3.	Investments in and Advances to Joint Ventures

At September 30, 2018 and December 31, 2017, the Company had ownership interests in various unconsolidated joint ventures that had an investment in 103 and 136 shopping center properties, respectively. Condensed combined financial information of the Company’s unconsolidated joint venture investments is as follows (in thousands):

	September 30, 2018			December 31, 2017
Condensed Combined Balance Sheets
Land	$	907,273		$	1,126,703
Buildings		2,541,879			3,057,072
Fixtures and tenant improvements		207,064			213,989
		3,656,216			4,397,764
Less: Accumulated depreciation		(936,932	)		(962,038	)
		2,719,284			3,435,726
Construction in progress and land		55,522			53,928
Real estate, net		2,774,806			3,489,654
Cash and restricted cash		92,078			155,894
Receivables, net		43,933			51,396
Other assets, net		114,771			174,832
	$	3,025,588		$	3,871,776

Mortgage debt	$	2,000,750		$	2,501,163
Notes and accrued interest payable to the Company		1,965			1,365
Other liabilities		123,524			156,076
		2,126,239			2,658,604
Redeemable preferred equity – SITECenters^(A)		280,428			345,149
Accumulated equity		618,921			868,023
	$	3,025,588		$	3,871,776

Company's share of accumulated equity	$	100,548		$	132,710
Redeemable preferred equity, net		204,078			277,776
Basis differentials		(16,004	)		(24,973	)
Deferred development fees, net of portion related to the Company's interest		(2,717	)		(3,065	)
Amounts payable to the Company		1,965			1,365
Investments in and Advances to Joint Ventures, net	$	287,870		$	383,813

(A)	Includes PIK that has accrued since March 2017 of $10.8 million and $6.3 million, which was fully reserved by the Company at September 30, 2018 and December 31, 2017, respectively.

	Three Months					Nine Months
	Ended September 30,					Ended September 30,
	2018			2017		2018			2017
Condensed Combined Statements of Operations
Revenues from operations^(A)	$	103,217		$	126,992	$	325,501		$	380,568
Expenses from operations:
Operating expenses		29,577			36,041		96,272			110,400
Impairment charges		87,880			2,160		104,790			82,667
Depreciation and amortization		34,332			45,291		111,308			137,976
Interest expense		23,126			24,276		72,315			83,410
Preferred share expense		6,249			8,307		19,074			24,674
Other (income) expense, net		5,460			6,577		19,497			22,204
		186,624			122,652		423,256			461,331
(Loss) income from continuing operations		(83,407	)		4,340		(97,755	)		(80,763	)
Gain on disposition of real estate, net		32,548			31,740		82,924			30,764
Net (loss) income attributable to unconsolidated joint ventures	$	(50,859	)	$	36,080	$	(14,831	)	$	(49,999	)
Company's share of equity in net (loss) income of joint ventures	$	(7,669	)	$	3,819	$	4,310		$	(2,570	)
Basis differential adjustments^(B)		4,749			992		5,377			4,999
Equity in net (loss) income of joint ventures	$	(2,920	)	$	4,811	$	9,687		$	2,429

(A)	Revenue from operations is subject to leasing or other standards.

(B)

The difference between the Company’s share of net income (loss), as reported above, and the amounts included in the Company’s consolidated statements of operations is attributable to the amortization of basis differentials, unrecognized preferred PIK, the recognition of deferred gains, differences in gain (loss) on sale of certain assets recognized due to the basis differentials and other than temporary impairment charges.

Service fees and income earned by the Company through management, leasing and development activities performed related to all of the Company’s unconsolidated joint ventures and interest income on its preferred interests in the BRE DDR Retail Holdings joint ventures are as follows (in millions):

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2018		2017		2018		2017
Revenue from contracts with customers:
Asset and property management fees	$	4.0	$	4.7	$	14.5	$	16.9
Development fees and leasing commissions		1.5		1.8		5.1		6.2
Total revenue from contracts with customers		5.5		6.5		19.6		23.1
Other:
Interest income		4.8		6.3		14.6		20.0
Other		0.7		0.7		1.9		2.1
Total fee and other income	$	11.0	$	13.5	$	36.1	$	45.2

The Company’s joint venture agreements generally include provisions whereby each partner has the right to trigger a purchase or sale of its interest in the joint venture or to initiate a purchase or sale of the properties after a certain number of years or if either party is in default of the joint venture agreements. The Company is not obligated to purchase the interests of its outside joint venture partners under these provisions.

BRE DDR Retail Holdings Joint Ventures

The Company’s two unconsolidated investments with The Blackstone Group L.P. (“Blackstone”), BRE DDR Retail Holdings III (“BRE DDR III”) and BRE DDR Retail Holdings IV (“BRE DDR IV” and, together with BRE DDR III, the “BRE DDR Joint Ventures”), have substantially similar terms and are summarized as follows (in millions, except properties owned):

		Common Equity		Preferred Investment (Principal)						Properties Owned
	Formation	Initial		Initial		September 30, 2018		Net of Reserve		Inception		September 30, 2018
BRE DDR III	Oct 2014	$	19.6	$	300.0	$	198.1	$	142.6		70		20
BRE DDR IV	Dec 2015		12.9		82.6		66.7		56.7		6		5
				$	382.6	$	264.8	$	199.3

An affiliate of Blackstone is the managing member and effectively owns 95% of the common equity of each of the two BRE DDR Joint Ventures, and consolidated affiliates of SITE Centers effectively own the remaining 5%. The Company provides leasing and property management services to all of the joint venture properties. The Company cannot be removed as the property and leasing manager until the preferred equity, as discussed below, is redeemed in full (except for certain specified events).

The Company reassessed the aggregate valuation allowance at September 30, 2018, with respect to its preferred investments in BRE DDR III and BRE DDR IV. Based upon actual timing and values of recent property sales, as well as current market assumptions, the Company adjusted the aggregate valuation allowance by an increase of $2.2 million and $4.5 million for the three- and nine-month periods ended September 30, 2018, respectively, resulting in a net valuation allowance of $65.5 million. The valuation allowance is recorded as Reserve of Preferred Equity Interests on the Company’s consolidated statements of operations. The Company will continue to monitor the investments and related valuation allowance which could be increased or decreased in future periods, as appropriate.

The Company’s preferred interests are entitled to certain preferential cumulative distributions payable out of operating cash flows and certain capital proceeds pursuant to the terms and conditions of the preferred investments. The preferred distributions are recognized as Interest Income within the Company’s consolidated statements of operations and are classified as a note receivable in Investments in and Advances to Joint Ventures on the Company’s consolidated balance sheets. The preferred investments have an annual distribution rate of 8.5% including any deferred and unpaid preferred distributions. Blackstone has the right to defer up to 2.0% of the 8.5% preferred fixed distributions as a payment in kind distribution or “PIK.” Blackstone has made this PIK deferral election since the formation of both joint ventures. The cash portion of the preferred fixed distributions is generally payable first out of operating cash flows and is current for both BRE DDR Joint Ventures. The Company has no expectation that the cash portion of the preferred fixed distribution will become impaired. As a result of the valuation allowances recorded, the Company no longer recognizes as interest income the 2.0% PIK. Although Blackstone has the right to change its payment election, the Company expects future preferred distributions to continue to include the PIK component. The recognition of the PIK interest income will be reevaluated based upon any future adjustments to the aggregate valuation allowance, as appropriate.

Disposition of Shopping Centers

From January 1, 2018 to September 30, 2018, the DDRM Properties joint venture sold 15 assets for $250.7 million, the BRE DDR III joint venture sold 17 assets for $374.9 million and the BRE DDR IV joint venture sold one asset for $40.0 million. The Company’s pro rata share of the aggregate gain from these sales was $12.6 million.