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Investments in Unconsolidated Joint Ventures
 9 Months Ended
Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Joint Ventures Investments in Unconsolidated Joint Ventures

General Information

We own beneficial interests in joint ventures that own shopping centers. TRG is the sole direct or indirect managing general partner or managing member of Fair Oaks Mall, International Plaza, Stamford Town Center, Sunvalley, The Mall at University Town Center, and Westfarms; however, these joint ventures are accounted for under the equity method due to the substantive participation rights of the outside partners. TRG also provides certain management, leasing, and/or development services to the other shopping centers noted below.
Shopping Center
 
Ownership as of
September 30, 2019 and
December 31, 2018
CityOn.Xi'an (1)
 
50%
CityOn.Zhengzhou (1)
 
49
Country Club Plaza
 
50
Fair Oaks Mall
 
50
The Gardens Mall (2)
 
48.5/0
International Plaza
 
50.1
The Mall at Millenia
 
50
Stamford Town Center
 
50
Starfield Anseong (under development)
 
Note 2
Starfield Hanam (1)
 
17.15/34.3
Sunvalley
 
50
The Mall at University Town Center
 
50
Waterside Shops
 
50
Westfarms
 
79


(1)
In February 2019, we entered into agreements to sell 50% of our ownership interests in CityOn.Xi'an, CityOn.Zhengzhou, and Starfield Hanam. In September 2019, we completed the sale of 50% of our interest in Starfield Hanam. The remaining transactions are subject to customary closing conditions and are expected to close around year-end 2019 (Note 2).
(2)
In April 2019, we acquired a 48.5% interest in The Gardens Mall (Note 2).

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

On our Consolidated Balance Sheet, we separately report our 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 shopping centers.
Combined Financial Information

Combined balance sheet and results of operations information is presented in the following table for our Unconsolidated Joint Ventures, followed by TRG's beneficial interest in the combined operations information. The combined financial information of the Unconsolidated Joint Ventures as of September 30, 2019 and December 31, 2018 excludes the balances of Starfield Anseong, which is currently under development (Note 2). Beneficial interest is calculated based on TRG's ownership interest in each of the Unconsolidated Joint Ventures.

 
September 30,
2019
 
December 31,
2018
Assets:
 
 
 
Properties
$
3,811,327

 
$
3,728,846

Accumulated depreciation and amortization
(991,445
)
 
(869,375
)
 
$
2,819,882

 
$
2,859,471

Cash and cash equivalents
150,638

 
161,311

Accounts and notes receivable (1)
140,347

 
131,767

Operating lease right-of-use assets (1)
11,525

 
 
Deferred charges and other assets
132,844

 
140,444

 
$
3,255,236

 
$
3,292,993

 
 
 
 
Liabilities and accumulated equity (deficiency) in assets:
 

 
 

Notes payable, net 
$
3,109,843

 
$
2,815,617

Accounts payable and other liabilities
248,440

 
426,358

Operating lease liabilities (1)
13,280

 
 
TRG's accumulated deficiency in assets (1)
(217,864
)
 
(49,465
)
Unconsolidated Joint Venture Partners' accumulated equity in assets (1)
101,537

 
100,483

 
$
3,255,236

 
$
3,292,993

 
 
 
 
TRG's accumulated deficiency in assets (above)
$
(217,864
)
 
$
(49,465
)
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou
185,135

 
140,743

TRG basis adjustments, including elimination of intercompany profit (2)
330,834

 
57,360

TCO's additional basis
45,718

 
47,178

Net investment in Unconsolidated Joint Ventures
$
343,823

 
$
195,816

Distributions in excess of investments in and net income of Unconsolidated Joint Ventures
481,315

 
477,800

Investment in Unconsolidated Joint Ventures
$
825,138

 
$
673,616


(1) Upon adoption of ASC Topic 842, "Leases" on January 1, 2019, we valued our operating lease obligations and recorded operating lease liabilities and related right-of-use assets. These lease liabilities and related right-of-use assets will amortize over the remaining life of the respective leases.
(2) The increase in basis adjustments is primarily due to the gain on remeasurement of ownership interest in Unconsolidated Joint Venture (Note 2).
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2019
 
2018
 
2019
 
2018
Revenues (1)
$
153,749

 
$
146,973

 
$
450,775

 
$
446,608

Maintenance, taxes, utilities, promotion, and other operating expenses (1)
$
54,441

 
$
50,140

 
$
158,851

 
$
155,321

Interest expense
35,926

 
33,199

 
104,637

 
99,316

Depreciation and amortization
31,861

 
32,791

 
98,501

 
98,727

Total operating costs
$
122,228

 
$
116,130

 
$
361,989

 
$
353,364

Nonoperating income, net (2)
837

 
563

 
2,161

 
1,491

Income tax expense
(2,023
)
 
(1,896
)
 
(5,669
)
 
(4,740
)
Net income
$
30,335

 
$
29,510

 
$
85,278

 
$
89,995

 
 
 
 
 
 
 
 
Net income attributable to TRG
$
15,545

 
$
15,193

 
$
43,993

 
$
46,435

Realized intercompany profit, net of depreciation on TRG’s basis adjustments
5,195

 
2,205

 
7,213

 
5,705

Depreciation of TCO's additional basis
(488
)
 
(488
)
 
(1,460
)
 
(1,460
)
Equity in income of Unconsolidated Joint Ventures
$
20,252

 
$
16,910

 
$
49,746

 
$
50,680

 
 
 
 
 
 
 
 
Beneficial interest in Unconsolidated Joint Ventures’ operations:
 

 
 

 
 

 
 

Revenues less maintenance, taxes, utilities, promotion, and other operating expenses
$
56,703

 
$
52,216

 
$
158,813

 
$
155,744

Interest expense
(17,798
)
 
(17,093
)
 
(52,579
)
 
(51,107
)
Depreciation and amortization
(17,662
)
 
(17,190
)
 
(53,808
)
 
(51,570
)
Income tax expense
(991
)
 
(1,023
)
 
(2,680
)
 
(2,387
)
Equity in income of Unconsolidated Joint Ventures
$
20,252

 
$
16,910

 
$
49,746

 
$
50,680



(1)
Upon adoption of ASC Topic 842, "Leases", uncollectible tenant revenues are now recorded in Rental Revenues (Note 1).
(2)
In addition to the disposition of 50% of our ownership interest in Starfield Hanam, in September 2019, Blackstone also purchased the 14.7% interest in Starfield Hanam that was previously owned by our institutional joint venture partner. Our previous partnership agreement provided for a promote fee due to Taubman Asia upon the institutional partner's exit from the partnership based on performance measures under the prior agreement, which resulted in the recognition of a $4.8 million promote fee during the three and nine months ended September 30, 2019.

Related Party

We have a note receivable outstanding with CityOn.Zhengzhou, which was originally issued for the purpose of funding development costs. The balance of the note receivable was $42.3 million and $43.6 million as of September 30, 2019 and December 31, 2018, respectively, and was classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet.