Quarterly report pursuant to Section 13 or 15(d)

Investments in Unconsolidated Joint Ventures (Notes)

v2.4.0.6
Investments in Unconsolidated Joint Ventures (Notes)
3 Months Ended
Mar. 31, 2012
Investments In Unconsolidated Real Estate Joint Ventures [Abstract]  
Equity Method Investments Disclosure [Text Block]
Investments in Unconsolidated Real Estate Joint Ventures
Our investments in unconsolidated joint ventures as of March 31, 2012 and December 31, 2011 aggregated $48.5 million and $28.5 million, respectively. We have evaluated the accounting treatment for each of the joint ventures and have concluded based on the current facts and circumstances that the equity method of accounting should be used to account for the individual joint ventures. At March 31, 2012, we were members of the following unconsolidated real estate joint ventures:
Joint Venture
 
Center Location
 
Ownership %
 
Square Feet
 
Carrying Value of Investment
 (in millions)
 
Total Joint Venture Debt
 (in millions)
Wisconsin Dells
 
Wisconsin Dells, Wisconsin
 
50.0
%
 
265,086

 
$
4.0

 
$
24.3

Deer Park
 
Deer Park, Long Island NY
 
33.3
%
 
741,976

 
4.7

 
246.9

Deer Park Warehouse
 
Deer Park, Long Island NY
 
33.3
%
 
29,253

 

 
2.3

Galveston/Houston
 
Texas City, Texas
 
50.0
%
 

 
13.9

 

RioCan Canada
 
Various
 
50.0
%
 
157,382

 
24.8

 

National Harbor
 
Washington D.C. Metro Area
 
50.0
%
 

 
0.9

 

Other
 
 
 
50.0
%
 

 
0.2

 

Total
 
 
 
 
 
 
 
$
48.5

 
$
273.5

These investments are recorded initially at cost and subsequently adjusted for our equity in the venture's net income (loss), cash contributions, distributions and other adjustments required by the equity method of accounting as discussed below.
Management, leasing and marketing fees earned from services provided to our unconsolidated joint ventures were recognized as follows (in thousands):
 
 
Three Months Ended
March 31,
 
 
2012
 
2011
Fee:
 
 
 
 
Management and leasing
 
$
479

 
$
505

Marketing
 
53

 
44

Total Fees
 
$
532

 
$
549


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 are amortized over the various useful lives of the related assets.
Deer Park Warehouse, Long Island, New York
In June 2008, we, along with our partners in Deer Park, entered into a joint venture to purchase a warehouse adjacent to the Deer Park project described above for a total purchase price of $3.3 million. The interest-only mortgage loan for the warehouse matured on May 17, 2011 and the joint venture did not qualify for the one-year extension option. As a result, the joint venture has accrued interest at a default rate of 8.25% from May 17, 2011 to March 31, 2012, and is currently in negotiations with the lender. As of March 31, 2012, the outstanding principal balance under the warehouse mortgage was $2.3 million. In December 2011, the joint venture recorded an impairment charge of approximately $900,000 to lower the basis of the warehouse to its estimated fair market value.
Galveston/Houston, Texas

In June 2011, we announced the formation of a joint venture with Simon Property Group, Inc. for the development of a Tanger Outlet Center south of Houston in Texas City, TX. We expect the center to be completed in October 2012 and to feature over 90 brand name and designer outlet stores in the first phase of approximately 350,000 square feet, with room for expansion for a total build out of approximately 470,000 square feet. In July 2011, the joint venture acquired the land underlying the site for approximately $5.6 million. As of March 31, 2012, we have contributed $13.7 million in cash to the joint venture to fund development activities. We will provide property management and marketing services to the center and with our partner, will jointly provide development and leasing services.

RioCan Canada

On December 9, 2011, the RioCan Canadian Joint Venture purchased the Cookstown Outlet Mall. The existing outlet center was acquired for $47.4 million, plus an additional $13.8 million for excess land upon the seller meeting certain conditions, for an aggregate purchase price of $61.2 million. RioCan will provide development and property management services to this existing outlet center and we will provide leasing and marketing services. In connection with the purchase, the joint venture assumed the in place financing of $29.6 million which carried an interest rate of 5.10% and had an original maturity date of June 21, 2014. In March, 2012, the joint venture negotiated the early payment of the financing. We contributed an additional $15.1 million to the joint venture to fund the payment.

During the quarter, the joint venture terminated an option contract to develop a center in Halton Hills, Ontario and accordingly pre-development costs of approximately $954,000 were written-off.

National Harbor, Washington, D.C. Metro Area

In May 2011, we announced the formation of a joint venture with The Peterson Companies for the development of a Tanger Outlets at National Harbor in the Washington, D.C. Metro area. The resulting Tanger Outlet Center is expected to contain approximately 80 outlet designer and name brand stores in a center measuring up to 350,000 square feet. The project is currently in the pre-development phase and in December 2011, both parties each made initial equity contributions of $850,000 to fund certain pre-development costs. We will provide property management, leasing and marketing services to the joint venture. We and The Peterson Companies will jointly provide site development and construction supervision 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):
Summary Balance Sheets - Unconsolidated Joint Ventures
 
As of
March 31,
2012
 
As of
December 31,
2011
Assets
 
 

 
 

Investment properties at cost, net
 
$
357,357

 
$
344,098

Cash and cash equivalents
 
9,621

 
7,582

Deferred lease costs, net
 
14,294

 
14,815

Deferred debt origination costs, net
 
6,626

 
7,566

Prepaids and other assets
 
15,663

 
11,687

Total assets
 
$
403,561

 
$
385,748

Liabilities and Owners' Equity
 
 

 
 

Mortgages payable
 
$
273,534

 
$
303,230

Construction trade payables
 
7,719

 
2,669

Accounts payable and other liabilities
 
24,788

 
27,246

Total liabilities
 
306,041

 
333,145

Owners' equity
 
97,520

 
52,603

Total liabilities and owners' equity
 
$
403,561

 
$
385,748



 
 
Three Months Ended
 
 
March 31,
Summary Statements of Operations - Unconsolidated Joint Ventures
 
2012
 
2011
Revenues
 
$
11,658

 
$
9,562

Expenses
 
 
 
 
Property operating
 
4,891

 
4,101

General and administrative
 
163

 
187

Acquisition costs
 
704

 

Abandoned development costs
 
954

 

Depreciation and amortization
 
4,608

 
3,611

Total expenses
 
11,320

 
7,899

Operating income
 
338

 
1,663

Interest expense
 
3,829

 
1,803

Net loss
 
$
(3,491
)
 
$
(140
)
 
 
 
 
 
The Company and Operating Partnership's share of:
Net loss
 
$
(1,452
)
 
$
(32
)
Depreciation (real estate related)
 
$
1,815

 
$
1,306