INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of June 30, 2014 and December 31, 2013:



(in thousands of dollars)	As of June 30, 2014			As of December 31, 2013
ASSETS:
Investments in real estate, at cost:
Operating properties	$	419,458		$	416,964
Construction in progress	20,037			2,298
Total investments in real estate	439,495			419,262
Accumulated depreciation	(175,850		)	(169,369		)
Net investments in real estate	263,645			249,893
Cash and cash equivalents	11,831			15,327
Deferred costs and other assets, net	18,011			19,474
Total assets	293,487			284,694
LIABILITIES AND PARTNERS’ DEFICIT:
Mortgage loans payable	395,266			398,717
Other liabilities	9,841			9,667
Total liabilities	405,107			408,384
Net deficit	(111,620		)	(123,690		)
Partners’ share	(57,071		)	(66,325		)
PREIT’s share	(54,549		)	(57,365		)
Excess investment⁽¹⁾	9,044			8,837
Net investments and advances	$	(45,505	)	$	(48,528	)

Investment in partnerships, at equity	$	19,170		$	15,963
Distributions in excess of partnership investments	(64,675		)	(64,491		)
Net investments and advances	$	(45,505	)	$	(48,528	)

_________________________


⁽¹⁾	Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”

We record distributions from our equity investments as cash from operating activities up to an amount equal to the equity in income of partnerships. Amounts in excess of our share of the income in the equity investments are treated as a return of partnership capital and recorded as cash from investing activities.

The following table summarizes our share of equity in income of partnerships for the three and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands of dollars)	2014			2013			2014			2013
Real estate revenue	$	20,331		$	19,528		$	41,507		$	39,722
Expenses:
Operating expenses	(5,749		)	(5,725		)	(12,849		)	(11,694		)
Interest expense	(5,452		)	(5,545		)	(10,927		)	(11,094		)
Depreciation and amortization	(3,413		)	(3,534		)	(7,062		)	(7,106		)
Total expenses	(14,614		)	(14,804		)	(30,838		)	(29,894		)
Net income	5,717			4,724			10,669			9,828
Less: Partners’ share	(2,858		)	(2,339		)	(5,331		)	(4,885		)
PREIT’s share	2,859			2,385			5,338			4,943
Amortization of excess investment	(75		)	(102		)	(152		)	(207		)
Equity in income of partnerships	$	2,784		$	2,283		$	5,186		$	4,736

Acquisitions

In June 2014, we contributed $3.2 million, representing a 25% interest, to the partnership that will be developing Gloucester Premium Outlets in Gloucester Township, New Jersey. The partnership used our and our partners' contribution to purchase the land on which the property will be developed.

Financing Activity

In June 2014, the partnership that will be developing Gloucester Premium Outlets entered into a $90.0 million construction loan. The initial term of the loan is four years with an extension option for one year. The loan is interest only and the interest rate is LIBOR plus 1.50% during the initial term and decreases to LIBOR plus 1.40% if and when the project is completed and a 1.10x debt service coverage ratio is achieved.

Lehigh Valley Mall

We have a 50% partnership interest in Lehigh Valley Associates LP, the owner of the substantial majority of Lehigh Valley Mall, which is a significant unconsolidated subsidiary, and which is included in the amounts above. Summarized balance sheet information as of June 30, 2014 and December 31, 2013 and summarized statement of operations information for the three and six months ended June 30, 2014 and 2013 for this entity, which is accounted for using the equity method, is as follows:



	As of
(in thousands of dollars)	June 30, 2014		December 31, 2013
Summarized balance sheet information
Total assets	$	51,379	$	55,592
Mortgage loan payable	132,484		133,542



	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands of dollars)	2014			2013			2014			2013
Summarized statement of operations information
Revenue	$	8,961		$	8,509		$	18,096		$	17,326
Property operating expenses	(2,455		)	(2,385		)	(5,211		)	(4,607		)
Interest expense	(1,964		)	(1,994		)	(3,935		)	(3,996		)
Net income	3,774			3,326			7,090			7,082
PREIT's share of equity in income of partnership	1,887			1,663			3,545			3,541