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Variable Interest and Unconsolidated Entities
 12 Months Ended
Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Variable Interest and Unconsolidated Entities
Variable Interests and Unconsolidated Entities:
Consolidated VIEs — As of December 31, 2016 and 2015, the Company had three wholly-owned subsidiaries which were determined to be VIEs, as the wholly-owned subsidiaries are designed as single property entities to own and lease their respective properties to single tenant operators, which are VIEs due to future buy-out options held by the respective tenants and of which the tenants can exercise but have not elected to do so. The three buy-out options expire between 2030 and 2032. The Company determined it is the primary beneficiary and holds a controlling financial interest in each of these entities due to the Company’s power to direct the activities that most significantly impact the economic performance of the entities, as well as its obligation to absorb the losses and its right to receive benefits from these entities that could potentially be significant to these entities. As such, the transactions and accounts of these VIEs are included in the accompanying consolidated financial statements.
The aggregate carrying amount and major classifications of the consolidated assets that can be used to settle obligations of the VIEs and liabilities of the consolidated VIEs that are non-recourse to the Company are as follows (in thousands):
7.
Variable Interests and Unconsolidated Entities (continued):
        
 
 
December 31,
 
 
2016
 
2015
Assets
 
 
 
 
Real estate investment properties, net
 
$
55,941

 
$
58,832

Other assets
 
5,320

 
6,578

Liabilities
 
 
 
 
Mortgages and other notes payable
 
18,628

 
19,503

Other liabilities
 
1,340

 
792



The Company’s maximum exposure to loss as a result of its involvement with these VIEs is limited to its net investment in these entities which totaled approximately $41.3 million and $45.1 million as of December 31, 2016 and 2015, respectively. The Company’s exposure is limited because of the non-recourse nature of the borrowings of the VIEs.
Unconsolidated Entities — As of December 31, 2014, the Company held an ownership interest in the DMC Partnership of $104.4 million. The Company sold its 81.98% interest in the DMC Partnership in April 2015 and received net sales proceeds of approximately $139.5 million from its co-venture partner, which resulted in a gain of approximately $39.3 million for financial reporting purposes. No disposition fee was paid to the Advisor on the sale of the DMC Partnership. The Company accounted for its pro-rata share of the net earnings of its investment in the DMC Partnership as continuing operations because although the properties owned by the DMC Partnership were outliers compared to the other assets invested in by the Company, the sale of the Company’s interest in the DMC Partnership did not cause a strategic shift in the Company, and it was not considered to have a major impact on the Company’s business; therefore, it did not qualify as discontinued operations under ASU 2014-08.
As of December 31, 2015, the Company held an 80% ownership interest in the Intrawest Venture with a carrying value of approximately $73.4 million. The Company had classified its investment in the Intrawest Venture, an unconsolidated entity, as a VIE and concluded it was not the primary beneficiary. On April 1, 2016, the Company satisfied the terms and conditions under the buy-sell provisions of the Intrawest Venture partnership agreement, acquired its co-venture partner's 20% interest in the Intrawest Venture for a nominal amount and as part of the Company's evaluation of strategic alternatives, upon acquiring the 20% interest, the Company agreed to sell the seven ski and mountain lifestyle properties. In conjunction with the acquisition of the remaining 20% interest, in April 2016, the Company contributed $5.8 million to the Intrawest Venture and the Intrawest Venture used the proceeds and repaid a mezzanine loan from its joint venture partner and related accrued interest of $5.8 million.
On April 1, 2016, the nominal consideration paid to acquire the remaining 20% interest, along with the approximate $79.5 million carrying value of the Company’s investment in the unconsolidated entity, was less than the fair value of the net assets acquired, which resulted in a gain of approximately $30.0 million in connection with this transaction. The Company determined the fair values of the real estate based on anticipated sales proceeds from the anticipated sale of the seven ski and mountain lifestyle properties, less costs to sell. The Company determined that the fair value of cash, trade receivables and trade payable (“Working Capital, net”) approximated their carrying values.
The following summarizes the allocation of the estimated fair values of the assets acquired and liabilities assumed as of April 1, 2016 (in thousands):
    
Land and land improvements
 
$
14,208

Buildings and building improvements
 
74,253

Intangibles (1)
 
9,449

Cash assumed
 
11,861

Working capital, net
 
(267
)
Net assets upon acquisitions of 20% non-controlling interest and consolidation
 
$
109,504

 
  
FOOTNOTES:
(1) Intangibles were comprised of approximately $13.7 million, $3.1 million and $(7.4) million of in-place lease, above-market lease and below-market lease intangible assets (liabilities), respectively.

7.
Variable Interests and Unconsolidated Entities (continued):
The following summarizes the gain that resulted from the change of control in the unconsolidated equity method investment for the year ended December 31, 2016 (in thousands):
Fair value of new assets upon acquisition of 20% non-controlling interest and consolidation
 
$
109,504

Less: Investment in unconsolidated entity
 
(79,479
)
Gain on purchase of controlling interest of investment in unconsolidated entity
 
$
30,025


In October 2016, the Company completed the sale of these seven properties and recognized a loss on sale of real estate of approximately $0.8 million. The revenues and net income attributable to the Company's acquisition of the Intrawest Venture from April 2016 through October 2016, were approximately $9.4 million and $3.7 million (which includes $0.8 million loss on sale of real estate), respectively, for the year ended December 31, 2016. There were no acquisitions of unconsolidated entities in 2015 and 2014.
The following tables present financial information for the Company’s unconsolidated entities for the years ended December 31, 2016, 2015 and 2014 (in thousands):
Summarized operating data:
        
 
 
Year Ended December 31, 2016
 
 
Intrawest
Venture(1)
 
Revenues
 
$
4,743

 
Property operating expenses
 
(2,683
)
 
Depreciation and amortization
 
(784
)
 
Interest expense and other income (expense)
 
(379
)
 
Net income
 
$
897

 
Loss allocable to other venture partners(3)
 
$
(410
)
(4)  
Income allocable to the Company(3)
 
$
1,307

 
Amortization of capitalized costs
 
(17
)
 
Equity in earnings on unconsolidated entities
 
$
1,290

 
Distribution declared to the Company
 
$
1,423

 
Distributions received by the Company
 
$
1,074

 

 
 
Year Ended December 31, 2015
 
 
DMC
Partnership(2)
 
Intrawest
Venture
 
 
 
Total
Revenues
 
$
10,743

 
$
18,778

 
  
 
$
29,521

Property operating expenses
 
(173
)
 
(11,114
)
 
 
 
(11,287
)
Depreciation and amortization
 
(3,038
)
 
(4,160
)
 
 
 
(7,198
)
Interest expense and other income (expense)
 
(1,555
)
 
(1,328
)
 
 
 
(2,883
)
Net income
 
$
5,977

 
$
2,176

 
  
 
$
8,153

Income (loss) allocable to other venture partners(3)
 
$
3,477

 
$
(1,611
)
 
(4)  
 
$
1,866

Income allocable to the Company(3)
 
$
2,500

 
$
3,787

 
  
 
$
6,287

Amortization of capitalized costs
 
(25
)
 
(109
)
 
 
 
(134
)
Equity in earnings on unconsolidated entities
 
$
2,475

 
$
3,678

 
  
 
$
6,153

Distribution declared to the Company
 
$
3,698

 
$
7,218

 
  
 
$
10,916

Distributions received by the Company
 
$
6,558

 
$
6,529

 
  
 
$
13,087

 
7.
Variable Interests and Unconsolidated Entities (continued):
 
 
Year Ended December 31, 2014
 
 
DMC
Partnership
 
Intrawest
Venture
 
 
 
Total
Revenues
 
$
28,519

 
$
19,856

 
  
 
$
48,375

Property operating expenses
 
(776
)
 
(10,744
)
 
 
 
(11,520
)
Depreciation and amortization
 
(9,114
)
 
(6,005
)
 
 
 
(15,119
)
Interest expense
 
(8,175
)
 
(5,408
)
 
 
 
(13,583
)
Interest and other income (expense)
 
(35
)
 
132

 
  
 
97

Net income (loss)
 
$
10,419

 
$
(2,169
)
 
 
 
$
8,250

Income (loss) allocable to other venture partners(3)
 
$
1,602

 
$
(1,612
)
 
(4)  
 
$
(10
)
Income (loss) allocable to the Company(3)
 
$
8,817

 
$
(557
)
 
 
 
$
8,260

Amortization of capitalized costs
 
(298
)
 
(209
)
 
 
 
(507
)
Equity in earnings (loss) on unconsolidated entities
 
$
8,519

 
$
(766
)
 
 
 
$
7,753

Distribution declared to the Company
 
$
11,345

 
$
2,277

 
  
 
$
13,622

Distributions received by the Company
 
$
11,345

 
$
2,152

 
  
 
$
13,497

    
 
  
FOOTNOTES:
 
(1)
In April 2016, the Company acquired its co-venture partner's 20% interest in the Intrawest Venture. Amounts presented reflect activity for the period January 1, 2016 through March 31, 2016.
(2)
On April 29, 2015, the Company completed the sale of its interest in the DMC Partnership as described above. As such, the summarized operating data for the partnership is reported through April 29, 2015.
(3)
Income was allocated between the Company and its venture partners using the hypothetical liquidation book value (“HLBV”) method of accounting.
(4)
This amount represents the venture partner’s portion of interest expense on a loan which the partners made to the venture prior to the Company's acquisition of the partner's 20% interest in the Intrawest Venture.

Summarized balance sheet data
        
 
 
As of December 31, 2015
 
 
Intrawest Venture(1)
Real estate assets, net
 
$
66,493

Other assets
 
15,495

Mortgages and other notes payable
 
11,100

Other liabilities
 
16,552

Partners’ capital
 
54,336

Carrying amount of investment(2)
 
73,434

Company’s ownership percentage(2)
 
80.0
%
 
 
FOOTNOTES:
 
(1)
As described above, the Company acquired the remaining 20% interest in the Intrawest Venture in April 2016.
(2)
As of December 31, 2015, the Company’s share of partners’ capital determined under HLBV was approximately $71.4 million and the total difference between the carrying amount of the investment and the Company’s share of partners’ capital determined under HLBV was approximately $2.0 million.
 
In 2015, the Company contributed approximately $54.6 million to the Intrawest Venture and the Intrawest Venture paid off two of its mortgage loans of approximately $54.6 million, which were scheduled to mature in January and June 2015.