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Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments | 3 Months Ended
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Mar. 31, 2016
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 March 31, 2016, the Company had investments in the following 20 entities, which are accounted for using the equity method of accounting:
Joint Venture | Property Name | Company's Interest
Ambassador Infrastructure, LLC | Ambassador Town Center - Infrastructure Improvements | 65.0%
Ambassador Town Center JV, LLC | Ambassador Town Center | 65.0%
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%
G&I VIII CBL Triangle LLC | Triangle Town Center, Triangle Town Commons and Triangle Town Place | 10.0%
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 Phases I, II and III | 50.0%
Kentucky Oaks Mall Company | Kentucky Oaks Mall | 50.0%
Mall of South Carolina L.P. | Coastal Grand | 50.0%
Mall of South Carolina Outparcel L.P. | 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%
River Ridge Mall JV, LLC | River Ridge Mall | 25.0%
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 2016 and 2015, 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. CBL-TRS Joint Venture II, LLC See Note 16 for information on the sale of Renaissance Center subsequent to March 31, 2016. This property is classified as held for sale within the condensed combined financial statements of unconsolidated affiliates as of March 31, 2016. G&I VIII CBL Triangle LLC In February 2016, G&I VIII CBL Triangle LLC, a newly formed 10/90 joint venture between the Company and DRA Advisors, acquired Triangle Town Center, Triangle Town Commons and Triangle Town Place from an existing 50/50 joint venture, Triangle Town Member LLC, between the Company and The R.E. Jacobs Group for $174,000, including the assumption of the $171,092 loan, of which each partner's share was $85,546 as of the closing date. Concurrent with the formation of the new joint venture, the new entity closed on a modification and restructuring of the loan. See information on the new loan under Financings below. The Company also made an equity contribution of $3,060 to the joint venture at closing to fund certain items. The Company will continue to lease and manage the properties. The joint venture is accounted for using the equity method of accounting. The joint venture has not yet finalized its allocation of the fair value of the tangible and identifiable intangible assets acquired as it is awaiting certain valuation information. The Company expects a final determination of the purchase price allocation will be made during 2016. River Ridge Mall JV, LLC In March 2016, the Company entered into a 25/75 joint venture, River Ridge Mall JV, LLC, ("River Ridge") with an unaffiliated partner. The Company contributed River Ridge Mall, located in Lynchburg, VA, to River Ridge and the partner contributed $33,500 of cash and an anchor parcel at River Ridge Mall that it already owned having a value of $7,000. Of the $33,500 of cash distributed to the Company, $32,819 was used to reduce outstanding balances on our lines of credit. Following the initial formation, all required future contributions will be funded on a pro rata basis. The joint venture is accounted for using the equity method of accounting. The Company has accounted for the formation of River Ridge as the sale of a partial interest and recorded a non-cash loss on impairment of real estate of $9,510 in the first quarter of 2016, which includes a reserve of $2,100 for future capital expenditures. See Note 3 for more information. The Company will continue to manage and lease the mall. The Company has the right to require its 75% partner to purchase its 25% interest in River Ridge if the Company ceases to manage the property at the partner's election. Condensed combined financial statement information of these unconsolidated affiliates is as follows:
| As of
ASSETS | March 31, 2016 |  | December 31, 2015
Investment in real estate assets | $ | 2,355,978 |  |  | $ | 2,357,902 |
Accumulated depreciation | (595,145 | ) |  | (677,448 | )
| 1,760,833 |  |  | 1,680,454 |
Held for sale | 68,064 |  |  | — |
Developments in progress | 15,458 |  |  | 59,592 |
Net investment in real estate assets | 1,844,355 |  |  | 1,740,046 |
Other assets | 199,405 |  |  | 168,540 |
Total assets | $ | 2,043,760 |  |  | $ | 1,908,586 |
LIABILITIES |  |  |
Mortgage and other indebtedness | $ | 1,560,802 |  |  | $ | 1,546,272 |
Other liabilities | 54,059 |  |  | 51,357 |
Total liabilities | 1,614,861 |  |  | 1,597,629 |
OWNERS' EQUITY |  |  |
The Company | 224,762 |  |  | 184,868 |
Other investors | 204,137 |  |  | 126,089 |
Total owners' equity | 428,899 |  |  | 310,957 |
Total liabilities and owners' equity | $ | 2,043,760 |  |  | $ | 1,908,586 |
| Total for the Three Months Ended March 31, |  | Company's Share for the Three Months Ended March 31,
| 2016 |  | 2015 |  | 2016 |  | 2015
Total revenues | $ | 64,204 |  |  | $ | 62,472 |  |  | $ | 30,264 |  |  | $ | 32,835 |
Depreciation and amortization | (20,610 | ) |  | (19,481 | ) |  | (9,178 | ) |  | (10,317 | )
Interest income | 336 |  |  | 332 |  |  | 256 |  |  | 255 |
Interest expense | (13,489 | ) |  | (18,794 | ) |  | (6,585 | ) |  | (9,685 | )
Operating expenses | (20,072 | ) |  | (19,306 | ) |  | (8,762 | ) |  | (9,828 | )
Gain on sales of real estate assets | 80,959 |  |  | 815 |  |  | 26,395 |  |  | 563 |
Net income | $ | 91,328 |  |  | $ | 6,038 |  |  | $ | 32,390 |  |  | $ | 3,823 |
Financings The following table presents the loan activity of the Company's unconsolidated affiliates in 2016:
Date |  | Property |  | Stated Interest Rate |  | Maturity Date (1) |  | Amount Financed or Extended |
February |  | Port Orange (2) |  | LIBOR + 2.00% |  | February 2018 | (3) | $ | 58,628 |  |
February |  | Hammock Landing - Phase I (2) |  | LIBOR + 2.00% |  | February 2018 | (3) | 43,347 |  | (4)
February |  | Hammock Landing - Phase II (2) |  | LIBOR + 2.00% |  | February 2018 | (3) | 16,757 |  |
February |  | Triangle Town Center, Triangle Town Place, Triangle Town Commons (5) |  | 4.00% | (6) | December 2018 | (7) | 171,092 |  |
(1) | Excludes any extension options.
(2) | The guaranty was reduced from 25% to 20% in conjunction with the refinancing. See Note 12 for more information.
(3) | The loan was modified and extended to February 2018 with a one-year extension option.
(4) | The capacity was increased from $39,475.
(5) | The loan was amended and modified in conjunction with the sale of the property to a newly formed joint venture. See above.
(6) | The interest rate was reduced from 5.74% to 4.00% interest-only payments through the initial maturity date.
(7) | The loan was extended to December 2018 with two one-year extension options.
All of the debt on the properties owned by the unconsolidated affiliates is non-recourse, except for Ambassador, Ambassador Infrastructure, Fremaux Phases I and II, West Melbourne and Port Orange. See Note 12 for a description of guarantees the Company has issued related to certain unconsolidated affiliates. JG Gulf Coast Town Center LLC - Phases I and II In the third quarter of 2015, the lender of the non-recourse mortgage loan secured by Phases I and II of Gulf Coast Town Center in Ft. Myers, FL sent a formal notice of default and initiated foreclosure proceedings. Gulf Coast Town Center generates insufficient cash flow to cover the debt service on the mortgage, which had a balance of $190,800 (of which the Company's 50% share was $95,400) at March 31, 2016 and a contractual maturity date of July 2017. In the third quarter of 2015, the lender on the loan began receiving the net operating cash flows of the property each month in lieu of scheduled monthly mortgage payments. Redeemable Interests of the Operating Partnership Redeemable common units of $19,156 and $19,744 at March 31, 2016 and December 31, 2015, 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 $1,698 and $5,586 at March 31, 2016 and December 31, 2015, 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 change relates to the reclassification of AOCI upon the maturity of the Company's hedges. See Note 7. 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 $3,877 and $4,876, as of March 31, 2016 and December 31, 2015, 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 March 31, 2016, the Company's total noncontrolling interests of $113,713 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $109,836 and $3,877, respectively. The Company's total noncontrolling interests at December 31, 2015 of $114,629 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $109,753 and $4,876, respectively. 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 March 31, 2016 and December 31, 2015. The noncontrolling interest is reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. Variable Interest Entities As discussed in Note 2, effective January 1, 2016, the Company adopted ASU 2015-02. As a result, the Operating Partnership and certain of our subsidiaries are deemed to have the characteristics of a VIE primarily because the limited partners of these entities do not collectively possess substantive kick-out or participating rights. However, the Company was not required to consolidate any previously unconsolidated entities or deconsolidate any previously consolidated entities as a result of the change in classification. Accordingly, the adoption of ASU 2015-02 affected disclosure only and did not change amounts within the condensed consolidated financial statements. The Company consolidates the Operating Partnership, which is a VIE, for which the Company is the primary beneficiary. The Company, through the Operating Partnership, consolidates all VIEs for which it is the primary beneficiary. Generally, a VIE, is a legal entity in which the equity investors do not have the characteristics of a controlling financial interest or the equity investors lack sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. A limited partnership is considered a VIE when the majority of the limited partners unrelated to the general partner possess neither the right to remove the general partner without cause, nor certain rights to participate in the decisions that most significantly affect the financial results of the partnership. In determining whether the Company is the primary beneficiary of a VIE, the Company considers qualitative and quantitative factors, including, but not limited to: which activities most significantly impact the VIE’s economic performance and which party controls such activities; the amount and characteristics of the Company's investment; the obligation or likelihood for the Company or other investors to provide financial support; and the similarity with and significance to our business activities and the business activities of the other investors. The table below lists the Company's VIEs as of March 31, 2016 under the new guidance:
Consolidated VIEs:
CBL Terrace LP
Foothills Mall Associates
High Point Development LP II
Jarnigan Road LP
Lebcon Associates
Lebcon I, Ltd
Lee Partners
Village at Orchard Hills, LLC
Statesboro Crossing, LLC
The Promenade at D'Ilberville
Madison Grandview Forum, LLC
Atlanta Outlet Shoppes, LLC
Woodstock Ga Investments, LLC
Atlanta Outlet Outparcels, LLC
El Paso Outlet Center Holding, LLC
El Paso Outlet Center II, LLC
Gettysburg Outlet Center Holding, LLC
Gettysburg Outlet Center, LLC
Louisville Outlet Shoppes, LLC
Louisville Outlet Outparcels, LLC
Unconsolidated VIEs:
JG Gulf Coast Town Center LLC
Ambassador Infrastructure, LLC
G&I VIII CBL Triangle LLC (1)
Triangle Town Member LLC (1)
(1) | As discussed above, prior to the sale of the Company's 50% interest in Triangle Town Member LLC, the Company's investment in this joint venture represented an interest in a VIE. Upon, the sale of the Company's 50% interest in Triangle Town Member LLC to G&I VIII CBL Triangle LLC, the Company determined that the new unconsolidated affiliate also represents an interest in a VIE based upon the criteria noted above.

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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 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: 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=49116238&loc=d3e32847-111569 Reference 3: 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 4: 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=49116238&loc=d3e32787-111569 + Details
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