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Unconsolidated Affiliates, Redeemable Interests, Noncontrolling Interests and Cost Method Investments | 6 Months Ended
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Jun. 30, 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 June 30, 2016, the Company had investments in the following 19 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%
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 Phase 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 In April 2016, CBL-TRS Joint Venture II, LLC, a subsidiary of the Company, and its 50/50 joint venture partner sold Renaissance Center, a community center located in Durham, NC, for a gross sales price of $129,200 and net proceeds of $80,324, of which $40,162 represents each partner's share. In conjunction with the sale, the buyer assumed the $16,000 loan secured by the property's second phase. The loan secured by the first phase, which had a balance of $31,641 as of closing, was retired. The unconsolidated affiliate recognized a gain on sale of real estate assets of $58,876, of which each partner's share was approximately $29,438. 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 selling 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 $171,092 loan, of which the Company's share is $17,109. 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 continues to lease and manage the properties. The joint venture is accounted for using the equity method of accounting. The following table summarizes the allocation of the estimated fair values of the tangible and identifiable intangible assets acquired as of the February 2016 acquisition date for the G&I VIII CBL Triangle LLC joint venture:
|  | 2016
Land |  | $ | 14,421 |
Buildings and improvements |  | 132,230 |
Tenant improvements |  | 1,206 |
Above-market leases |  | 11,599 |
In-place leases |  | 22,538 |
Total assets |  | 181,994 |
Below-market leases |  | (7,994 | )
Net assets acquired |  | $ | 174,000 |
River Ridge Mall JV, LLC In the first quarter of 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 contributed to the Company, after closing costs, $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 continues to manage and lease the ma ll. T he 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 | June 30, 2016 |  | December 31, 2015
Investment in real estate assets | $ | 2,184,268 |  |  | $ | 2,357,902 |
Accumulated depreciation | (549,935 | ) |  | (677,448 | )
| 1,634,333 |  |  | 1,680,454 |
Developments in progress | 17,709 |  |  | 59,592 |
Net investment in real estate assets | 1,652,042 |  |  | 1,740,046 |
Other assets | 241,951 |  |  | 168,540 |
Total assets | $ | 1,893,993 |  |  | $ | 1,908,586 |
LIABILITIES |  |  |
Mortgage and other indebtedness | $ | 1,333,293 |  |  | $ | 1,546,272 |
Other liabilities | 56,261 |  |  | 51,357 |
Total liabilities | 1,389,554 |  |  | 1,597,629 |
OWNERS' EQUITY |  |  |
The Company | 236,005 |  |  | 184,868 |
Other investors | 268,434 |  |  | 126,089 |
Total owners' equity | 504,439 |  |  | 310,957 |
Total liabilities and owners' equity | $ | 1,893,993 |  |  | $ | 1,908,586 |
| Total for the Three Months Ended June 30, |  | Company's Share for the Three Months Ended June 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
Total revenues | $ | 62,854 |  |  | $ | 63,111 |  |  | $ | 29,836 |  |  | $ | 32,958 |
Depreciation and amortization | (22,248 | ) |  | (19,641 | ) |  | (9,156 | ) |  | (10,303 | )
Interest income | 332 |  |  | 335 |  |  | 256 |  |  | 257 |
Interest expense | (14,181 | ) |  | (18,589 | ) |  | (7,093 | ) |  | (9,587 | )
Operating expenses | (18,333 | ) |  | (17,468 | ) |  | (8,421 | ) |  | (9,045 | )
Gain on extinguishment of debt | 63,294 |  |  | — |  |  | — |  |  | — |
Income from continuing operations before gain on sales of real estate assets | 71,718 |  |  | 7,748 |  |  | 5,422 |  |  | 4,280 |
Gain on sales of real estate assets | 60,377 |  |  | 619 |  |  | 58,927 |  |  | 601 |
Net income | $ | 132,095 |  |  | $ | 8,367 |  |  | $ | 64,349 |  |  | $ | 4,881 |
| Total for the Six Months Ended June 30, |  | Company's Share for the Six Months Ended June 30,
| 2016 |  | 2015 |  | 2016 |  | 2015
Total revenues | $ | 127,058 |  |  | $ | 125,583 |  |  | $ | 60,100 |  |  | $ | 65,793 |
Depreciation and amortization | (42,858 | ) |  | (39,122 | ) |  | (18,334 | ) |  | (20,620 | )
Interest income | 668 |  |  | 667 |  |  | 512 |  |  | 512 |
Interest expense | (27,670 | ) |  | (37,383 | ) |  | (13,678 | ) |  | (19,272 | )
Operating expenses | (38,405 | ) |  | (36,774 | ) |  | (17,183 | ) |  | (18,873 | )
Gain on extinguishment of debt | 63,294 |  |  | — |  |  | — |  |  | — |
Income from continuing operations before gain on sales of real estate assets | 82,087 |  |  | 12,971 |  |  | 11,417 |  |  | 7,540 |
Gain on sales of real estate assets | 141,336 |  |  | 1,434 |  |  | 85,322 |  |  | 1,164 |
Net income | $ | 223,423 |  |  | $ | 14,405 |  |  | $ | 96,739 |  |  | $ | 8,704 |
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 |
June |  | Fremaux Town Center (2) |  | 3.70% | (3) | June 2026 |  | $ | 73,000 |  |
June |  | Ambassador Town Center (4) |  | 3.22% | (5) | June 2023 |  | 47,660 |  |
February |  | Port Orange (6) |  | LIBOR + 2.0% |  | February 2018 | (7) | 58,628 |  |
February |  | Hammock Landing - Phase I (6) |  | LIBOR + 2.0% |  | February 2018 | (7) | 43,347 |  | (8)
February |  | Hammock Landing - Phase II (6) |  | LIBOR + 2.0% |  | February 2018 | (7) | 16,757 |  |
February |  | Triangle Town Center, Triangle Town Place, Triangle Town Commons (9) |  | 4.00% | (10) | December 2018 | (11) | 171,092 |  |
(1) | Excludes any extension options.
(2) | Net proceeds from the non-recourse loan were used to retire the existing construction loans, secured by Phase I and Phase II of Fremaux Town Center, with an aggregate balance of $71,125.
(3) | The joint venture has an interest rate swap on a notional amount of $73,000, amortizing to $52,130 over the term of the swap, related to Fremaux Town Center to effectively fix the interest rate on that variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate.
(4) | The non-recourse loan was used to retire an existing construction loan with a balance of $41,900 and excess proceeds were utilized to fund remaining construction costs.
(5) | The joint venture has an interest rate swap on a notional amount of $47,660, amortizing to $38,866 over the term of the swap, related to Ambassador Town Center to effectively fix the interest rate on that variable-rate loan. Therefore, this amount is currently reflected as having a fixed rate.
(6) | The guaranty was reduced from 25% to 20% in conjunction with the refinancing. See Note 12 for more information.
(7) | The loan was modified and extended to February 2018 with a one-year extension option.
(8) | The capacity was increased from $39,475 to fund the expansion.
(9) | The loan was amended and modified in conjunction with the sale of the property to a newly formed joint venture. See previous section in Note 5 for additional information.
(10) | The interest rate was reduced from 5.74% to 4.00% interest-only payments through the initial maturity date.
(11) | 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 Infrastructure, West Melbourne and Port Orange. See Note 12 for a description of guarantees the Company has issued related to certain unconsolidated affiliates. Subsequent to June 30, 2016, an unconsolidated affiliate retired a loan. See Note 16 for more information. JG Gulf Coast Town Center LLC - Phases I and II In June 2016, the foreclosure process was completed and the mortgage lender received title to the mall in satisfaction of the non-recourse mortgage loan secured by Phases I and II of Gulf Coast Town Center in Ft. Myers, FL. Gulf Coast Town Center generated 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) 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. The Company recognized a gain on the net investment in Gulf Coast of $29,267, which is included in Equity in Earnings of Unconsolidated Affiliates in the condensed consolidated statements of operations. Redeemable Interests of the Operating Partnership Redeemable common units of $15,079 and $19,744 at June 30, 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 $2,754 and $5,586 at June 30, 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 interests were $13,992 and $4,876, as of June 30, 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 June 30, 2016, the Company's total noncontrolling interests of $125,045 consisted of noncontrolling interests in the Operating Partnership and in other consolidated subsidiaries of $111,053 and $13,992, 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. In June 2016, the Company elected to pay cash of $146 to three holders of 14,796 common units in the Operating Partnership upon the exercise of their conversion rights. 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 June 30, 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 June 30, 2016 under ASC 2015-02:
Consolidated VIEs:
Atlanta Outlet Outparcels, LLC
Atlanta Outlet Shoppes, LLC
CBL Terrace LP
El Paso Outlet Center Holding, LLC
El Paso Outlet Center II, LLC
Foothills Mall Associates
Gettysburg Outlet Center Holding, LLC
Gettysburg Outlet Center, LLC
High Point Development LP II
Jarnigan Road LP
Laredo Outlet Shoppes, LLC (1)
Lebcon Associates
Lebcon I, Ltd
Lee Partners
Louisville Outlet Outparcels, LLC
Louisville Outlet Shoppes, LLC
Madison Grandview Forum, LLC
The Promenade at D'Ilberville
Statesboro Crossing, LLC
Village at Orchard Hills, LLC
Woodstock Ga Investments, LLC
Unconsolidated VIEs: (2)
Ambassador Infrastructure, LLC
G&I VIII CBL Triangle LLC (3)
(1) | In May 2016, the Company formed a 65/35 joint venture, Laredo Outlet Shoppes, LLC, to develop, own and operate The Outlet Shoppes of Laredo in Laredo, TX. The Company initially contributed $7,714, which consisted of a cash contribution of $2,434 and its interest in a note receivable of $5,280 (see Note 8), and the third party partner contributed $10,686 which included land and construction costs to date. The Company will be responsible for contributing 100% of the capital to fund the project until the pro rata 65% contribution is reached. All subsequent future contributions will be funded on a 65/35 pro rata basis. As of June 30, 2016, the Company had funded $15,493 of the project costs and only $4,353 remained to be funded by the company to reach the pro rata 65% contribution level. The Company determined that the new consolidated affiliate represents an interest in a VIE based upon the criteria noted above.
(2) | In June 2016, the foreclosure process was completed and Phases I and II of Gulf Coast Town Center in Ft. Myers, FL were returned to the lender in satisfaction of the non-recourse mortgage loan. As of June 30, 2016, the Company determined that the unconsolidated affiliate, JG Gulf Coast Town Center LLC, no longer represents an interest in a VIE based upon the criteria noted above.
(3) | 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 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=66011266&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=64825282&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=64825282&loc=d3e32787-111569 + Details
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