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Investments in and Advances to Unconsolidated Affiliates
 9 Months Ended
Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract]  
Investments in and Advances to Unconsolidated Affiliates

4. Investments in and Advances to Unconsolidated Affiliates

The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting as it has the ability to exercise significant influence, but does not have financial or operating control over the investment, which is maintained by each of the unaffiliated partners who co-invest with the Company. Certain of the Company’s unconsolidated joint venture agreements include provisions whereby, at certain specified times, each partner has the right to initiate a purchase or sale of its interest in the joint ventures. Under certain of the Company’s joint venture agreements, if certain return thresholds are achieved, the partners or the Company will be entitled to an additional promoted interest or payments.

The Company’s investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):

 

 

 

 

 

Ownership Interest

 

September 30,

 

 

December 31,

 

Portfolio

 

Property

 

September 30, 2023

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

Core:

 

Renaissance Portfolio

 

20%

 

$

28,050

 

 

$

28,755

 

 

 

Gotham Plaza

 

49%

 

 

30,405

 

 

 

30,112

 

 

 

Georgetown Portfolio (a)

 

50%

 

 

4,170

 

 

 

4,048

 

 

 

1238 Wisconsin Avenue (a, b)

 

80%

 

 

17,995

 

 

 

14,502

 

 

 

 

 

 

 

 

80,620

 

 

 

77,417

 

 

 

 

 

 

 

 

 

 

 

 

Mervyns II:

 

KLA/ABS (c)

 

36.7%

 

 

—

 

 

 

85,403

 

 

 

 

 

 

 

 

 

 

 

 

Fund IV:

 

Fund IV Other Portfolio

 

98.57%

 

 

5,400

 

 

 

7,914

 

 

 

650 Bald Hill Road

 

90%

 

 

9,698

 

 

 

10,203

 

 

 

Paramus Plaza

 

50%

 

 

203

 

 

 

936

 

 

 

 

 

 

 

 

15,301

 

 

 

19,053

 

 

 

 

 

 

 

 

 

 

 

 

Fund V:

 

Family Center at Riverdale (d)

 

89.42%

 

 

3,641

 

 

 

4,995

 

 

 

Tri-City Plaza

 

90%

 

 

7,163

 

 

 

8,422

 

 

 

Frederick County Acquisitions

 

90%

 

 

12,037

 

 

 

12,240

 

 

 

Wood Ridge Plaza

 

90%

 

 

11,395

 

 

 

12,751

 

 

 

La Frontera Village

 

90%

 

 

19,062

 

 

 

20,803

 

 

 

Shoppes at South Hills (e)

 

90%

 

 

11,522

 

 

 

44,677

 

 

 

Mohawk Commons

 

90%

 

 

18,634

 

 

 

775

 

 

 

 

 

 

 

 

83,454

 

 

 

104,663

 

 

 

 

 

 

 

 

 

 

 

 

Various:

 

Due from (to) Related Parties

 

 

 

 

262

 

 

 

305

 

 

 

Other (f)

 

 

 

 

4,397

 

 

 

4,315

 

 

 

Investments in and advances to
unconsolidated affiliates

 

 

 

$

184,034

 

 

$

291,156

 

 

 

 

 

 

 

 

 

 

 

 

Core:

 

Crossroads (g)

 

49%

 

$

8,324

 

 

$

8,832

 

 

 

840 N. Michigan Avenue (d, g)

 

88.43%

 

 

221

 

 

 

1,673

 

 

 

Distributions in excess of income from,
and investments in, unconsolidated affiliates

 

 

 

$

8,545

 

 

$

10,505

 

 

(a)
Represents a VIE for which the Company is not the primary beneficiary (Note 15).
(b)
Includes the amounts advanced against a $12.8 million construction commitment from the Company to the venture that holds its investment in 1238 Wisconsin. As of September 30, 2023 and December 31, 2022 the note receivable from a related party had a balance of $12.3 million and $7.7 million, net of an allowance for credit losses of $0.1 million, and $0.1 million, respectively. The loan is collateralized by the venture members' equity interest in the entity that holds the 1238 Wisconsin development property, bears interest at Prime + 1.0% subject to a 4.5% floor, and matures on December 28, 2023. The loan has a one-year extension option and interest is recognized over the life of the loan.
(c)
At December 31, 2022, Mervyns II had an effective indirect ownership of approximately 4.1 million shares (approximately 1% interest) through its Investment in Albertsons Companies Inc. ("Albertsons"), which is accounted for at fair value (Note 8). Mervyns II distributed the shares to its investors upon expiration of the lock-up agreement in January 2023, as further described below.
(d)
Represents a tenancy-in-common interest.
(e)
At December 31, 2022, includes a $31.7 million bridge loan from the Company to the venture that holds the property in its investment in Shoppes at South Hills. During the first quarter of 2023 the bridge loan was repaid (Note 2), as further described below.
(f)
Includes cost-method investments in Fifth Wall.
(g)
Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may elect to contribute capital to the entity.

 

During the nine months ended September 30, 2023, the Company:

•
funded $4.6 million of a $12.8 million construction loan commitment to the 1238 Wisconsin venture. The total outstanding balance of the loan was $12.3 million as of September 30, 2023;
•
through Fund IV, modified a property mortgage with an outstanding balance of $21.9 million with a new loan of $24.1 million at an unconsolidated property, Eden Square;
•
through Fund V, acquired a 90% interest in a venture which acquired Mohawk Commons, a shopping center located in Schenectady, New York for $62.1 million. In addition, on January 27, 2023, the Mohawk Commons venture entered into a $39.7 million mortgage loan;
•
through Fund V, received payment on a bridge loan from the Shoppes at South Hills venture for $31.7 million which matured in February 2023. Upon maturity of the bridge loan, the venture entered into a $36.0 million mortgage loan, of which $31.8 million was funded at closing.
•
through Mervyns II, received cash dividends from its investment in Albertsons totaling $28.5 million on January 20, 2023, of which the Company's share was $11.3 million. Additionally, the lock-up period, which restricted the transfer or sale of shares, expired on January 24, 2023, and 4.1 million shares of Albertsons were distributed to the individual investors as a non-cash distribution, of which the Company received 1.6 million shares. The shares are classified as Marketable securities on the Company's condensed consolidated balance sheets (Note 8).


Fees from Unconsolidated Affiliates

The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated partnerships totaling $0.1 million for each of the three months ended September 30, 2023 and 2022, and $0.3 million for each of the nine months ended September 30, 2023 and 2022, which are included in Other revenues in the condensed consolidated statements of operations.

In addition, the Company's joint ventures paid to certain unaffiliated partners of its joint ventures $0.9 million and $0.5 million for the three months ended September 30, 2023 and 2022, respectively, and $2.1 million and $1.1 million for the nine months ended September 30, 2023 and 2022, respectively, for leasing commissions, development, management, construction and overhead fees.

Summarized Financial Information of Unconsolidated Affiliates

The following combined and condensed Balance Sheets and Statements of Operations, in each period, summarize the financial information of the Company’s investments in unconsolidated affiliates that were held as of September 30, 2023, and accordingly exclude the results of any investments disposed of or consolidated prior to that date (in thousands):

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Combined and Condensed Balance Sheets

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

Rental property, net

 

$

718,145

 

 

$

650,997

 

Real estate under development

 

 

5,560

 

 

 

17,359

 

Other assets

 

 

130,238

 

 

 

127,070

 

Total assets

 

$

853,943

 

 

$

795,426

 

Liabilities and partners’ equity:

 

 

 

 

 

 

Mortgage notes payable

 

$

688,978

 

 

$

609,923

 

Other liabilities

 

 

97,373

 

 

 

96,532

 

Partners’ equity

 

 

67,592

 

 

 

88,971

 

Total liabilities and partners’ equity

 

$

853,943

 

 

$

795,426

 

 

 

 

 

 

 

 

Company's share of accumulated equity

 

$

115,358

 

 

$

131,878

 

Basis differential

 

 

52,071

 

 

 

52,813

 

Deferred fees, net of portion related to the Company's interest

 

 

3,401

 

 

 

5,937

 

Amounts receivable/payable by the Company

 

 

262

 

 

 

305

 

Investments in and advances to unconsolidated affiliates, net of Company's
   share of distributions in excess of income from and investments in
   unconsolidated affiliates

 

 

171,092

 

 

 

190,933

 

Investments carried at fair value or cost

 

 

4,397

 

 

 

89,718

 

Company's share of distributions in excess of income from and
   investments in unconsolidated affiliates

 

 

8,545

 

 

 

10,505

 

Investments in and advances to unconsolidated affiliates

 

$

184,034

 

 

$

291,156

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Combined and Condensed Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

24,490

 

 

$

25,096

 

 

$

81,375

 

 

$

72,167

 

Operating and other expenses

 

 

(9,189

)

 

 

(8,443

)

 

 

(26,538

)

 

 

(23,768

)

Interest expense

 

 

(10,742

)

 

 

(7,130

)

 

 

(29,877

)

 

 

(18,458

)

Depreciation and amortization

 

 

(11,567

)

 

 

(9,708

)

 

 

(31,700

)

 

 

(24,867

)

Impairment of Investment

 

 

—

 

 

 

(57,423

)

 

 

—

 

 

 

(57,423

)

Net loss attributable to unconsolidated affiliates

 

$

(7,008

)

 

$

(57,608

)

 

$

(6,740

)

 

$

(52,349

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Company’s share of equity in net losses of unconsolidated affiliates

 

$

(4,617

)

 

$

(50,331

)

 

$

(5,531

)

 

$

(45,416

)

Basis differential amortization

 

 

(248

)

 

 

(248

)

 

 

(742

)

 

 

(753

)

Company’s equity in losses of unconsolidated affiliates

 

$

(4,865

)

 

$

(50,579

)

 

$

(6,273

)

 

$

(46,169

)