INVESTMENTS IN AND ADVANCES TO JOINT VENTURES (Tables)

27 Months Ended

Sep. 30, 2012

Condensed Combined Financial Information of Company's Unconsolidated Joint Venture Investments

Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):


	September 30, 2012 ^(A)		December 31, 2011
Condensed Combined Balance Sheets
Real estate, net	$	6,221,498	$	5,355,190
Cash and restricted cash ⁽^B⁾		414,619		308,008
Receivables, net		108,298		108,038
Other assets		447,490		177,251

	$	7,191,905	$	5,948,487

Mortgage debt ⁽^B⁾	$	4,376,380	$	3,742,241
Notes and accrued interest payable to DDR		143,660		100,470
Other liabilities		311,040		214,370

		4,831,080		4,057,081
Redeemable preferred equity		150,000		—
Accumulated equity		2,210,825		1,891,406

	$	7,191,905	$	5,948,487

Company’s share of accumulated equity	$	461,872	$	402,242

^(A)	Increase in the balance sheet at September 30, 2012, is primarily attributable to the investment in BRE DDR Retail Holdings, LLC as described below.

^(B)	Increase is primarily due to the issuance of public debt by Sonae Sierra Brasil in 2012. The proceeds are being used to fund development activities.

Condensed Combined Statements of Operations of Unconsolidated Joint Venture Investments


	Three-Month Periods Ended September 30,						Nine-Month Periods Ended September 30,
	2012			2011			2012			2011
Condensed Combined Statements of Operations
Revenues from operations	$	193,897		$	170,291		$	530,056		$	506,029

Operating expenses ⁽^A⁾		68,916			57,517			192,445			171,617
Impairment charges ⁽^B⁾		840			—			5,745			—
Depreciation and amortization		67,927			42,894			153,324			133,482
Interest expense		63,498			55,408			181,877			166,983

		201,181			155,819			533,391			472,082

(Loss) income before tax expense and discontinued operations		(7,284	)		14,472			(3,335	)		33,947
Income tax expense (primarily Sonae Sierra Brasil), net		(6,628	)		(9,434	)		(18,897	)		(26,963	)

(Loss) income from continuing operations		(13,912	)		5,038			(22,232	)		6,984
Discontinued operations:
Loss from discontinued operations		(38,026	)		(62,323	)		(41,385	)		(62,703	)
Gain on debt forgiveness ⁽^C⁾		—			—			—			2,976
Gain (loss) on disposition of real estate, net ⁽^D⁾		1,183			(593	)		1,290			21,300

Loss before gain on disposition of real estate, net		(50,755	)		(57,878	)		(62,327	)		(31,443	)
Gain on disposition of real estate, net		1,128			—			14,230			—

Net loss	$	(49,627	)	$	(57,878	)	$	(48,097	)	$	(31,443	)

Non-controlling interests		(6,155	)		(6,570	)		(19,689	)		(11,564	)

Net loss attributable to unconsolidated joint ventures	$	(55,782	)	$	(64,448	)	$	(67,786	)	$	(43,007	)

Company’s share of equity in net (loss) income of joint ventures ⁽^E⁾	$	(1,613	)	$	(6,199	)	$	11,739		$	14,240

^(A)	Operating expenses for the nine-month periods ended September 30, 2012, include transaction costs associated with the formation of the unconsolidated joint venture, BRE DDR Retail Holdings, LLC described later in this footnote.

^(B)

For the three- and nine-month periods ended September 30, 2012, impairment charges were recorded primarily on assets that are in the process of being marketed for sale of which the Company’s proportionate share of the charges was not material due to impairment charges previously taken at the investment level.

^(C)

Gain on debt forgiveness is related to one property owned by an unconsolidated joint venture that was transferred to the lender pursuant to a consensual foreclosure proceeding. The operations of the asset have been reclassified as discontinued operations in the combined condensed statements of operations presented.

^(D)

For the three- and nine-month period ended September 30, 2012, gain on disposition of discontinued operations includes the sale of three properties. The Company’s proportionate share of the aggregate gain for the assets sold for the three- and nine-month periods ended September 30, 2012, was not material.

For the nine-month period ended September 30, 2011, gain on disposition of discontinued operations includes the sale of three properties. The Company’s proportionate share of the aggregate gain for the assets sold for the nine-month period ended September 30, 2011, was $10.5 million.

^(E)

The difference between the Company’s share of net (loss) income, as reported above, and the amounts included in the condensed consolidated statements of operations is attributable to the amortization of basis differentials, deferred gains and differences in gain (loss) on sale of certain assets due to the basis differentials and other than temporary impairment charges. The Company is not recording income or loss from those investments in which its investment basis is zero as the Company does not have the obligation or intent to fund any additional capital. Adjustments to the Company’s share of joint venture net income (loss) for these items are reflected as follows (in millions):

Adjustments to Company's Share of Joint Venture Net Income (Loss)

^(E)


	Three-Month Periods Ended September 30,				Nine-Month Periods Ended September 30,
	2012		2011		2012		2011
Net income	$	7.1	$	3.6	$	5.2	$	1.7

Investments in and Advances to Joint Ventures

Investments in and Advances to Joint Ventures include the following items, which represent the difference between the Company’s investment and its share of all of the unconsolidated joint ventures’ underlying net assets (in millions):


	September 30, 2012			December 31, 2011
Company’s share of accumulated equity	$	461.9		$	402.2
Notes receivable from investments ^(A)		150.4			0.4
Basis differentials ⁽^B⁾		(167.0	)		(145.6	)
Deferred development fees, net of portion related to the Company’s interest		(3.0	)		(3.6	)
Notes and accrued interest payable to DDR ⁽^C⁾		143.7			100.5

Investments in and Advances to Joint Ventures	$	586.0		$	353.9

^(A)	Primarily relates to a $150.0 million preferred equity investment in BRE DDR Retail Holdings, LLC. See discussion regarding this unconsolidated joint venture later in this footnote.

^(B)

This amount represents the aggregate difference between the Company’s historical cost basis and the equity basis reflected at the joint venture level. Basis differentials recorded upon transfer of assets are primarily associated with assets previously owned by the Company that have been transferred into an unconsolidated joint venture at fair value. Other basis differentials occur primarily when the Company has purchased interests in existing unconsolidated joint ventures at fair market values, which differ from its proportionate share of the historical net assets of the unconsolidated joint ventures. In addition, certain transaction and other costs, including capitalized interest, reserves on notes receivable as discussed below and impairments of the Company’s investments that were other than temporary may not be reflected in the net assets at the joint venture level. Certain basis differentials indicated above are amortized over the life of the related assets.

^(C)	The Company has amounts receivable from several joint ventures aggregating $38.4 million at September 30, 2012. The remaining amounts were fully reserved by the Company at September 30, 2012.

Service Fees and Income Earned by Company's Unconsolidated Joint Ventures

Service fees and income earned by the Company through management, financing, leasing and development activities performed related to all of the Company’s unconsolidated joint ventures are as follows (in millions):


	Three-Month Periods Ended September 30,				Nine-Month Periods Ended September 30,
	2012		2011		2012		2011
Management and other fees	$	7.6	$	7.0	$	20.9	$	21.7
Financing and other fees		—		0.3		—		—
Development fees and leasing commissions		2.3		1.6		6.2		5.3
Interest income		4.7		—		5.1		0.1