INVESTMENTS IN PARTNERSHIPS

The following table presents summarized financial information of the equity investments in our unconsolidated partnerships as of September 30, 2015 and December 31, 2014:



(in thousands of dollars)	As of September 30, 2015			As of December 31, 2014
ASSETS:
Investments in real estate, at cost:
Operating properties	$	753,001		$	654,024
Construction in progress	5,678			41,919
Total investments in real estate	758,679			695,943
Accumulated depreciation	(194,114		)	(190,100		)
Net investments in real estate	564,565			505,843
Cash and cash equivalents	37,041			15,229
Deferred costs and other assets, net	41,061			37,274
Total assets	642,667			558,346
LIABILITIES AND PARTNERS’ INVESTMENT:
Mortgage loans payable	438,061			383,190
Other liabilities	32,470			34,314
Total liabilities	470,531			417,504
Net investment	172,136			140,842
Partners’ share	89,764			74,663
PREIT’s share	82,372			66,179
Excess investment⁽¹⁾	7,978			8,747
Net investments and advances	$	90,350		$	74,926

Investment in partnerships, at equity	$	154,588		$	140,882
Distributions in excess of partnership investments	(64,238		)	(65,956		)
Net investments and advances	$	90,350		$	74,926

_________________________


⁽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 as cash from operating activities up to an amount equal to the equity in income of partnerships. 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 three and nine months ended September 30, 2015 and 2014:



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2015			2014			2015			2014
Real estate revenue	$	25,432		$	25,684		$	76,285		$	67,191
Operating expenses:
Property operating expenses	(8,768		)	(8,659		)	(28,819		)	(21,508		)
Interest expense	(5,211		)	(5,483		)	(15,653		)	(16,410		)
Depreciation and amortization	(6,508		)	(4,972		)	(18,806		)	(12,035		)
Total expenses	(20,487		)	(19,114		)	(63,278		)	(49,953		)
Net income	4,945			6,570			13,007			17,238
Less: Partners’ share	(2,647		)	(3,283		)	(6,667		)	(8,614		)
PREIT’s share	2,298			3,287			6,340			8,624
Amortization of excess investment	87			(81		)	159			(232		)
Equity in income of partnerships	$	2,385		$	3,206		$	6,499		$	8,392

Financing Activity

In September 2015, the unconsolidated partnership that owns Springfield Mall in Springfield, Pennsylvania entered into a $65.0 million mortgage loan secured by the property with a fixed interest rate of 4.45% and a term of 10 years with no options to extend. The proceeds were used to repay the existing $61.7 million mortgage loan plus accrued interest. We received $1.0 million of proceeds as a distribution in connection with the financing.

Disposition

In July 2015, we sold our entire 50% interests in the Springfield Park shopping center in Springfield, Pennsylvania for $20.2 million, representing a capitalization rate of 7.0%, and recognized a gain of $12.0 million. In connection with our interest in the property, we had an ongoing obligation to sublet approximately 10,100 square feet of space of a tenant at the property, which we transferred as part of the transaction. In connection with the sale, a mortgage loan of approximately $9.0 million, of which our share was 50%, was assumed by the buyer of our interests. We are providing limited property management services to the shopping center for a limited term for nominal consideration. We divested $0.1 million of goodwill in connection with this transaction. We used the net proceeds from the transaction for general corporate purposes. See note 8 regarding the related party aspect of this transaction.

Lehigh Valley Mall

We have a 50% partnership interest in Lehigh Valley Associates LP, the owner of the substantial majority of Lehigh Valley Mall, which was considered to be a significant unconsolidated subsidiary as of December 31, 2014, and which is included in the amounts above. Summarized balance sheet information as of September 30, 2015 and December 31, 2014 and summarized statement of operations information for the three and nine months ended September 30, 2015 and 2014 for this entity, which is accounted for using the equity method, is as follows:



	As of
(in thousands of dollars)	September 30, 2015		December 31, 2014
Summarized balance sheet information
Total assets	$	52,668	$	51,703
Mortgage loan payable	129,698		131,394



	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands of dollars)	2015			2014			2015			2014
Summarized statement of operations information
Revenue	$	8,903		$	9,037		$	26,807		$	27,133
Property operating expenses	(2,200		)	(2,297		)	(7,219		)	(7,516		)
Interest expense	(1,923		)	(1,956		)	(5,794		)	(5,891		)
Net income	3,964			3,984			11,284			11,066
PREIT’s share of equity in income of partnership	1,982			1,992			5,642			5,533