INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of our equity investments in unconsolidated partnerships as of December 31, 2015 and 2014:



	As of December 31,
(in thousands of dollars)	2015			2014
ASSETS:
Investments in real estate, at cost:
Retail properties	$	636,774		$	654,024
Construction in progress	126,199			41,919
Total investments in real estate	762,973			695,943
Accumulated depreciation	(186,580		)	(190,100		)
Net investments in real estate	576,393			505,843
Cash and cash equivalents	37,362			15,229
Deferred costs and other assets, net	41,770			37,274
Total assets	655,525			558,346
LIABILITIES AND PARTNERS’ EQUITY:
Mortgage loans	442,330			383,190
Other liabilities	30,425			34,314
Total liabilities	472,755			417,504
Net equity	182,770			140,842
Partners’ share	95,165			74,663
Company’s share	87,605			66,179
Excess investment⁽¹⁾	7,877			8,747
Net investments and advances	$	95,482		$	74,926

Investment in partnerships, at equity	$	161,029		$	140,882
Distributions in excess of partnership investments	(65,547		)	(65,956		)
Net investments and advances	$	95,482		$	74,926


⁽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 up to an amount equal to the equity in income of partnerships as cash from operating activities. 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 years ended December 31, 2015, 2014 and 2013:



	For the Year Ended December 31,
(in thousands of dollars)	2015			2014			2013
Real estate revenue	$	105,813		$	95,643		$	81,020
Expenses:
Property operating expenses	(39,134		)	(32,992		)	(24,104		)
Interest expense	(21,021		)	(21,805		)	(22,228		)
Depreciation and amortization	(25,718		)	(19,521		)	(14,401		)
Total expenses	(85,873		)	(74,318		)	(60,733		)
Net income	19,940			21,325			20,287
Less: Partners’ share	(10,128		)	(10,637		)	(10,096		)
Company’s share	9,812			10,688			10,191
Amortization of excess investment	(272		)	(119		)	(413		)
Equity in income of partnerships	$	9,540		$	10,569		$	9,778

Acquisitions

In June 2014, we contributed $3.2 million, representing a 25% interest, to the partnership that was developing Gloucester Premium Outlets in Gloucester Township, New Jersey, which opened in August 2015. The partnership used our and our partners’ contribution to purchase the land on which the property was developed.

Dispositions

In July 2015, we sold our entire 50% interests in the Springfield Park shopping center in Springfield, Pennsylvania for $20.2 million, representing a capitalization rate of 7.0%, and recognized a gain of $12.0 million. In connection with our interest in the property, we had an ongoing obligation to sublet approximately 10,100 square feet of space of a tenant at the property, which we transferred as part of the transaction. In connection with the sale, a mortgage loan of approximately $9.0 million, of which our share was 50%, was assumed by the buyer of our interests. We divested $0.1 million of goodwill in connection with this transaction. We used the net proceeds from the transaction for general corporate purposes. See note 10 regarding the related party aspect of this transaction.

In December 2014, we sold our 50% interest in Whitehall Mall in Allentown, Pennsylvania for $14.9 million representing a capitalization rate of 7.0%, and we recorded a gain on sale of interests in real estate of $12.4 million. In connection with the sale of Whitehall Mall, our share of the mortgage loan secured by the property had a balance of $5.1 million that was assumed by the buyer at closing.

In July 2014, we entered into a 50/50 joint venture with Macerich to redevelop The Gallery. The results of operations of The Gallery have been recorded as an equity method investment after the July 29, 2014 transaction with Macerich.

Financing Activity of Unconsolidated Properties

Mortgage loans, which are secured by seven of the unconsolidated properties (including one property under development), are due in installments over various terms extending to the year 2025. Five of the mortgage loans bear interest at a fixed interest rate and two of the mortgage loans bear interest at a variable interest rate. The balances of the fixed interest rate mortgage loans have interest rates that range from 4.45% to 5.88% and had a weighted average interest rate of 5.32% at December 31, 2015. The variable interest rate mortgage loans have interest rates that range from 1.79% to 2.94% and had a weighted average interest rate of 1.97% at December 31, 2015. The weighted average interest rate of all partnership mortgage loans was 4.96% at December 31, 2015. The liability under each mortgage loan is limited to the partnership that owns the particular property. Our proportionate share, based on our respective partnership interest, of principal payments due in the next five years and thereafter is as follows:



	Company’s Proportionate Share
(in thousands of dollars) For the Year Ending December 31,	Principal Amortization		Balloon Payments		Total		Property Total
2016	$	3,313	$	—	$	3,313	$	6,675
2017	3,461		3,283		6,744		15,157
2018	3,591		18,232		21,823		80,110
2019	3,789		—		3,789		7,577
2020	3,212		58,519		61,731		123,462
2021 and thereafter	6,713		97,961		104,674		209,349
	$	24,079	$	177,995	$	202,074	$	442,330

We have a 50% partnership interest in Lehigh Valley Associates LP, the owner of Lehigh Valley Mall, which met the definition of a significant unconsolidated subsidiary in the years ended December 31, 2014 and 2013. The mortgage loan associated with the property is included in the amounts above. Summarized financial information as of or for the years ended December 31, 2014 and 2013 for this property, which is accounted for by the equity method, is as follows:



	As of or for the years ended December 31,
(in thousands of dollars)	2014		2013
Total assets	$	51,703	$	55,592
Mortgage payable	131,394		133,542
Revenue	36,605		35,628
Property operating expenses	10,027		9,817
Interest expense	7,839		7,962
Net income	14,932		14,515
PREIT’s share of equity in income of partnership	7,466		7,258

Mortgage Loan Activity—Unconsolidated Properties

The following table presents the mortgage loans secured by the unconsolidated properties entered into since January 1, 2014:



Financing Date	Property	Amount Financed or Extended (in millions of dollars)		Stated Interest Rate	Maturity
2015 Activity:
September	Springfield Mall⁽¹⁾	$	65.0	Fixed 4.45%	September 2025

2014 Activity:
December	Gloucester Premium Outlets⁽²⁾	72.9		LIBOR plus 1.50%	June 2018


⁽¹⁾	The proceeds were used to repay the existing $61.7 million mortgage loan plus accrued interest. We received $1.0 million of proceeds as a distribution in connection with the financing.

⁽²⁾

The unconsolidated entity that owns Gloucester Premium Outlets entered into this construction mortgage loan and completed the project in 2015. The construction mortgage loan has a maximum availability of $90.0 million, of which $71.3 million and $1.6 million was borrowed during 2015 and 2014, respectively, and $17.1 million was available as of December 31, 2015 (subject to submission of required documentation). Our interest in the unconsolidated entity is 25%.