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Investments in and Advances to Joint Ventures | 12 Months Ended
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Dec. 31, 2013
Equity Method Investments And Joint Ventures [Abstract] |
Investments in and Advances to Joint Ventures | 2. Investments in and Advances to Joint Ventures The Company’s equity method joint ventures at December 31, 2013, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheets, are as follows:
Unconsolidated Real Estate Ventures |  | Effective Ownership Percentage |  | Assets Owned
Sonae Sierra Brasil S.A. |  | 33.3% |  | 10 shopping centers and a management company in Brazil
DDR Domestic Retail Fund I |  | 20.0 |  | 59 grocery-anchored retail centers in several states
DDR Markaz II LLC |  | 20.0 |  | 13 neighborhood grocery-anchored retail centers in several states
DDR — SAU Retail Fund, LLC |  | 20.0 |  | 27 grocery-anchored retail centers in several states
DDRTC Core Retail Fund, LLC |  | 15.0 |  | 27 shopping centers in several states
Coventry II Joint Ventures |  | 20.0 |  | Four shopping centers in several states
BRE DDR Retail Holdings I |  | 5.0 |  | 14 shopping centers in several states
BRE DDR Retail Holdings II |  | 5.0 |  | Seven shopping centers in several states
Other Joint Venture Interests |  | 25.25 – 79.45 |  | 13 shopping centers in several states and a management company
In addition, included in the condensed combined financial information, the Company has a zero investment basis in 21 retail sites/centers in several states owned through several Coventry II joint ventures and accounted for under the equity method at December 31, 2013, and has no intent or obligation to fund any further capital in these joint ventures. Condensed combined financial information of the Company’s unconsolidated joint venture investments is summarized as follows (in thousands):
|  | December 31, |
|  | 2013(A) |  |  | 2012 |
Condensed combined balance sheets |  |  |  |  |  |  |  |
Land |  | $ | 1,275,232 |  |  | $ | 1,569,548 |
Buildings |  |  | 3,940,806 |  |  |  | 4,681,462 |
Fixtures and tenant improvements |  |  | 266,851 |  |  |  | 244,293 |
|  |  | 5,482,889 |  |  |  | 6,495,303 |
Less: Accumulated depreciation |  |  | (839,867 | ) |  |  | (833,816 | )
|  |  | 4,643,022 |  |  |  | 5,661,487 |
Land held for development and construction in progress |  |  | 116,088 |  |  |  | 348,822 |
Real estate, net |  |  | 4,759,110 |  |  |  | 6,010,309 |
Cash and restricted cash(B) |  |  | 282,866 |  |  |  | 467,200 |
Receivables, net |  |  | 101,003 |  |  |  | 99,098 |
Other assets |  |  | 196,615 |  |  |  | 427,014 |
|  | $ | 5,339,594 |  |  | $ | 7,003,621 |
Mortgage debt |  | $ | 3,282,643 |  |  | $ | 4,246,407 |
Notes and accrued interest payable to DDR(C) |  |  | 127,679 |  |  |  | 143,338 |
Other liabilities |  |  | 245,368 |  |  |  | 342,614 |
|  |  | 3,655,690 |  |  |  | 4,732,359 |
Redeemable preferred equity |  |  | 71,771 |  |  |  | 154,556 |
Accumulated equity |  |  | 1,612,133 |  |  |  | 2,116,706 |
|  | $ | 5,339,594 |  |  | $ | 7,003,621 |
Company’s share of accumulated equity |  | $ | 365,297 |  |  | $ | 432,500 |
(A) | The net decrease in the balance sheet at December 31, 2013, is primarily attributable to the Company’s acquisition of 30 assets from BRE DDR Retail Holdings I, described later in this footnote, as well as other joint venture asset sales partially offset by a new joint venture entered into in 2013.
(B) | Includes $191.9 million and $347.9 million at December 31, 2013 and 2012, respectively, held by Sonae Sierra Brazil BV SARL.
(C) | The Company has amounts receivable from several joint ventures aggregating $2.7 million and $34.3 million at December 31, 2013 and 2012, respectively, which are included in Investments in and Advances to Joint Ventures on the consolidated balance sheets. The remaining amounts were fully reserved by the Company in prior years.
|  | For the Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Condensed combined statements of operations |  |  |  |  |  |  |  |  |  |  |  |
Revenues from operations |  | $ | 692,368 |  |  | $ | 666,951 |  |  | $ | 620,354 |
Operating expenses |  |  | 237,538 |  |  |  | 230,499 |  |  |  | 198,988 |
Impairment charges(A) |  |  | 86,346 |  |  |  | 840 |  |  |  | 145,507 |
Depreciation and amortization |  |  | 222,756 |  |  |  | 190,514 |  |  |  | 157,993 |
Interest expense |  |  | 224,133 |  |  |  | 220,612 |  |  |  | 201,086 |
|  |  | 770,773 |  |  |  | 642,465 |  |  |  | 703,574 |
(Loss) income before tax expense and discontinued operations |  |  | (78,405 | ) |  |  | 24,486 |  |  |  | (83,220 | )
Income tax expense (primarily Sonae Sierra Brasil), net |  |  | (27,553 | ) |  |  | (25,444 | ) |  |  | (38,598 | )
Loss from continuing operations |  |  | (105,958 | ) |  |  | (958 | ) |  |  | (121,818 | )
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |  |
Loss from discontinued operations(B) |  |  | (14,567 | ) |  |  | (71,787 | ) |  |  | (136,684 | )
Gain on debt forgiveness |  |  | — |  |  |  | — |  |  |  | 2,976 |
(Loss) gain on disposition of real estate, net of tax(C) |  |  | (19,190 | ) |  |  | 11,739 |  |  |  | 18,705 |
Loss before gain on disposition of real estate, net |  |  | (139,715 | ) |  |  | (61,006 | ) |  |  | (236,821 | )
Gain on disposition of real estate, net |  |  | 794 |  |  |  | 54,582 |  |  |  | 1,733 |
Net loss |  | $ | (138,921 | ) |  | $ | (6,424 | ) |  | $ | (235,088 | )
Non-controlling interests |  |  | (26,005 | ) |  |  | (42,995 | ) |  |  | (16,132 | )
Net loss attributable to unconsolidated joint ventures |  | $ | (164,926 | ) |  | $ | (49,419 | ) |  | $ | (251,220 | )
Company’s share of equity in net income (loss) of joint ventures |  | $ | 3,314 |  |  | $ | 33,512 |  |  | $ | (12,979 | )
Amortization/adjustments of basis differentials(D) |  |  | 3,505 |  |  |  | 1,738 |  |  |  | 26,713 |
Equity in net income of joint ventures(E) |  | $ | 6,819 |  |  | $ | 35,250 |  |  | $ | 13,734 |
(A) | For the years ended December 31, 2013, 2012 and 2011, the Company’s proportionate share was $10.6 million, $0.4 million and $5.7 million, respectively.
(B) | For the years ended December 31, 2013, 2012 and 2011, impairment charges included in discontinued operations related to asset sales were $6.8 million, $56.3 million and $127.0 million, respectively, of which the Company’s proportionate share was $0.7 million and $7.2 million for the years ended December 31, 2012 and 2011, respectively. For the year ended December 31, 2013, the Company’s proportionate share was not material. The Company’s share of the impairment charges was reduced by the impact of the other than temporary impairment charges recorded on these investments, as appropriate, and as discussed below.
(C) | For the year ended December 31, 2013, the loss primarily was attributable to an investment in the Coventry II Fund in which the Company had a 20% interest. The joint venture recorded a loss of $32.6 million on the transfer of its ownership of one of its properties to the lender. The Company’s share of the loss is zero as the Company had previously written off its investment in this operating property.
(D) | The difference between the Company’s share of net income (loss), as reported above, and the amounts included in the consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials and other than temporary impairment charges.
(E) | The Company is not recording income or loss from those investments in which its investment basis is zero as the Company does not have the intent or obligation to fund any additional capital in the joint ventures.
Investments in and Advances to Joint Ventures include the following items, which represent the difference between the Company’s investment and its share of all of the unconsolidated joint ventures’ underlying net assets (in millions):
|  | For the Year Ended December 31, |
|  | 2013 |  |  | 2012 |
Company’s share of accumulated equity |  | $ | 365.3 |  |  | $ | 432.5 |
Redeemable preferred equity and other(A) |  |  | 72.2 |  |  |  | 155.0 |
Basis differentials |  |  | 10.6 |  |  |  | (5.9 | )
Deferred development fees, net of portion related to the Company’s interest |  |  | (2.8 | ) |  |  | (2.9 | )
Notes and accrued interest payable to DDR |  |  | 2.7 |  |  |  | 34.3 |
Investments in and Advances to Joint Ventures |  | $ | 448.0 |  |  | $ | 613.0 |
(A) | Primarily relates to $71.8 million and $154.6 million in preferred equity investments in joint ventures with affiliates of The Blackstone Group L.P. (collectively “Blackstone”), as of December 31, 2013 and 2012, respectively. Approximately $110.0 million of the preferred investment issued in 2012 was applied to fund the Company’s acquisition of its partner’s interest in 30 assets in 2013 (Note 3).
Service fees and income earned by the Company through management, financing, leasing and development activities performed related to all of the Company’s unconsolidated joint ventures are as follows (in millions):
|  | For the Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Management and other fees |  | $ | 29.3 |  |  | $ | 28.6 |  |  | $ | 29.9 |
Development fees and leasing commissions |  |  | 10.0 |  |  |  | 8.7 |  |  |  | 7.0 |
Interest income |  |  | 16.1 |  |  |  | 9.7 |  |  |  | 0.1 |
The Company’s joint venture agreements generally include provisions whereby each partner has the right to trigger a purchase or sale of its interest in the joint venture (Reciprocal Purchase Rights) or to initiate a purchase or sale of the properties (Property Purchase Rights) after a certain number of years or if either party is in default of the joint venture agreements. The Company is not obligated to purchase the interests of its outside joint venture partners under these provisions. BRE DDR Retail Holdings I Joint Venture In June 2012, a joint venture between consolidated affiliates of the Company and Blackstone acquired a portfolio of 44 shopping centers aggregating 10.6 million square feet of gross leasable area (“GLA”) (all references to GLA or square feet are unaudited). In October 2013, the Company acquired Blackstone’s 95% interest in 30 of the assets, aggregating 8.5 million square feet of GLA (the “Blackstone Acquisition”) (Note 3). The joint venture owned 14 assets at December 31, 2013. The condensed financial information above includes the operating results of the 30 assets acquired by the Company through September 30, 2013. Blackstone owns 95% of the common equity of the joint venture, and the remaining 5% common equity interest is owned by a consolidated affiliate of the Company. The Company invested $150.0 million in preferred equity in the joint venture, of which $110.0 million was repaid upon the closing of the Blackstone Acquisition. The preferred equity has a fixed distribution rate of 10% per annum and entitles the Company to certain preferential cumulative distributions payable out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity. This distribution is recognized as interest income within the Company’s consolidated statements of operations and is classified as a note receivable in Investments in and Advances to Joint Ventures on the Company’s consolidated balance sheets. Blackstone has the right to defer up to 20% of the preferred equity fixed distribution. Any deferred and unpaid preferred equity distributions will continue to accrue at a fixed distribution rate of 10% per annum. The preferred equity is redeemable: (1) at Blackstone’s option, in part, after 18 months following acquisition of the properties, and in full, after two years following acquisition of the properties; (2) at DDR’s option after seven years; (3) at varying levels based upon specified financial covenants upon a sale of properties over a certain threshold and (4) upon the incurrence of additional indebtedness by the joint venture. The Company provides leasing and property management services to all of the joint venture properties. The Company cannot be removed as the property and leasing manager until the preferred equity is redeemed in full (except for certain specified events). BRE DDR Retail Holdings II Joint Venture In 2013, a newly formed joint venture between consolidated affiliates of the Company and Blackstone acquired a portfolio of seven shopping centers (“BRE DDR Retail Holdings II”), aggregating approximately 2.4 million square feet of GLA. The purchase price was $332.0 million, including assumed debt of $206.6 million and $28.0 million of new mortgage debt. Blackstone owns 95% of the common equity of the joint venture and an affiliate of DDR owns the remaining 5%. DDR also invested $30.0 million in preferred equity in the joint venture with a fixed dividend rate of 9% per annum. The Company is entitled to certain preferential cumulative distributions payable out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity. Blackstone has the right to defer up to 22.2% of the preferred equity fixed distribution. The preferred equity has similar provisions to the BRE DDR Retail Holdings I investment disclosed above. DDR provides leasing and management services and has certain rights allowing it to potentially acquire four assets in the portfolio. Sonae Sierra Brasil At December 31, 2013, the Company had an approximate 33% interest in an unconsolidated joint venture, Sonae Sierra Brasil, S.A., which owns real estate in Brazil and is headquartered in Sao Paulo, Brazil. The weighted-average exchange rate used for recording the equity in net income into U.S. dollars was 2.14, 1.94 and 1.67 for the years ended December 31, 2013, 2012 and 2011, respectively. DDRTC Core Retail Fund, LLC In 2013, the Company purchased its unconsolidated joint venture partner’s 85% ownership interest in five assets. The aggregate purchase price of these assets was $110.5 million. At closing, $92.4 million of aggregate mortgage debt was repaid by the joint venture. Upon acquisition, these shopping centers were unencumbered and consolidated into the Company’s results from operations. Coventry II Fund The Company and Coventry Real Estate Advisors L.L.C. (“CREA”) formed Coventry Real Estate Fund II L.L.C. and Coventry Fund II Parallel Fund, L.L.C. (collectively, the “Coventry II Fund”) to invest in a variety of retail properties that presented opportunities for value creation, such as re-tenanting, market repositioning, resale, redevelopment or expansion. The Coventry II Fund was formed with several institutional investors and CREA as the investment manager. In 2013, the asset owned by Coventry II DDR Tri-County LLC was foreclosed by the lender and 18 other sites were sold to third parties. The Company had previously written down its investment to zero in all of these assets. At December 31, 2013, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was $2.1 million. See discussion of legal matters surrounding the Coventry II Fund (Note 9). Discontinued Operations Included in discontinued operations in the condensed combined statements of operations for the unconsolidated joint ventures are 27 properties sold in 2013, seven properties sold in 2012 and eight properties sold in 2011.

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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 35 -URI http://asc.fasb.org/extlink&oid=7658923&loc=d3e32847-111569 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=7658923&loc=d3e32787-111569 + Details
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