Investment in Unconsolidated Entities

6 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture Interest in IAGM

As of June 30, 2022 and December 31, 2021, 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"). IAGM was formed on April 17, 2013 for the purpose of acquiring, owning, managing, and disposing of retail properties and sharing in the profits and losses from those retail properties and their activities.

During the six months ended June 30, 2022, IAGM disposed of Price Plaza, a 206 thousand square foot retail property, for a gross disposition price of $39,100 and recognized a gain on sale of $3,751. The Company's share of IAGM's gain on sale was $2,063. The buyer assumed a $17,800 mortgage payable secured by the property.

During the three months ended June 30, 2022, the Company purchased The Highlands of Flower Mound from IAGM for $38,000, a purchase price determined by a third party real estate valuation specialist, which resulted in IAGM recognizing a gain on sale of $1,244. The Company assumed a $22,880 mortgage payable secured by the property. The Company deferred its share of IAGM's gain on sale of $684 and began amortizing the gain over 30 years as an increase to equity in earnings of unconsolidated entities.

During the six months ended June 30, 2021, IAGM prepaid mortgages payable of $23,150 with cash on hand.

IAGM is party to 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"). As of June 30, 2022, and December 31, 2021, the interest rate swaps were recorded as assets with fair values of $2,764 and $530, respectively, on IAGM's condensed consolidated balance sheet, of which the Company's share was $1,520 and $291, respectively. 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.

Condensed Financial Information

The following table presents condensed balance sheet information for IAGM:


	As of
	June 30, 2022		December 31, 2021
Assets:
Net investment properties	$	214,606	$	288,014
Other assets	35,841		98,696
Total assets	$	250,447	$	386,710
Liabilities and equity:
Mortgages debt, net	$	125,545	$	165,831
Other liabilities	7,062		12,409
Equity	117,840		208,470
Total liabilities and equity	250,447		386,710

Company's share of equity	65,671		115,513
Outside basis difference, net (a)	(8,121)		(7,569)
Carrying value of investments in unconsolidated entities	$	57,550	$	107,944

(a)The outside basis difference reflects unamortized deferred gains on historical property sales from IAGM to the Company.

The following table presents condensed income statement information of IAGM:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Total income	$	6,604	$	11,421	$	14,983	$	22,850
Depreciation and amortization	(2,519)		(3,793)		(5,424)		(7,557)
Property operating	(1,111)		(2,056)		(2,441)		(4,129)
Real estate taxes	(834)		(2,298)		(2,245)		(4,670)
Asset management fees	(220)		(296)		(471)		(567)
Interest expense, net	(899)		(1,469)		(2,058)		(3,161)
Other income and (expense), net	249		(116)		107		(245)
Loss on debt extinguishment	(91)		—		(202)		(14)
Gain on sale of real estate	1,244		—		4,995		—
Net income	$	2,423	$	1,393	$	7,244	$	2,507

Company's share of net income	$	1,332	$	768	$	3,984	$	1,380
Outside basis adjustment for investee's sale of real estate, net	(616)		7		(552)		15
Equity in earnings of unconsolidated entities	$	716	$	775	$	3,432	$	1,395

As of June 30, 2022 and December 31, 2021, 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. IAGM's remaining mortgages payable of $126,022 are scheduled to mature during the year ending December 31, 2023.