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Investments in and Advances to Joint Ventures | 12 Months Ended
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Dec. 31, 2014
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, which are included in Investments in and Advances to Joint Ventures in the Company’s consolidated balance sheet at December 31, 2014, are as follows:
Unconsolidated Real Estate Ventures |  | Effective Ownership Percentage |  |  | Assets Owned
DDR Domestic Retail Fund I |  |  | 20.0% |  |  | 56 grocery-anchored retail centers in several states
DDR – SAU Retail Fund, LLC |  | 20.0 |  |  | 23 grocery-anchored retail centers in several states
DDRTC Core Retail Fund, LLC |  | 15.0 |  |  | 26 shopping centers in several states
BRE DDR Retail Holdings III |  | 5.0 |  |  | 70 shopping centers in several states
Other Joint Venture Interests |  | 25.25–79.45 |  |  | 13 shopping centers in several states and a management company
Coventry II Fund |  | 20.0 |  |  | Three shopping centers in three states
In addition, included in the condensed combined financial information, the Company has a zero investment basis in 17 retail sites/centers in several states owned through several Coventry II joint ventures and accounted for under the equity method at December 31, 2014, 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 as follows (in thousands):
| December 31, |
| 2014 |  |  | 2013 |
Condensed Combined Balance Sheets |  |  |  |  |  |  |
Land | $ | 1,439,849 |  |  | $ | 1,275,232 |
Buildings |  | 3,854,585 |  |  |  | 3,940,806 |
Fixtures and tenant improvements |  | 200,696 |  |  |  | 266,851 |
|  | 5,495,130 |  |  |  | 5,482,889 |
Less: Accumulated depreciation |  | (773,256 | ) |  |  | (839,867 | )
|  | 4,721,874 |  |  |  | 4,643,022 |
Land held for development and construction in progress |  | 55,698 |  |  |  | 116,088 |
Real estate, net |  | 4,777,572 |  |  |  | 4,759,110 |
Cash and restricted cash |  | 100,812 |  |  |  | 282,866 |
Receivables, net |  | 80,508 |  |  |  | 101,003 |
Other assets |  | 394,751 |  |  |  | 196,615 |
| $ | 5,353,643 |  |  | $ | 5,339,594 |
Mortgage debt | $ | 3,552,764 |  |  | $ | 3,282,643 |
Notes and accrued interest payable to DDR(A) |  | 144,831 |  |  |  | 127,679 |
Other liabilities |  | 276,998 |  |  |  | 245,368 |
|  | 3,974,593 |  |  |  | 3,655,690 |
Redeemable preferred equity |  | 305,310 |  |  |  | 71,771 |
Accumulated equity |  | 1,073,740 |  |  |  | 1,612,133 |
| $ | 5,353,643 |  |  | $ | 5,339,594 |
Company's share of Accumulated Equity | $ | 122,937 |  |  | $ | 365,297 |
(A) | The Company had net amounts receivable from several joint ventures aggregating $2.1 million and $2.7 million at December 31, 2014 and 2013, respectively, which were included in Investments in and Advances to Joint Ventures on the consolidated balance sheets.
| For the Year Ended December 31, |
| 2014 |  |  | 2013 |  |  | 2012 |
Condensed Combined Statements of Operations |  |  |  |  |  |  |  |  |  |  |
Revenues from operations | $ | 485,764 |  |  | $ | 635,933 |  |  | $ | 622,771 |
Expenses from operations: |  |  |  |  |  |  |  |  |  |  |
Operating expenses |  | 167,691 |  |  |  | 210,829 |  |  |  | 200,662 |
Impairment charges(A) |  | 21,583 |  |  |  | 43,913 |  |  |  | 840 |
Depreciation and amortization |  | 151,651 |  |  |  | 201,021 |  |  |  | 175,225 |
Interest expense |  | 171,803 |  |  |  | 204,893 |  |  |  | 203,205 |
Other (income) expense, net |  | 18,249 |  |  |  | 2,298 |  |  |  | 10,435 |
|  | 530,977 |  |  |  | 662,954 |  |  |  | 590,367 |
(Loss) income before tax expense and discontinued operations |  | (45,213 | ) |  |  | (27,021 | ) |  |  | 32,404 |
Income tax expense (primarily Sonae Sierra Brasil), net |  | (6,565 | ) |  |  | (27,553 | ) |  |  | (25,444 | )
(Loss) income from continuing operations |  | (51,778 | ) |  |  | (54,574 | ) |  |  | 6,960 |
Discontinued operations: |  |  |  |  |  |  |  |  |  |  |
Loss from discontinued operations(B) |  | (13,955 | ) |  |  | (65,951 | ) |  |  | (79,705 | )
Gain (loss) on disposition of real estate, net of tax(C) |  | 55,020 |  |  |  | (19,190 | ) |  |  | 11,739 |
Loss before gain on disposition of real estate, net |  | (10,713 | ) |  |  | (139,715 | ) |  |  | (61,006 | )
Gain on disposition of real estate, net |  | 10,116 |  |  |  | 794 |  |  |  | 54,582 |
Net loss | $ | (597 | ) |  | $ | (138,921 | ) |  | $ | (6,424 | )
Income attributable to non-controlling interests |  | (2,022 | ) |  |  | (26,005 | ) |  |  | (42,995 | )
Net loss attributable to unconsolidated joint ventures | $ | (2,619 | ) |  | $ | (164,926 | ) |  | $ | (49,419 | )
Company's share of equity in net income of joint ventures(D) | $ | 9,218 |  |  | $ | 3,314 |  |  | $ | 33,512 |
Basis differential adjustments(E) |  | 1,771 |  |  |  | 3,505 |  |  |  | 1,738 |
Equity in net income of joint ventures(D) | $ | 10,989 |  |  | $ | 6,819 |  |  | $ | 35,250 |
(A) | For the years ended December 31, 2014, 2013 and 2012, the Company’s proportionate share was $4.4 million, $6.6 million and $0.4 million, respectively.
(B) | For the years ended December 31, 2014, 2013 and 2012, impairment charges included in discontinued operations related to asset sales were $11.1 million, $49.3 million and $56.3 million, respectively, of which the Company’s proportionate share was $0.8 million, $4.0 million and $0.7 million for the years ended December 31, 2014, 2013 and 2012, respectively. 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, 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 was zero as the Company had previously written off its investment in this operating property.
(D) | 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.
(E) | The difference between the Company’s share of net income, as reported above, and the amounts included in the consolidated statements of operations is attributable to the amortization of basis differentials, the recognition of deferred gains and differences in gain (loss) on sale of certain assets recognized due to the basis differentials and other than temporary impairment charges.
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):
| December 31, |
| 2014 |  |  | 2013 |
Company's share of accumulated equity | $ | 122.9 |  |  | $ | 365.3 |
Redeemable preferred equity and other(A) |  | 305.3 |  |  |  | 72.2 |
Basis differentials |  | (13.0 | ) |  |  | 10.6 |
Deferred development fees, net of portion related to the Company's interest |  | (2.5 | ) |  |  | (2.8 | )
Amounts payable to DDR |  | 2.1 |  |  |  | 2.7 |
Investments in and Advances to Joint Ventures | $ | 414.8 |  |  | $ | 448.0 |
(A) | Primarily related to $305.3 million and $71.8 million in preferred equity investments in joint ventures with an affiliate of The Blackstone Group L.P. (collectively “Blackstone”), at December 31, 2014 and 2013, respectively.
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, |
| 2014 |  |  | 2013 |  |  | 2012 |
Management and other fees | $ | 24.9 |  |  | $ | 29.3 |  |  | $ | 28.6 |
Development fees and leasing commissions |  | 6.4 |  |  |  | 10.0 |  |  |  | 8.7 |
Interest income |  | 11.0 |  |  |  | 16.1 |  |  |  | 9.7 |
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 Joint Venture Acquisitions In 2014 and 2013, in two separate transactions, two joint ventures between consolidated affiliates of the Company and Blackstone acquired a portfolio of shopping centers (the “BRE DDR Joint Ventures”). The joint ventures were completed on similar terms as follows:
Terms |  | BRE DDR Retail Holdings II |  |  | BRE DDR Retail Holdings III |
Date acquired |  | August 2013 |  |  | October 2014 |
Number of centers |  |  | 7 |  |  |  | 70 |
Gross leasable area ("GLA")(A) |  | 2.3 million |  |  | 11.4 million |
DDR common equity interest (5%) |  | $3.5 million |  |  | $19.6 million |
DDR preferred equity interest |  | $30.0 million |  |  | $300.0 million |
Preferred equity fixed dividend rate per annum |  |  | 9.0% |  |  |  | 8.5% |
Transaction value at 100% |  | $332.0 million |  |  | $1.93 billion |
Maximum preferred equity fixed distribution deferral |  |  | 22.2% |  |  |  | 23.5% |
Fixed distribution rate per annum for any deferred and unpaid preferred equity distributions |  |  | 9.0% |  |  |  | 8.5% |
Mortgage debt assumed at 100% |  | $206.6 million |  |  | $436.8 million |
New mortgage financings at 100% |  | $28.0 million |  |  | $800.0 million |
(A) | All references to GLA or square feet are unaudited.
Blackstone owned 95% of the common equity of the BRE DDR Joint Ventures and consolidated affiliates of DDR owned the remaining 5%. The Company’s preferred equity entitled it to certain preferential cumulative distributions payable out of operating and capital proceeds pursuant to the terms and conditions of the preferred equity. This distribution was recognized as interest income within the Company’s consolidated statements of operations and classified as a note receivable in Investments in and Advances to Joint Ventures on the Company’s consolidated balance sheets. The preferred equity is redeemable (1) at Blackstone’s option, in whole or in part, following acquisition of the properties, subject to early redemption premiums; (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). In 2014, the Company acquired Blackstone’s 95% interest in all of the assets owned by BRE DDR Retail Holdings II (the “Blackstone II Acquisition”) and one asset owned by BRE DDR Retail Holdings I (Note 3). Sonae Sierra Brazil BV SARL (“SSB”) On April 28, 2014, affiliates of DDR sold to Mr. Alexander Otto and certain of his affiliates the Company’s 50% ownership interest in SSB for approximately $343.6 million, which represented the Company’s entire investment in Brazil. SSB owned an approximate 66% interest in a publicly traded company in Brazil, Sonae Sierra Brasil, S.A., which owned 10 shopping centers in Brazil and an indirect interest in the Parque Dom Pedro shopping center. The Company’s effective economic ownership in this investment was approximately 33%. The Company recorded a Gain on Sale of Interests of $83.7 million in 2014, which included the reclassification of $19.7 million of foreign currency translation from Accumulated OCI (Note 11). See discussions of related party considerations (Note 14). The weighted-average exchange rate used for recording the equity in net income into U.S. dollars was 2.26 for the Company’s ownership period, January 1, 2014 to April 28, 2014, and 2.14 and 1.94 for the years ended December 31, 2013 and 2012, respectively. 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. The Coventry II Fund was formed with several institutional investors and CREA as the investment manager. In 2014, the asset owned by Coventry II Westover LLC was sold for an aggregate gain of $18.4 million, of which the Company’s share was $4.4 million. In addition in 2014, an asset in Chicago, Illinois, was foreclosed upon by the lender and three assets owned by the Service Holdings LLC joint venture were sold. The Company had previously written down its investment to zero in these four assets. At December 31, 2014, the aggregate carrying amount of the Company’s net investment in the Coventry II Fund joint ventures was $0.9 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 37 properties sold in 2014, 27 properties sold in 2013 and seven properties sold in 2012.

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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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