Note 8 - Other Real Estate Investments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Other Real Estate Investments and Other Assets [Text Block]

8.    Other Real Estate Investments:

Preferred Equity Capital –

The Company previously provided capital to owners and developers of real estate properties through its Preferred Equity program. The Company’s maximum exposure to losses associated with its preferred equity investments is primarily limited to its net investment. As of December 31, 2019, the Company’s net investment under the Preferred Equity program was $175.3 million relating to 240 properties, including 230 net leased properties which are accounted for as direct financing leases. For the year ended December 31, 2019, the Company earned $25.8 million from its preferred equity investments, including net profit participation of $7.3 million. As of December 31, 2018, the Company’s net investment under the Preferred Equity program was $176.3 million relating to 285 properties, including 273 net leased properties which are accounted for as direct financing leases. For the year ended December 31, 2018, the Company earned $28.8 million from its preferred equity investments, including profit participation of $10.6 million.

As of December 31, 2019, these preferred equity investment properties had non-recourse mortgage loans aggregating $236.1 million (including fair market value of debt adjustments aggregating $9.3 million). These loans have scheduled maturities ranging from seven months to five years and bear interest at rates ranging from 4.19% to 10.47%. Due to the Company’s preferred position in these investments, the Company’s share of each investment is subject to fluctuation and is dependent upon property cash flows. The Company’s maximum exposure to losses associated with its preferred equity investments is primarily limited to its invested capital.

Summarized financial information relating to the Company’s preferred equity investments is as follows (in millions):

	December 31,
	2019		2018
Assets:
Real estate, net	$	91.6	$	110.4
Other assets		484.6		578.8
Total Assets	$	576.2	$	689.2
Liabilities and Partners’/Members’ Capital:
Mortgages payable, net	$	236.1	$	314.0
Other liabilities		2.6		3.0
Partners’/Members’ capital		337.5		372.2
Total Liabilities and Partners'/Members Capital	$	576.2	$	689.2

	Year Ended December 31,
	2019			2018			2017
Revenues	$	66.6		$	77.0		$	75.4
Operating expenses		(16.0	)		(15.5	)		(14.7	)
Depreciation and amortization		(3.2	)		(4.3	)		(4.6	)
Gain on sale of operating properties		13.6			1.9			4.3
Interest expense		(11.9	)		(16.9	)		(20.4	)
Other expense, net		(7.9	)		(8.2	)		(5.9	)
Net income	$	41.2		$	34.0		$	34.1