Investments in Unconsolidated Real Estate Joint Ventures | Investments in Unconsolidated Real Estate Joint Ventures The equity method of accounting is used to account for each of the individual joint ventures. We have an ownership interest in the following unconsolidated real estate joint ventures: As of September 30, 2016 Joint Venture Outlet Center Location Ownership % Square Feet (in 000's) Carrying Value of Investment (in millions) Total Joint Venture Debt, Net (in millions) (1) Columbus Columbus, OH 50.0 % 355 $ 44.3 $ — National Harbor National Harbor, MD 50.0 % 341 4.7 86.0 RioCan Canada Various 50.0 % 901 121.9 11.5 $ 170.9 $ 97.5 Charlotte (3) Charlotte, NC 50.0 % 398 $ (2.2 ) $ 89.7 Galveston/Houston (3) Texas City, TX 50.0 % 353 (3.3 ) 64.8 $ (5.5 ) $ 154.5 As of December 31, 2015 Joint Venture Outlet Center Location Ownership % Square Feet (in 000's) Carrying Value of Investment (in millions) Total Joint Venture Debt, Net (1) Columbus Columbus, OH 50.0 % — $ 21.1 $ — National Harbor National Harbor, MD 50.0 % 339 6.1 85.8 RioCan Canada Various 50.0 % 870 117.2 11.3 Savannah (2) Savannah, GA 50.0 % 377 44.4 87.6 Westgate Glendale, AZ 58.0 % 411 12.3 61.9 $ 201.1 $ 246.6 Charlotte (3) Charlotte, NC 50.0 % 398 $ (1.1 ) $ 89.6 Galveston/Houston (3) Texas City, TX 50.0 % 353 (1.5 ) 64.7 $ (2.6 ) $ 154.3 (1) Net of debt origination costs and including premiums of $912,000 and $3.3 million as of September 30, 2016 and December 31, 2015, respectively. (2) Based on capital contribution and distribution provisions in the joint venture agreement, our economic interest in the venture's cash flow was greater than indicated in the Ownership column, which states our legal interest in this venture. As of December 31, 2015, based upon the liquidation proceeds we would receive from a hypothetical liquidation of our investment based on depreciated book value, our estimated economic interest in the venture was approximately 98% . Our economic interest may fluctuate based on a number of factors, including mortgage financing, partnership capital contributions and distributions, and proceeds from gains or losses of asset sales. (3) The negative carrying value is due to the distributions of proceeds from mortgage loans and quarterly distributions of excess cash flow exceeding the original contributions from the partners. Fees we received for various services provided to our unconsolidated joint ventures were recognized in management, leasing and other services as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2016 2015 2016 2015 Fee: Development and leasing $ 65 $ 325 $ 611 $ 1,632 Loan guarantee 85 182 449 564 Management and marketing 656 746 2,199 2,067 Total Fees $ 806 $ 1,253 $ 3,259 $ 4,263 Our investments in real estate joint ventures are reduced by the percentage of the profits earned for leasing and development services associated with our ownership interest in each joint venture. Our carrying value of investments in unconsolidated joint ventures differs from our share of the assets reported in the "Summary Balance Sheets - Unconsolidated Joint Ventures" shown below due to adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the unconsolidated joint ventures. The differences in basis (totaling $3.7 million and $3.9 million as of September 30, 2016 and December 31, 2015 , respectively) are amortized over the various useful lives of the related assets. Columbus In June 2016, we opened an approximately 355,000 square foot outlet center in Columbus, Ohio. As of September 30, 2016 , we and our partner had each contributed $40.5 million to fund development activities. We are providing property management, marketing and leasing services to the joint venture. During construction, our partner provided development services to the joint venture and we, along with our partner, provided joint leasing services. Savannah In May 2016, we expanded our outlet center in Savannah by approximately 42,000 square feet, bringing the outlet center's total gross leasable area to approximately 419,000 square feet. As described in Note 3, we acquired our partners' interest in the Savannah joint venture in August 2016 and have consolidated the property for financial reporting purposes since the acquisition date. Westgate As described in Note 3, we acquired our partners' interest in the Westgate joint venture in June 2016 and have consolidated the property for financial reporting purposes since the acquisition date. RioCan Canada Rental property held and used by our RioCan joint venture is reviewed for impairment in the event that facts and circumstances indicate the carrying amount of an asset may not be recoverable. In such an event, the estimated future undiscounted cash flows associated with the asset is compared to the asset's carrying amount, and if less, recognize an impairment loss in an amount by which the carrying amount exceeds its fair value. During the third quarter 2016, the joint venture determined for its Bromont, Quebec outlet center that the estimated future undiscounted cash flows of that property did not exceed the property's carrying value based on deteriorating amounts of net operating income. Therefore, the joint venture recorded a $5.8 million non-cash impairment charge in its statement of operations, which equaled the excess of the property's carrying value over its fair value. The fair value was determined using a market approach considering the prevailing market income capitalization rates and sales data for transactions involving similar assets. Our share of this impairment charge, $2.9 million , was recorded in equity in earnings of unconsolidated joint ventures in our consolidated statement of operations. Condensed combined summary financial information of unconsolidated joint ventures accounted for using the equity method is as follows (in thousands): Condensed Combined Balance Sheets - Unconsolidated Joint Ventures September 30, 2016 December 31, 2015 Assets Land $ 89,036 $ 103,046 Buildings, improvements and fixtures 497,892 615,662 Construction in progress, including land 14,933 62,308 601,861 781,016 Accumulated depreciation (61,890 ) (60,629 ) Total rental property, net 539,971 720,387 Cash and cash equivalents 28,649 28,723 Deferred lease costs, net 14,408 18,399 Prepaids and other assets 12,794 14,455 Total assets $ 595,822 $ 781,964 Liabilities and Owners' Equity Mortgages payable, net $ 252,019 $ 400,935 Accounts payable and other liabilities 24,979 31,805 Total liabilities 276,998 432,740 Owners' equity 318,824 349,224 Total liabilities and owners' equity $ 595,822 $ 781,964 Three months ended Nine months ended Condensed Combined Statements of Operations September 30, September 30, - Unconsolidated Joint Ventures 2016 2015 2016 2015 Revenues $ 25,654 $ 27,495 $ 82,693 $ 77,648 Expenses Property operating 9,103 9,601 30,499 29,912 General and administrative 95 92 390 400 Asset impairment 5,838 — 5,838 — Depreciation and amortization 8,001 9,003 26,208 25,381 Total expenses 23,037 18,696 62,935 55,693 Operating income 2,617 8,799 19,758 21,955 Interest expense (1,925 ) (2,324 ) (7,161 ) (6,304 ) Other nonoperating income 2 4 5 17 Net income $ 694 $ 6,479 $ 12,602 $ 15,668 The Company and Operating Partnership's share of: Net income $ 715 $ 3,713 $ 7,680 $ 8,302 Depreciation expense (real estate related) $ 4,325 $ 5,411 $ 15,472 $ 14,525 |