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Investments in Unconsolidated Entities

12 Months Ended

Jan. 31, 2012

Investments in Unconsolidated Entities [Abstract]

C. Investments in Unconsolidated Entities

Investments in unconsolidated entities include investments in and advances to unconsolidated entities and cash distributions and losses in excess of investments in unconsolidated entities that the Company does not control and/or is not deemed to be the primary beneficiary, which are accounted for under the equity method of accounting.

The following is a reconciliation of members’ and partners’ equity to the Company’s carrying value:


	January 31,

	2012			2011

	(in thousands)

Members’ and partners’ equity, as below	$	945,129		$	587,164
Equity of other members and partners		790,618			616,640


Company’s investment in partnerships		154,511			(29,476	)
Basis differences⁽¹⁾		79,913			76,634
Advances to and on behalf of affiliates		94,947			93,859

Total Investments in Unconsolidated Entities	$	329,371		$	141,017


Assets - Investments in and advances to unconsolidated entities	$	609,079		$	431,509
Liabilities - Cash distributions and losses in excess of investments in unconsolidated entities		(279,708	)		(290,492	)

Total Investments in Unconsolidated Entities	$	329,371		$	141,017

(1)

This amount represents the aggregate difference between the Company’s historical cost basis and the basis reflected at the equity method venture level, which is typically amortized over the life of the related assets and liabilities. Basis differences occur from certain acquisition, transaction and other costs, as well as other-than-temporary impairments that are not reflected in the net assets of the equity method venture.

Summarized financial information for the equity method investments, including those shown separately later in this Note C, is as follows:


	(Combined 100%) January 31,
	2012			2011
	(in thousands)

Balance Sheet:
Real Estate
Completed rental properties	$	7,287,539		$	5,514,041
Projects under construction and development		287,738			174,106
Land held for development and sale ⁽¹⁾		224,224			272,930
Total Real Estate		7,799,501			5,961,077
Less accumulated depreciation		(1,257,091	)		(944,968	)
Real Estate, net		6,542,410			5,016,109
Cash and equivalents		149,702			109,246
Restricted cash - military housing bond funds		284,641			384,584
Other restricted cash and escrowed funds		274,201			206,778
Other assets		756,564			536,246
Operating property assets held for sale ⁽³⁾		-			67,190
Total Assets	$	8,007,518		$	6,320,153
Mortgage debt and notes payable, nonrecourse ⁽²⁾	$	6,551,891		$	5,301,900
Other liabilities		510,498			369,871
Liabilities of operating property held for sale ⁽³⁾		-			61,218
Members’ and partners’ equity		945,129			587,164
Total Liabilities and Members’ and Partners’ Equity	$	8,007,518		$	6,320,153

(1)

The amount at January 31, 2012 includes $181,749 of land held by unconsolidated entities in which the Company is currently reviewing its options to divest its portion of land held by these unconsolidated entities.

(2)

The amount at January 31, 2012 includes $35,551 of mortgage debt and notes payable, nonrecourse related to the land held by the unconsolidated entities discussed in footnote (1).

(3)

Represents assets and liabilities of Metropolitan Lofts, an unconsolidated apartment community in Los Angeles, California, which was disposed of February 1, 2011.

		$0,000,00			$0,000,00			$0,000,00
	(Combined 100%) Years Ended January 31,
	2012			2011			2010
	(in thousands)

Operations:
Revenues	$	1,051,766		$	916,942		$	818,875
Operating expenses		(573,060	)		(529,975	)		(528,408	)
Interest expense including early extinguishment of debt		(323,667	)		(264,548	)		(217,131	)
Impairment of real estate⁽¹⁾		-			(1,457	)		-
Depreciation and amortization		(203,319	)		(167,731	)		(145,097	)
Interest and other income		14,757			15,782			13,129
Loss from continuing operations	$	(33,523	)	$	(30,987	)	$	(58,632	)
Discontinued operations:
Operating earnings (loss) from rental properties		-			1,842			(2,007	)
Gain on disposition of rental properties ⁽²⁾		-			28,289			-
Discontinued operations subtotal		-			30,131			(2,007	)
Net loss (pre-tax)	$	(33,523	)	$	(856	)	$	(60,639	)
Company’s portion of net earnings (loss) (pre-tax)		8,580			42,352			(28,458	)
Impairment of investments in unconsolidated entities⁽¹⁾		(82,186	)		(71,716	)		(36,356	)
Gain (loss) on disposition of equity method investments⁽²⁾		12,567			(830	)		49,761
Net loss (pre-tax) from unconsolidated entities	$	(61,039	)	$	(30,194	)	$	(15,053	)

(1)

The following tables show the detail of the impairments noted above:

	$000,000,0000		$000,000,0000		$000,000,0000		$000,000,0000
		Years Ended January 31,
		2012		2011		2010
		(in thousands)
Impairment of real estate:
Old Stone Crossing at Caldwell Creek (Mixed-Use Land Development)	Charlotte, North Carolina	$	-	$	1,457	$	-
Company’s portion of impairment of real estate		$	-	$	743	$	-
Impairment of investments in unconsolidated entities:
Equity method investments in land entities	Various	$	41,902	$	-	$	-
Specialty Retail Centers:
Village at Gulfstream Park	Hallandale Beach, Florida		35,674		35,000		-
Metreon	San Francisco, California		-		4,595		-
Commercial land and development rights	Cleveland, Ohio		4,610		-		-
Four Museum Park properties at Central Station	Chicago, Illinois		-		18,311		-
Office Buildings:
818 Mission Street	San Francisco, California		-		4,018		-
Bulletin Building	San Francisco, California		-		3,543		-
Millender Center	Detroit, Michigan		-		-		10,317
Pittsburgh Peripheral (Commercial Group Land Project)	Pittsburgh, Pennsylvania		-		-		7,217
Uptown Apartments	Oakland, California		-		-		6,781
Classic Residence by Hyatt (Supported-Living Apartments)	Yonkers, New York		-		-		3,152
Other			-		6,249		8,889
Total impairment of investments in unconsolidated entities		$	82,186	$	71,716	$	36,356
Total impairment of unconsolidated entities		$	82,186	$	72,459	$	36,356

(2)

Upon disposition, investments accounted for on the equity method are not classified as discontinued operations; therefore, gains or losses on the disposition of these properties are reported in continuing operations. The following table shows the detail of the gains and losses on the disposition of unconsolidated entities:

	$000,000,0000		$000,000,0000		$000,000,0000			$000,000,0000
		Years Ended January 31,
		2012		2011			2010
		(in thousands)
Gain on disposition of rental properties:
Millender Center (hotel, parking, office and retail)	Detroit, Michigan	$	-	$	17,291		$	-
Woodbridge Crossing (Specialty Retail Center)	Woodbridge, New Jersey		-		6,443			-
Pebble Creek (Apartment Community)	Twinsburg, Ohio		-		4,555			-
Gain on disposition of rental properties		$	-	$	28,289		$	-
Company’s portion of gain on disposition of rental properties		$	-	$	24,291		$	-
Gain (loss) on disposition of equity method investments:
Apartment Communities:
Metropolitan Lofts	Los Angeles, California	$	9,964	$	-		$	-
Twin Lake Towers	Denver, Colorado		2,603		-			-
Clarkwood	Warrensville Heights, Ohio		-		-			6,983
Granada Gardens	Warrensville Heights, Ohio		-		-			6,577
Boulevard Towers	Amherst, New York		-		-			4,498
Sale of three Classic Residence by Hyatt	Chevy Chase, Maryland,
(Supported-Living Apartments)	Teaneck, New Jersey and Yonkers, New York		-		-			31,703
Other			-		(830	)		-
Total gain (loss) on disposition of equity method investments, net		$	12,567	$	(830	)	$	49,761

For the year ended January 31, 2012, Brooklyn Basketball Holdings, LLC (“BBH”), an equity method investment that owns The Nets was deemed a significant subsidiary. Summarized financial information for BBH is as follows:


	January 31,

	2012			2011

	(in thousands)

Balance Sheet:
Current assets	$	15,955		$	12,271
Non-current assets		223,112			227,155


Total Assets	$	239,067		$	239,426

Current liabilities	$	126,457		$	110,028
Non-current liabilities		123,809			107,151
Members’ equity (deficit)		(11,199	)		22,247


Total Liabilities and Members’ Equity (Deficit)	$	239,067		$	239,426


	Year Ended January 31,			May 12, 2010 through January 31,

	2012			2011

	(in thousands)

Operations:
Revenues	$	54,593		$	31,601
Operating expenses		(93,765	)		(54,246	)
Interest expense, net		(13,906	)		(7,981	)
Depreciation and amortization		(7,999	)		(3,476	)


Net loss (pre-tax)	$	(61,077	)	$	(34,102	)


Company’s portion of net loss (pre-tax)	$	(26,814	)	$	-	⁽¹⁾

(1)

On May 12, 2010, entities controlled by Mikhail Prokhorov (“MP Entities”) acquired 80% of the Nets, at which time BBH was formed. Losses from May 12, 2010 through January 31, 2011 were allocated solely to the MP Entities.