Variable Interest Entities

3 Months Ended

Mar. 31, 2024

Variable Interest Entities [Abstract]

Other Real Estate Partnerships

The Other Real Estate Partnerships are variable interest entities ("VIEs") of the Operating Partnership and the Operating Partnership is the primary beneficiary, thus causing the Other Real Estate Partnerships to be consolidated by the Operating Partnership. In addition, the Operating Partnership is a VIE of the Company and the Company is the primary beneficiary.

The following table summarizes the assets and liabilities of the Other Real Estate Partnerships included in our Consolidated Balance Sheets, net of intercompany amounts:


	March 31, 2024		December 31, 2023
ASSETS
Assets:
Net Investment in Real Estate	$	298,357	$	302,869


Operating Lease Right-of-Use Assets	12,888		12,910
Cash and Cash Equivalents	2,305		2,221

Deferred Rent Receivable	15,621		15,601
Prepaid Expenses and Other Assets, Net	13,563		12,945
Total Assets	$	342,734	$	346,546
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:

Accounts Payable, Accrued Expenses and Other Liabilities	$	9,583	$	9,698
Operating Lease Liabilities	10,211		10,219
Rents Received in Advance and Security Deposits	8,276		8,368
Partners' Capital	314,664		318,261
Total Liabilities and Partners' Capital	$	342,734	$	346,546

Joint Venture

Through a wholly-owned TRS of the Operating Partnership, we own a 43% interest in the Joint Venture. Our ownership interest in the Joint Venture is held through a partnership with a third party (the “Joint Venture Partnership”). Since we own our interest in the Joint Venture through the Joint Venture Partnership and we hold the power to direct the activities that most significantly impact the economic performance of the Joint Venture Partnership, we consolidate the Joint Venture Partnership and reflect our partner's 6% interest in the Joint Venture within the financial statements (see Note 6). The Joint Venture was formed for the purpose of developing, leasing, operating and selling land located in the Phoenix, Arizona metropolitan area.

Under the operating agreement for the Joint Venture, we act as the managing member and are entitled to receive fees for providing management, leasing, development, construction supervision, disposition and asset management services. In addition, the Joint Venture's operating agreement provides us the ability to earn incentive fees based on the ultimate financial performance of the Joint Venture.

During the three months ended March 31, 2024 and 2023, we earned fees of $859 and $1,350, respectively, from the Joint Venture, related to asset management, property management, leasing and development services we provided to the Joint Venture, of which we deferred recognition of $190 and $277, respectively, due to our economic interest in the Joint Venture. During the three months ended March 31, 2024 and 2023, we incurred fees of $426 and $784, respectively, related to third-party development, management and leasing services associated with the Joint Venture. At March 31, 2024 and December 31, 2023, we had a receivable from the Joint Venture of $211 and $138, respectively.

Net income of the Joint Venture for the three months ended March 31, 2024 and 2023 was $2,032 and $40,045, respectively. Included in net income during the three months ended March 31, 2024 was $1,624 of lease revenue as well as gain on sale of real estate of $191. The gain on sale of real estate recognized during the three months ended March 31, 2024 relates to gain that was deferred on land sales during the years ended December 31, 2023 and 2022. An allocable portion of this gain on sale was deferred because the Joint Venture was required to complete infrastructure work for the purchasers of the land. The deferred gain is being recognized under the percentage of completion method. Our economic share of the Joint Venture's lease revenue and gain on sale was $796 and $94, respectively. Included in net income of the Joint Venture during the three months ended March 31, 2023 is gain on sale of real estate of $40,041 related to the sale of approximately 31 acres of land for which our economic share was $19,620. For the three months ended March 31, 2024 and 2023, we earned incentive fees of $406 and $8,045, respectively, from the Joint Venture, which is reflected in the Equity In Income of Joint Venture line item in the Consolidated Statements of Operations.

The Joint Venture has three buildings under development comprising an aggregate 1.8 million square feet (the "Project") at March 31, 2024. During the year ended December 31, 2022, in connection with the Project, the Joint Venture entered into a construction loan with a capacity of $149,514 with a third party lender (the "Joint Venture Loan"). As of March 31, 2024 and December 31, 2023, the balance of the Joint Venture Loan is $110,166 and $95,711, respectively, excluding $615 and $730, respectively, of unamortized debt issuance costs. With respect to the Joint Venture Loan, we provided a completion guarantee to the lender and our third-party joint venture partner that requires the Company to timely complete construction of the Project. Total estimated investment for the Project is approximately $214,766 and the Joint Venture is using a third-party general contractor to develop the buildings pursuant to a guaranteed maximum price contract. We also provided a guarantee to the lender related to typical non-recourse exceptions and an environmental indemnity. It is not possible to estimate the amount of additional costs, if any, that we may incur in connection with our completion guarantees to the third party lender and/or our joint venture partner as well as the non-recourse exception and environmental indemnity guarantees; however, we do not expect that we will be required to make any significant payments in satisfaction of these guarantees.