Investments in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Joint Ventures

General Information

We own beneficial interests in joint ventures that own shopping centers. TRG is the sole direct or indirect managing general partner or managing member of Fair Oaks Mall, International Plaza, Stamford Town Center, Sunvalley, The Mall at University Town Center, and Westfarms; however, these joint ventures are accounted for under the equity method due to the substantive participation rights of the outside partners. TRG also provides certain management, leasing, and/or development services to the other shopping centers noted below.



Shopping Center		Ownership as of December 31, 2019 and 2018
CityOn.Xi'an ⁽¹⁾		50%
CityOn.Zhengzhou ⁽¹⁾		24.5/49
Country Club Plaza		50
Fair Oaks Mall		50
The Gardens Mall ⁽²⁾		48.5/0
International Plaza		50.1
The Mall at Millenia		50
Stamford Town Center		50
Starfield Anseong (under development)		Note 2
Starfield Hanam ⁽¹⁾		17.15/34.3
Sunvalley		50
The Mall at University Town Center		50
Waterside Shops		50
Westfarms		79


(1)	We entered into agreements to sell half of our ownership interest in CityOn.Xi'an, CityOn.Zhengzhou, and Starfield Hanam in February 2019. In September 2019 and December 2019, we completed the sales of 50% of our interests in Starfield Hanam and CityOn.Zhengzhou, respectively. CityOn.Xi'an is subject to customary closing conditions and is expected to close in the first quarter of 2020 (Note 2).


(2)	In April 2019, we acquired a 48.5% interest in The Gardens Mall (Note 2).

The carrying value of our investment in UJVs differs from our share of the partnership or members’ equity reported on the combined balance sheet of the UJVs due to (i) the cost of our investment in excess of the historical net book values of the UJVs and (ii) TRG's adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the UJVs. Our additional basis allocated to depreciable assets is generally recognized on a straight-line basis over 40 years. TRG's differences in bases are amortized over the useful lives or terms of the related assets and liabilities.

On our Consolidated Balance Sheet, we separately report our investment in UJVs for which accumulated distributions have exceeded investments in and net income of the UJVs. The net equity of certain joint ventures is less than zero because distributions are usually greater than net income, as net income includes non-cash charges for depreciation and amortization. In addition, any distributions related to refinancing of the shopping centers further decrease the net equity of the shopping centers.

Combined Financial Information

Combined balance sheet and results of operations information is presented in the following table for the UJVs, followed by TRG's beneficial interest in the combined operations information. The combined financial information of the UJVs as of December 31, 2019 and 2018 excludes the balances of Starfield Anseong, which is currently under development (Note 2). Beneficial interest is calculated based on TRG's ownership interest in each of the UJVs.



	December 31 2019			December 31 2018
Assets:
Properties	$	3,816,923		$	3,728,846
Accumulated depreciation and amortization	(942,840		)	(869,375		)
	$	2,874,083		$	2,859,471
Cash and cash equivalents	201,501			161,311
Accounts and notes receivable ⁽¹⁾	122,569			131,767
Operating lease right-of-use assets ⁽¹⁾	11,521
Deferred charges and other assets	178,708			140,444
	$	3,388,382		$	3,292,993

Liabilities and accumulated equity (deficiency) in assets:
Notes payable, net	$	3,049,737		$	2,815,617
Accounts payable and other liabilities	341,263			426,358
Operating lease liabilities ⁽¹⁾	13,274
TRG's accumulated deficiency in assets ⁽¹⁾	(212,380		)	(49,465		)
UJV Partners' accumulated equity in assets ⁽¹⁾	196,488			100,483
	$	3,388,382		$	3,292,993

TRG's accumulated deficiency in assets (above)	$	(212,380	)	$	(49,465	)
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou	209,024			140,743
TRG basis adjustments, including elimination of intercompany profit ⁽²⁾	329,673			57,360
TCO's additional basis	32,625			47,178
Net investment in UJVs	$	358,942		$	195,816
Distributions in excess of investments in and net income of UJVs	473,053			477,800
Investment in UJVs	$	831,995		$	673,616

(1) Upon adoption of ASC Topic 842, "Leases" on January 1, 2019, we valued our operating lease obligations and recorded operating lease liabilities and related right-of-use assets. These lease liabilities and related right-of-use assets will amortize over the remaining life of the respective leases.

(2) The increase in basis adjustments is primarily due to the gains on remeasurements of ownership interests in UJVs (Note 2).



	Year Ended December 31
	2019			2018			2017
Revenues ⁽¹⁾	$	620,513		$	601,272		$	586,499
Maintenance, taxes, utilities, promotion, and other operating expenses	$	226,014		$	211,285		$	218,004
Impairment charge	6,154
Interest expense	139,756			132,669			130,339
Depreciation and amortization	131,223			131,884			127,625
Total operating costs	$	503,147		$	475,838		$	475,968
Nonoperating income, net	2,870			1,923			2,894
Income tax expense	(8,541		)	(5,935		)	(5,226		)
Gain on disposition, net of tax ⁽²⁾							3,713
Net income	$	111,695		$	121,422		$	111,912

Net income attributable to TRG	$	58,020		$	62,964		$	59,994
Realized intercompany profit, net of depreciation on TRG’s basis adjustments ⁽³⁾	5,698			8,386			9,326
Depreciation of TCO's additional basis	(1,946		)	(1,946		)	(1,946		)
Impairment of TCO's additional basis	(12,606		)
Equity in income of UJVs	$	49,166		$	69,404		$	67,374

Beneficial interest in UJVs’ operations:
Revenues less maintenance, taxes, utilities, promotion, and other operating expenses ⁽³⁾	$	212,057		$	209,423		$	202,332
Impairment charge	(17,951		)
Interest expense	(69,749		)	(68,225		)	(67,283		)
Depreciation and amortization	(71,583		)	(68,894		)	(66,933		)
Income tax expense	(3,608		)	(2,900		)	(2,825		)
Gain on disposition, net of tax ⁽¹⁾							2,083
Equity in income of UJVs	$	49,166		$	69,404		$	67,374

(1) Upon adoption of ASC Topic 842, "Leases", uncollectible tenant revenues are now recorded in Rental Revenues (Note 11).

(2) Amount represents the gain related to the sale of the Valencia Place office tower at Country Club Plaza in March 2017 (Note 2).

(3) In addition to the disposition of 50% of our ownership interest in Starfield Hanam, in September 2019, Blackstone also purchased the 14.7% interest in Starfield Hanam that was previously owned by our institutional joint venture partner. Our previous partnership agreement provided for a promote fee due to Taubman Asia upon the institutional partner's exit from the partnership based on performance measures under the prior agreement, which resulted in the recognition of a $4.8 million promote fee during the year ended December 31, 2019.

Related Party

TRG owns a 50% general partnership interest in Sunvalley, while the other 50% is controlled by the A. Alfred Taubman Restated Revocable Trust (the Revocable Trust). A. Alfred Taubman was the former Chairman of the Board and the father of Robert S. and William S. Taubman. Sunvalley is subject to a ground lease on the land, which is 50% owned through an affiliate of TRG and 50% by an entity owned and controlled by Robert S. Taubman, William S. Taubman, and Gayle Taubman Kalisman. The Manager is the manager of the Sunvalley shopping center.

In 2016, we issued a note receivable outstanding to CityOn.Zhengzhou for purposes of funding development costs. The balance of the note receivable was $43.1 million and $43.6 million as of December 31, 2019 and 2018, respectively, and was classified within Investments in UJVs on the Consolidated Balance Sheet.

Impairment Charge - Stamford Town Center

In December 2019, we concluded that the carrying value of our 50% interest in the investment in the UJV that owns Stamford Town Center was impaired and recognized an impairment charge of $18.0 million within Equity in Income of UJVs on the Consolidated Statement of Operations and Comprehensive Income (Loss). The charge represents the excess of the book value of our equity investment in Stamford Town Center over our 50% share of its fair value. Our fair value conclusion was based on offers received from potential buyers of the shopping center.