Note 15 - Noncontrolling Interests and Redeemable Noncontrolling Interests

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Noncontrolling Interest Disclosure [Text Block]

15.  Noncontrolling Interests and Redeemable Noncontrolling Interests:

Noncontrolling interests represent the portion of equity that the Company does not own in those entities it consolidates as a result of having a controlling interest or having determined that the Company was the primary beneficiary of a VIE in accordance with the provisions of the FASB’s Consolidation guidance. The Company accounts and reports for noncontrolling interests in accordance with the Consolidation guidance and the Distinguishing Liabilities from Equity guidance issued by the FASB. The Company identifies its noncontrolling interests separately within the equity section on the Company’s Consolidated Balance Sheets. The amounts of consolidated net income attributable to the Company and to the noncontrolling interests are presented separately on the Company’s Consolidated Statements of Income.

Noncontrolling interests

The Company owns seven shopping center properties located throughout Puerto Rico. These properties were acquired in 2006 partially through the issuance of $158.6 million of non-convertible units and $45.8 million of convertible units. Noncontrolling interests related to these acquisitions totaled $233.0 million of units, including premiums of $13.5 million and a fair market value adjustment of $15.1 million (collectively, the "Units"). Since the acquisition date the Company has redeemed a substantial portion of these units. As of December 31, 2023 and 2022, noncontrolling interests relating to the remaining units was $4.7 million. The Units related annual cash distribution rates and related conversion features consisted of the following as of December 31, 2023:

Type	Par Value Per Unit		Number of Units Remaining		Return Per Annum
Class B-1 Preferred Units (1)	$	10,000		166		7.0%
Class B-2 Preferred Units (2)	$	10,000		21		7.0%
Class C DownREIT Units (1)	$	30.52		52,797	Equal to the Company’s common stock dividend

(1) These units are redeemable for cash by the holder or at the Company’s option, shares of the Company’s common stock, based upon the conversion calculation as defined in the agreement. These units are included in Noncontrolling interests on the Company’s Consolidated Balance Sheets.

(2) These units are redeemable for cash by the holder or callable by the Company and are included in Redeemable noncontrolling interests on the Company’s Consolidated Balance Sheets.

The Company owns a shopping center located in Bay Shore, NY, which was acquired in 2006 with the issuance of 647,758 redeemable Class B Units at a par value of $37.24 per unit. The units accrue a return equal to the Company’s common stock dividend and are redeemable for cash by the holder or at the Company’s option, shares of the Company’s common stock at a ratio of 1:1. These units are callable by the Company any time after April 3, 2028 and are included in Noncontrolling interests on the Company’s Consolidated Balance Sheets. The redemption value of these units is calculated using the 30-day weighted average closing price of the Company’s common stock prior to redemption. As of December 31, 2023 and 2022, noncontrolling interest relating to the remaining 377,837 Class B Units was $16.1 million.

Noncontrolling interests also includes 138,015 convertible units issued during 2006 by the Company, which were valued at $5.3 million, including a fair market value adjustment of $0.3 million, related to an interest acquired in an office building located in Albany, NY. These units are currently redeemable at the option of the holder for cash or at the option of the Company for the Company’s common stock at a ratio of 1:1. The holder is entitled to a distribution equal to the dividend rate of the Company’s common stock.

The Company acquired two consolidated joint ventures structured as DownREIT partnerships. The Raleigh Limited Partnership had 1,813,615 units and the Madison Village Limited Partnership had 174,411 units, together which had an aggregate fair value of $41.7 million. These ventures allow the outside limited partners to redeem their interest in the partnership (at the Company’s option) in cash or for the Company’s common stock at a ratio of 1:1. The unit holders are entitled to a distribution equal to the dividend rate of the Company’s common stock. During 2023, all 174,411 outstanding units in the Madison Village Limited Partnership were redeemed for $3.0 million in cash. This transaction resulted in a net decrease in Noncontrolling interests of $3.7 million and a corresponding increase in Paid-in capital totaling $0.7 million, on the Company’s Consolidated Balance Sheets. During 2022, 73,286 units in the Raleigh Limited Partnership were redeemed for 73,286 common shares of the Company’s common stock with a redemption value of $1.7 million. This transaction resulted in a net decrease in Noncontrolling interests of $1.5 million and a corresponding decrease in Common stock and Paid-in capital totaling $1.5 million, on the Company’s Consolidated Balance Sheets. As of December 31, 2023 and 2022, the aggregate redemption value of these noncontrolling interests was $34.9 million and $38.6 million, respectively.

During 2022, a consolidated joint venture, in which the Company had a 15% controlling interest, disposed of five properties (encumbered by $42.8 million of mortgage debt, in aggregate) for a sales price of $105.5 million, in aggregate. The Company recognized impairment charges of $19.0 million, before the partner’s $15.8 million noncontrolling interests share of the impairment. As a result of this transaction, the noncontrolling partner received a distribution of $50.3 million.

Redeemable noncontrolling interests

Included within noncontrolling interests are units that were determined to be contingently redeemable that are classified as Redeemable noncontrolling interests and presented in the mezzanine section between Total liabilities and Stockholder’s equity on the Company’s Consolidated Balance Sheets.

The Company owns eight shopping center properties located in Long Island, NY, which were acquired partially through the issuance of $122.1 million of Preferred Outside Partner Units and $13.6 million of Common Outside Partner Units during 2022, see Footnote 14 of the Notes to Consolidated Financial Statements included in this Form 10-K. Upon acquisition, the Outside Partner Units related to these acquisitions totaled $135.7 million of units, including noncontrolling interests of $79.7 million and an embedded derivative liability associated with put and call options of these unitholders of $56.0 million. The noncontrolling interest is classified as mezzanine equity and included in Redeemable noncontrolling interests on the Company’s Consolidated Balance Sheets as a result of the put right available to the unit holders, an event that is not solely in the Company’s control. During 2023, 2,126,527 Preferred Outside Partner Units and 56,548 Common Outside Partner Units were redeemed for cash of $43.5 million. This transaction resulted in a net decrease in Redeemable noncontrolling interests of $21.1 million and a decrease in Other liabilities of $22.4 million on the Company’s Consolidated Balance Sheets. The Outside Partner Units related annual cash distribution rates and related conversion features consisted of the following as of December 31, 2023:

Type	Par Value Per Unit		Number of Units Remaining		Return Per Annum
Preferred Outside Partner Units	$	20.00		3,978,304		3.75	%
Common Outside Partner Units	$	20.00		621,758	Equal to the Company’s common stock dividend

The following table presents the change in the redemption value of the Redeemable noncontrolling interests for the years ended December 31, 2023 and 2022 (in thousands):

	2023			2022
Balance at January 1,	$	92,933		$	13,480
Fair value allocation to unitholders/partnership interest (1)		-			79,663
Income		5,820			1,770
Distributions		(5,820	)		(1,771	)
Redemption/conversion of noncontrolling interests (1)		(21,070	)		(209	)
Adjustment to estimated redemption value		414			-
Balance at December 31,	$	72,277		$	92,933

(1) Relates to Preferred and Common Outside Partner Units, which were issued during 2022 and partially redeemed during 2023 described above.