Investment in Unconsolidated Entities

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture Interest in IAGM

As of December 31, 2022 and 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. On January 18, 2023, the Company acquired the four remaining retail properties from IAGM by acquiring 100% of the membership interests in each of IAGM's wholly owned subsidiaries, as disclosed in "Note 13. Subsequent Events".

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 income (loss).

IAGM is party to two interest rate swap agreements to achieve fixed interest rates on its senior secured term loan facility. As of December 31, 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 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.

On September 28, 2022, IAGM transitioned its senior secured term loan facility from a London Inter-bank Offered Rate ("LIBOR") which repriced monthly ("1-Month LIBOR") to a Secured Overnight Financing Rate ("SOFR") which reprices monthly ("1-Month Term SOFR").

On December 15, 2022, IAGM transitioned its interest rate swaps from 1-Month LIBOR to 1-Month Term SOFR. IAGM's hedging instruments continue to qualify for cash flow hedge accounting through application of expedients provided by Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform.

The following table reflects the real property disposed by IAGM of during the years ended December 31, 2022 and 2021:


Date	Property	Square Feet	Gross Disposition Price		IAGM's Gain (Loss) on Sale		The Company's Gain Deferral
July 12, 2021	Prestonwood Town Center (a)	233	$	52,800	$	12,428	$	6,835
September 3, 2021	Westover Marketplace	243	28,775		399		—
December 1, 2021	South Frisco Village	227	32,600		5,467		—
March 3, 2022	Price Plaza (b)	206	39,100		3,751		—
April 21, 2022	The Highlands of Flower Mound (a)	175	38,000		1,244		684
December 16, 2022	Stone Ridge Market (a)	219	58,100		12,287		6,758
December 22, 2022	Stables Town Center (c)	43	7,800		(244)		—

(a)The Company purchased these properties at a purchase price determined by a third party real estate valuation specialist. The Company deferred its share of IAGM's gains on sale and began amortizing it over 30 years as an increase to equity in earnings of unconsolidated entities.

(b)The buyer assumed a $17,800 mortgage payable secured by the property.

(c)IAGM disposed of 43 square feet out of a total 191 square feet through a partial sale of the property.

The following table reflects the mortgage paydowns by IAGM of during the years ended December 31, 2022 and 2021:


Date	Mortgaged Property	Contractual Interest Rate			Mortgage Paydown (a)		Loss on Debt Extinguishment
March 26, 2021	Westover Marketplace	4.08	%		$	23,150	$	14
July 12, 2021	Senior secured pooled loan	1.55	%	+ 1M LIBOR	$	54,103	$	215
December 16, 2022	Stone Ridge Market	3.47	%		$	28,125	$	2
December 22, 2022	Senior secured pooled loan	1.65	%	+ 1M SOFR	$	5,428	$	15

(a)Mortgage paydowns were funded by available liquidity and proceeds from the sale of properties.

Condensed Financial Information

The following table presents condensed balance sheet information for IAGM:


	As of
	December 31, 2022		December 31, 2021
Assets:
Net investment properties	$	161,312	$	288,014
Other assets	65,565		98,696
Total assets	226,877		386,710
Liabilities and equity:
Mortgage debt, net	92,186		165,831
Other liabilities	7,392		12,409
Equity	127,299		208,470
Total liabilities and equity	226,877		386,710
Company's share of equity	70,869		115,513
Outside basis difference, net (a)	(14,738)		(7,569)
Carrying value of investments in unconsolidated entities	$	56,131	$	107,944

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

The following table presents condensed income statement information of IAGM:


	Year ended December 31,
IAGM	2022		2021		2020
Total income	$	27,764	$	42,145	$	46,259
Depreciation and amortization	(10,508)		(14,437)		(16,303)
Property operating	(5,149)		(7,265)		(7,143)
Real estate taxes	(4,086)		(7,507)		(8,687)
Asset management fees	(882)		(1,128)		(1,098)
Interest expense, net	(4,002)		(5,637)		(7,455)
Other expense and income, net	(245)		(422)		(307)
Loss on debt extinguishment	(219)		(229)		(8)
Provision for asset impairment	—		—		(11,016)
Gain on sale of investment properties, net	17,038		18,294		1,741
Net income (loss)	19,711		23,814		(4,017)

Company's share of net income (loss)	$	10,832	$	13,089	$	(2,264)
Outside basis adjustment for investee's sale of real estate, net	(7,169)		(6,691)		(877)
Equity in earnings (losses) of unconsolidated entities	$	3,663	$	6,398	$	(3,141)

As of December 31, 2022 and 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 $92,468 are scheduled to mature during the year ending December 31, 2023, not inclusive of two twelve-month extension options.