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Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments | 9 Months Ended
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Sep. 30, 2014
Equity Method Investments and Joint Ventures [Abstract] |
Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments | Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments Unconsolidated Affiliates At September 30, 2014, the Company had investments in the following 17 entities, which are accounted for using the equity method of accounting:
Joint Venture | Property Name | Company's Interest
CBL/T-C, LLC | CoolSprings Galleria, Oak Park Mall and West County Center | 50.0%
CBL-TRS Joint Venture, LLC | Friendly Center, The Shops at Friendly Center and a portfolio of four office buildings | 50.0%
CBL-TRS Joint Venture II, LLC | Renaissance Center | 50.0%
El Paso Outlet Outparcels, LLC | The Outlet Shoppes at El Paso (vacant land) | 50.0%
Fremaux Town Center JV, LLC | Fremaux Town Center Phases I and II | 65.0%
Governor’s Square IB | Governor’s Plaza | 50.0%
Governor’s Square Company | Governor’s Square | 47.5%
High Pointe Commons, LP | High Pointe Commons | 50.0%
High Pointe Commons II-HAP, LP | High Pointe Commons - Christmas Tree Shop | 50.0%
JG Gulf Coast Town Center LLC | Gulf Coast Town Center | 50.0%
Kentucky Oaks Mall Company | Kentucky Oaks Mall | 50.0%
Mall of South Carolina L.P. | Coastal Grand—Myrtle Beach | 50.0%
Mall of South Carolina Outparcel L.P. | Coastal Grand—Myrtle Beach (Coastal Grand Crossing and vacant land) | 50.0%
Port Orange I, LLC | The Pavilion at Port Orange Phase I and one office building | 50.0%
Triangle Town Member LLC | Triangle Town Center, Triangle Town Commons and Triangle Town Place | 50.0%
West Melbourne I, LLC | Hammock Landing Phases I and II | 50.0%
York Town Center, LP | York Town Center | 50.0%
Although the Company had majority ownership of certain joint ventures during 2014 and 2013, it evaluated the investments and concluded that the other partners or owners in these joint ventures had substantive participating rights, such as approvals of:
• | the pro forma for the development and construction of the project and any material deviations or modifications thereto;
• | the site plan and any material deviations or modifications thereto;
• | the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;
• | any acquisition/construction loans or any permanent financings/refinancings;
• | the annual operating budgets and any material deviations or modifications thereto;
• | the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and
• | any material acquisitions or dispositions with respect to the project.
As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting. Condensed combined financial statement information of these unconsolidated affiliates is as follows:
| As of
ASSETS | September 30, 2014 |  | December 31, 2013
Investment in real estate assets | $ | 2,243,113 |  |  | $ | 2,167,227 |
Accumulated depreciation | (603,622 | ) |  | (555,174 | )
| 1,639,491 |  |  | 1,612,053 |
Developments in progress | 57,875 |  |  | 103,161 |
Net investment in real estate assets | 1,697,366 |  |  | 1,715,214 |
Other assets | 183,920 |  |  | 168,799 |
Total assets | $ | 1,881,286 |  |  | $ | 1,884,013 |
LIABILITIES |  |  |
Mortgage and other indebtedness | $ | 1,505,907 |  |  | $ | 1,468,422 |
Other liabilities | 47,765 |  |  | 48,203 |
Total liabilities | 1,553,672 |  |  | 1,516,625 |
OWNERS' EQUITY |  |  |
The Company | 187,714 |  |  | 213,664 |
Other investors | 139,900 |  |  | 153,724 |
Total owners' equity | 327,614 |  |  | 367,388 |
Total liabilities and owners' equity | $ | 1,881,286 |  |  | $ | 1,884,013 |
| Total for the Three Months Ended September 30, |  | Company's Share for the Three Months Ended September 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
Total revenues | $ | 61,781 |  |  | $ | 59,348 |  |  | $ | 32,371 |  |  | $ | 30,556 |
Depreciation and amortization | (19,776 | ) |  | (18,889 | ) |  | (10,537 | ) |  | (9,877 | )
Interest income | 336 |  |  | 340 |  |  | 257 |  |  | 242 |
Interest expense | (18,861 | ) |  | (19,150 | ) |  | (9,719 | ) |  | (9,840 | )
Operating expenses | (17,788 | ) |  | (18,045 | ) |  | (9,134 | ) |  | (8,822 | )
Gain on sales of real estate assets | 1,119 |  |  | 21 |  |  | 698 |  |  | 11 |
Net income | $ | 6,811 |  |  | $ | 3,625 |  |  | $ | 3,936 |  |  | $ | 2,270 |
| Total for the Nine Months Ended September 30, |  | Company's Share for the Nine Months Ended September 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
Total revenues | $ | 185,002 |  |  | $ | 180,091 |  |  | $ | 96,389 |  |  | $ | 93,002 |
Depreciation and amortization | (57,793 | ) |  | (57,158 | ) |  | (30,654 | ) |  | (29,748 | )
Interest income | 1,015 |  |  | 1,017 |  |  | 775 |  |  | 713 |
Interest expense | (56,165 | ) |  | (57,861 | ) |  | (28,872 | ) |  | (29,677 | )
Operating expenses | (53,457 | ) |  | (54,240 | ) |  | (27,298 | ) |  | (26,683 | )
Gain on sales of real estate assets | 1,119 |  |  | 21 |  |  | 698 |  |  | 11 |
Net income | $ | 19,721 |  |  | $ | 11,870 |  |  | $ | 11,038 |  |  | $ | 7,618 |
2014 Financing The following table presents the loan activity of the Company's unconsolidated affiliates since January 1, 2014:
Date |  | Property |  | Stated Interest Rate |  | Maturity Date (1) |  | Amount Financed or Extended
August |  | Fremaux Town Center - Phase I (2) |  | LIBOR + 2.0% |  | August 2016 | (3) | $ | 47,291 |
August |  | Fremaux Town Center - Phase II (4) |  | LIBOR + 2.0% |  | August 2016 | (3) | 32,100 |
July |  | Coastal Grand-Myrtle Beach (5) |  | 4.09% |  | August 2024 |  | 126,000 |
February |  | Fremaux Town Center - Phase I (6) |  | LIBOR + 2.125% |  | March 2016 |  | 47,291 |
(1) Excludes any extension options.
(2) | Fremaux Town Center JV, LLC ("Fremaux") amended and modified its Phase I construction loan to change the maturity date and interest rate. Additionally, the Company's guarantee of the loan was reduced from 100% to 50% of the outstanding principal loan amount. See Note 12 for further information on future guarantee reductions.
(3) | The construction loan has two one-year extension options, which are at the joint venture's election, for an outside maturity date of August 2018.
(4) | The Company has guaranteed 100% of the construction loan. See Note 12 for further information on future guarantee reductions.
(5) | Two subsidiaries of Mall of South Carolina L.P. and Mall of South Carolina Outparcel L.P., closed on a non-recourse loan, secured by Coastal Grand-Myrtle Beach in Myrtle Beach, SC. Net proceeds were used to retire the outstanding borrowings under the previous loan, which had a balance of $75,238 as well as to pay off $18,000 of subordinated notes to the Company and its joint venture partner, each of which held $9,000. See Note 8 for additional information. Excess proceeds were distributed 50/50 to the Company and its partner.
(6) | Fremaux amended and restated its March 2013 loan agreement to increase the capacity on its construction loan from $46,000 to $47,291 for additional development costs related to Fremaux Town Center. The Company had guaranteed 100% of the loan. The construction loan had two one-year extension options, which were at the joint venture's election, for an outside maturity date of March 2018. See Note 2 and Note 3 above for information on the extension and modification of the Phase I loan in August 2014.
All of the debt on the properties owned by the unconsolidated affiliates is non-recourse, except for Fremaux Phases I and II, West Melbourne, Port Orange, and Gulf Coast Phase III. See Note 12 for a description of guarantees the Company has issued related to certain unconsolidated affiliates. CBL/T-C, LLC In accordance with the terms of the joint venture agreement, the Company elected to purchase TIAA-CREF's 12.0% interest in Pearland Town Center in the first quarter of 2014 for $17,948. This amount represented the noncontrolling partner's unreturned equity contribution related to Pearland Town Center, which was accounted for as a financing obligation, plus accrued and unpaid preferred return at a rate of 8.0%. Redeemable Interests Redeemable common units of $28,723 and $28,756 at September 30, 2014 and December 31, 2013, respectively, include a partnership interest in the Operating Partnership for which the partnership agreement includes redemption provisions that may require the Operating Partnership to redeem the partnership interest for real property. Redeemable noncontrolling interests of $6,120 and $5,883 at September 30, 2014 and December 31, 2013, respectively, include the aggregate noncontrolling ownership interest in consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder's election that allow for redemption through cash and/or properties. The redeemable noncontrolling interests in other consolidated subsidiaries includes the third party interest in the Company's subsidiary that provides security and maintenance services and also included, prior to their redemption by the Company in September 2013, the perpetual preferred joint venture units (“PJV units”) issued to the Westfield Group (“Westfield”) for its preferred interest in CW Joint Venture, LLC ("CWJV"), a Company-controlled entity, consisting of four of the Company's other consolidated subsidiaries. The 2013 activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units that the Company redeemed in September 2013 is as follows:
|  | Nine Months Ended September 30, 2013
Beginning Balance |  | $ | 423,834 |
Net income attributable to redeemable noncontrolling preferred joint venture interest |  | 14,637 |
Distributions to redeemable noncontrolling preferred joint venture interest |  | (19,894 | )
Reduction to preferred liquidation value of PJV units |  | (10,000 | )
Redemption of noncontrolling preferred joint venture interest |  | (408,577 | )
Ending Balance |  | $ | — |
Noncontrolling Interests of the Operating Partnership Noncontrolling interests include the aggregate noncontrolling ownership interest in the Operating Partnership's consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. Total noncontrolling interest was $17,578 and $19,179, as of September 30, 2014 and December 31, 2013, respectively. Noncontrolling Interests of the Company The noncontrolling interests of the Company include the third party interests discussed above as well as the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock or, at the Company’s election, their cash equivalent. As of September 30, 2014, the Company's total noncontrolling interests of $149,345 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $131,767 and $17,578, respectively. The Company's total noncontrolling interest at December 31, 2013 of $155,021 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $135,842 and $19,179, respectively. In the third quarter of 2014, we elected to pay cash of $1,695 to two holders of 91,167 common units in the Operating Partnership upon the exercise of their conversion rights. In the second quarter of 2014, a holder of 170,847 common units in the Operating Partnership exercised its conversion rights. The Company elected to pay $2,914 in cash for those units in May 2014. Cost Method Investment The Company owns a 6.2% noncontrolling interest in subsidiaries of Jinsheng, an established mall operating and real estate development company located in Nanjing, China. The Company accounts for its noncontrolling interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded. The carrying amount of this investment was $5,325 at September 30, 2014 and December 31, 2013. The noncontrolling interest is reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. Variable Interest Entities Triangle Town Member LLC The Company holds a 50% ownership interest in the joint venture Triangle Town Member, LLC. In 2013, the Company reconsidered the entity’s status, and determined that its investment in this joint venture represents an interest in a VIE. The entity is under joint control, and therefore the Company accounts for it as an unconsolidated affiliate using the equity method of accounting as of September 30, 2014 and December 31, 2013, respectively. JG Gulf Coast Town Center LLC The Company holds a 50% ownership interest in the joint venture JG Gulf Coast Town Center LLC. In 2013, the Company reconsidered the entity’s status, and determined that its investment in this joint venture represents an interest in a VIE. The entity is under joint control, and therefore the Company accounts for it as an unconsolidated affiliate using the equity method of accounting as of September 30, 2014 and December 31, 2013, respectively. West Melbourne I, LLC The Company holds a 50% ownership interest in the joint venture West Melbourne I, LLC. In 2013, the Company reconsidered the entity’s status, and determined that its investment in this joint venture represents an interest in a VIE. The entity is under joint control, and therefore the Company accounts for it as an unconsolidated affiliate using the equity method of accounting as of September 30, 2014 and December 31, 2013, respectively. Gettysburg Outlet Center Holding LLC In the second quarter of 2012, the Company entered into a joint venture, Gettysburg Outlet Center Holding LLC, with a third party to develop, own and operate The Outlet Shoppes at Gettysburg. The Company holds a 50% ownership interest in this joint venture. The Company determined that its investment in this joint venture represents an interest in a VIE and that the Company is the primary beneficiary since it has the power to direct activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of September 30, 2014 and December 31, 2013 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest. El Paso Outlet Center Holding, LLC In the second quarter of 2012, the Company entered into a joint venture, El Paso Outlet Center Holding, LLC, with a third party to develop, own and operate The Outlet Shoppes at El Paso. The Company holds a 75% ownership interest in the joint venture. The Company determined that its investment in this joint venture represents an interest in a VIE and that the Company is the primary beneficiary since it has the power to direct the activities of the joint venture that most significantly impact the joint venture's economic performance as well as the obligation to absorb losses or right to receive benefits from the VIE that could be significant. As a result, the joint venture is presented in the accompanying condensed consolidated financial statements as of September 30, 2014 and December 31, 2013 on a consolidated basis, with the interests of the third party reflected as a noncontrolling interest.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32787-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32847-111569 + Details
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