INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of our equity investments in unconsolidated partnerships as of December 31, 2014 and 2013:



	As of December 31,
(in thousands of dollars)	2014			2013
ASSETS:
Investments in real estate, at cost:
Retail properties	$	654,024		$	416,964
Construction in progress	41,919			2,298
Total investments in real estate	695,943			419,262
Accumulated depreciation	(190,100		)	(169,369		)
Net investments in real estate	505,843			249,893
Cash and cash equivalents	15,229			15,327
Deferred costs and other assets, net	37,274			19,474
Total assets	558,346			284,694
LIABILITIES AND PARTNERS’ EQUITY (DEFICIT):
Mortgage loans	383,190			398,717
Other liabilities	34,314			9,667
Total liabilities	417,504			408,384
Net equity (deficit)	140,842			(123,690		)
Partners’ share	74,663			(66,325		)
Company’s share	66,179			(57,365		)
Excess investment⁽¹⁾	8,747			8,837
Net investments and advances	$	74,926		$	(48,528	)

Investment in partnerships, at equity	$	140,882		$	15,963
Distributions in excess of partnership investments	(65,956		)	(64,491		)
Net investments and advances	$	74,926		$	(48,528	)


⁽¹⁾	Excess investment represents the unamortized difference between our investment and our share of the equity in the underlying net investment in the partnerships. The excess investment is amortized over the life of the properties, and the amortization is included in “Equity in income of partnerships.”

We record distributions from our equity investments up to an amount equal to the equity in income of partnerships as cash from operating activities. Amounts in excess of our share of the income in the equity investments are treated as a return of partnership capital and recorded as cash from investing activities.

The following table summarizes our share of equity in income of partnerships for the years ended December 31, 2014, 2013 and 2012:



	For the Year Ended December 31,
(in thousands of dollars)	2014			2013			2012
Real estate revenue	$	95,643		$	81,020		$	77,533
Expenses:
Operating expenses	(32,992		)	(24,104		)	(23,023		)
Interest expense	(21,805		)	(22,228		)	(22,573		)
Depreciation and amortization	(19,521		)	(14,401		)	(14,447		)
Total expenses	(74,318		)	(60,733		)	(60,043		)
Net income	21,325			20,287			17,490
Less: Partners’ share	(10,637		)	(10,096		)	(8,738		)
Company’s share	10,688			10,191			8,752
Amortization of excess investment	(119		)	(413		)	(414		)
Equity in income of partnerships	$	10,569		$	9,778		$	8,338

Acquisitions

In June 2014, we contributed $3.2 million, representing a 25% interest, to the partnership that is developing Gloucester

Premium Outlets in Gloucester Township, New Jersey. The partnership used our and our partners’ contribution to purchase the

land on which the property will be developed.

Dispositions

In December 2014, we sold our 50% interest in Whitehall Mall in Allentown, Pennsylvania for $14.9 million representing a capitalization rate of 7.0%, and we recorded a gain on sale of interests in real estate of $12.4 million. In connection with the sale of Whitehall Mall, our share of the mortgage loan secured by the property had a balance of $5.1 million that was assumed by the buyer at closing.

In July 2014, we entered into a 50/50 joint venture with Macerich to redevelop The Gallery. The results of operations of The Gallery have been recorded as an equity method investment after the July 29, 2014 transaction with Macerich (as further described in note 2).

Financing Activity of Unconsolidated Properties

Mortgage loans, which are secured by eight of the partnership properties (including two properties under development), are due in installments over various terms extending to the year 2023. Five of the mortgage loans bear interest at a fixed interest rate and three of the mortgage loans bear interest at a variable interest rate. The balances of the fixed interest rate mortgage loans have interest rates that range from 5.00% to 5.88% and had a weighted average interest rate of 5.51% at December 31, 2014. The variable interest rate mortgage loans have interest rates that range from 1.66% to 3.26% and had a weighted average interest rate of 3.18% at December 31, 2014. The weighted average interest rate of all partnership mortgage loans was 5.08% at December 31, 2014. The liability under each mortgage loan is limited to the partnership that owns the particular property. Our proportionate share, based on our respective partnership interest, of principal payments due in the next five years and thereafter is as follows:



	Company’s Proportionate Share
(in thousands of dollars) For the Year Ending December 31,	Principal Amortization		Balloon Payments		Total		Property Total
2015	$	3,263	$	35,221	$	38,484	$	77,015
2016	2,805		—		2,805		5,658
2017	2,925		3,283		6,208		14,085
2018	3,030		402		3,432		7,669
2019	3,202		—		3,202		6,404
2020 and thereafter	5,998		130,181		136,179		272,359
	$	21,223	$	169,087	$	190,310	$	383,190

We have a 50% partnership interest in Lehigh Valley Associates LP, the owner of Lehigh Valley Mall, which is a significant unconsolidated subsidiary, and that is included in the amounts above. Summarized financial information as of or for the years ended December 31, 2014 and 2013 for this property, which is accounted for by the equity method, is as follows:



	As of or for the year ended December 31,
(in thousands of dollars)	2014		2013
Total assets	$	51,703	$	55,592
Mortgage payable	131,394		133,542
Revenues	36,605		35,628
Property operating expenses	10,027		9,817
Interest expense	7,839		7,962
Net income	14,932		14,515
PREIT’s share of equity in income of partnership	7,466		7,258

Mortgage Loan Activity—Unconsolidated Properties

The following table presents the mortgage loans secured by our unconsolidated properties entered into since January 1, 2013:



Financing Date	Property	Amount Financed or Extended (in millions of dollars)		Stated Interest Rate	Maturity
2014 Activity:
December	Gloucester Premium Outlets	$	1.6	LIBOR plus 1.50%	June 2018


⁽¹⁾	The unconsolidated entity that owns Gloucester Premium Outlets entered into this construction mortgage loan. The construction mortgage loan has a maximum availability of $90.0 million, of which $88.4 million is available as of December 31, 2014 (after minimum construction thresholds are achieved). Our interest in the unconsolidated entity is 25%.