Quarterly report pursuant to Section 13 or 15(d)

Investments In Unconsolidated Joint Ventures

v3.21.2
Investments In Unconsolidated Joint Ventures
9 Months Ended
Sep. 30, 2021
Investments In Unconsolidated Joint Ventures [Line Items]  
Investments In Unconsolidated Joint Ventures 4.    INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

As of September 30, 2021, the Company had an aggregate investment of approximately $148.5 million in its equity method joint ventures. The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties. As of September 30, 2021, the unconsolidated joint ventures owned: six multi-family properties totaling 1,786 apartment units, a retail property aggregating approximately 51,000 square feet, a 351-room hotel, a development project for up to approximately 360 apartment units, which commenced initial operation in March 2021; and interests and/or rights to developable land parcels able to accommodate up to 1,621 apartment units. The Company’s unconsolidated interests range from 20 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.

The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures. The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture. The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. As of September 30,

2021, such debt had a total borrowing capacity of up to $303.8 million of which the Company agreed to guarantee up to $33.2 million. As of September 30, 2021, the outstanding balance of such debt totaled $295.8 million of which $32.4 million was guaranteed by the Company. The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $0.9 million and $1.2 million for such services in the three months ended September 30, 2021 and 2020, respectively. The Company had $0.2 million and $0.3 million in accounts receivable due from its unconsolidated joint ventures as of September 30, 2021 and December 31, 2020, respectively.

Included in the Company’s investments in unconsolidated joint ventures as of September 30, 2021 are three unconsolidated development joint ventures, two of which are currently completed-development, in-service operating properties, which are VIEs for which the Company is not the primary beneficiary. These joint ventures were primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs. The Company’s aggregate investment in these VIEs was approximately $104.3 million as of September 30, 2021. The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $138.3 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $34.0 million. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide. In general, future costs of development not financed through third parties will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages. 

The following is a summary of the Company's unconsolidated joint ventures as of September 30, 2021 and December 31, 2020 (dollars in thousands):

Property Debt

Number of

Company's

Carrying Value

As of September 30, 2021

Apartment Units

Effective

September 30,

December 31,

Maturity

Interest

Entity / Property Name

or Rentable SF

Ownership % (a)

2021

2020

Balance

Date

Rate

Multi-family

Metropolitan and Lofts at
40 Park (b) (c)

189 

units

25.00 

%

$

2,688 

$

3,347 

$

60,767 

(d)

(d)

RiverTrace at Port Imperial

316 

units

22.50 

%

6,139 

6,667 

82,000 

11/10/26

3.21

%

PI North - Riverwalk C (e)

360 

units

40.00 

%

36,709 

36,992 

103,954 

12/06/21

L+

2.75

%

Riverpark at Harrison (k)

141 

units

45.00 

%

(521)

681 

30,192 

07/01/35

3.19

%

Station House

378 

units

50.00 

%

33,542 

34,026 

93,789 

07/01/33

4.82

%

Urby at Harborside (f)

762 

units

85.00 

%

67,588 

72,752 

191,805 

08/01/29

5.197

%

PI North - Land (b) (g)

771 

potential units

20.00 

%

1,678 

1,678 

-

-

-

Liberty Landing

850 

potential units

50.00 

%

337 

337 

-

-

-

Office

12 Vreeland Road (h)

139,750 

sf

50.00 

%

-

1,811 

-

-

-

Offices at Crystal Lake (i)

106,345 

sf

31.25 

%

-

3,744 

-

-

-

Other

Hyatt Regency Hotel Jersey City

351 

rooms

50.00 

%

-

-

100,000 

10/01/26

3.668

%

Other (j)

347 

347 

-

-

-

Totals:

$

148,507 

$

162,382 

$

662,507 

(a)Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.

(b)The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.

(c)Through the joint venture, the Company also owns a 25 percent interest in a 50,973 square feet retail building ("Shops at 40 Park") and a 50 percent interest in a 59-unit, five story multi-family rental property ("Lofts at 40 Park").

(d)Property debt balance consists of: (i) an interest only loan, collateralized by the Metropolitan at 40 Park, with a balance of $36,500, bears interest at LIBOR +2.85 percent, matures in October 2023; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,067, bears interest at LIBOR +1.50 percent and matures in October 2022; (iii) an interest only loan, collateralized by the Lofts at 40 Park, with a balance of $18,200, which bears interest at LIBOR +1.50 percent and matures in January 2023.

(e)The venture has a construction loan with a maximum borrowing amount of $112,000, of which the Company has guaranteed 10 percent of the principal outstanding. The loan has a one year extension option.

(f)The Company owns an 85 percent interest with shared control over major decisions such as, approval of budgets, property financings and leasing guidelines. The Company has guaranteed $22 million of the principal outstanding debt.

(g)The Company owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J that can accommodate the development of 771 apartment units.

(h)On April 29, 2021, the Company sold its interest in the joint venture for a gross sales price of approximately $2 million.

(i)On September 1, 2021, the Company sold its interest in the joint venture for a gross sales price of approximately $1.9 million.

(j)The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses

are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term. 

(k)The negative carrying value of the Company’s interest in the venture as of September 30, 2021 reflects the Company’s agreement to contribute capital to the venture of approximately $500,000, in connection with the venture’s settlement obligations.

 

The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

Entity / Property Name

2021

2020

2021

2020

Multi-family

Metropolitan and Lofts at 40 Park

$

(163)

$

(276)

$

(659)

$

(611)

RiverTrace at Port Imperial

(4)

(3)

(14)

130 

Crystal House (c)

-

(257)

-

(598)

PI North - Riverwalk C (d)

171 

(102)

(287)

(340)

Riverpark at Harrison (e)

(1,008)

(62)

(1,135)

(186)

Station House

(291)

(677)

(1,109)

(1,816)

Urby at Harborside

(1,026)

1,924 

(90)

1,915 

PI North - Land

(38)

-

(156)

-

Liberty Landing

(3)

-

(3)

-

Office

12 Vreeland Road

-

92 

2 

350 

Offices at Crystal Lake (f)

22 

72 

(113)

147 

Other

Riverwalk Retail (b)

-

-

-

(11)

Hyatt Regency Hotel Jersey City

-

412 

-

363 

Other

616 

250 

733 

376 

Company's equity in earnings (loss) of unconsolidated joint ventures (a)

$

(1,724)

$

1,373 

$

(2,831)

$

(281)

 

(a)Amounts are net of amortization of basis differences of $141 and $143 for the three months ended September 30, 2021 and 2020, respectively, and $427 and $438 for the nine months ended September 30, 2021 and 2020, respectively.

(b)On March 12, 2020, the Company acquired its equity partner's 80 percent interest and increased ownership to 100 percent.

(c)On December 31, 2020, the Crystal House Apartment Investors LLC, an unconsolidated joint venture property sold its sole apartment property. The Company realized its share of the gain on the property sale from the unconsolidated joint venture of $35.1 million.

(d)The property commenced operations in second quarter 2021.

(e)As of September 30, 2021, the joint venture agreed to settle certain obligations regarding a previously owned development project, of which the Company’s share of the expense for such settlement was $0.9 million, which was recorded in equity in earnings for this venture in the three and nine months ended September 30, 2021.

(f)On September 1, 2021, the Company sold its interest in this unconsolidated joint venture to its venture partner for $1.9 million, and realized a loss on the sale of approximately $1.9 million.

 
Mack-Cali Realty LP [Member]  
Investments In Unconsolidated Joint Ventures [Line Items]  
Investments In Unconsolidated Joint Ventures 4.    INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

As of September 30, 2021, the Company had an aggregate investment of approximately $148.5 million in its equity method joint ventures. The Company formed these ventures with unaffiliated third parties, or acquired interests in them, to develop or manage primarily office and multi-family rental properties, or to acquire land in anticipation of possible development of office and multi-family rental properties. As of September 30, 2021, the unconsolidated joint ventures owned: six multi-family properties totaling 1,786 apartment units, a retail property aggregating approximately 51,000 square feet, a 351-room hotel, a development project for up to approximately 360 apartment units, which commenced initial operation in March 2021; and interests and/or rights to developable land parcels able to accommodate up to 1,621 apartment units. The Company’s unconsolidated interests range from 20 percent to 85 percent subject to specified priority allocations in certain of the joint ventures.

The amounts reflected in the following tables (except for the Company’s share of equity in earnings) are based on the historical financial information of the individual joint ventures. The Company does not record losses of the joint ventures in excess of its investment balances unless the Company is liable for the obligations of the joint venture or is otherwise committed to provide financial support to the joint venture. The outside basis portion of the Company’s investments in joint ventures is amortized over the anticipated useful lives of the underlying ventures’ tangible and intangible assets acquired and liabilities assumed. Unless otherwise noted below, the debt of the Company’s unconsolidated joint ventures generally is non-recourse to the Company, except for customary exceptions pertaining to such matters as intentional misuse of funds, environmental conditions, and material misrepresentations.

The Company has agreed to guarantee repayment of a portion of the debt of its unconsolidated joint ventures. As of September 30,

2021, such debt had a total borrowing capacity of up to $303.8 million of which the Company agreed to guarantee up to $33.2 million. As of September 30, 2021, the outstanding balance of such debt totaled $295.8 million of which $32.4 million was guaranteed by the Company. The Company performed management, leasing, development and other services for the properties owned by the unconsolidated joint ventures and recognized $0.9 million and $1.2 million for such services in the three months ended September 30, 2021 and 2020, respectively. The Company had $0.2 million and $0.3 million in accounts receivable due from its unconsolidated joint ventures as of September 30, 2021 and December 31, 2020, respectively.

Included in the Company’s investments in unconsolidated joint ventures as of September 30, 2021 are three unconsolidated development joint ventures, two of which are currently completed-development, in-service operating properties, which are VIEs for which the Company is not the primary beneficiary. These joint ventures were primarily established to develop real estate property for long-term investment and were deemed VIEs primarily based on the fact that the equity investment at risk was not sufficient to permit the entities to finance their activities without additional financial support. The initial equity contributed to these entities was not sufficient to fully finance the real estate construction as development costs are funded by the partners throughout the construction period. The Company determined that it was not the primary beneficiary of these VIEs based on the fact that the Company has shared control of these entities along with the entity’s partners and therefore does not have controlling financial interests in these VIEs. The Company’s aggregate investment in these VIEs was approximately $104.3 million as of September 30, 2021. The Company’s maximum exposure to loss as a result of its involvement with these VIEs is estimated to be approximately $138.3 million, which includes the Company’s current investment and estimated future funding commitments/guarantees of approximately $34.0 million. The Company has not provided financial support to these VIEs that it was not previously contractually required to provide. In general, future costs of development not financed through third parties will be funded with capital contributions from the Company and its outside partners in accordance with their respective ownership percentages. 

The following is a summary of the Company's unconsolidated joint ventures as of September 30, 2021 and December 31, 2020 (dollars in thousands):

Property Debt

Number of

Company's

Carrying Value

As of September 30, 2021

Apartment Units

Effective

September 30,

December 31,

Maturity

Interest

Entity / Property Name

or Rentable SF

Ownership % (a)

2021

2020

Balance

Date

Rate

Multi-family

Metropolitan and Lofts at
40 Park (b) (c)

189 

units

25.00 

%

$

2,688 

$

3,347 

$

60,767 

(d)

(d)

RiverTrace at Port Imperial

316 

units

22.50 

%

6,139 

6,667 

82,000 

11/10/26

3.21

%

PI North - Riverwalk C (e)

360 

units

40.00 

%

36,709 

36,992 

103,954 

12/06/21

L+

2.75

%

Riverpark at Harrison (k)

141 

units

45.00 

%

(521)

681 

30,192 

07/01/35

3.19

%

Station House

378 

units

50.00 

%

33,542 

34,026 

93,789 

07/01/33

4.82

%

Urby at Harborside (f)

762 

units

85.00 

%

67,588 

72,752 

191,805 

08/01/29

5.197

%

PI North - Land (b) (g)

771 

potential units

20.00 

%

1,678 

1,678 

-

-

-

Liberty Landing

850 

potential units

50.00 

%

337 

337 

-

-

-

Office

12 Vreeland Road (h)

139,750 

sf

50.00 

%

-

1,811 

-

-

-

Offices at Crystal Lake (i)

106,345 

sf

31.25 

%

-

3,744 

-

-

-

Other

Hyatt Regency Hotel Jersey City

351 

rooms

50.00 

%

-

-

100,000 

10/01/26

3.668

%

Other (j)

347 

347 

-

-

-

Totals:

$

148,507 

$

162,382 

$

662,507 

(a)Company's effective ownership % represents the Company's entitlement to residual distributions after payments of priority returns, where applicable.

(b)The Company's ownership interests in this venture are subordinate to its partner's preferred capital balance and the Company is not expected to meaningfully participate in the venture's cash flows in the near term.

(c)Through the joint venture, the Company also owns a 25 percent interest in a 50,973 square feet retail building ("Shops at 40 Park") and a 50 percent interest in a 59-unit, five story multi-family rental property ("Lofts at 40 Park").

(d)Property debt balance consists of: (i) an interest only loan, collateralized by the Metropolitan at 40 Park, with a balance of $36,500, bears interest at LIBOR +2.85 percent, matures in October 2023; (ii) an amortizable loan, collateralized by the Shops at 40 Park, with a balance of $6,067, bears interest at LIBOR +1.50 percent and matures in October 2022; (iii) an interest only loan, collateralized by the Lofts at 40 Park, with a balance of $18,200, which bears interest at LIBOR +1.50 percent and matures in January 2023.

(e)The venture has a construction loan with a maximum borrowing amount of $112,000, of which the Company has guaranteed 10 percent of the principal outstanding. The loan has a one year extension option.

(f)The Company owns an 85 percent interest with shared control over major decisions such as, approval of budgets, property financings and leasing guidelines. The Company has guaranteed $22 million of the principal outstanding debt.

(g)The Company owns a 20 percent residual interest in undeveloped land parcels: parcels 6, I, and J that can accommodate the development of 771 apartment units.

(h)On April 29, 2021, the Company sold its interest in the joint venture for a gross sales price of approximately $2 million.

(i)On September 1, 2021, the Company sold its interest in the joint venture for a gross sales price of approximately $1.9 million.

(j)The Company owns other interests in various unconsolidated joint ventures, including interests in assets previously owned and interest in ventures whose businesses

are related to its core operations. These ventures are not expected to significantly impact the Company's operations in the near term. 

(k)The negative carrying value of the Company’s interest in the venture as of September 30, 2021 reflects the Company’s agreement to contribute capital to the venture of approximately $500,000, in connection with the venture’s settlement obligations.

 

The following is a summary of the Company’s equity in earnings (loss) of unconsolidated joint ventures for the nine months ended September 30, 2021 and 2020 (dollars in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

Entity / Property Name

2021

2020

2021

2020

Multi-family

Metropolitan and Lofts at 40 Park

$

(163)

$

(276)

$

(659)

$

(611)

RiverTrace at Port Imperial

(4)

(3)

(14)

130 

Crystal House (c)

-

(257)

-

(598)

PI North - Riverwalk C (d)

171 

(102)

(287)

(340)

Riverpark at Harrison (e)

(1,008)

(62)

(1,135)

(186)

Station House

(291)

(677)

(1,109)

(1,816)

Urby at Harborside

(1,026)

1,924 

(90)

1,915 

PI North - Land

(38)

-

(156)

-

Liberty Landing

(3)

-

(3)

-

Office

12 Vreeland Road

-

92 

2 

350 

Offices at Crystal Lake (f)

22 

72 

(113)

147 

Other

Riverwalk Retail (b)

-

-

-

(11)

Hyatt Regency Hotel Jersey City

-

412 

-

363 

Other

616 

250 

733 

376 

Company's equity in earnings (loss) of unconsolidated joint ventures (a)

$

(1,724)

$

1,373 

$

(2,831)

$

(281)

 

(a)Amounts are net of amortization of basis differences of $141 and $143 for the three months ended September 30, 2021 and 2020, respectively, and $427 and $438 for the nine months ended September 30, 2021 and 2020, respectively.

(b)On March 12, 2020, the Company acquired its equity partner's 80 percent interest and increased ownership to 100 percent.

(c)On December 31, 2020, the Crystal House Apartment Investors LLC, an unconsolidated joint venture property sold its sole apartment property. The Company realized its share of the gain on the property sale from the unconsolidated joint venture of $35.1 million.

(d)The property commenced operations in second quarter 2021.

(e)As of September 30, 2021, the joint venture agreed to settle certain obligations regarding a previously owned development project, of which the Company’s share of the expense for such settlement was $0.9 million, which was recorded in equity in earnings for this venture in the three and nine months ended September 30, 2021.

(f)On September 1, 2021, the Company sold its interest in this unconsolidated joint venture to its venture partner for $1.9 million, and realized a loss on the sale of approximately $1.9 million.