Unconsolidated Affiliates, Noncontrolling Interests and Cost Method Investments

Unconsolidated Affiliates

At September 30, 2011, the Company had investments in the following 16 entities, which are accounted for using the equity method of accounting:



Joint Venture	Property Name	Company's Interest
CBL-TRS Joint Venture, LLC	Friendly Center, The Shops at Friendly Center and a portfolio of six office buildings	50.0	%
CBL-TRS Joint Venture II, LLC	Renaissance Center	50.0	%
Governor’s Square IB	Governor’s Plaza	50.0	%
Governor’s Square Company	Governor’s Square	47.5	%
High Pointe Commons, LP	High Pointe Commons	50.0	%
High Pointe Commons II-HAP, LP	High Pointe Commons - Christmas Tree Shop	50.0	%
Imperial Valley Mall L.P.	Imperial Valley Mall	60.0	%
Imperial Valley Peripheral L.P.	Imperial Valley Mall (vacant land)	60.0	%
JG Gulf Coast Town Center LLC	Gulf Coast Town Center	50.0	%
Kentucky Oaks Mall Company	Kentucky Oaks Mall	50.0	%
Mall of South Carolina L.P.	Coastal Grand—Myrtle Beach	50.0	%
Mall of South Carolina Outparcel L.P.	Coastal Grand—Myrtle Beach (Coastal Grand Crossing and vacant land)	50.0	%
Port Orange I, LLC	The Pavilion at Port Orange Phase I	50.0	%
Triangle Town Member LLC	Triangle Town Center, Triangle Town Commons and Triangle Town Place	50.0	%
West Melbourne I, LLC	Hammock Landing Phases I and II	50.0	%
York Town Center, LP	York Town Center	50.0	%

Although the Company has majority ownership of certain of these joint ventures, it has evaluated these investments and concluded that the other partners or owners in these joint ventures have substantive participating rights, such as approvals of:


•	the pro forma for the development and construction of the project and any material deviations or modifications thereto;


•	the site plan and any material deviations or modifications thereto;


•	the conceptual design of the project and the initial plans and specifications for the project and any material deviations or modifications thereto;


•	any acquisition/construction loans or any permanent financings/refinancings;


•	the annual operating budgets and any material deviations or modifications thereto;


•	the initial leasing plan and leasing parameters and any material deviations or modifications thereto; and


•	any material acquisitions or dispositions with respect to the project.

As a result of the joint control over these joint ventures, the Company accounts for these investments using the equity method of accounting.

Condensed combined financial statement information of these unconsolidated affiliates is as follows:



	Total for the Three Months Ended September 30,						Company's Share for the Three Months Ended September 30,
	2011			2010			2011			2010
Revenues	$	37,290		$	38,814		$	20,683		$	17,884
Depreciation and amortization expense	(12,481		)	(13,713		)	(7,020		)	(5,681		)
Interest expense	(12,903		)	(14,228		)	(7,195		)	(5,658		)
Other operating expenses (1)	(10,842		)	(12,535		)	(5,599		)	(8,047		)
Gain (loss) on sales of real estate assets	79			(1		)	120			(47		)
Operating loss of discontinued operations	—			(19		)	—			(9		)
Net income (loss)	$	1,143		$	(1,682	)	$	989		$	(1,558	)



	Total for the Nine Months Ended September 30,						Company's Share for the Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues	$	114,237		$	116,187		$	63,667		$	60,195
Depreciation and amortization expense	(37,581		)	(40,957		)	(21,132		)	(20,885		)
Interest expense	(39,140		)	(41,929		)	(21,655		)	(21,269		)
Other operating expenses	(33,647		)	(36,162		)	(18,024		)	(18,800		)
Gain on sales of real estate assets	1,744			1,289			1,366			73
Operating income of discontinued operations	—			151			—			76
Net income (loss)	$	5,613		$	(1,421	)	$	4,222		$	(610	)


(1)	The Company's share of other operating expense for the three months ended September 30, 2010 includes an adjustment of $2,119 to reduce earnings previously allocated to it based on the terms of certain joint venture agreements. There is no effect of this adjustment on any other period presented.

Noncontrolling Interests

Noncontrolling interests include the aggregate noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which each of the noncontrolling limited partners has the right to exchange all or a portion of its partnership interests for shares of the Company’s common stock, or at the Company’s election, their cash equivalent. Noncontrolling interests also includes the aggregate noncontrolling ownership interest in the Company’s other consolidated subsidiaries that is held by third parties and for which the related partnership agreements either do not include redemption provisions or are subject to redemption provisions that do not require classification outside of permanent equity. As of September 30, 2011, the total noncontrolling interests of $197,214 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $190,827 and $6,387 respectively. The total noncontrolling interests at December 31, 2010 of $223,605 consisted of third-party interests in the Operating Partnership and in other consolidated subsidiaries of $217,519 and $6,086, respectively.

Redeemable noncontrolling interests include a noncontrolling partnership interest in the Operating Partnership that is not owned by the Company and for which the partnership agreement includes redemption provisions that may require the Company to redeem the partnership interest for real property. Redeemable noncontrolling interests also includes the aggregate noncontrolling ownership interest in other consolidated subsidiaries that is held by third parties and for which the related partnership agreements contain redemption provisions at the holder’s election that allow for redemption through cash and/or properties. The total redeemable noncontrolling partnership interests of $24,507 as of September 30, 2011 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated subsidiary that provides security and maintenance services to third parties of $18,413 and $6,094, respectively. At December 31, 2010, the total redeemable noncontrolling partnership interests of $34,379 consisted of third-party interests in the Operating Partnership and in the Company’s consolidated security and maintenance services subsidiary of $28,070 and $6,309, respectively.

The redeemable noncontrolling preferred joint venture interest includes the preferred joint venture units (“PJV units”) issued to the Westfield Group (“Westfield”) for the acquisition of certain properties during 2007. See Note 11 for additional information related to the PJV units. Activity related to the redeemable noncontrolling preferred joint venture interest represented by the PJV units is as follows:



	Nine Months Ended September 30,
	2011			2010
Beginning Balance	$	423,834		$	421,570
Net income attributable to redeemable noncontrolling preferred joint venture interest	15,436			15,454
Distributions to redeemable noncontrolling preferred joint venture interest	(15,436		)	(15,336		)
Issuance of preferred joint venture interest	—			2,146
Ending Balance	$	423,834		$	423,834

Cost Method Investments

The Company owns a 6.2% noncontrolling interest in subsidiaries of Jinsheng, an established mall operating and real estate development company located in Nanjing, China. As of September 30, 2011, Jinsheng owns controlling interests in 12 home furnishing shopping malls.

The Company also holds a secured convertible promissory note secured by 16,565,534 Series 2 Ordinary Shares of Jinsheng. The secured note is non-interest bearing and matures upon the earlier to occur of (i) January 22, 2012, (ii) the closing of the sale, transfer or other disposition of substantially all of Jinsheng’s assets, (iii) the closing of a merger or consolidation of Jinsheng or (iv) an event of default, as defined in the secured note. In lieu of the Company’s right to demand payment on the maturity date, the Company may, at its sole option, convert the outstanding amount of the secured note into 16,565,534 Series A-2 Preferred Shares of Jinsheng (which equates to a 2.275% ownership interest). See Note 3 for further discussion.

The Company accounts for its noncontrolling interest in Jinsheng using the cost method because the Company does not exercise significant influence over Jinsheng and there is no readily determinable market value of Jinsheng’s shares since they are not publicly traded. The noncontrolling interest and the secured note are reflected as investment in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. The Company performed quantitative and qualitative analyses of its noncontrolling investment as of September 30, 2011 and determined that the carrying value of its investment of $4,819 is not impaired.