Variable Interest Entities

9 Months Ended

Sep. 30, 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:


	September 30, 2024		December 31, 2023
ASSETS
Assets:
Net Investment in Real Estate	$	296,549	$	302,869


Operating Lease Right-of-Use Assets	12,842		12,910
Cash and Cash Equivalents	2,499		2,221

Deferred Rent Receivable	16,047		15,601
Prepaid Expenses and Other Assets, Net	15,764		12,945
Total Assets	$	343,701	$	346,546
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:

Accounts Payable, Accrued Expenses and Other Liabilities	$	10,410	$	9,698
Operating Lease Liabilities	10,194		10,219
Rents Received in Advance and Security Deposits	7,633		8,368
Partners' Capital	315,464		318,261
Total Liabilities and Partners' Capital	$	343,701	$	346,546

Joint Venture

The Joint Venture was formed for the purpose of developing, leasing, operating and selling land located in the Phoenix, Arizona metropolitan area. We hold our Joint Venture interest through a consolidated partnership (the "Joint Venture Partnership") in which we hold an 88% interest and in which a third-party partner holds the remaining 12% interest. As 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 share as Noncontrolling Interest (see Note 6). The Joint Venture Partnership holds a 49% interest in the unconsolidated Joint Venture, which we account for under the equity method of accounting. Excluding the minority interest holder's share, we own a 43% interest in the Joint Venture. The Joint Venture Partnership is held through a wholly-owned TRS of the Operating Partnership.

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 nine months ended September 30, 2024 and 2023, we earned fees of $2,113 and $4,693, 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 $427 and $955, respectively, due to our economic interest in the Joint Venture. During the nine months ended September 30, 2024 and 2023, we incurred fees of $1,005 and $2,690, respectively, related to third-party development, property management and leasing services associated with the Joint Venture. At September 30, 2024 and December 31, 2023, we had a receivable from the Joint Venture of $190 and $138, respectively.

Net income of the Joint Venture for the nine months ended September 30, 2024 and 2023 was $4,581 and $44,334, respectively. Included in net income during the nine months ended September 30, 2024 was gain on sale of real estate of $495. The gain on sale of real estate recognized by the Joint Venture during the nine months ended September 30, 2024 relates to gain that was deferred on land sales during the years ended December 31, 2023 and 2022. The 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 gain on sale was $243. Included in net income of the Joint Venture during the nine months ended September 30, 2023 is gain on sale of real estate of $40,283 related to the sale of approximately 31 acres of land for which our economic share was $19,739. For the nine months ended September 30, 2024 and 2023, we earned incentive fees of $916 and $8,903, respectively, from the Joint Venture, which is reflected in the Equity In Income of Joint Venture line item in the Consolidated Statements of Operations.

During the nine months ended September 30, 2024, the Joint Venture substantially completed development of three buildings totaling an aggregate 1.8 million square feet of GLA (the "Project"). 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 September 30, 2024 and December 31, 2023, the balance of the Joint Venture Loan is $125,807 and $95,711, respectively, excluding $384 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 $224,020 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.