed joint venture activity
Net (loss) income	—		(4,869)		573
Total net (loss) income of unconsolidated entities	$	(4,017)	$	(3,206)	$	(3,432)

Company's share of net loss	$	(2,264)	$	(3,446)	$	(1,870)
Outside basis adjustment for investee's sale of real estate, net	(877)		4,403		—
Impairment of DRV	—		—		(29,933)
Distributions in excess of the investments' carrying value	—		—		410
Equity in (losses) earnings and (impairment), net, of unconsolidated entities	$	(3,141)	$	957	$	(31,393)

The following table summarizes the scheduled maturities of IAGM's mortgages payable as of December 31, 2020:


Scheduled maturities by year:	As of December 31, 2020
2021	$	23,150
2022	—
2023	180,125
2024	—
2025	22,880
Thereafter	17,800
Total	$	243,955

As of December 31, 2020, none of IAGM's mortgages payable are recourse to the Company. It is anticipated that the joint venture will be able to repay, refinance or extend all of its debt on a timely basis.