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Note 7 - Investments In and Advances to Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2021

Investments and Advances In Real Estate Joint Ventures [Text Block]

7. Investment in and Advances to Real Estate Joint Ventures:

The Company has investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting. The Company manages certain of these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees. The table below presents unconsolidated joint venture investments for which the Company held an ownership interest at December 31, 2021 and 2020 (in millions, except number of properties):

			The Company's Investment
	Ownership		December 31,
Joint Venture	Interest		2021		2020
Prudential Investment Program		15.0%	$	163.0	$	175.1
Kimco Income Opportunity Portfolio (“KIR”)		48.6%		186.0		177.4
Canada Pension Plan Investment Board (“CPP”)		55.0%		165.1		159.7
Other Institutional Joint Ventures (1) (2)		Various		281.8		-
Other Joint Venture Programs (1)		Various		211.0		78.5
Total*			$	1,006.9	$	590.7

* Representing 120 property interests and 24.7 million square feet of GLA, as of December 31, 2021, and 97 property interests and 21.2 million square feet of GLA, as of December 31, 2020.

(1)	In connection with the Merger, the Company acquired ownership in 9 unconsolidated joint ventures, which have a fair market value of $586.2 million at the time of Merger. These joint ventures represented 30 property interests and 4.4 million square feet of GLA.

(2)	During 2021, the Company entered into a new joint venture with BREIT in which it contributed six properties for a gross sales price of $425.8 million. See Footnote 5 of the Notes to Consolidated Financial Statements for the operating properties disposed by the Company.

The table below presents the Company’s share of net income for these investments which is included in Equity in income of joint ventures, net on the Company’s Consolidated Statements of Income (in millions):

	Year Ended December 31,
	2021		2020		2019
Prudential Investment Program (1)	$	17.5	$	9.0	$	10.4
KIR		36.9		30.5		50.3
CPP		9.2		5.6		5.8
Other Institutional Joint Ventures		1.7		-		-
Other Joint Venture Programs	19.5			2.3		5.7
Total	$	84.8	$	47.4	$	72.2

(1)	During the year ended December 31, 2019, the Prudential Investment Program recognized an impairment charge on a property of $29.9 million, of which the Company’s share was $3.7 million.

During 2021, certain of the Company’s real estate joint ventures disposed of four properties and one parcel, in separate transactions, for an aggregate sales price of $88.9 million. These transactions resulted in an aggregate net gain to the Company of $9.9 million for the year ended December 31, 2021.

In addition, during 2021, the Company acquired a controlling interest in nine operating properties from certain joint ventures, in separate transactions, with an aggregate gross fair value of $780.1 million. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as a result, recognized net gains on change in control of interests of $5.0 million, in aggregate, resulting from the fair value adjustments associated with the Company’s previously held equity interests. See Footnote 4 of the Notes to Consolidated Financial Statements for the operating properties acquired by the Company.

During 2019, certain of the Company’s real estate joint ventures disposed of nine operating properties, in separate transactions, for an aggregate sales price of $247.4 million. These transactions resulted in an aggregate net gain to the Company of $14.4 million, for the year ended December 31, 2019.

The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2021 and 2020 (dollars in millions):

	December 31, 2021							December 31, 2020
Joint Venture	Mortgages and Notes Payable, Net		Weighted Average Interest Rate			Weighted Average Remaining Term (months)*		Mortgages and Notes Payable, Net		Weighted Average Interest Rate			Weighted Average Remaining Term (months)*
Prudential Investment Program	$	426.9		2.02	%		45.6	$	495.8		2.05	%		37.2
KIR		492.6		2.55	%		27.9		536.9		3.87	%		25.3
CPP		84.2		1.85	%		55.0		84.9		3.25	%		30.0
Other Institutional Joint Ventures (1)		232.9		1.65	%		59.7		-		-			-
Other Joint Venture Programs (1)		402.1		3.58	%		83.0		423.4		3.41	%		86.7
Total	$	1,638.7						$	1,541.0

* Average remaining term includes extensions

(1)

As of the date of the Merger, the Company acquired ownership in 9 unconsolidated joint ventures, which had an aggregate $191.5 million of secured debt (including a fair market value adjustment of $0.8 million).

KIR –

The Company holds a 48.6% noncontrolling limited partnership interest in KIR and has a master management agreement whereby the Company performs services for fees relating to the management, operation, supervision and maintenance of the joint venture properties. The Company’s equity in income from KIR for the year ended December 31, 2019, exceeded 10% of the Company’s income from continuing operations before income taxes; as such, the Company is providing summarized financial information for KIR as follows (in millions):

	December 31,
	2021		2020
Assets:
Real estate, net	$	769.4	$	787.1
Other assets, net		68.2		75.3
Total Assets	$	837.6	$	862.4
Liabilities and Members’ Capital:
Notes payable, net	$	258.8	$	91.5
Mortgages payable, net		233.7		445.4
Other liabilities		16.2		17.4
Members’ capital		328.9		308.1
Total Liabilities and Members’ Capital	$	837.6	$	862.4

	Year Ended December 31,
	2021			2020			2019
Revenues, net	$	186.6		$	173.9		$	193.6
Operating expenses		(51.3	)		(49.5	)		(51.0	)
Depreciation and amortization		(40.3	)		(36.9	)		(38.0	)
Gain on sale of properties		-			-			32.2
Interest expense		(18.1	)		(23.8	)		(28.2	)
Other expense, net		(2.1	)		(1.6	)		(1.1	)
Net income	$	74.8		$	62.1		$	107.5

Summarized financial information for the Company’s investment in and advances to all other real estate joint ventures is as follows (in millions):

	December 31,
	2021		2020
Assets:
Real estate, net	$	3,619.4	$	2,549.2
Other assets, net		193.8		179.0
Total Assets	$	3,813.2	$	2,728.2

Liabilities and Members’ Capital:
Notes payable, net	$	199.0	$	199.8
Mortgages payable, net		947.2		804.3
Other liabilities		73.8		53.6
Noncontrolling interests		32.6		18.3
Members’ capital		2,560.6		1,652.2
Total Liabilities and Members’ Capital	$	3,813.2	$	2,728.2

	Year Ended December 31,
	2021			2020			2019
Revenues, net	$	340.3		$	282.4		$	317.6
Operating expenses		(111.7	)		(101.9	)		(99.4	)
Impairment charges		(23.5	)		(4.4	)		(39.5	)
Depreciation and amortization		(97.2	)		(75.0	)		(76.9	)
Gain on sale of properties		61.5			0.2			15.0
Interest expense		(27.6	)		(31.2	)		(47.1	)
Other expense, net		(0.9	)		(10.8	)		(14.2	)
Net income	$	140.9		$	59.3		$	55.5

Other liabilities included in the Company’s accompanying Consolidated Balance Sheets include investments in certain real estate joint ventures totaling $4.8 million and $3.7 million at December 31, 2021 and 2020, respectively. The Company has varying equity interests in these real estate joint ventures, which may differ from their proportionate share of net income or loss recognized in accordance with GAAP.

The Company’s maximum exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments. Generally, such investments contain operating properties and the Company has determined these entities do not contain the characteristics of a VIE. As of December 31, 2021 and 2020, the Company’s carrying value in these investments was $1.0 billion and $590.7 million, respectively.

The Company will continue to monitor the economic, financial, and social conditions resulting from the COVID-19 pandemic and assess its joint venture portfolio for any impairment indicators.