Investments in Unconsolidated Entities

9 Months Ended

Sep. 30, 2022

Investments in Unconsolidated Entities.

Investments in Unconsolidated Entities

6. Investments in Unconsolidated Entities

A summary of the Company’s investments in unconsolidated entities accounted for under the equity method of accounting is shown below (in thousands):

	Year	Metropolitan			Balance as of		Balance as of
Entity	Entity Formed	Area of Properties	% Ownership			September 30, 2022		December 31, 2021
Digital Core REIT (DCRU)	2021	U.S. / Canada	35	%	$	328,094	$	343,317
Ownership interest in DCRU operating properties	2021	U.S. / Canada	10	%		139,223		144,050
Ascenty	2019	Brazil / Chile / Mexico	51	%		620,068		553,031
Mapletree	2019	Northern Virginia	20	%		163,239		172,465
Mitsubishi	Various	Osaka / Tokyo	50	%		391,859		401,509
Lumen	2012	Hong Kong	50	%		69,704		68,854
Other	Various	U.S. / India / Nigeria	Various			200,771		124,463
Total					$	1,912,958	$	1,807,689

DCREIT – Digital Core REIT is a standalone real estate investment trust under Singapore law, which is publicly-traded on the Singapore Exchange under the ticker symbol “DCRU”. Digital Core REIT owns 10 operating data center properties. The Company’s ownership interest in the units of DCRU, as well as its ownership interest in the operating properties of DCRU are collectively referred to as the Company’s investment in DCREIT. As of September 30, 2022, the Company held 35% of the outstanding DCRU units and separately owned a 10% retained interest in the underlying operating properties. The Company’s 35% interest in DCRU consisted of 392 million units and 390 million units as of September 30, 2022 and December 31, 2021, respectively. Based on the closing price per unit of $0.70 and $1.16 as of September 30, 2022 and December 31, 2021, the fair value of the units the Company owned in DCRU was approximately $274 million and $453 million as of September 30, 2022 and December 31, 2021, respectively. These values do not include the value of the Company’s 10% interest in the operating properties of DCRU, because the associated ownership interests are not publicly traded. The Company accounts for its investment in DCREIT as an equity method investment (and not at fair value) based on the significant influence it is able to exert on DCREIT. The Company determined that the decline in fair value of the investment in DCRU as compared to the Company’s book basis as of September 30, 2022 was temporary in nature.

Pursuant to contractual agreements with DCRU and its operating properties, the Company will earn fees for asset and property management services as well as fees for aiding in future acquisition, disposition and development activities. Certain of these fees are payable to the Company in the form of additional units in DCRU or in cash. During the three and nine months ended September 30, 2022, the Company earned fees pursuant to these contractual agreements of approximately $1.8 million and $6.9 million, respectively, which is recorded as fee income and other on the condensed consolidated income statement.

Ascenty – The Company’s ownership interest in Ascenty includes an approximate 2% interest held by one of the Company’s non-controlling interest holders. This 2% interest had a carrying value of approximately $19.3 million and $20.9 million as of September 30, 2022 and December 31, 2021, respectively. Ascenty is a variable interest entity (“VIE”) and the Company’s maximum exposure to loss related to this VIE is limited to our equity investment in the entity.

The debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to matters such as intentional misuse of funds, environmental conditions, and material misrepresentations.