Investments in Unconsolidated Entities

12 Months Ended

Dec. 31, 2022

Investments in Unconsolidated Entities.

Investments in Unconsolidated Entities

8. Investments in Unconsolidated Entities

As of December 31, 2022 and 2021, our investments in unconsolidated entities accounted for under the equity method presented in our consolidated balance sheets consist of the following (in thousands):

	Year	Metropolitan			Balance as of		Balance as of
Entity	Entity Formed	Area of Properties	% Ownership			December 31, 2022		December 31, 2021
Digital Core REIT (DCRU)	2021	U.S. / Canada	35	%	$	328,584	$	343,317
Ownership interest in DCRU operating properties	2021	U.S. / Canada / Frankfurt	10	%		136,431		144,050
Ascenty	2019	Brazil / Chile / Mexico	51	%		606,141		553,031
Mapletree	2019	Northern Virginia	20	%		160,200		172,465
Mitsubishi	Various	Osaka / Tokyo	50	%		453,420		401,509
Lumen	2012	Hong Kong	50	%		68,821		68,854
Other	Various	U.S. / India / Nigeria	Various			237,829		124,463
Total					$	1,991,426	$	1,807,689

DCREIT – Digital Core REIT is a standalone real estate investment trust under Singapore law, which is publicly-traded on the Singapore Exchange under the ticker symbol “DCRU”. Digital Core REIT owns 11 operating data center properties. The Company’s ownership interest in the units of DCRU, as well as its ownership interest in certain operating properties of DCRU are collectively referred to as the Company’s investment in DCREIT.

As of December 31, 2022, the Company held a 35% interest in the DCRU and separately owns a 10% direct retained interest in the underlying North American operating properties and a 75% direct retained interest in the underlying German operating property. The Company’s 35% interest in DCRU consists of 396 million units and 390 million units as of December 31, 2022 and December 31, 2021, respectively. Based on the closing price per unit of $0.55 and $1.16 as of December 31, 2022 and 2021, the fair value of the units the Company owns in DCRU was approximately $218 million and $453 million as of December 31, 2022 and 2021, respectively.

These values do not include the value of the Company’s 10% interest in the North American operating properties and 75% interest in the German operating property of DCRU, because the associated ownership interests are not publicly traded. The Company accounts for its investment in DCREIT as an equity method investment (and not at fair value) based on the significant influence it is able to exert on DCREIT. The Company determined that the decline in fair value of the investment in DCRU as compared to the Company’s book basis as of December 31, 2022 was temporary in nature.

Pursuant to contractual agreements with DCRU and its operating properties, the Company will earn fees for asset and property management services as well as fees for aiding in future acquisition, disposition and development activities. Certain of these fees are payable to the Company in the form of additional units in DCRU or in cash. During the years ended December 31, 2022 and 2021, the Company earned fees pursuant to these contractual agreements of approximately $10.6 million and $0.5 million, respectively, which is recorded as fee income and other on the consolidated income statement.

Ascenty – The Company’s ownership percentage in Ascenty includes an approximate 2% interest held by one of the Company’s non-controlling interest holders. This 2% interest had a carrying value of approximately $18.0 million and $20.9 million as of December 31, 2022 and December 31, 2021, respectively. Ascenty is a variable interest entity (“VIE”) and the Company’s maximum exposure to loss related to this VIE is limited to our equity investment in the entity.

PREI ® – In the third quarter of 2021, the existing unconsolidated partnership between the Company and PGIM Real Estate (the “PGIM Joint Venture”), completed the sale of a portfolio of 10 data centers in North America for $581 million. PGIM Real Estate owned an 80% interest and the Company owned a 20% interest in the partnership. We recognized a gain of approximately $64 million from the sale of the data centers. This gain is reflected in equity in earnings (loss) of unconsolidated entities in our consolidated income statements. In addition, we received a promote in the amount of $19 million related to the partnership exceeding certain investor return thresholds over the life of the partnership, which is included in fee income and other in our consolidated income statements.

Summarized Financial Information of Investments in Unconsolidated Entities

The subsequent tables provide summarized financial information for all of our investments in unconsolidated entities accounted for using the equity method. Amounts are shown in thousands.

									Net		Net
	Total		Total						Operating		Income
December 31, 2022	Assets		Liabilities		Equity		Revenues		Income		(Loss)
Unconsolidated entities
Ascenty	$	2,410,845	$	1,209,852	$	1,200,993	$	254,884	$	155,847	$	(35,726)
Mitsubishi		1,441,935		495,394		946,541		175,833		78,859		24,768
Digital Core REIT		1,602,725		551,088		1,051,636		111,408		72,937		(19,055)
Lumen		148,323		10,681		137,642		25,572		15,211		4,909
Mapletree		861,290		22,289		839,001		122,775		67,003		(7,736)
Other		613,279		221,679		391,600		37,123		19,998		(5,018)
Total Unconsolidated entities	$	7,078,397	$	2,510,983	$	4,567,413	$	727,595	$	409,855	$	(37,858)
Our investment in and share of equity in earnings of unconsolidated entities					$	1,991,426					$	(13,497)

									Net		Net
	Total		Total						Operating		Income
December 31, 2021	Assets		Liabilities		Equity		Revenues		Income		(Loss)
Unconsolidated entities
Ascenty	$	2,079,401	$	1,046,079	$	1,033,322	$	204,696	$	128,827	$	(41,461)
Mitsubishi		1,376,763		537,581		839,182		168,203		88,462		31,125
Digital Core REIT		1,440,500		350,000		1,090,500		8,184		5,844		(4,648)
Lumen		148,576		10,868		137,708		25,541		15,506		2,718
Mapletree		925,190		24,865		900,325		111,010		65,701		(9,825)
Other		440,694		190,996		249,698		59,881		36,427		233,298
Total Unconsolidated entities	$	6,411,124	$	2,160,389	$	4,250,735	$	577,515	$	340,767	$	211,207
Our investment in and share of equity in loss of unconsolidated entities					$	1,807,689					$	62,283

									Net		Net
	Total		Total						Operating		Income
December 31, 2020	Assets		Liabilities		Equity		Revenues		Income		(Loss)
Unconsolidated entities
Ascenty	$	1,862,402	$	833,801	$	1,028,601	$	165,680	$	105,040	$	(191,161)
Mitsubishi		968,957		358,749		610,208		154,114		83,113		43,746
Lumen		181,464		8,264		173,200		25,006		14,765		5,581
Mapletree		985,900		38,140		947,760		106,966		66,062		(11,473)
Other		604,215		421,349		182,866		83,475		57,674		18,210
Total Unconsolidated entities	$	4,602,938	$	1,660,303	$	2,942,635	$	535,241	$	326,654	$	(135,097)
Our investment in and share of equity in earnings of unconsolidated entities					$	1,148,158					$	(57,629)

The amounts reflected in the previous tables on this topic are based on the historical financial information of the respective individual entities and have not been adjusted to show only the portion that is owned by the Company. The debt of our unconsolidated entities generally is non-recourse to us, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.