Equity Method Investments

9 Months Ended

Sep. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

We own interests in certain unconsolidated real estate investments with third parties and in the Managed Programs. There have been no significant changes in our equity method investment policies from what was disclosed in the 2022 Annual Report.

Interests in Unconsolidated Real Estate Investments

We own equity interests in properties that are generally leased to companies through noncontrolling interests in partnerships and limited liability companies that we do not control but over which we exercise significant influence. The underlying investments are jointly owned with third parties. We account for these investments under the equity method of accounting. Operating results of our unconsolidated real estate investments are included in the Real Estate segment.

The following table sets forth our ownership interests in our equity method investments in real estate, excluding the Managed Programs, and their respective carrying values (dollars in thousands):


			Carrying Value at
Lessee/Fund/Description	Co-owner	Ownership Interest	September 30, 2023		December 31, 2022
Las Vegas Retail Complex (a)	Third Party	N/A	$	232,941	$	196,352
Johnson Self Storage	Third Party	90%	64,286		65,707
Kesko Senukai (b)	Third Party	70%	28,414		38,569
Harmon Retail Corner (c)	Third Party	15%	24,118		24,649
			$	349,759	$	325,277

__________

(a)On June 10, 2021, we entered into an agreement to fund a construction loan of approximately $261.9 million (as of September 30, 2023) for a retail complex in Las Vegas, Nevada. Through September 30, 2023, we funded $229.8 million, including $36.6 million during the nine months ended September 30, 2023. Equity income from this investment was $9.1 million and $6.2 million for the nine months ended September 30, 2023 and 2022, respectively, which was recognized within Earnings from equity method investments in our consolidated statements of income.

(b)The carrying value of this investment is affected by fluctuations in the exchange rate of the euro.

(c)This investment is reported using the hypothetical liquidation at book value model, which may be different than pro rata ownership percentages, primarily due to the capital structure of the partnership agreement.

We received aggregate distributions of $25.2 million and $24.2 million from our unconsolidated real estate investments for the nine months ended September 30, 2023 and 2022, respectively. At September 30, 2023 and December 31, 2022, the aggregate unamortized basis differences on our unconsolidated real estate investments were $18.3 million and $19.1 million, respectively.

Managed Programs

We own interests in the Managed Programs and account for these interests under the equity method because, as their advisor, we do not exert control over, but we do have the ability to exercise significant influence over, the Managed Programs. Operating results of the Managed Programs are included in the Investment Management segment.

CPA:18 – Global — On August 1, 2022, we acquired all of the remaining interests in CPA:18 – Global and the CPA:18 – Global operating partnership in the CPA:18 Merger (Note 1). We received distributions from this investment during the nine months ended September 30, 2022 of $1.6 million. We received distributions from our investment in the CPA:18 – Global operating partnership during the nine months ended September 30, 2022 of $8.7 million (Note 4).

CESH — We have elected to account for our investment in 2.43% of CESH at fair value by selecting the equity method fair value option available under GAAP. We record our investment in CESH on a one quarter lag; therefore, the balance of our equity method investment in CESH recorded as of September 30, 2023 is based on the estimated fair value of our investment as of June 30, 2023. The carrying amount of our investment in CESH was $1.8 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively. We received distributions from this investment during both the nine months ended September 30, 2023 and 2022 of $1.2 million.