Noncontrolling Interests

6 Months Ended

Jun. 30, 2020

Redeemable Noncontrolling Interests

Former Taubman Asia President

In September 2019, we reacquired René Tremblay's (the Former Taubman Asia President's) remaining 5% ownership interest in Taubman Asia for $6.0 million, which included the return of the $2.0 million previously contributed by the Former Taubman Asia President in connection with the prior repurchase transaction.

The Former Taubman Asia President had an ownership interest in Taubman Asia, which entitled him to 5% of Taubman Asia's dividends, with 85% of his dividends relating to investment activities withheld during his tenure as Taubman Asia President. These withholdings would have continued until he contributed and maintained his capital consistent with his percentage ownership interest, including all capital funded by TRG for Taubman Asia's operating and investment activities subsequent to the Former Taubman Asia President obtaining his ownership interest. TRG had a preferred investment in Taubman Asia to the extent the Former Taubman Asia President had not yet contributed capital commensurate with his ownership interest. The $6.0 million acquisition price for the ownership interest represented the fair value of the ownership interest less the amount required to return TRG's preferred interest. The 5% ownership interest became puttable in 2019.

Prior to the acquisition, we determined that the Former Taubman Asia President's ownership interest in Taubman Asia qualified as an equity award, considering its specific redemption provisions, and accounted for it as a contingently redeemable noncontrolling interest. We presented as temporary equity at each balance sheet date an estimate of the redemption value of the ownership interest, which was classified as Level 3 of the fair value hierarchy. Adjustments to the redemption value were recorded through equity.

In September 2016, we announced the appointment of Peter Sharp as president of Taubman Asia, succeeding the Former Taubman Asia President effective January 1, 2017. Peter Sharp also had an ownership interest in Taubman Asia, which entitled him to 3% of Taubman Asia's dividends for investment activities undergone by Taubman Asia subsequent to him obtaining his ownership interest, with all of his dividends being withheld as contributions to capital. Peter Sharp resigned from Taubman Asia effective October 2019. Upon resignation, Peter Sharp's ownership interest in Taubman Asia was assigned to us.

International Market Place

We own a 93.5% controlling interest in a joint venture that owns International Market Place in Waikiki, Honolulu, Hawaii. The 6.5% joint venture partner has no obligation and no right to contribute capital. We are entitled to a preferential return on our capital contributions. We have the right to purchase the joint venture partner's interest and the joint venture partner has the right to require us to purchase the joint venture partner's interest annually. The purchase price of the joint venture partner's interest will be based on fair value. Considering the redemption provisions, we account for the joint venture partner's interest as a contingently redeemable noncontrolling interest with a carrying value of zero at both June 30, 2020 and December 31, 2019. Any adjustments to the redemption value are recorded through equity.

Reconciliation of Redeemable Noncontrolling Interest



	Three Months Ended June 30					Six Months Ended June 30
	2020		2019			2020		2019
Beginning Balance	$	—	$	7,800		$	—	$	7,800
Allocation of net loss			(144		)			(237		)
Former Taubman Asia President adjustment of redeemable equity			(1,800		)			(1,800		)
Adjustments of redeemable noncontrolling interest			144					237
Ending Balance	$	—	$	6,000		$	—	$	6,000

Equity Balances of Non-redeemable Noncontrolling Interests

The net equity balance of the non-redeemable noncontrolling interests as of June 30, 2020 and December 31, 2019 included the following:



	2020			2019
Non-redeemable noncontrolling interests:
Noncontrolling interests in consolidated joint ventures	$	(151,371	)	$	(153,343	)
Noncontrolling interests in partnership equity of TRG	(42,423		)	(13,840		)
	$	(193,794	)	$	(167,183	)

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to the noncontrolling interests for the three months ended June 30, 2020 and 2019 included the following:



	Three Months Ended June 30
	2020			2019
Net income (loss) attributable to noncontrolling interests:
Non-redeemable noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures	$	300		$	976
Noncontrolling share of income of TRG	(13,811		)	3,408
	$	(13,511	)	$	4,384
Redeemable noncontrolling interest:				(144		)
	$	(13,511	)	$	4,240

Net income (loss) attributable to the noncontrolling interests for the six months ended June 30, 2020 and 2019 included the following:



	Six Months Ended June 30
	2020			2019
Net income (loss) attributable to noncontrolling interests:
Non-redeemable noncontrolling interests:
Noncontrolling share of income of consolidated joint ventures	1,323			$	2,498
Noncontrolling share of income of TRG	(4,601		)	10,209
	$	(3,278	)	$	12,707
Redeemable noncontrolling interest:				(237		)
	$	(3,278	)	$	12,470

Equity Transactions

The following table presents the effects of changes in TCO’s ownership interest in consolidated subsidiaries on TCO’s equity for the six months ended June 30, 2020 and 2019:



	Six Months Ended June 30
	2020			2019
Net income (loss) attributable to TCO common shareholders	$	(14,197	)	$	21,356
Transfers (to) from the noncontrolling interest:
Increase (decrease) in TCO’s paid-in capital for adjustments of noncontrolling interest ⁽¹⁾	(248		)	57,500
Net transfers (to) from noncontrolling interests	(248		)	57,500
Change from net income (loss) attributable to TCO and transfers (to) from noncontrolling interests	$	(14,445	)	$	78,856

(1)

In 2020 and 2019, adjustments of the noncontrolling interest were made as a result of changes in our ownership of TRG in connection with our share-based compensation under employee and director benefit plans (Note 8) and issuances of common stock pursuant to the Continuing Offer (Note 9). In 2019, adjustments of noncontrolling interest were made in connection with the accounting for the Former Taubman Asia President's redeemable ownership interest and issuance of TRG Units for the acquisition of The Gardens Mall (Note 2).

Finite Life Entities

ASC Topic 480, “Distinguishing Liabilities from Equity” establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. At June 30, 2020, we held a controlling interest in a consolidated entity with a specified termination date in 2083. The noncontrolling owners' interest in this entity is to be settled upon termination by distribution or transfer of either cash or specific assets of the underlying entity. The estimated fair value of this noncontrolling interest was approximately $152 million at June 30, 2020, compared to a book value of $(151.4) million that is classified in Noncontrolling Interests on our Consolidated Balance Sheet. The fair value of the noncontrolling interest was calculated as the noncontrolling interest's effective ownership share of the underlying property's net asset value. The property's net asset value was estimated by considering its in-place net operating income, current market capitalization rate, and mortgage debt outstanding.