Investments in Unconsolidated Joint Ventures

General Information

The Company owns beneficial interests in joint ventures that own shopping centers. The Operating Partnership is the sole direct or indirect managing general partner or managing member of Fair Oaks, International Plaza, Stamford Town Center, Sunvalley, The Mall at University Town Center, and Westfarms. The Operating Partnership also provides certain management, leasing, and/or development services to the other shopping centers noted below.



Shopping Center		Ownership as of June 30, 2016 and December 31, 2015
CityOn.Xi'an ⁽¹⁾		50/30%
CityOn.Zhengzhou (under construction)		Note 2
Country Club Plaza ⁽²⁾		50/0
Fair Oaks		50
International Plaza		50.1
The Mall at Millenia		50
Stamford Town Center		50
Starfield Hanam (under construction)		Note 2
Sunvalley		50
The Mall at University Town Center		50
Waterside Shops		50
Westfarms		79


(1)	In April 2016, the joint venture effectively acquired the 40% noncontrolling interest in the project. As a result of the acquisition, the Company’s effective ownership is 50%, an increase from the Company’s previous 30% effective interest (Note 2).


(2)	In March 2016, the Company acquired a 50% ownership interest in Country Club Plaza (Note 2).

The Company's carrying value of its Investment in Unconsolidated Joint Ventures differs from its share of the partnership or members’ equity reported on the combined balance sheet of the Unconsolidated Joint Ventures due to (i) the Company's cost of its investment in excess of the historical net book values of the Unconsolidated Joint Ventures and (ii) the Operating Partnership’s adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the Unconsolidated Joint Ventures. The Company's additional basis allocated to depreciable assets is recognized on a straight-line basis over 40 years. The Operating Partnership’s differences in bases are amortized over the useful lives or terms of the related assets and liabilities.

In its Consolidated Balance Sheet, the Company separately reports its investment in Unconsolidated Joint Ventures for which accumulated distributions have exceeded investments in and net income of the Unconsolidated Joint Ventures. The net equity of certain joint ventures is less than zero because distributions are usually greater than net income, as net income includes non-cash charges for depreciation and amortization. In addition, any distributions related to refinancing of the centers further decrease the net equity of the centers.

Combined Financial Information

Combined balance sheet and results of operations information is presented in the following table for the Unconsolidated Joint Ventures, followed by the Operating Partnership's beneficial interest in the combined operations information. The combined information of the Unconsolidated Joint Ventures as of June 30, 2016 and December 31, 2015 excluded the balances of CityOn.Zhengzhou and Starfield Hanam which were under construction as of June 30, 2016 and December 31, 2015 (Note 2). In addition, the combined information of the Unconsolidated Joint Ventures as of December 31, 2015 excluded the balances of CityOn.Xi'an, which was under construction as of December 31, 2015 (Note 2). Beneficial interest is calculated based on the Operating Partnership's ownership interest in each of the Unconsolidated Joint Ventures.



	June 30, 2016			December 31, 2015
Assets:
Properties	$	2,556,015		$	1,628,492
Accumulated depreciation and amortization	(618,829		)	(589,145		)
	$	1,937,186		$	1,039,347
Cash and cash equivalents	32,626			36,047
Accounts and notes receivable, less allowance for doubtful accounts of $2,861 and $1,602 in 2016 and 2015	52,617			42,361
Deferred charges and other assets ⁽¹⁾	34,710			32,660
	$	2,057,139		$	1,150,415

Liabilities and accumulated deficiency in assets:
Notes payable, net⁽¹⁾⁽²⁾	$	2,303,763		$	1,994,298
Accounts payable and other liabilities	272,342			70,539
TRG's accumulated deficiency in assets	(314,273		)	(512,256		)
Unconsolidated Joint Venture Partners' accumulated deficiency in assets	(204,693		)	(402,166		)
	$	2,057,139		$	1,150,415

TRG's accumulated deficiency in assets (above)	$	(314,273	)	$	(512,256	)
TRG's investment in properties under construction (Note 2)	240,156			296,847
TRG basis adjustments, including elimination of intercompany profit	138,839			132,218
TCO's additional basis	52,043			53,016
Net investment in Unconsolidated Joint Ventures	$	116,765		$	(30,175	)
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures	468,508			464,086
Investment in Unconsolidated Joint Ventures	$	585,273		$	433,911


(1)	The December 31, 2015 balance has been adjusted in connection with the Company's adoption of ASU No. 2015-03 "Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs" (Note 1).

(2)

As the balances presented exclude centers under construction, the Notes Payable, Net amounts exclude the construction financings outstanding for Starfield Hanam of $151.8 million ($52.1 million at TRG's share) and $52.9 million ($18.1 million at TRG's share) as of June 30, 2016 and December 31, 2015, respectively, and CityOn.Zhengzhou of $43.7 million ($13.9 million at TRG's share) and $44.7 million ($14.2 million at TRG's share) as of June 30, 2016 and December 31, 2015, respectively, and the related debt issuance costs.



	Three Months Ended June 30						Six Months Ended June 30
	2016			2015			2016			2015
Revenues	$	109,191		$	88,418		$	205,954		$	180,332
Maintenance, taxes, utilities, promotion, and other operating expenses	$	43,390		$	29,286		$	71,712		$	56,281
Interest expense	25,490			21,318			47,086			42,547
Depreciation and amortization	19,824			13,654			35,123			26,406
Total operating costs	$	88,704		$	64,258		$	153,921		$	125,234
Nonoperating income (expense)	860			(3		)	1,106			5
Net income	$	21,347		$	24,157		$	53,139		$	55,103

Net income attributable to TRG	$	12,334		$	13,435		$	29,793		$	30,488
Realized intercompany profit, net of depreciation on TRG’s basis adjustments	4,061			1,055			5,567			1,563
Depreciation of TCO's additional basis	(485		)	(486		)	(972		)	(972		)
Equity in income of Unconsolidated Joint Ventures	$	15,910		$	14,004		$	34,388		$	31,079

Beneficial interest in Unconsolidated Joint Ventures’ operations:
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses	$	40,786		$	33,911		$	80,127		$	70,417
Interest expense	(13,207		)	(11,405		)	(24,735		)	(22,768		)
Depreciation and amortization	(11,669		)	(8,502		)	(21,004		)	(16,570		)
Equity in income of Unconsolidated Joint Ventures	$	15,910		$	14,004		$	34,388		$	31,079