| Investments in Unconsolidated Real Estate Joint Ventures |
Investments in Unconsolidated Real Estate Joint Ventures
The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures:
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As of March 31, 2016 |
Joint Venture |
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Outlet Center Location |
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Ownership % |
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Square Feet
(in 000's)
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Carrying Value of Investment (in millions) |
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Total Joint Venture Net Debt
(in millions)(1)
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Columbus |
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Columbus, OH |
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50.0 |
% |
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— |
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$ |
30.7 |
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$ |
— |
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National Harbor |
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National Harbor, MD |
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50.0 |
% |
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339 |
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5.5 |
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85.9 |
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RioCan Canada |
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Various |
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50.0 |
% |
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902 |
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126.4 |
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11.9 |
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Savannah (2)
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Savannah, GA |
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50.0 |
% |
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377 |
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43.8 |
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93.5 |
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Westgate |
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Glendale, AZ |
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58.0 |
% |
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411 |
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12.3 |
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61.9 |
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$ |
218.7 |
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$ |
253.2 |
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Charlotte(3)
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Charlotte, NC |
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50.0 |
% |
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398 |
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$ |
(1.4 |
) |
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$ |
89.6 |
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Galveston/Houston (3)
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Texas City, TX |
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50.0 |
% |
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353 |
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(2.1 |
) |
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64.8 |
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$ |
(3.5 |
) |
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$ |
154.4 |
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As of December 31, 2015 |
Joint Venture |
|
Outlet Center Location |
|
Ownership % |
|
Square Feet
(in 000's)
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|
Carrying Value of Investment (in millions) |
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Total Joint Venture Net Debt
(in millions)(1)
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Columbus |
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Columbus, OH |
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50.0 |
% |
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— |
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$ |
21.1 |
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$ |
— |
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National Harbor |
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National Harbor, MD |
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50.0 |
% |
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339 |
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6.1 |
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85.8 |
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RioCan Canada |
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Various |
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50.0 |
% |
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870 |
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117.2 |
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11.3 |
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Savannah (2)
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Savannah, GA |
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50.0 |
% |
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377 |
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44.4 |
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87.6 |
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Westgate |
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Glendale, AZ |
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58.0 |
% |
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411 |
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12.3 |
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61.9 |
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$ |
201.1 |
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$ |
246.6 |
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Charlotte(3)
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Charlotte, NC |
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50.0 |
% |
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398 |
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$ |
(1.1 |
) |
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$ |
89.6 |
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Galveston/Houston(3)
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Texas City, TX |
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50.0 |
% |
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353 |
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(1.5 |
) |
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64.7 |
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$ |
(2.6 |
) |
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$ |
154.3 |
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(1) |
Net of debt origination costs and including premiums of $2.8 million and $3.3 million as of March 31, 2016 and December 31, 2015, respectively.
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(2) |
Based on capital contribution and distribution provisions in the joint venture agreement, we expect our economic interest in the venture's cash flow to be greater than indicated in the Ownership column, which states our legal interest in this venture. As of March 31 2016, based upon the liquidation proceeds we would receive from a hypothetical liquidation of our investment based on depreciated book value, our estimated economic interest in the venture was approximately 98%. Our economic interest may fluctuate based on a number of factors, including mortgage financing, partnership capital contributions and distributions, and proceeds from gains or losses of asset sales.
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(3) |
The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners. |
Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands):
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Three months ended |
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March 31, |
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2016 |
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2015 |
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Fee: |
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Development and leasing |
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$ |
192 |
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$ |
581 |
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Loan guarantee |
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182 |
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196 |
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Management and marketing |
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747 |
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506 |
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Total Fees |
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$ |
1,121 |
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$ |
1,283 |
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Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary Balance Sheets - Unconsolidated Joint Ventures" shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis (totaling $4.1 million and $3.9 million as of March 31, 2016 and December 31, 2015, respectively) are amortized over the various useful lives of the related assets.
Columbus, Ohio
During the second quarter of 2015, the joint venture purchased land for approximately $8.9 million and began construction on Tanger Outlets Columbus. We and our partner currently expect to complete construction in time to open the center during the second quarter of 2016. As of March 31, 2016, we and our partner had each contributed $30.0 million to fund development activities. Our partner is providing development services to the joint venture and we, along with our partner, are providing joint leasing services. Once the center opens, we will provide property management, marketing and leasing services to the joint venture.
Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands):
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Condensed Combined Balance Sheets - Unconsolidated Joint Ventures |
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March 31, 2016 |
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December 31, 2015 |
Assets |
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Land |
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$ |
107,403 |
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$ |
103,046 |
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Buildings, improvements and fixtures |
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632,456 |
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615,662 |
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Construction in progress, including land |
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83,701 |
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62,308 |
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823,560 |
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781,016 |
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Accumulated depreciation |
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(69,754 |
) |
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(60,629 |
) |
Total rental property, net |
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753,806 |
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720,387 |
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Cash and cash equivalents |
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27,671 |
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28,723 |
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Deferred lease costs, net |
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18,605 |
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18,399 |
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Prepaids and other assets |
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17,217 |
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14,455 |
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Total assets |
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$ |
817,299 |
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$ |
781,964 |
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Liabilities and Owners' Equity |
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Mortgages payable, net |
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$ |
407,640 |
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$ |
400,935 |
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Accounts payable and other liabilities |
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27,604 |
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31,805 |
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Total liabilities |
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435,244 |
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432,740 |
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Owners' equity |
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382,055 |
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349,224 |
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Total liabilities and owners' equity |
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$ |
817,299 |
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$ |
781,964 |
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Three months ended |
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Condensed Combined Statements of Operations |
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March 31, |
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- Unconsolidated Joint Ventures |
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2016 |
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2015 |
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Revenues |
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$ |
27,698 |
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$ |
23,965 |
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Expenses |
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Property operating |
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10,318 |
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9,144 |
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General and administrative |
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117 |
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218 |
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Depreciation and amortization |
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8,799 |
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7,822 |
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Total expenses |
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19,234 |
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17,184 |
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Operating income |
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8,464 |
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6,781 |
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Interest expense |
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(2,554 |
) |
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(1,770 |
) |
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Other nonoperating income |
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1 |
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8 |
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Net income |
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$ |
5,911 |
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$ |
5,019 |
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The Company and Operating Partnership's share of: |
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Net income |
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$ |
3,499 |
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$ |
2,543 |
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Depreciation expense (real estate related) |
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$ |
5,339 |
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$ |
4,076 |
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