Consolidated Entities

As of December 31, 2013, the Company had ownership interests of 67% in various limited liability companies which owned nine shopping centers. These nine shopping centers were previously classified as held for sale at December 31, 2013 and were sold during second quarter 2014. The operations for the periods presented are classified on the consolidated statements of operations and comprehensive income as discontinued operations for all periods presented. These entities were considered variable interest entities (“VIEs”) as defined in ASC 810, and the Company was considered the primary beneficiary of each of these entities. Therefore, these entities were consolidated by the Company. The entities' agreements contained put/call provisions which granted the right to the outside owners and the Company to require these entities to redeem the ownership interests of the outside owners during future periods. Because the outside ownership interests were subject to a put/call arrangement requiring settlement for a fixed amount, these entities were treated as 100% owned subsidiaries by the Company with the amount of $47,762 as of December 31, 2013 and $0 as of September 30, 2014 reflected as a financing and included within other liabilities classified as held for sale in the accompanying consolidated financial statements. Interest expense was recorded on these liabilities in an amount generally equal to the preferred return due to the outside owners as provided in the entities' agreements.

During the fourth quarter 2013, the Company entered into two joint ventures to each develop a lodging property. The Company has ownership interests of 75% in each joint venture. These entities are considered VIEs as defined in FASB ASC 810 because the entities do not have enough equity to finance their activities without additional subordinated financial support. The Company determined that it has the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance, as well as the obligation to absorb losses of the VIEs that could potentially be significant to the VIEs or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As such, the Company has a controlling financial interest and is considered the primary beneficiary of each of these entities. Therefore, these entities are consolidated by the Company.

For the VIEs where the Company is the primary beneficiary, the following are the liabilities of the consolidated VIEs which are not recourse to the Company, and the assets that can be used only to settle those obligations.



	As of September 30, 2014		December 31, 2013
Net investment properties	$27,723		$123,121
Other assets	233		8,766
Total assets	27,956		131,887
Mortgages, notes and margins payable	(13,973	)	(77,873	)
Other liabilities	(3,902	)	(49,904	)
Total liabilities	(17,875	)	(127,777	)
Net assets	$10,081		$4,110

Unconsolidated Entities

The entities listed below are owned by the Company and other unaffiliated parties in joint ventures. Net income, distributions and capital transactions for these properties are allocated to the Company and its joint venture partners in accordance with the respective partnership agreements. Refer to the Company’s Form 10-K for the year ended December 31, 2013 for details of each unconsolidated entity.

These entities are not consolidated by the Company and the equity method of accounting is used to account for these investments. Under the equity method of accounting, the net equity investment of the Company and the Company’s share of net income or loss from the unconsolidated entity are reflected in the consolidated balance sheets and the consolidated statements of operations and comprehensive income.



Entity	Description	Ownership %	Investment at September 30, 2014	Investment at December 31, 2013
Cobalt Industrial REIT II	Industrial portfolio	36%	$72,463	$83,306
Brixmor/IA JV, LLC	Retail Shopping Centers	(a)	60,960	77,551
IAGM Retail Fund I, LLC	Retail Shopping Centers	55%	110,102	90,509
Other Unconsolidated Entities (b)	Various real estate investments	Various	5,340	12,552
			$248,865	$263,918


(a)	The Company has a preferred membership interest and is entitled to a 11% preferred dividend in Brixmor/IA JV, LLC. On September 11, 2014, the joint venture partner gave notice of its intent to purchase the Company's interest in the joint venture. The transaction is expected to close December 6, 2014.

(b)

On February 21, 2014, the Company purchased its partners' interest in one joint venture, which resulted in the Company obtaining control of the venture. Therefore, as of September 30, 2014, the Company consolidated this entity, recorded the assets and liabilities of the joint venture at fair value, and recorded a gain of $4,509 on the purchase of this investment during the nine months ended September 30, 2014.

For the three months ended September 30, 2014 and 2013, the Company recorded $0 and $5,528 of impairment in its unconsolidated entities, respectively. For the nine months ended September 30, 2014 and 2013, the Company recorded $0 and $6,532 of impairment in its unconsolidated entities, respectively.

Combined Financial Information

The following table presents the combined condensed financial information for the Company’s investment in unconsolidated entities.



	September 30, 2014		December 31, 2013
Assets:
Real estate assets, net of accumulated depreciation	$1,513,473		$	1,558,312
Other assets	261,235		272,810
Total Assets	1,774,708		1,831,122
Liabilities and Equity:
Mortgage debt	1,075,711		1,135,630
Other liabilities	103,382		96,217
Equity	595,615		599,275
Total Liabilities and Equity	$1,774,708		$1,831,122
Company’s share of equity	$263,316		$278,745
Net excess of cost of investments over the net book value of underlying net assets (net of accumulated depreciation of $1,168 and $783, respectively)	(14,451	)	(14,827		)
Carrying value of investments in unconsolidated entities	$248,865		$263,918



	Three Months Ended					Nine Months Ended
	September 30, 2014			September 30, 2013		September 30, 2014			September 30, 2013
Revenues	$	48,036		$	57,566	$	148,760		$	168,863
Expenses:
Interest expense and loan cost amortization	6,713			12,399		31,718			38,344
Depreciation and amortization	23,215			18,590		56,978			51,438
Operating expenses, ground rent and general and administrative expenses	22,602			19,098		60,678			55,121
Total expenses	52,530			50,087		149,374			144,903
Net (loss) income	$	(4,494	)	$	7,479	$	(614	)	$	23,960
Company’s share of:
Net income, net of excess basis depreciation of $129 and $125, and $385 and $400, respectively	$	(2,089	)	$	3,000	$	334		$	11,044

The unconsolidated entities had total third party debt of $1,075,711 at September 30, 2014 that matures as follows:



Year	Amount
2014	$44,147
2015	16,120
2016	19,500
2017	200,119
2018	318,028
Thereafter	477,797
	$1,075,711

Of the total outstanding debt, approximately $23,000 is recourse to the Company. It is anticipated that the joint ventures will be able to repay or refinance all of their debt on a timely basis.