Investment in Unconsolidated Entities

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Joint Venture Interest in IAGM

As of March 31, 2023 and December 31, 2022, 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. 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 for an aggregate purchase price of $222.3 million by acquiring 100% of the membership interests in each of IAGM's wholly owned subsidiaries. The Company assumed aggregate mortgage debt of $92.5 million and funded the remaining balance with its available liquidity. IAGM recognized a gain on sale of $45.2 million, of which the Company's share was approximately $24.9 million. Subsequent to the transaction, IAGM proportionately distributed substantially all net proceeds from the sale, of which the Company's share was approximately $71.4 million. In connection with the foregoing, IAGM adopted a liquidation plan on January 11, 2023. As of March 31, 2023, net assets of IAGM were $28.6 million, inclusive of cash and cash equivalents of $30.7 million.

As of March 31, 2023, the Company's aggregate deferred gains related to its previously owned equity interest in real estate acquisitions from IAGM of $39.9 million are reflected in the basis of the respective acquired assets. Previously, deferred gains were reflected as a reduction of the Company's investment in IAGM and amortized to equity in earnings of unconsolidated entities.

On January 18, 2023, the Company also acquired IAGM's two interest rate swap agreements which achieve fixed interest rates on an aggregate notional amount of $75.0 million of the assumed pooled mortgage priced in a Secured Overnight Financing Rate ("SOFR"), each of which reprice monthly ("1-Month Term SOFR"). IAGM recognized a gain on sale of $2.6 million representing the fair value of the derivatives, of which the Company's share was approximately $1.4 million. The Company deferred its share of IAGM's gain on sale of derivatives, initially reflecting it within accumulated comprehensive income and amortizing it to interest expense, net, through the instruments' maturity date.

The following table reflects the real property disposed by IAGM since January 1, 2022.


Date	Property	Square Feet	Gross Disposition Price		IAGM's Gain (Loss) on Sale		The Company's Gain Deferral
March 3, 2022	Price Plaza (a)	206	$	39,100	$	3,751	$	—
April 21, 2022	The Highlands of Flower Mound (b)	175	38,000		1,244		684
December 16, 2022	Stone Ridge Market (b)	219	58,100		12,287		6,758
December 22, 2022	Stables Town Center (c)	43	7,800		(244)		—
January 18, 2023	Bay Colony (b)	416	79,100		22,327		12,280
January 18, 2023	Blackhawk Town Center (b)	127	26,300		12,632		6,948
January 18, 2023	Cyfair Town Center (b)	433	79,200		4,713		2,592
January 18, 2023	Stables Town Center (b)	148	37,000		5,536		3,045

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

(b)The Company purchased these properties at a purchase price determined by a third party real estate valuation specialist.

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

Condensed Financial Information

The following table presents condensed balance sheet information for IAGM:


	As of
	March 31, 2023		December 31, 2022
Assets:
Net investment properties	$	—	$	161,312
Other assets	32,690		65,565
Total assets	$	32,690	$	226,877
Liabilities and equity:
Mortgages debt, net	$	—	$	92,186
Other liabilities	4,053		7,392
Equity	28,637		127,299
Total liabilities and equity	$	32,690	$	226,877

Company's share of equity	$	15,706	$	70,869
Outside basis differences, net (a)	—		(14,738)
Carrying value of investments in unconsolidated entities	$	15,706	$	56,131

(a)The outside basis differences reflect 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 March 31,
		2023		2022
Total income		$	952	$	8,379
Depreciation and amortization		(622)		(2,905)
Property operating		(232)		(1,330)
Real estate taxes		(127)		(1,411)
Asset management fees		(32)		(251)
Interest expense, net		(143)		(1,159)
Other income and expense, net		199		(142)
Gain (loss) on debt extinguishment		444		(111)
Gain on sale of real estate		45,208		3,751
Gain on sale of derivatives		2,556		—
Net income		$	48,203	$	4,821

Company's share of net income		$	26,512	$	2,652
Outside basis adjustments for IAGM's sales to the Company		(27,175)		64
Equity in (losses) earnings of unconsolidated entities		$	(663)	$	2,716