Investments in and Advances to Unconsolidated Affiliates

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Investments in and Advances to Unconsolidated Affiliates

4. Investments in and Advances to Unconsolidated Affiliates

The Company accounts for its investments in and advances to unconsolidated affiliates primarily under the equity method of accounting. The Company’s Investments in and advances to unconsolidated affiliates consist of the following (dollars in thousands):


		Ownership Interest	December 31,		December 31,
Portfolio	Property	December 31, 2024	2024		2023

Core:	Renaissance Portfolio	20%	$	28,250	$	30,745
	Gotham Plaza	49%		30,561		30,772
	Georgetown Portfolio (a)	50%		4,214		4,230
	1238 Wisconsin Avenue (a, b)	80%		19,048		19,719
	840 N. Michigan Avenue (c)	91.85%		28,111		15,761
				110,184		101,227
Investment Management:
Fund IV: (g)	Fund IV Other Portfolio	90%		5,291		5,221
	650 Bald Hill Road	90%		9,220		9,486
	Paramus Plaza	50%		—		70
				14,511		14,777

Fund V: (g)	Family Center at Riverdale (c)	89.42%		1,832		2,552
	Tri-City Plaza	90%		6,914		6,452
	Frederick County Acquisitions (d)	90%		4,375		11,345
	Wood Ridge Plaza	90%		9,313		10,313
	La Frontera Village	90%		13,389		17,483
	Shoppes at South Hills	90%		10,139		11,707
	Mohawk Commons	90%		12,350		16,434
				58,312		76,286

Other:	Shops at Grand	5%		2,452		—
	Walk at Highwoods Preserve	20%		2,279		—
	LINQ Promenade (a)	15%		16,508		—
				21,239		—

Various:	Due (to) from Related Parties			446		396
	Other (e)			4,540		4,554
	Investments in and advances to unconsolidated affiliates		$	209,232	$	197,240

Core:	Crossroads (f)	49%	$	16,514	$	7,982
	Distributions in excess of income from, and investments in, unconsolidated affiliates		$	16,514	$	7,982

Represents a variable interest entity (“VIE”) for which the Company is not the primary beneficiary (Note 16).

Includes the amounts advanced against a $12.8 million construction commitment from the Company to the venture that holds its investment in 1238 Wisconsin. As of December 31, 2024 and December 31, 2023 the note receivable from a related party had a balance of $12.8 million, as of each period, net of an allowance for credit losses of $0.1 million at each of December 31, 2024 and 2023. The loan is collateralized by the venture members’ equity interest in the entity that holds the 1238 Wisconsin development property, bears interest at Prime + 1.0% subject to a 4.5% floor and matures on December 28, 2027 (as extended). The Company recognized Interest income of $0.2 million for each of the years ended December 31, 2024 and 2023, respectively, related to this note receivable.

Represents a tenancy-in-common interest. In December 2023, the Company acquired an additional 3.42% interest in the North Michigan Avenue venture, increasing its ownership from 88.43% to 91.85% and provided a loan to the remaining venture partners. The note receivable bears interest at 6.50% had an outstanding balance of $2.3 million and $1.4 million as of December 31, 2024 and 2023, respectively (Note 3).

On September 25, 2024 the venture which Fund V holds a 90% interest in sold a 300,000 square foot property in Frederick County, Maryland commonly referred to as Frederick Crossing. Fund V maintains its 90% interest in the venture which retains its interest in the remaining property of the Frederick County Acquisitions portfolio, commonly referred to as Frederick County Square.

Includes cost-method investment in Fifth Wall. As of December 31, 2024, the Company recorded an impairment charge of $0.4 million.

Distributions have exceeded the Company’s investment; however, the Company recognizes a liability balance as it may elect to contribute capital to the entity.

The Company owns 23.12% and 20.10% in Funds IV and V, respectively (Note 1). For the ventures within these Funds, the ownership interest percentage represents the Fund’s ownership interest and not the Company’s proportionate share.

During the year ended December 31, 2024, the Company:

•

on May 16, 2024, sold a 95% interest in the Shops at Grand property for a total of $48.3 million and retained a 5% interest through an investment in a newly formed joint venture which had a fair value of $2.4 million upon deconsolidation (Note 2);

•

on June 28, 2024, through Fund IV, sold its investment in Paramus Plaza for $36.8 million and repaid the related $27.9 million property mortgage loan. The venture recognized a gain of $8.5 million, of which Fund IV’s proportionate share was $4.1 million. The Company’s proportionate share was $1.0 million;

•

on September 25, 2024, through Fund V, sold its investment in Frederick Crossing for $47.2 million and repaid the related $23.2 million property mortgage loan. The venture recognized a gain of $12.9 million, of which Fund V’s proportionate share was $11.6 million. The Company’s proportionate share was $2.3 million;

•

on September 19, 2024, refinanced a $17.1 million property mortgage loan at Gotham Plaza with a new lender upon maturity. The new $28.0 million property mortgage loan bears interest at 5.9% and matures in October 2034;

•

on October 25, 2024, sold an 80% interest in the Walk at Highwoods Preserve property for a total of $31.4 million and retained a 20% interest through an investment in a newly formed joint venture which had a fair value of $6.4 million upon deconsolidation (Note 2). At closing, the venture entered into a new $20.5 million property mortgage loan;

•

on November 5, 2024, refinanced a $58.1 million property mortgage loan at Crossroads with a new lender upon maturity. The new $75.0 million property mortgage loan bears interest at SOFR + 3.83% and matures in November 2029; and

•

on December 12, 2024, acquired a 15% interest in a venture for $41.6 million, which purchased the LINQ Promenade, an open-air retail, entertainment, and dining district located in Las Vegas, Nevada for $277.5 million, inclusive of transaction costs. At closing, the venture entered into a new $175.0 million property mortgage loan.

During the year ended December 31, 2023, the Company:

•

funded $5.3 million of a $12.8 million construction loan commitment to the 1238 Wisconsin venture. The total outstanding balance of the loan was $12.8 million;

•

modified a property mortgage loan with an outstanding balance of $160.0 million with a new loan of $152.0 million and extended the maturity date at Georgetown Renaissance. The Company contributed an additional $1.4 million in equity to cover the venture partner’s share of the required paydown;

•

through Fund IV, modified a property mortgage loan with an outstanding balance of $21.9 million with a new loan of $24.1 million at Eden Square;

•

through Fund V, modified a property mortgage loan with an outstanding balance of $33.5 million to extend the maturity date at Wood Ridge Plaza;

•

through Fund V, acquired a 90% interest in a venture for $20.2 million, which purchased Mohawk Commons, a shopping center located in Schenectady, New York for $62.1 million, inclusive of transaction costs. In addition, the Mohawk Commons venture entered into a $39.7 million property mortgage loan;

•

through Fund V, received payment on a bridge loan from the Shoppes at South Hills venture for $31.7 million which matured in February 2023. Upon maturity of the bridge loan, the venture entered into a $36.0 million property mortgage loan, of which $31.8 million was funded at closing; and

•

through Mervyns II, received cash dividends from its investment in Albertsons totaling $28.5 million on January 20, 2023, of which the Company’s share was $11.4 million. Additionally, the lock-up period, which restricted the transfer or sale of shares, expired on January 24, 2023, and 4.1 million shares of Albertsons were distributed to the individual investors as a non-cash distribution, of which the Company received 1.6 million shares. The shares are classified as Marketable securities on the Company’s Consolidated Balance Sheets (Note 8).

In December 2023, an unconsolidated venture that holds interest in a property on North Michigan Avenue modified its $73.5 million nonrecourse property mortgage loan. As part of the modification, the principal balance was reduced by $18.5 million and required a principal paydown of $17.5 million, the interest rate increased from 4.4% to 6.5%, and the maturity date was extended from February 2025 to December 2026. In addition, the venture, upon a sale or secured refinancing prior to maturity at an amount that exceeds $55.0 million (as adjusted pursuant to the modification agreement), may be subject to additional contingent payments to its lender of up to $17.5 million (“Contingent Payment”), which amortizes pursuant to the terms of the modification agreement on a straight-line basis over the remaining term of the loan. The modification was accounted for as a troubled debt restructuring pursuant to ASC 470, resulting in an initial gain of approximately $0.4 million, which was recognized within Equity in (losses) earnings of unconsolidated affiliates on the Company’s Consolidated Statements of Operations for the year ended December 31, 2023, and represented the excess of the original principal balance of the mortgage (prior to modification), over the maximum total future cash payments (inclusive of the Contingent Payment) under the new terms. Thus, all future cash payments under the terms of the payable, including the Contingent Payment, shall be accounted for as a reduction of the carrying amount of the mortgage, and no interest expense shall be recognized for any period between the modification and the revised maturity of the mortgage. As the Contingent Payment amortizes (and no transactions arise during the period that would require a payment as described above) the additional gain will be recognized within equity in earnings in the Company’s consolidated financial statements of which $5.4 million and $0 were recognized for the years ended December 31, 2024 and 2023, respectively. Additionally, as part of the modification, the Operating Partnership provided a recourse guarantee equivalent to 50% of the unpaid outstanding principal balance of the mortgage.

Fees earned from and paid to Unconsolidated Affiliates

The Company earned property management, construction, development, legal and leasing fees from its investments in unconsolidated affiliates totaling $1.5 million and $0.4 million and $0.4 million for the years ended December 31, 2024, 2023 and 2022, respectively, which are included in Other revenues in the Consolidated Statements of Operations.

In addition, the Company’s unconsolidated joint ventures paid fees to the Company’s unaffiliated joint venture partners of $5.1 million and $4.5 million and $2.7 million for the years ended December 31, 2024, 2023 and 2022, respectively, for leasing commissions, development, management, construction, and overhead fees.

Summarized Financial Information of Unconsolidated Affiliates

The following Combined and Condensed Balance Sheets and Statements of Operations, in each period, summarized the financial information of the Company’s investments in unconsolidated affiliates that were held as of December 31, 2024 and 2023 (in thousands):


	December 31,		December 31,
	2024		2023
Combined and Condensed Balance Sheets
Assets:
Rental property, net	$	1,016,229	$	723,411
Other assets		162,713		125,699
Total assets	$	1,178,942	$	849,110
Liabilities and partners’ equity:
Mortgage notes payable	$	815,045	$	662,552
Other liabilities		140,743		100,270
Partners’ equity		223,154		86,288
Total liabilities and partners’ equity	$	1,178,942	$	849,110

Company's share of accumulated equity	$	131,793	$	128,690
Basis differential		50,851		51,824
Deferred fees, net of portion related to the Company's interest		5,400		3,794
Amounts receivable/payable by the Company		446		396
Investments in and advances to unconsolidated affiliates, net of Company's share of distributions in excess of income from and investments in unconsolidated affiliates		188,490		184,704
Investments carried at cost		4,228		4,554
Company's share of distributions in excess of income from and investments in unconsolidated affiliates		16,514		7,982
Investments in and advances to unconsolidated affiliates	$	209,232	$	197,240


	Year Ended December 31,
	2024			2023			2022
Combined and Condensed Statements of Operations
Total revenues	$	114,442		$	108,425		$	96,080
Operating and other expenses		(41,001	)		(35,488	)		(29,858	)
Interest expense		(40,998	)		(40,864	)		(26,807	)
Depreciation and amortization		(43,183	)		(42,212	)		(34,596	)
Gain (loss) on extinguishment of debt (a)		3,934			368			(7	)
Impairment of Investment (b)		—			—			(57,423	)
Gain on disposition of properties (c)		21,357			—			12,983
Net income (loss) attributable to unconsolidated affiliates	$	14,551		$	(9,771	)	$	(39,628	)

Company’s share of equity in net earnings (losses) of unconsolidated affiliates	$	16,151		$	(6,688	)	$	(31,907	)
Basis differential amortization		(973	)		(989	)		(1,000	)
Company’s equity in earnings (losses) of unconsolidated affiliates	$	15,178		$	(7,677	)	$	(32,907	)

Includes the gain on debt extinguishment related to the restructuring at 840 N. Michigan Avenue for the year ended December 31, 2024 and 2023.

Includes the impairment charge related to 840 N. Michigan Avenue for the year ended December 31, 2022.

Includes the gain on the sale of Frederick Crossing, Paramus Plaza for the year ended December 31, 2024 and Promenade at Manassas for the year ended December 31, 2022.