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

12 Months Ended

Dec. 31, 2022

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

7. Investment in and Advances to Real 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 Company manages certain of these joint venture investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, asset management fees and construction management fees. The table below presents unconsolidated joint venture investments for which the Company held an ownership interest at December 31, 2022 and 2021 (in millions, except number of properties):

	Noncontrolling		The Company's Investment
	Ownership Interest		As of December 31,
Joint Venture	As of December 31, 2022		2022		2021
Prudential Investment Program		15.0%	$	153.6	$	163.0
Kimco Income Opportunity Portfolio (“KIR”) (1)		52.1%		281.5		186.0
Canada Pension Plan Investment Board (“CPP”)		55.0%		190.8		165.1
Other Institutional Joint Ventures (2)		Various		256.8		281.8
Other Joint Venture Programs		Various		208.9		211.0
Total*			$	1,091.6	$	1,006.9

* Representing 111 property interests and 22.4 million square feet of GLA, as of December 31, 2022, and 120 property interests and 24.7 million square feet of GLA, as of December 31, 2021.

(1)

During 2022, the Company purchased additional ownership interests for $55.1 million, including the General Partner’s ownership interest from Milton Cooper, Executive Chairman of the Board of Directors of the Company, for $0.1 million. There was no change in control as a result of these transactions.

(2)	During 2021, the Company entered into a new joint venture with BREIT in which it contributed six properties for a gross sales price of $425.8 million. See Footnote 5 of the Notes to Consolidated Financial Statements for the operating properties disposed of by the Company.

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,
	2022		2021		2020
Prudential Investment Program (1)	$	9.6	$	17.5	$	9.0
KIR		70.3		36.9		30.5
CPP		10.6		9.2		5.6
Other Institutional Joint Ventures		7.0		1.7		-
Other Joint Venture Programs		12.0		19.5		2.3
Total	$	109.5	$	84.8	$	47.4

(1)	During 2022, the Prudential Investment Program recognized an impairment charge on a property of $15.1 million, of which the Company’s share was $2.3 million.

During 2022, certain of the Company’s real estate joint ventures disposed of nine properties and two parcels, in separate transactions, for an aggregate sales price of $349.1 million. These transactions resulted in an aggregate net gain to the Company of $39.3 million for the year ended December 31, 2022.

During 2021, certain of the Company’s real estate joint ventures disposed of four properties and one parcel, in separate transactions, for an aggregate sales price of $88.9 million. These transactions resulted in an aggregate net gain to the Company of $9.9 million for the year ended December 31, 2021.

In connection with the Merger, the Company acquired ownership in nine unconsolidated joint ventures, which had a fair market value of $586.2 million at the time of Merger. These joint ventures represented 30 property interests and 4.4 million square feet of GLA.

In addition, during 2021, the Company acquired a controlling interest in nine operating properties from certain joint ventures, in separate transactions, with an aggregate gross fair value of $780.1 million. The Company evaluated these transactions pursuant to the FASB’s Consolidation guidance and as a result, recognized net gains on change in control of interests of $5.0 million, in aggregate, resulting from the fair value adjustments associated with the Company’s previously held equity interests. See Footnote 4 of the Notes to Consolidated Financial Statements for the operating properties acquired by the Company.

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, 2022 and 2021 (dollars in millions):

	December 31, 2022							December 31, 2021
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	$	380.1		5.20	%		33.1	$	426.9		2.02	%		45.6
KIR		297.9		5.46	%		47.2		492.6		2.55	%		27.9
CPP		83.1		6.14	%		43.0		84.2		1.85	%		55.0
Other Institutional Joint Ventures		233.5		4.30	%		47.7		232.9		1.65	%		59.7
Other Joint Venture Programs		388.8		4.10	%		71.8		402.1		3.58	%		83.0
Total	$	1,383.4						$	1,638.7

* Average remaining term includes extensions

As of the date of the Merger, the Company acquired ownership in nine unconsolidated joint ventures, which had an aggregate of $191.5 million of secured debt (including a fair market value adjustment of $0.8 million).

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, the Company must determine which of its unconsolidated investments, if any, are considered “significant subsidiaries.” In evaluating these investments, there are three tests utilized to determine if any unconsolidated subsidiaries are considered significant subsidiaries: the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X requires the Company to include separate audited financial statements of any unconsolidated majority-owned subsidiary (unconsolidated subsidiaries in which the Company owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information of unconsolidated subsidiaries in an annual report if any of the three tests exceeds 10%, and summarized financial information in a quarterly report if any of the three tests exceeds 20% pursuant to Rule 10-01(b)(1) of Regulation S-X.

As of December 31, 2022, the Company held an unconsolidated investment in KIR which the Company determined was significant under the income test and requires summarized financial information under Rule 4-08(g) of Regulation S-X. The Company holds a 52.1% 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 following table shows summarized unaudited financial information for KIR, as follows (in millions):

	December 31,
	2022		2021
Assets:
Real estate, net	$	668.7	$	769.4
Other assets, net		72.4		68.2
Total Assets	$	741.1	$	837.6
Liabilities and Members’ Capital:
Notes payable, net	$	272.9	$	258.8
Mortgages payable, net		25.0		233.7
Other liabilities		13.9		16.2
Members’ capital		429.3		328.9
Total Liabilities and Members’ Capital	$	741.1	$	837.6

	Year Ended December 31,
	2022			2021			2020
Revenues, net	$	182.5		$	186.6		$	173.9
Operating expenses		(48.2	)		(51.3	)		(49.5	)
Depreciation and amortization		(39.4	)		(40.3	)		(36.9	)
Gain on sale of properties		76.2			-			-
Interest expense		(15.5	)		(18.1	)		(23.8	)
Other expense, net		(1.2	)		(2.1	)		(1.6	)
Net income	$	154.4		$	74.8		$	62.1

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,
	2022		2021
Assets:
Real estate, net	$	3,440.1	$	3,619.4
Other assets, net		208.4		193.8
Total Assets	$	3,648.5	$	3,813.2

Liabilities and Members’ Capital:
Notes payable, net	$	159.5	$	199.0
Mortgages payable, net		925.9		947.2
Other liabilities		78.8		73.8
Noncontrolling interests		33.5		32.6
Members’ capital		2,450.8		2,560.6
Total Liabilities and Members’ Capital	$	3,648.5	$	3,813.2

	Year Ended December 31,
	2022			2021			2020
Revenues, net	$	395.2		$	340.3		$	282.4
Operating expenses		(126.9	)		(111.7	)		(101.9	)
Impairment charges		(21.1	)		(23.5	)		(4.4	)
Depreciation and amortization		(119.0	)		(97.2	)		(75.0	)
Gain on sale of properties		24.7			61.5			0.2
Interest expense		(38.6	)		(27.6	)		(31.2	)
Other expense, net		(6.2	)		(0.9	)		(10.8	)
Net income	$	108.1		$	140.9		$	59.3

Other liabilities included in the Company’s accompanying Consolidated Balance Sheets include investments in certain real estate joint ventures totaling $5.3 million and $4.8 million at December 31, 2022 and 2021, 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, 2022 and 2021, the Company’s carrying value in these investments was $1.1 billion and $1.0 billion, respectively.