Note 7 - Investment In and Advances to Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Investments and Advances In Real Estate Joint Ventures [Text Block]

7.    Investment in and Advances toReal Estate Joint Ventures:

The Company has investments in and advances to various real estate joint ventures. These joint ventures are engaged primarily in the operation of shopping centers which are either owned or held under long-term operating leases. The Company and the joint venture partners have joint approval rights for major decisions, including those regarding property operations. As such, the Company holds noncontrolling interests in these joint ventures and accounts for them under the equity method of accounting. The table below presents unconsolidated joint venture investments for which the Company held an ownership interest at December 31, 2019 and 2018 (in millions, except number of properties):

			The Company's Investment
	Ownership		as of December 31,
Joint Venture	Interest		2019		2018
Prudential Investment Program (1) (2)		15.0%	$	169.5	$	175.2
Kimco Income Opportunity Portfolio (“KIR”) (2)		48.6%		175.0		167.2
Canada Pension Plan Investment Board (“CPP”) (2)		55.0%		151.7		135.0
Other Joint Venture Programs (3)		Various		81.9		93.5
Total*			$	578.1	$	570.9

* Representing 98 property interests and 21.3 million square feet of GLA, as of December 31, 2019, and 109 property interests and 23.2 million square feet of GLA, as of December 31, 2018.

(1) Represents four separate joint ventures, with four separate accounts managed by Prudential Global Investment Management.  One of these ventures disposed of all its properties during 2019.

(2) The Company manages these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees.

(3) During March 2018, the Company sold a portion of its investment in an operating property to its partner and amended the partnership agreement to provide for joint control of the entity. As a result of the amendment, the Company no longer consolidates the entity. As of the date of deconsolidation, the Company had an investment in this unconsolidated property of $62.4 million. 

The table below presents the Company’s share of net income for these investments which is included in Equity in income of joint ventures, net on the Company’s Consolidated Statements of Income (in millions):

	Year Ended December 31,
	2019		2018		2017
Prudential Investment Program (1)	$	10.4	$	15.2	$	13.0
KIR		50.3		38.7		36.7
CPP		5.8		5.1		7.2
Other Joint Venture Programs (2) (3) (4) (5)		5.7		12.6		3.9
Total	$	72.2	$	71.6	$	60.8

(1) During the year ended December 31, 2019, the Prudential Investment Program recognized an impairment charge on a property of $29.9 million, of which the Company’s share was $3.7 million.

(2) During the year ended December 31, 2018, a joint venture investment distributed cash proceeds resulting from the refinancing of an existing loan of which the Company’s share was $3.6 million. This distribution was in excess of the Company’s carrying basis in this joint venture investment and to that extent was recognized as income.

(3) During the year ended December 31, 2018, a joint venture recognized an impairment charge related to the pending foreclosure of a property, of which the Company’s share was $5.2 million.

(4) During the year ended December 31, 2017, the Company recognized a cumulative foreign currency translation loss of $4.8 million due to the substantial liquidation of the Company’s investments in Canada during 2017.

(5) During the year ended December 31, 2017, a joint venture recognized an impairment charge related to the pending sale of a property, of which the Company’s share was $3.4 million.

During 2019, certain of the Company’s real estate joint ventures disposed of nine operating properties, in separate transactions, for an aggregate sales price of $247.4 million. These transactions resulted in an aggregate net gain to the Company of $14.4 million, for the year ended December 31, 2019.

During 2018, certain of the Company’s real estate joint ventures disposed of 11 operating properties, in separate transactions, for an aggregate sales price of $213.5 million. These transactions resulted in an aggregate net gain to the Company of $18.5 million, for the year ended December 31, 2018.

During 2017, certain of the Company’s real estate joint ventures disposed of or transferred interest to joint venture partners in 13 operating properties and a portion of one property, in separate transactions, for an aggregate sales price of $180.8 million. These transactions resulted in an aggregate net gain to the Company of $7.5 million, for the year ended December 31, 2017. In addition, during 2017, the Company acquired a controlling interest in three operating properties from certain joint ventures, in separate transactions, with an aggregate gross fair value of $320.1 million. 

The table below presents debt balances within the Company’s unconsolidated joint venture investments for which the Company held noncontrolling ownership interests at December 31, 2019 and 2018 (dollars in millions):

	December 31, 2019							December 31, 2018
Joint Venture	Mortgages and Notes Payable, Net		Weighted Average Interest Rate			Weighted Average Remaining Term (months)*		Mortgages and Notes Payable, Net		Weighted Average Interest Rate			Weighted Average Remaining Term (months)*
Prudential Investment Program	$	538.1		3.46	%		46.8	$	572.6		4.29	%		49.0
KIR		556.0		4.39	%		28.4		651.4		4.43	%		40.4
CPP		84.8		3.25	%		42.0		84.4		3.85	%		54.0
Other Joint Venture Programs		415.2		3.87	%		80.9		474.2		4.26	%		78.6
Total	$	1,594.1						$	1,782.6

* Average remaining term includes extensions

KIR –

The Company holds a 48.6% noncontrolling limited partnership interest in KIR and has a master management agreement whereby the Company performs services for fees relating to the management, operation, supervision and maintenance of the joint venture properties.

The Company’s equity in income from KIR for the year ended December 31, 2019 exceeded 10% of the Company’s income from continuing operations before income taxes; as such the Company is providing summarized financial information for KIR as follows (in millions):

	December 31,
	2019		2018
Assets:
Real estate, net	$	788.7	$	848.7
Other assets		83.6		98.5
Total Assets	$	872.3	$	947.2
Liabilities and Partners’/Members’ Capital:
Notes payable, net	$	-	$	73.0
Mortgages payable, net		556.0		578.5
Other liabilities		16.3		20.0
Members’ capital		300.0		275.7
Total Liabilities and Partners'/Members Capital	$	872.3	$	947.2

	Year Ended December 31,
	2019			2018			2017
Revenues	$	193.6		$	197.2		$	198.9
Operating expenses		(51.0	)		(53.3	)		(55.5	)
Depreciation and amortization		(38.0	)		(42.2	)		(39.4	)
Gain on sale of operating properties		32.2			13.5			9.0
Interest expense		(28.2	)		(33.3	)		(35.3	)
Other expense, net		(1.1	)		(1.5	)		(1.5	)
Net income	$	107.5		$	80.4		$	76.2

Summarized financial information for the Company’s investment in and advances to all other real estate joint ventures is as follows (in millions):

	December 31,
	2019		2018
Assets:
Real estate, net	$	2,596.9	$	2,725.4
Other assets		140.3		128.5
Total Assets	$	2,737.2	$	2,853.9
Liabilities and Partners’/Members’ Capital:
Notes payable, net	$	199.8	$	199.7
Mortgages payable, net		838.3		931.4
Other liabilities		59.5		42.4
Noncontrolling interests		17.7		16.8
Partners’/Members’ capital		1,621.9		1,663.6
Total Liabilities and Partners'/Members Capital	$	2,737.2	$	2,853.9

	Year Ended December 31,
	2019			2018			2017
Revenues	$	317.6		$	309.1		$	317.1
Operating expenses		(99.4	)		(92.8	)		(95.1	)
Impairment charges		(39.5	)		(20.7	)		(12.8	)
Depreciation and amortization		(76.9	)		(80.3	)		(76.8	)
Gain on sale of operating properties		15.0			46.8			17.0
Interest expense		(47.1	)		(46.8	)		(46.6	)
Other (expense)/income, net		(14.2	)		(2.9	)		(1.5	)
Net income	$	55.5		$	112.4		$	101.3

Other liabilities included in the Company’s accompanying Consolidated Balance Sheets include accounts with certain real estate joint ventures totaling $3.5 million and $2.5 million at December 31, 2019 and 2018, respectively. The Company has varying equity interests in these real estate joint ventures, which may differ from their proportionate share of net income or loss recognized in accordance with GAAP.

The Company’s maximum exposure to losses associated with its unconsolidated joint ventures is primarily limited to its carrying value in these investments. Generally, such investments contain operating properties and the Company has determined these entities do not contain the characteristics of a VIE. As of December 31, 2019 and 2018, the Company’s carrying value in these investments was $578.1 million and $570.9 million, respectively.