TAUBMAN CENTERS INC, 10-K filed on 2/27/2020
Annual Report
v3.19.3.a.u2
Document and Entity Information Document - USD ($)
$ / shares in Units, $ in Billions
12 Months Ended
Dec. 31, 2019
Feb. 26, 2020
Jun. 28, 2019
Entity Information [Line Items]      
Entity Central Index Key 0000890319    
Document Type 10-K    
Document Annual Report true    
Document Transition Report false    
Document Period End Date Dec. 31, 2019    
Entity File Number 1-11530    
Entity Registrant Name TAUBMAN CENTERS, INC.    
Entity Incorporation, State or Country Code MI    
Entity Tax Identification Number 38-2033632    
Entity Address, Address Line One 200 East Long Lake Road,    
Entity Address, Address Line Two Suite 300,    
Entity Address, City or Town Bloomfield Hills,    
Entity Address, State or Province MI    
Entity Address, Country US    
Entity Address, Postal Zip Code 48304-2324    
City Area Code (248)    
Local Phone Number 258-6800    
Current Fiscal Year End Date --12-31    
Amendment Flag false    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
Entity Shell Company false    
Document Fiscal Year Focus 2019    
Document Fiscal Period Focus FY    
Equity in Common Stock, Shares Held by Non-Affiliates, Shares     59,434,600
Entity Public Float     $ 2.4
Share Price $ 31.09   $ 40.83
Entity Common Stock, Shares Outstanding   61,238,366  
Common Stock [Member]      
Entity Information [Line Items]      
Title of 12(b) Security Common Stock, $0.01 Par Value    
Trading Symbol TCO    
Security Exchange Name NYSE    
Series J Preferred Stock [Member]      
Entity Information [Line Items]      
Title of 12(b) Security 6.5% Series J Cumulative Redeemable Preferred Stock,No Par Value    
Trading Symbol TCO PR J    
Security Exchange Name NYSE    
Series K Preferred Stock [Member]      
Entity Information [Line Items]      
Title of 12(b) Security 6.25% Series K CumulativeRedeemable Preferred Stock,No Par Value    
Trading Symbol TCO PR K    
Security Exchange Name NYSE    
v3.19.3.a.u2
CONSOLIDATED BALANCE SHEET - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Assets:    
Properties (Notes 1, 4, and 8) $ 4,731,061 $ 4,717,569
Accumulated depreciation and amortization (1,514,992) (1,404,692)
Real Estate Investment Property, Net 3,216,069 3,312,877
Investment in Unconsolidated Joint Ventures (UJVs) (Notes 2 and 5) 831,995 673,616
Cash and cash equivalents (Note 18) 102,762 48,372
Restricted cash (Notes 1 and 18) 656 94,557
Accounts and notes receivable (Note 6) 95,416 77,730
Accounts receivable from related parties (Note 12) 2,112 1,818
Operating lease right-of-use assets (Note 11) 173,796  
Deferred charges and other assets (Note 7) 92,659 135,136
Total Assets 4,515,465 4,344,106
Liabilities:    
Notes payable, net (Note 8) 3,710,327 3,830,195
Accounts payable and accrued liabilities 268,714 336,208
Operating lease liabilities (Note 11) 240,777  
Distributions in excess of investments in and net income of UJVs (Note 5) 473,053 477,800
Total Liabilities 4,692,871 4,644,203
Commitments and contingencies (Notes 8, 9, 10, 11, 13, and 15)
Redeemable noncontrolling interests (Note 9) 0 7,800
Equity:    
Series B Non-Participating Convertible Preferred Stock, $0.001 par and liquidation value, 40,000,000 shares authorized, 26,398,473 and 24,862,994 shares issued and outstanding at December 31, 2019 and 2018 26 25
Common Stock, $0.01 par value, 250,000,000 shares authorized, 61,228,579 and 61,069,108 shares issued and outstanding at December 31, 2019 and 2018 612 611
Additional paid-in capital 741,026 676,097
Accumulated other comprehensive income (loss) (Notes 10 and 19) (39,003) (25,376)
Dividends in excess of net income (Notes 1 and 10) (712,884) (744,230)
Stockholders' Equity Attributable to Parent (10,223) (92,873)
Noncontrolling interests (Notes 1 and 9) (167,183) (215,024)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest (177,406) (307,897)
Total Liabilities and Equity $ 4,515,465 $ 4,344,106
v3.19.3.a.u2
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Common stock, par value per share $ 0.01 $ 0.01
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 61,228,579 61,069,108
Common stock, shares outstanding 61,228,579 61,069,108
Series B Preferred Stock [Member]    
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, shares authorized 40,000,000 40,000,000
Preferred Stock, shares issued 26,398,473 24,862,994
Preferred Stock, shares outstanding 26,398,473 24,862,994
Series J Preferred Stock [Member]    
Preferred Stock, par value $ 0 $ 0
Preferred Stock, liquidation preference, value $ 192,500,000 $ 192,500,000
Preferred Stock, shares authorized 7,700,000 7,700,000
Preferred Stock, shares issued 7,700,000 7,700,000
Preferred Stock, shares outstanding 7,700,000 7,700,000
Series K Preferred Stock [Member]    
Preferred Stock, par value $ 0 $ 0
Preferred Stock, liquidation preference, value $ 170,000,000 $ 170,000,000
Preferred Stock, shares authorized 6,800,000 6,800,000
Preferred Stock, shares issued 6,800,000 6,800,000
Preferred Stock, shares outstanding 6,800,000 6,800,000
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CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Revenues:      
Rental revenues (Note 11) $ 581,755,000    
Minimum rents (Note 11) $ 353,226,000 $ 345,557,000
Overage rents 19,210,000 16,670,000 16,923,000
Expense recoveries (Note 11) 205,514,000 211,625,000
Management, leasing, and development services 4,846,000 3,271,000 4,383,000
Other (Note 11) 55,243,000 62,189,000 50,677,000
Total Revenues 661,054,000 640,870,000 629,165,000
Expenses:      
Maintenance, taxes, utilities, and promotion 163,538,000 157,957,000 167,091,000
Other operating (Notes 1 and 11) 82,488,000 87,308,000 94,513,000
Management, leasing, and development services 3,582,000 1,470,000 2,157,000
General and administrative 40,566,000 37,174,000 39,018,000
Impairment charge (Note 1) 72,232,000 0 0
Restructuring charges (Note 1) 3,543,000 596,000 13,848,000
Costs associated with shareholder activism (Note 1) 17,305,000 12,500,000 14,500,000
Interest expense 148,407,000 133,197,000 108,572,000
Depreciation and amortization 188,407,000 179,275,000 167,806,000
Total Expenses 720,068,000 609,477,000 607,505,000
Nonoperating income, net (Notes 7 and 15) 27,449,000 14,714,000 23,828,000
Income (loss) before income tax benefit (expense), equity in income of UJVs, gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs (31,565,000) 46,107,000 45,488,000
Income tax benefit (expense) (Note 3) (6,332,000) 231,000 (105,000)
Equity in income of UJVs (Note 5) 49,166,000 69,404,000 67,374,000
Income before gains on partial dispositions of ownership interests in UJVs, net of tax, and gains on remeasurements of ownership interests in UJVs 11,269,000 115,742,000 112,757,000
Gains on partial dispositions of ownership interests in UJVs, net of tax (Note 2) 154,466,000
Gains on remeasurements of ownership interests in UJVs (Note 2) 164,639,000    
Net income 330,374,000 115,742,000 112,757,000
Net income attributable to noncontrolling interests (Note 9) (100,898,000) (32,256,000) (32,052,000)
Net income attributable to Taubman Centers, Inc. 229,476,000 83,486,000 80,705,000
Distributions to participating securities of TRG (Note 13) (2,413,000) (2,396,000) (2,300,000)
Preferred stock dividends (Note 14) (23,138,000) (23,138,000) (23,138,000)
Net income attributable to Taubman Centers, Inc. common shareholders 203,925,000 57,952,000 55,267,000
Other comprehensive income (loss) (Note 19):      
Unrealized gain (loss) on interest rate instruments and other (14,038,000) (38,000) 57,000
Cumulative translation adjustment (14,171,000) (23,240,000) 33,303,000
Reclassification adjustment for amounts recognized in net income (930,000) (1,809,000) 7,564,000
Other Comprehensive Income (Loss), Net of Tax (29,139,000) (25,087,000) 40,924,000
Comprehensive income 301,235,000 90,655,000 153,681,000
Comprehensive income attributable to noncontrolling interests (95,049,000) (24,994,000) (43,956,000)
Comprehensive income attributable to Taubman Centers, Inc. $ 206,186,000 $ 65,661,000 $ 109,725,000
Basic earnings per common share (Note 16) $ 3.33 $ 0.95 $ 0.91
Diluted earnings per common share (Note 16) $ 3.32 $ 0.95 $ 0.91
Weighted average number of common shares outstanding – basic 61,181,983 60,994,444 60,675,129
v3.19.3.a.u2
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($)
$ in Thousands
Total
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income [Member]
Accumulated Distributions in Excess of Net Income [Member]
Noncontrolling Interest [Member]
Former Taubman Asia President Redeemable Noncontrolling Interest [Member]
Balance at Dec. 31, 2016 $ (70,703) $ 25 $ 604 $ 657,281 $ (35,916) $ (549,914) $ (142,783)  
Balance, shares at Dec. 31, 2016   39,529,059 60,430,613          
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15) 0   $ (1) (1)        
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15), shares   (90,945) (90,950)          
Share-based compensation under employee and director benefit plans (Note 13) 18,049   $ 3 18,046        
Share-based compensation under employee and director benefit plans (Note 13), shares     311,355          
Former Asia President redeemable equity adjustment (Note 9) 1,204     1,204        
Adjustments of noncontrolling interests (Note 9) (924)     (1,197) (23)   296  
Dividends and distributions (251,927)         (177,266)    
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders             (74,661)  
Other (332)       (332)  
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 9) 113,681         80,705 32,976  
Unrealized gain (loss) on interest rate instruments and other 57       41   16  
Cumulative translation adjustment 33,303       23,615   9,688  
Reclassification adjustment for amounts recognized in net income 7,564       5,364   2,200  
Balance at Dec. 31, 2017 (150,028) $ 25 $ 608 675,333 (6,919) (646,807) (172,268)  
Balance, shares at Dec. 31, 2017   39,438,114 60,832,918          
Payments for Repurchase of Redeemable Noncontrolling Interest              
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15) 0   $ (1) (1)        
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15), shares   (75,120) (77,584)          
Share-based compensation under employee and director benefit plans (Note 13) 6,068   $ 2 6,066        
Share-based compensation under employee and director benefit plans (Note 13), shares     158,606          
Former Asia President redeemable equity adjustment (Note 9) (300)     (300)       300
Adjustments of noncontrolling interests (Note 9) (280)     (601) 47   274  
Dividends and distributions (253,420)         (185,392)    
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders             (68,028)  
Cumulative Effect New Accounting Principle In Period Of Adoption         (679)      
Other (872)     (4,400) (679) 4,483 (276)  
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 9) 116,022         83,486 32,536  
Unrealized gain (loss) on interest rate instruments and other (38)       (26)   (12)  
Cumulative translation adjustment (23,240)       (16,513)   (6,727)  
Reclassification adjustment for amounts recognized in net income (1,809)       (1,286)   523  
Balance at Dec. 31, 2018 (307,897) $ 25 $ 611 676,097 (25,376) (744,230) (215,024)  
Balance, shares at Dec. 31, 2018   39,362,994 61,069,108          
Payments for Repurchase of Redeemable Noncontrolling Interest               (6,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]                
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15) 0              
Issuance of stock pursuant to Continuing Offer (Notes 13, 14, and 15), shares   (55,704) (60,155)          
Issuance of equity for acquisition of interest in UJV (Note 2) 79,320 $ 1         79,319  
Issuance of equity for acquisition of interest in UJV (Note 2), shares   1,500,000            
Share-based compensation under employee and director benefit plans (Note 13) 7,435   $ 1 7,434        
Share-based compensation under employee and director benefit plans (Note 13), shares   91,183 99,316          
Former Asia President redeemable equity adjustment (Note 9) 1,800     1,800       $ (1,800)
Adjustments of noncontrolling interests (Note 9) (237)     55,695 (76)   (55,856)  
Dividends and distributions (263,442)         (190,771)    
Noncontrolling Interest, Decrease from Distributions to Noncontrolling Interest Holders             (72,671)  
Cumulative Effect New Accounting Principle In Period Of Adoption 4,919         3,156 1,763  
Partial dispositions of ownership interests in UJVs (Note 2) 0       9,739 (9,739)    
Other (776)         (776)    
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 9) 330,611         229,476 101,135  
Unrealized gain (loss) on interest rate instruments and other (14,038)       (9,806)   (4,232)  
Cumulative translation adjustment (14,171)       (12,835)   (1,336)  
Reclassification adjustment for amounts recognized in net income (930)       (649)   (281)  
Balance at Dec. 31, 2019 $ (177,406) $ 26 $ 612 $ 741,026 $ (39,003) $ (712,884) $ (167,183)  
Balance, shares at Dec. 31, 2019   40,898,473 61,228,579          
v3.19.3.a.u2
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Cash Flows From Operating Activities:      
Net income $ 330,374,000 $ 115,742,000 $ 112,757,000
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 188,407,000 179,275,000 167,806,000
Provision for bad debts (Note 1) 3,728,000 11,025,000
Gains on partial dispositions of ownership interests in UJVs, net of tax (Note 2) (154,466,000)
Gains on remeasurements of ownership interests in UJVs (Note 2) (164,639,000)    
Gain on Saks settlement - The Mall of San Juan (Note 15) 10,095,000    
Impairment charge (Note 1) 72,232,000 0 0
Gains on sales of peripheral land 1,034,000 (945,000)
Gain on Simon common share conversion (Note 7) (11,613,000)
Fluctuation in fair value of equity securities (Notes 1 and 7) (3,492,000) (2,801,000)  
Income (loss) from UJVs net of distributions 3,981,000 (1,429,000) 845,000
Non-cash operating lease expense 2,074,000    
Other 12,905,000 14,730,000 17,285,000
Increase (decrease) in cash attributable to changes in assets and liabilities:      
Receivables, deferred charges, and other assets (21,670,000) (17,141,000) (26,420,000)
Accounts payable and other liabilities (1,838,000) 2,762,000 7,634,000
Net Cash Provided By Operating Activities 253,773,000 293,832,000 278,374,000
Cash Flows From Investing Activities:      
Additions to properties (196,343,000) (289,854,000) (353,322,000)
Partial reimbursement of Saks anchor allowance at The Mall of San Juan (Note 15) 20,000,000    
Proceeds from partial dispositions of ownership interests in UJVs (Note 2) 285,334,000    
Proceeds from sales of peripheral land 1,260,000 1,300,000
Proceeds from sale of equity securities (Note 7) 52,077,000 54,703,000  
Insurance proceeds for capital items at The Mall of San Juan (Note 15) 948,000 5,768,000  
Contributions to UJVs (Note 2) (70,972,000) (95,329,000) (32,990,000)
Distributions from UJVs in excess of income (Note 2) 6,181,000 (2,173,000) 70,002,000
Other 93,000 89,000 86,000
Net Cash Provided By (Used In) Investing Activities 97,318,000 (325,536,000) (314,924,000)
Cash Flows From Financing Activities:      
Proceeds from (payments to) revolving lines of credit, net (84,675,000) 255,020,000 269,955,000
Debt proceeds 10,080,000 800,000,000 336,749,000
Debt payments (36,912,000) (778,549,000) (308,673,000)
Debt issuance costs (7,622,000) (5,112,000) (6,665,000)
Issuance of common stock and/or TRG Units in connection with incentive plans (816,000) (2,396,000) 6,289,000
Distributions to noncontrolling interests (Note 9) (78,671,000) (68,028,000) (74,661,000)
Distributions to participating securities of TRG (2,413,000) (2,396,000) (2,300,000)
Cash dividends to preferred shareholders (23,138,000) (23,138,000) (23,138,000)
Cash dividends to common shareholders (165,220,000) (159,858,000) (151,828,000)
Net Cash Provided By (Used In) Financing Activities (389,387,000) 15,543,000 45,728,000
Effect of Exchange Rate on Cash and Cash Equivalents (1,215,000) (5,314,000) 2,261,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect (39,511,000) (21,475,000) 11,439,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at Beginning of Year 142,929,000 164,404,000 152,965,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents at End of Year $ 103,418,000 $ 142,929,000 $ 164,404,000
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Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Documents Incorporated by Reference [Text Block]

Summary of Significant Accounting Policies Summary of Significant Accounting Policies

Organization and Basis of Presentation

General

Taubman Centers, Inc. (TCO) is a Michigan corporation that operates as a self-administered and self-managed real estate investment trust (REIT). TCO's sole asset is an approximate 70% general partnership interest in The Taubman Realty Group Limited Partnership (TRG), which owns direct or indirect interests in all of our real estate properties. In this report, the terms "we", "us", and "our" refers to TCO, TRG, and/or TRG's subsidiaries as the context may require. We own, manage, lease, acquire, dispose of, develop, and expand retail shopping centers and interests therein. Our owned portfolio as of December 31, 2019 included 24 urban and suburban shopping centers operating in 11 U.S. states, Puerto Rico, South Korea, and China. The Taubman Company LLC (the Manager) provides certain management and administrative services for us and for our U.S. properties.

The Consolidated Businesses consist of shopping centers and entities that are controlled, through ownership or contractual agreements, by TRG, the Manager, or Taubman Properties Asia, LLC and its subsidiaries (Taubman Asia). Shopping centers owned through joint ventures that are not controlled by us but over which we have significant influence (Unconsolidated Joint Ventures, or UJVs) are accounted for under the equity method.

In May 2018, we entered into a redevelopment agreement for Taubman Prestige Outlets Chesterfield, and all operations at the center, as well as the building and improvements, were transferred to The Staenberg Group (TSG). TSG leases the land from us through a long-term, participating ground lease. We have the right to terminate the ground lease in the event that a redevelopment has not begun within five years, with the buildings and improvements reverting to us upon such a termination. We have deferred recognition of a sale until our termination right is no longer available, with the right ceasing upon TSG commencing construction of a redevelopment. TSG has made significant progress on its redevelopment plans and the commencement of construction is probable within the year, leading to an expected sale of the property in 2020. Accordingly, the center was classified as held for sale as of December 31, 2019 and an impairment charge of $72.2 million was recognized in the fourth quarter, which reduced the book value of the buildings, improvements, and equipment that were transferred to zero. The shopping center has been excluded from our owned shopping center portfolio disclosure above.

Dollar amounts presented in tables within the notes to the financial statements are stated in thousands, except share data or as otherwise noted.

Consolidation

The consolidated financial statements of TCO include all accounts of TCO, TRG, and its consolidated subsidiaries, including the Manager and Taubman Asia. All intercompany transactions have been eliminated. The entities included in these consolidated financial statements are separate legal entities and maintain records and books of account separate from any other entity. However, inclusion of these separate entities in the consolidated financial statements does not mean that the assets and credit of each of these legal entities are available to satisfy the debts or other obligations of any other such legal entity included in the consolidated financial statements.

In determining the method of accounting for partially owned joint ventures, we evaluate the characteristics of associated entities and determine whether an entity is a variable interest entity (VIE), and, if so, determine whether we are the primary beneficiary by analyzing whether we have both the power to direct the entity's significant economic activities and the obligation to absorb potentially significant losses or receive potentially significant benefits. Significant judgments and assumptions inherent in this analysis include the nature of the entity's operations, the entity's financing and capital structure, and contractual relationship and terms, including consideration of governance and decision making rights. We consolidate a VIE when we have determined that we are the primary beneficiary. All of our consolidated joint ventures, including TRG, meet the definition and criteria as VIEs, as either we or an affiliate of ours is the primary beneficiary of each VIE.

TCO's sole asset is an approximate 70% general partnership interest in TRG and, consequently, substantially all of TCO's consolidated assets and liabilities are assets and liabilities of TRG. All of TCO's debt (Note 8) is an obligation of TRG or our consolidated subsidiaries. Note 8 also provides disclosure of guarantees provided by TRG to certain consolidated joint ventures. Note 9 provides additional disclosures of the carrying balance of the noncontrolling interests in our consolidated joint ventures and other information, including a description of certain rights of the noncontrolling owners.
Investments in UJVs are accounted for under the equity method. We have evaluated our investments in the UJVs under guidance for determining whether an entity is a VIE and have concluded that the ventures are not VIEs. Accordingly, we account for our interests in these entities under general accounting standards for investments in real estate ventures (including guidance for determining effective control of a limited partnership or similar entity). Our partners or other owners in these UJVs have substantive participating rights including approval rights over annual operating budgets, capital spending, financing, admission of new partners/members, or sale of the properties and we have concluded that the equity method of accounting is appropriate for these interests. Specifically, our 79% and 50.1% investments in Westfarms and International Plaza, respectively, are through general partnerships in which the other general partners have participating rights over annual operating budgets, capital spending, refinancing, or sale of the property. We provide our beneficial interest in certain financial information of our UJVs (Notes 5 and 8). This beneficial information is derived as our ownership interest in the investee multiplied by the specific financial statement item being presented. Investors are cautioned that deriving our beneficial interest in this manner may not accurately depict the legal and economic implications of holding a noncontrolling interest in the investee.

TRG

At December 31, 2019 and 2018, TRG's equity included two classes of preferred equity (Series J and K Preferred Equity) and the net equity of the TRG unitholders. Net income and distributions of TRG are allocable first to the preferred equity interests, and the remaining amounts to the general and limited partners in TRG in accordance with their percentage ownership. The Series J and K Preferred Equity are owned by TCO and are eliminated in consolidation.

The partnership equity of TRG and TCO's ownership therein are shown below:
Year
 
TRG Units outstanding at December 31
 
TRG Units owned by TCO at December 31(1)
 
TRG Units owned by noncontrolling interests at December 31
 
TCO's % interest in TRG at December 31
 
TCO's average interest % in TRG
2019
 
87,644,651

 
61,228,579

 
26,416,072

 
70%
 
70%
2018
 
85,946,862

 
61,069,108

 
24,877,754

 
71
 
71
2017
 
85,788,252

 
60,832,918

 
24,955,334

 
71
 
71

(1)
There is a one-for-one relationship between TRG Units owned by TCO and TCO common shares outstanding; amounts in this column are equal to TCO’s common shares outstanding as of the specified dates.

Outstanding voting securities of TCO at December 31, 2019 consisted of 26,398,473 shares of Series B Non-Participating Convertible Preferred Stock (Series B Preferred Shares) (Note 14) and 61,228,579 shares of common stock.

The remaining approximate 30% of TRG Units are owned by TRG’s partners other than TCO, including Robert S. Taubman, William S. Taubman, Gayle Taubman Kalisman, and the A. Alfred Taubman Restated Revocable Trust (Taubman Family).

Revenue Recognition

General

Shopping center space is generally leased to tenants under short and intermediate term leases that are accounted for as operating leases. Rental revenues are generally recognized on a straight-line basis over the lease terms, unless specific tenant circumstances indicate that the revenue should be recorded on a cash basis. For traditional net leases, where tenants reimburse the landlord for an allocation of reimbursable costs incurred, we recognize revenue in the period the applicable costs are chargeable to tenants. Overage rent is accrued when lessees' specified sales targets have been met (Note 11).










Disaggregation of Revenue

The nature, amount, timing, and uncertainty of individual types of revenues may be affected differently by economic factors. Under Accounting Standards Codification (ASC) Topic 606, "Revenue from Contracts with Customers", we are required to disclose a disaggregation of our revenues derived from contracts with customers that considers economic differences between revenue types. The following table summarizes our disaggregation of consolidated revenues for this purpose.
 
 
Year Ended December 31
 
 
2019
 
2018
 
2017
Expense recoveries(1)
 

 
$
205,514

 
$
211,625

Shopping center and other operational revenues (2)
 
$
55,243

 
48,434

 
40,902

Management, leasing, and development services
 
4,846

 
3,271

 
4,383

Total revenue from contracts with customers
 
$
60,089

 
$
257,219

 
$
256,910


(1)
Pursuant to our adoption of ASC Topic 842, "Leases", beginning January 1, 2019, expense recoveries have been combined with minimum rent on the Consolidated Statement of Operations and Comprehensive Income (Loss) into Rental Revenues and is no longer required to be disaggregated.
(2)
Represents consolidated Other revenue reported on the Consolidated Statement of Operations and Comprehensive Income (Loss) excluding lease cancellation income for the years ended December 31, 2018 and 2017. Pursuant to the adoption of ASC Topic 842, "Leases", beginning January 1, 2019, lease cancellation income is now presented in Rental Revenues on the Consolidated Statement of Operations and Comprehensive Income (Loss).

Nature of Services and Performance Obligations

Expense recoveries revenue represented reimbursements from mall tenants for (1) services performed by us to the benefit of all mall tenants and the property as a whole for common area maintenance, (2) insurance, property taxes, and utilities, and (3) promotion and other miscellaneous charges. Pursuant to our adoption of ASC Topic 842, "Leases", beginning January 1, 2019, expense recoveries have been combined with minimum rent on the Consolidated Statement of Operations and Comprehensive Income (Loss) into Rental Revenues and is no longer required to be disaggregated.

Shopping center and other operational revenues represent a collection of non-core revenue streams that are generated through the course of owning and operating a shopping center, including sponsorship, parking, and storage income, as well as revenues from food and beverage operations. The contracts for these revenue streams are predominately short-term in nature and individually do not contain more than one performance obligation. In addition, we record revenue for property services fees billed for the management of our Asia centers, which represents one performance obligation. We satisfy our performance obligations related to shopping center and other operational revenues either over time or at a point in time, depending on the specific nature of the revenue generating activity. For performance obligations that are satisfied at a point in time, including food and beverage and parking income, the control of the good or service is immediately transferred to the customer upon completion of the performance obligation. Payment terms related to shopping center and other operational revenues vary depending on the nature of the agreement, however, payment is generally due directly upon the satisfaction of the related performance obligation.

Management, leasing, and development services revenue represents income from various services performed by us for our third party customers, as provided for under management agreements. These services typically generate fees that are based on operating results of the shopping centers, the execution and opening of mall tenants, and/or the successful completion of other agreed-upon services. As each management agreement provides for a variety of services, significant judgment is required to identify multiple performance obligations. The standalone selling price of each performance obligation is determined based on the terms of the management agreement and the specific services being rendered. Each performance obligation is considered to be satisfied over time as services are rendered. The related revenue is recognized upon billing, as the amounts invoiced generally correspond directly with the value the customer is receiving from the services. Customers are invoiced on a quarterly basis and payment is generally due within 30 days of each calendar quarter.

Information about Contract Balances and Unsatisfied Performance Obligations

Contract assets exist when we have a right to payment for services rendered that remains conditional on factors other than the passage of time. Similarly, contract liabilities are incurred when customers prepay for services to be rendered. Certain revenue streams within shopping center and other operational revenues may give rise to contract assets and liabilities. However, these revenue streams are generally short-term in nature and the difference between revenue recognition and cash collection, although variable, does not differ significantly from period to period. As of December 31, 2019, we had an inconsequential amount of contract assets and liabilities.
The aggregate amount of the transaction price allocated to our performance obligations that were unsatisfied, or partially unsatisfied, as of December 31, 2019 were inconsequential.

Depreciation and Amortization

Buildings, improvements, and equipment are primarily depreciated on straight-line bases over the estimated useful lives of the assets, which generally range from 3 to 50 years. Capital expenditures that are recoverable from tenants are generally depreciated over the estimated recovery period. Intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. Tenant allowances are depreciated on a straight-line basis over the shorter of the useful life of the leasehold improvements or the lease term. Deferred leasing costs are amortized on a straight-line basis over the lives of the related leases. In the event of early termination of such leases, the unrecoverable net book values of the assets are recognized as depreciation and amortization expense in the period of termination.

Capitalization

Direct and indirect costs that are clearly related to the acquisition, development, construction, and improvement of properties are capitalized. Compensation costs are allocated based on actual time spent on a project. Costs incurred on real estate for ground leases, property taxes, insurance, and interest costs for qualifying assets are capitalized during periods in which activities necessary to get the property ready for its intended use are in progress.

The viability of all projects under construction or development, including those owned by UJVs, are regularly evaluated on an individual basis under the accounting for abandonment of assets or changes in use. To the extent a project, or individual components of the project, are no longer considered to have value, the related capitalized costs are charged against operations. Additionally, all properties are reviewed for impairment on an individual basis whenever events or changes in circumstances, such as changes in expected holding periods, indicate that their carrying value may not be recoverable. Impairment of a shopping center owned by consolidated entities is recognized when the sum of expected cash flows (undiscounted and without interest charges) is less than the carrying value of the property. Other than temporary impairment of an investment in an UJV is recognized when the carrying value of the investment is not considered recoverable based on evaluation of the severity and duration of the decline in value, including the results of discounted cash flow and other valuation techniques. To the extent impairment has occurred, the excess carrying value of the asset over its estimated fair value is charged to income. In the fourth quarter of December 31, 2019, we recognized $72.2 million as an Impairment Charge on Taubman Prestige Outlets Chesterfield on our Consolidated Statement of Operations and Comprehensive Income (Loss) and our beneficial share of an impairment charge of $18.0 million on Stamford Town Center in Equity in Income of UJVs on our Consolidated Statement of Operations and Comprehensive Income (Loss) (Note 5). No impairment charges were recognized for the years ended December 31, 2018 or 2017.

In leasing a shopping center space, we may provide funding to the lessee through a tenant allowance. In accounting for a tenant allowance, we determine whether the allowance represents funding for the construction of leasehold improvements and evaluate the ownership, for accounting purposes, of such improvements. If we are considered the owner of the leasehold improvements for accounting purposes, we capitalize the amount of the tenant allowance and depreciate it over the shorter of the useful life of the leasehold improvements or the lease term. If the tenant allowance represents a payment for a purpose other than funding leasehold improvements, or in the event we are not considered the owner of the improvements for accounting purposes, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Factors considered during this evaluation usually include (1) who holds legal title to the improvements, (2) evidentiary requirements concerning the spending of the tenant allowance, and (3) other controlling rights provided by the lease agreement (e.g. unilateral control of the tenant space during the build-out process). Determination of the accounting for a tenant allowance is made on a case-by-case basis, considering the facts and circumstances of the individual tenant lease. Substantially all of our tenant allowances have been determined to be leasehold improvements.

Cash and Cash Equivalents and Restricted Cash

Cash equivalents consist of highly liquid investments with a maturity of 90 days or less at the date of purchase. We deposit cash and cash equivalents with institutions with high credit quality. From time to time, cash and cash equivalents may be in excess of FDIC insurance limits. Substantially all cash and cash equivalents at December 31, 2019 were not insured or guaranteed by the FDIC or any other government agency and were invested across nine separate financial institutions as of December 31, 2019. Included in restricted cash is $0.4 million at December 31, 2019 on deposit in excess of the FDIC insured limit.



Acquisitions

We recognize the assets acquired, the liabilities assumed, and any noncontrolling interests in the acquiree at their fair values as of the acquisition date. The cost of acquiring a controlling ownership interest or an additional ownership interest (if not already consolidated) is allocated to the tangible assets acquired (such as land and building) and to any identifiable intangible assets based on their estimated fair values at the date of acquisition. The fair value of a property is determined on an "as-if-vacant" basis. Management considers various factors in estimating the "as-if-vacant" value including an estimated lease up period, lost rents, and carrying costs. The identifiable intangible assets would include the estimated value of "in-place" leases, above and below market "in-place" leases, and tenant relationships. The portion of the purchase price that management determines should be allocated to identifiable intangible assets is amortized in depreciation and amortization or as an adjustment to rental revenue, as appropriate, over the estimated life of the associated intangible asset (for instance, the remaining life of the associated tenant lease). We account for the acquisition of shopping centers as asset acquisitions, and as such, costs related to the acquisition of controlling and non-controlling interests, including due diligence costs, professional fees, and other costs related to the acquisition, are capitalized.

Deferred Charges and Other Assets

Direct costs related to successful leasing activities are capitalized and amortized on a straight-line basis over the lives of the related leases. Cash expenditures for leasing costs are recognized in the Consolidated Statement of Cash Flows as operating activities. Debt issuance costs incurred in connection with our revolving lines of credit are deferred and amortized on a straight-line basis, which approximates the effective interest method. All other deferred charges are amortized on a straight-line basis over the terms of the agreements to which they relate.

Share-Based Compensation Plans

The cost of share-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized over the requisite employee service period which is generally the vesting period of the grant. We recognize compensation costs for awards with graded vesting schedules on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards. We recognize compensation costs for awards with net operating income performance conditions based on the grant date fair value of the award that coincides with the expected outcome of the condition, as updated for actual results (Note 13).

Interest Rate Hedging Agreements

All derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If a derivative is designated as a cash flow hedge, all changes in the fair value of the derivative are recorded in other comprehensive income (OCI) and are recognized in the income statement when the hedged item affects income (Note 10).

We formally document all relationships between hedging instruments and hedged items, as well as our risk management objectives and strategies for undertaking various hedge transactions. We assess, both at the inception of the hedge and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items.

Insurance Accounting

We carry liability insurance to mitigate our exposure to certain losses, including those relating to property damage and business interruption. We record the estimated amount of expected insurance proceeds for property damage and other losses incurred as an asset (typically a receivable from the insurer) and income up to the amount of the losses incurred when receipt of insurance proceeds is deemed probable. Any amount of insurance recovery in excess of the amount of the losses incurred is considered a gain contingency and is not recorded until the proceeds are received. Insurance recoveries for business interruption for lost revenue or profit are accounted for as gain contingencies in their entirety, and therefore are not recorded in income until the proceeds are received.

During the years ended December 31, 2019, 2018, and 2017, we recorded insurance proceeds related to reimbursement of expenses and property damage incurred at The Mall of San Juan as a result of Hurricane Maria (Note 15).



Income Taxes

We operate in such a manner as to qualify as a REIT under the applicable provisions of the Internal Revenue Code. To qualify as a REIT, we must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, to our shareholders and meet certain other requirements. As a REIT, we are entitled to a dividends paid deduction for the dividends we pay to our shareholders. Therefore, we will generally not be subject to federal income taxes under current Federal income tax law as long as we currently distribute to our shareholders an amount equal to or in excess of our taxable income. REIT qualification reduces but does not eliminate the amount of state and local taxes paid by us. In addition, a REIT may be subject to certain excise taxes if it engages in certain activities.
No provision for federal income taxes for consolidated partnerships has been made; as such taxes are the responsibility of the individual partners under current Federal income tax law. There are certain state income taxes incurred which are provided for in our financial statements.
We have made Taxable REIT Subsidiary (TRS) elections for all of our subsidiaries that are treated as corporations for federal income tax purposes pursuant to section 856 (I) of the Internal Revenue Code. The TRSs are subject to corporate level income taxes, including federal, state, and certain foreign income taxes for foreign operations, which are provided for in our financial statements.
Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence, including expected taxable earnings. Our temporary differences primarily relate to deferred compensation, depreciation, and net operating loss carryforwards.
In connection with the revised 21% Federal corporate income tax rate under the Tax Cuts and Jobs Act of 2017 (2017 Tax Act), we adjusted our net Federal deferred tax asset to reflect the change in tax rate (Note 3). Future changes to tax laws could affect the taxation of the REIT, partnerships and Taxable REIT subsidiaries, possibly having a significant impact on the current and deferred income taxes of TCO.

Severance Plans and Restructuring Charges

We have severance plans in place for certain employees, which we account for as a post-employment benefit. We recognize a liability and expense when it is probable that employees will be entitled to benefits under the severance plans and the amount can be reasonably estimated.

We have been undergoing a restructuring to reduce our workforce and reorganize various areas of the organization in response to the completion of another major development cycle and the current near-term challenges facing the U.S. mall industry. During the years ended December 31, 2019, 2018 and 2017, we incurred restructuring charges of $3.5 million, $0.6 million, and $13.8 million, respectively. These expenses have been separately classified as Restructuring Charges on the Consolidated Statement of Operations and Comprehensive Income (Loss). As of December 31, 2019, $0.2 million of the restructuring costs recognized during 2019 were unpaid and remained accrued.

Costs Associated with Shareholder Activism

During the years ended December 31, 2019, 2018, and 2017, we incurred $17.3 million, $12.5 million, and $14.5 million, respectively, of expense associated with activities related to shareholder activism, largely legal and advisory services. Expenses for the year ended December 31, 2019 included $5.0 million pursuant to an agreement with Land & Buildings Investment Management, LLC (Land & Buildings) for a reimbursement of a portion of the billed fees and expenses incurred by Land & Buildings and its affiliated funds in connection with Land & Buildings' activist involvement with TCO and the service on our Board of Directors of its founder and Chief Investment Officer, Jonathan Litt. The reimbursement represented a related party transaction. We received written certification from Land & Buildings that the actual billed fees and expenses as of the payment date exceeded $5.0 million.





Also included in the activism costs was a retention program for certain employees. Given the uncertainties associated with shareholder activism and to ensure the retention of top talent in key positions within TCO, certain key employees were provided certain incentive benefits in the form of cash and/or equity retention awards. We and our Board of Directors believed these benefits were instrumental in ensuring the continued success of TCO during the retention period. Due to the unusual and infrequent nature of these expenses in our history, they have been separately classified as Costs Associated with Shareholder Activism on our Consolidated Statement of Operations and Comprehensive Income (Loss). As of December 31, 2019, all incentive benefits under the retention awards had vested.

Noncontrolling Interests
Noncontrolling interests in TCO are comprised of the ownership interests of (1) noncontrolling interests in TRG and (2) the noncontrolling interests in joint ventures controlled by us through ownership or contractual arrangements. Consolidated net income and comprehensive income includes amounts attributable to us and the noncontrolling interests. Transactions that change our ownership interest in a subsidiary are accounted for as equity transactions if we retain our controlling financial interest in the subsidiary.
We evaluate whether noncontrolling interests are subject to any redemption features outside of our control that would result in presentation outside of permanent equity pursuant to general accounting standards regarding the classification and measurement of redeemable equity instruments. Certain noncontrolling interests in TRG and consolidated ventures of TCO qualify as redeemable noncontrolling interests (Note 9). To the extent such noncontrolling interests are currently redeemable or it is probable that they will eventually become redeemable, these interests are adjusted to the greater of their redemption value or their carrying value at each balance sheet date.

Foreign Currency Translation
We have certain entities in Asia for which the functional currency is the local currency. The assets and liabilities of the entities are translated from their functional currency into U.S. Dollars at the rate of exchange in effect on the balance sheet date. Income statement accounts are generally translated using the average exchange rate for the period. Income statement amounts of significant transactions are translated at the rate in effect as of the date of the transaction. Our share of unrealized gains and losses resulting from the translation of the entities' financial statements are reflected in shareholders' equity as a component of Accumulated Other Comprehensive Income (Loss) on our Consolidated Balance Sheet (Note 19).
Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Segments and Related Disclosures

We have one reportable operating segment: we own, develop, and manage shopping centers. We have aggregated our shopping centers into this one reportable segment, as the shopping centers share similar economic characteristics and other similarities. The shopping centers are located in major metropolitan areas, have similar tenants, are operated using consistent business strategies, and are expected to exhibit similar long-term financial performance. Net Operating Income (NOI) is often used by our chief operating decision makers in assessing segment operating performance. NOI is believed to be a useful indicator of operating performance as it is customary in the real estate and shopping center business to evaluate the performance of properties on a basis unaffected by capital structure.

No single retail company represents 5% or more of our revenues. Our consolidated revenues and assets do not have any material amounts derived from countries other than the United States, as our investments in Asia are in UJVs that are accounted for under the equity method.







Management's Responsibility to Evaluate TCO's Ability to Continue as a Going Concern

When preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. No such conditions or events were identified as of the issuance date of the financial statements contained in this Annual Report on Form 10-K.

Change in Accounting Policies

Recognition and Measurement of Financial Assets and Financial Liabilities

On January 1, 2018, we adopted Accounting Standards Update (ASU) No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities", which changed certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. As such, we now measure equity securities at fair value through net income, except for those that result in consolidation or are accounted for under the equity method. Upon adoption, we applied the modified-retrospective approach and recorded a one-time cumulative-effect adjustment to reclassify $1.0 million of historical unrealized gains on the fair value adjustments as of December 31, 2017 of our investment in Simon Property Group, Inc. (Simon) common shares from Accumulated Other Comprehensive Income (Loss) (AOCI) to Dividends in Excess of Net Income on our Consolidated Balance Sheet. Beginning in January 2018, changes in the fair value of any outstanding Simon common shares are being recorded in Nonoperating Income, Net on our Consolidated Statement of Operations and Comprehensive Income (Loss) (Notes 7 and 17).

Accounts Receivable and Uncollectible Tenant Revenues

In connection with the adoption of ASC Topic 842, "Leases" (Note 11), we now review the collectibility of both billed and accrued charges under our tenant leases each quarter taking into consideration the tenant's historical payment status, credit profile, and known issues related to tenant operations. For any tenant receivable balances thought to be uncollectible, we now record an offset for uncollectible tenant revenues directly to Rental Revenues on the Consolidated Statement of Operations and Comprehensive Income (Loss). Uncollectible tenant revenues were previously reported as bad debt expense in Other Operating expense on our Consolidated Statement of Operations and Comprehensive Income (Loss). Our allowance for doubtful accounts as of December 31, 2018 was $10.4 million.

As a result of the above change in evaluation in uncollectible tenant revenues, the allowance for doubtful accounts was written off and an entry was recorded as of January 1, 2019 to adjust the receivables and equity balance of our Consolidated Businesses and UJVs. This resulted in a cumulative effect adjustment increasing Dividends in Excess of Net Income by $3.2 million and Non-redeemable Noncontrolling Interest by $1.8 million on our Consolidated Balance Sheet with offsetting increases in Accounts and Notes Receivable, Investment in UJVs, and Distributions in Excess of Investments In and Net Income of UJVs balances on our Consolidated Balance Sheet.
v3.19.3.a.u2
Disposition, Acquisition, Partial Dispositions of Ownership Interests, Redevelopments, and Developments
12 Months Ended
Dec. 31, 2019
Disposition, Acquisition, Partial Dispositions of Ownership Interests, Redevelopments, and Developments [Abstract]  
Disposition, Acquisition, Partial Dispositions of Ownership Interests, Redevelopments, and Developments [Text Block] Disposition, Acquisition, Partial Dispositions of Ownership Interests, Redevelopments, and Developments

Disposition

In March 2017, our joint venture with The Macerich Company sold the Valencia Place office tower at Country Club Plaza for $75.2 million ($37.6 million at TRG's beneficial share). The joint venture recognized a gain on the sale of the Valencia Place office tower, of which TRG's beneficial share, net of tax, was $2.1 million. The gain was included within Equity in Income of UJVs on the Consolidated Statement of Operations and Comprehensive Income (Loss) as the Company's 50% ownership interest in the office tower was accounted for as a UJV under the equity method.

Acquisition

In April 2019, we acquired a 48.5% interest in The Gardens Mall in Palm Beach Gardens, Florida, in exchange for 1.5 million newly issued TRG Units (Note 18). We also assumed our $94.6 million share of the existing debt at the center. Our ownership interest in the center is accounted for as a UJV under the equity method.

Partial Dispositions of Ownership Interests

In February 2019, we announced agreements to sell 50% of our interests in Starfield Hanam, CityOn.Xi’an, and CityOn.Zhengzhou to funds managed by The Blackstone Group L.P. (Blackstone). The interests to be sold were valued at $480 million as of the sale agreement date, with net cash proceeds expected to be about $315 million, after transaction costs and the allocation to Blackstone of its share of third party debt. The agreements allowed for additional consideration of up to $50 million based on the 2019 performance of the three assets, however, based on actual performance for 2019, we will not receive any contingent consideration.

In September 2019, we completed the sale of 50% of our interest in Starfield Hanam. Net proceeds from the sale were $235.7 million following the allocation to Blackstone of its share of third party debt and transaction costs. Net proceeds were used to pay down our revolving lines of credit. An initial gain of $138.7 million was recognized as a result of the partial disposition of our interest, which represented the excess of the net consideration from the sale over our investment in the UJV. In addition, upon completion of the sale, we remeasured our remaining 17.15% interest in the shopping center to fair value, resulting in the recognition of an initial $145.0 million gain on remeasurement. In December 2019, a true-up of the gains was recorded resulting in an additional $1.8 million gain on disposition and an additional $1.8 million gain on remeasurement. Cash proceeds of $1.8 million were received in February 2020 as a result of this true-up.

In December 2019, we completed the sale of 50% of our interest in CityOn.Zhengzhou. Net proceeds from the sale were $47.5 million, following the allocation to Blackstone of its share of third party debt, taxes, and transaction costs. Net proceeds were used to pay down our revolving lines of credit. A gain of $14.3 million was recognized as a result of the partial disposition of our interest, which represented the excess of the net consideration from the sale over our investment in the UJV. In addition, upon completion of the sale, we remeasured our remaining 24.5% interest in the shopping center to fair value, resulting in the recognition of a $17.8 million gain on remeasurement.

Following the CityOn.Xi'an transaction, which is subject to customary closing conditions and is expected to close in the first quarter of 2020, we will retain a 25% ownership interest in CityOn.Xi'an. We will remain the partner responsible for the joint management of the three shopping centers, with Blackstone paying a property service fee recorded within Other revenue on the Consolidated Statement of Operations and Comprehensive Income (Loss).

Redevelopments

Beverly Center

We substantially completed our redevelopment project at Beverly Center in November 2018, although some spending continued into 2019 as certain costs were incurred subsequent to the project's completion, including construction on certain tenant spaces.






The Mall at Green Hills

We substantially completed our redevelopment project at The Mall at Green Hills in June 2019. We expect some capital spending at The Mall at Green Hills to continue into 2020 as certain costs are incurred subsequent to the project's completion, including construction on certain tenant spaces.

Asia Developments

CityOn.Zhengzhou

CityOn.Zhengzhou, a shopping center located in Zhengzhou, China, opened in March 2017. This investment is classified within Investment in UJVs on the Consolidated Balance Sheet.

Starfield Anseong

We have partnered with Shinsegae Group, our partner in Starfield Hanam, to build, lease, own, and manage Starfield Anseong, an approximately 1.1 million square foot shopping center in Anseong, Gyeonggi Province, South Korea. We own a 49% interest in the project. The shopping center is scheduled to open in late 2020. As of December 31, 2019, we have invested $165.9 million in the project, after cumulative currency translation adjustments. This investment is classified within Investment in UJVs on the Consolidated Balance Sheet.
v3.19.3.a.u2
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes

Income Tax Expense (Benefit)

Our income tax expense (benefit) for the years ended December 31, 2019, 2018, and 2017 consisted of the following:
 
2019
 
2018

2017
 
Federal current
$
56

 
$
(373
)

$
(2,509
)
 
Federal deferred
1,724

 
(1,057
)

1,632

(1) 
Foreign current
1,775

(2) 
1,160


849

 
Foreign deferred
2,518

(3) 
307


158

 
State current
62

 
(128
)
 
(208
)
 
State deferred
197

 
(140
)
 
183

 
Total income tax (benefit) expense
$
6,332

 
$
(231
)

$
105

 


(1)
Reflects $0.3 million of expense related to the restatement of the net Federal deferred tax asset at December 31, 2017 at the revised 21% Federal corporate income tax rate under the 2017 Tax Act.
(2)
During the year ended December 31, 2019, we recognized $0.9 million of foreign current income tax expense (22% tax rate) related to a promote fee paid by our previous institutional partner in Starfield Hanam (Note 5).
(3)
During the year ended December 31, 2019, we recognized $2.8 million of foreign deferred tax expense (10% tax rate) as we are no longer able to assert indefinite reinvestment in our China assets due to our sale of 50% of our interest in CityOn.Zhengzhou and pending sale of 50% of our interest in CityOn.Xi'an to funds managed by Blackstone (Note 2). The tax expense is related to an excess of the Investments in the UJVs under GAAP accounting over the tax basis of our investments.

In December 2017, the 2017 Tax Act was signed into law making significant changes to the Internal Revenue Code. The 2017 Tax Act reduced the corporate tax rate to 21% effective January 1, 2018. Consequently, our Federal deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate. We recorded a decrease related to the TRS net Federal deferred tax asset of $0.3 million, with a corresponding net adjustment to deferred income tax expense of $0.3 million for the year ended December 31, 2017. With the exception of the reduction in the corporate tax rate, we did not identify any other items for which the accounting for the income tax effects of the 2017 Tax Act have not been completed.







Net Operating Loss Carryforwards

As of December 31, 2019, we had a foreign net operating loss carryforward of $8.8 million, of which $7.7 million had an indefinite carryforward period and $1.1 million had a 5-year carryforward period. As of December 31, 2019, the TRS's had a Federal net operating loss carryforward of $4.9 million, which had an indefinite carryforward period. Its future use is limited annually to 80% of taxable income. As of December 31, 2019, the TRS's also had an investment tax credit carryforward of $4.4 million, which had a carryforward period of 20 years.

Deferred Taxes

Deferred tax assets and liabilities as of December 31, 2019 and 2018 were as follows:
 
2019
 
2018
 
Deferred tax assets:
 
 
 
 
Federal
$
4,385

(1) 
$
5,662

(2) 
Foreign
2,020

 
1,655

 
State
1,388

 
807

 
Total deferred tax assets
$
7,793

 
$
8,124

 
Valuation allowances
(2,761
)
(3) 
(1,744
)
(4) 
Net deferred tax assets
$
5,032

 
$
6,380

 
Deferred tax liabilities:
 

 
 

 
Foreign(5)
$
4,449

 
$
2,454

 
Total deferred tax liabilities
$
4,449

 
$
2,454

 


(1)
Includes a $4.4 million Federal investment tax credit carryforward.
(2)
Includes a $3.6 million Federal investment tax credit carryforward.
(3)
Includes a $1.7 million valuation allowance against Foreign deferred tax assets, and a $1.1 million valuation allowance against State deferred tax assets. The foreign increase in the valuation allowance is primarily due to an unrecognized 2019 net operating loss at one of our China service entities. The increase in the state valuation allowance is due to an unrecognized 2019 Tennessee net operating loss.
(4)
Includes a $1.2 million valuation allowance against Foreign deferred tax assets, and a $0.5 million valuation allowance against State deferred tax assets.
(5)
The foreign deferred tax liability relates to shareholder level withholding taxes from Korea and China on undistributed profits.

We believe that it is more likely than not the results of future operations will generate sufficient taxable income to recognize the net deferred tax assets. These future operations are primarily dependent upon the Manager's profitability, the timing and amounts of gains on peripheral land sales, the profitability of Taubman Asia's operations, and other factors affecting the results of operations of the taxable REIT subsidiaries. The valuation allowances relate to net operating loss carryforwards and tax basis differences where there is uncertainty regarding their realizability.

Tax Status of Dividends

Dividends declared on TCO's common and preferred stock and their tax status are presented in the following tables. The tax status of TCO's dividends in 2019, 2018, and 2017 may not be indicative of future periods. The portion of the per share dividends paid in 2019 and each year detailed in each table below as capital gains (long-term and unrecaptured Sec. 1250) are designated as capital gain dividends as required by Internal Revenue Code Section 857(b)(3)(B). In addition, 82.26% and 99.85% of the portion of the 2019 and 2018 common dividend taxed as ordinary income, respectively, are qualified REIT dividends that may be eligible for a new 20% tax deduction in 2019 and 2018, respectively, under Internal Revenue Code Section 199A(a) if the shareholder meets certain holding period requirements.

Year
 
Dividends per common share declared
 
Return of capital
 
Ordinary income
 
Long-term capital gain
 
Unrecaptured Sec. 1250 capital gain
2019
 
$
2.7000

 
$

 
$
1.2937

 
$
1.4063

 
$

2018
 
2.6200

 
1.1167

 
1.4766

 
0.0263

 
0.0004

2017
 
2.5000

 
0.4775

 
1.3927

 
0.4397

 
0.1901



Year

Dividends per Series J Preferred share declared

Ordinary income

Long-term capital gain

Unrecaptured Sec. 1250 capital gain
2019

$
1.6250


$
0.7786


$
0.8464


$

2018

1.6250


1.5961


0.0284


0.0005

2017
 
1.6250

 
1.0505

 
0.4011

 
0.1734



Year
 
Dividends per Series K Preferred share declared
 
Ordinary income
 
Long-term capital gain
 
Unrecaptured Sec. 1250 capital gain
2019
 
$
1.5625

 
$
0.7487

 
$
0.8138

 
$

2018
 
1.5625

 
1.5347

 
0.0273

 
0.0005

2017
 
1.5625

 
1.0101

 
0.3857

 
0.1667



Uncertain Tax Positions

We expect no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2019. We have no material interest or penalties relating to income taxes recognized on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the years ended December 31, 2019, 2018, and 2017 or on the Consolidated Balance Sheet as of December 31, 2019 and 2018. As of December 31, 2019, returns for the calendar years 2016 through 2019 remain subject to examination by U.S. and various state and foreign tax jurisdictions.
v3.19.3.a.u2
Properties
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Real Estate Disclosure [Text Block] Properties

Properties at December 31, 2019 and 2018 are summarized as follows:
 
2019
 
2018
Land
$
232,744


$
233,301

Buildings, improvements, and equipment
4,395,463


4,342,664

Construction in process and pre-development costs
102,854


141,604

 
$
4,731,061


$
4,717,569

Accumulated depreciation and amortization
(1,514,992
)

(1,404,692
)
 
$
3,216,069


$
3,312,877



Depreciation expense for 2019, 2018, and 2017 was $173.0 million, $155.1 million, and $161.1 million, respectively.

The charge to operations in 2019, 2018, and 2017 for domestic and non-U.S. pre-development activities was $1.9 million, $3.8 million, and $5.6 million, respectively.
v3.19.3.a.u2
Investments in Unconsolidated Joint Ventures
12 Months Ended
Dec. 31, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Joint Ventures Investments in Unconsolidated Joint Ventures

General Information

We own beneficial interests in joint ventures that own shopping centers. TRG is the sole direct or indirect managing general partner or managing member of Fair Oaks Mall, International Plaza, Stamford Town Center, Sunvalley, The Mall at University Town Center, and Westfarms; however, these joint ventures are accounted for under the equity method due to the substantive participation rights of the outside partners. TRG also provides certain management, leasing, and/or development services to the other shopping centers noted below.
Shopping Center
 
Ownership as of
December 31, 2019 and 2018
CityOn.Xi'an (1)
 
50%
CityOn.Zhengzhou (1)
 
24.5/49
Country Club Plaza
 
50
Fair Oaks Mall
 
50
The Gardens Mall (2)
 
48.5/0
International Plaza
 
50.1
The Mall at Millenia
 
50
Stamford Town Center
 
50
Starfield Anseong (under development)
 
Note 2
Starfield Hanam (1)
 
17.15/34.3
Sunvalley
 
50
The Mall at University Town Center
 
50
Waterside Shops
 
50
Westfarms
 
79


(1)
We entered into agreements to sell half of our ownership interest in CityOn.Xi'an, CityOn.Zhengzhou, and Starfield Hanam in February 2019. In September 2019 and December 2019, we completed the sales of 50% of our interests in Starfield Hanam and CityOn.Zhengzhou, respectively. CityOn.Xi'an is subject to customary closing conditions and is expected to close in the first quarter of 2020 (Note 2).
(2)
In April 2019, we acquired a 48.5% interest in The Gardens Mall (Note 2).

The carrying value of our investment in UJVs differs from our share of the partnership or members’ equity reported on the combined balance sheet of the UJVs due to (i) the cost of our investment in excess of the historical net book values of the UJVs and (ii) TRG's adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the UJVs. Our additional basis allocated to depreciable assets is generally recognized on a straight-line basis over 40 years. TRG's differences in bases are amortized over the useful lives or terms of the related assets and liabilities.

On our Consolidated Balance Sheet, we separately report our investment in UJVs for which accumulated distributions have exceeded investments in and net income of the UJVs. The net equity of certain joint ventures is less than zero because distributions are usually greater than net income, as net income includes non-cash charges for depreciation and amortization. In addition, any distributions related to refinancing of the shopping centers further decrease the net equity of the shopping centers.


Combined Financial Information

Combined balance sheet and results of operations information is presented in the following table for the UJVs, followed by TRG's beneficial interest in the combined operations information. The combined financial information of the UJVs as of December 31, 2019 and 2018 excludes the balances of Starfield Anseong, which is currently under development (Note 2). Beneficial interest is calculated based on TRG's ownership interest in each of the UJVs.
 
December 31 2019
 
December 31 2018
Assets:
 
 
 
Properties
$
3,816,923

 
$
3,728,846

Accumulated depreciation and amortization
(942,840
)
 
(869,375
)
 
$
2,874,083

 
$
2,859,471

Cash and cash equivalents
201,501

 
161,311

Accounts and notes receivable (1)
122,569

 
131,767

Operating lease right-of-use assets (1)
11,521

 


Deferred charges and other assets
178,708

 
140,444

 
$
3,388,382

 
$
3,292,993

 


 
 
Liabilities and accumulated equity (deficiency) in assets:
 

 
 

Notes payable, net
$
3,049,737

 
$
2,815,617

Accounts payable and other liabilities
341,263

 
426,358

Operating lease liabilities (1)
13,274

 


TRG's accumulated deficiency in assets (1)
(212,380
)
 
(49,465
)
UJV Partners' accumulated equity in assets (1)
196,488

 
100,483

 
$
3,388,382

 
$
3,292,993

 


 
 
TRG's accumulated deficiency in assets (above)
$
(212,380
)
 
$
(49,465
)
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou
209,024

 
140,743

TRG basis adjustments, including elimination of intercompany profit (2)
329,673

 
57,360

TCO's additional basis
32,625

 
47,178

Net investment in UJVs
$
358,942

 
$
195,816

Distributions in excess of investments in and net income of UJVs
473,053

 
477,800

Investment in UJVs
$
831,995

 
$
673,616


(1) Upon adoption of ASC Topic 842, "Leases" on January 1, 2019, we valued our operating lease obligations and recorded operating lease liabilities and related right-of-use assets. These lease liabilities and related right-of-use assets will amortize over the remaining life of the respective leases.
(2) The increase in basis adjustments is primarily due to the gains on remeasurements of ownership interests in UJVs (Note 2).

 
Year Ended December 31
 
2019
 
2018
 
2017
Revenues (1)
$
620,513

 
$
601,272

 
$
586,499

Maintenance, taxes, utilities, promotion, and other operating expenses
$
226,014

 
$
211,285

 
$
218,004

Impairment charge
6,154

 
 
 
 
Interest expense
139,756

 
132,669

 
130,339

Depreciation and amortization
131,223

 
131,884

 
127,625

Total operating costs
$
503,147

 
$
475,838

 
$
475,968

Nonoperating income, net
2,870

 
1,923

 
2,894

Income tax expense
(8,541
)
 
(5,935
)
 
(5,226
)
Gain on disposition, net of tax (2)


 


 
3,713

Net income
$
111,695

 
$
121,422

 
$
111,912

 


 
 
 
 
Net income attributable to TRG
$
58,020

 
$
62,964

 
$
59,994

Realized intercompany profit, net of depreciation on TRG’s basis adjustments (3)
5,698

 
8,386

 
9,326

Depreciation of TCO's additional basis
(1,946
)
 
(1,946
)
 
(1,946
)
Impairment of TCO's additional basis
(12,606
)
 


 


Equity in income of UJVs
$
49,166

 
$
69,404

 
$
67,374

 
 
 
 
 
 
Beneficial interest in UJVs’ operations:
 

 
 

 
 

Revenues less maintenance, taxes, utilities, promotion, and other operating expenses (3)
$
212,057

 
$
209,423

 
$
202,332

Impairment charge
(17,951
)
 
 
 
 
Interest expense
(69,749
)
 
(68,225
)
 
(67,283
)
Depreciation and amortization
(71,583
)
 
(68,894
)
 
(66,933
)
Income tax expense
(3,608
)
 
(2,900
)
 
(2,825
)
Gain on disposition, net of tax (1)


 


 
2,083

Equity in income of UJVs
$
49,166

 
$
69,404

 
$
67,374



(1) Upon adoption of ASC Topic 842, "Leases", uncollectible tenant revenues are now recorded in Rental Revenues (Note 11).
(2) Amount represents the gain related to the sale of the Valencia Place office tower at Country Club Plaza in March 2017 (Note 2).
(3) In addition to the disposition of 50% of our ownership interest in Starfield Hanam, in September 2019, Blackstone also purchased the 14.7% interest in Starfield Hanam that was previously owned by our institutional joint venture partner. Our previous partnership agreement provided for a promote fee due to Taubman Asia upon the institutional partner's exit from the partnership based on performance measures under the prior agreement, which resulted in the recognition of a $4.8 million promote fee during the year ended December 31, 2019.

Related Party

TRG owns a 50% general partnership interest in Sunvalley, while the other 50% is controlled by the A. Alfred Taubman Restated Revocable Trust (the Revocable Trust). A. Alfred Taubman was the former Chairman of the Board and the father of Robert S. and William S. Taubman. Sunvalley is subject to a ground lease on the land, which is 50% owned through an affiliate of TRG and 50% by an entity owned and controlled by Robert S. Taubman, William S. Taubman, and Gayle Taubman Kalisman. The Manager is the manager of the Sunvalley shopping center.

In 2016, we issued a note receivable outstanding to CityOn.Zhengzhou for purposes of funding development costs. The balance of the note receivable was $43.1 million and $43.6 million as of December 31, 2019 and 2018, respectively, and was classified within Investments in UJVs on the Consolidated Balance Sheet.

Impairment Charge - Stamford Town Center

In December 2019, we concluded that the carrying value of our 50% interest in the investment in the UJV that owns Stamford Town Center was impaired and recognized an impairment charge of $18.0 million within Equity in Income of UJVs on the Consolidated Statement of Operations and Comprehensive Income (Loss). The charge represents the excess of the book value of our equity investment in Stamford Town Center over our 50% share of its fair value. Our fair value conclusion was based on offers received from potential buyers of the shopping center.
v3.19.3.a.u2
Accounts and Notes Receivable
12 Months Ended
Dec. 31, 2019
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] Accounts and Notes Receivable

Accounts and notes receivable at December 31, 2019 and 2018 are summarized as follows:

 
2019
 
2018
Trade
$
39,575

 
$
46,292

Notes
2,342

 
3,172

Straight-line rent and recoveries
53,499

 
38,626

 
$
95,416

 
$
88,090

Less: Allowance for doubtful accounts (1)


 
(10,360
)
 
$
95,416

 
$
77,730



(1) As a result of the adoption of ASC 842 on January 1, 2019, the allowance for doubtful accounts was written off (Note 1).
v3.19.3.a.u2
Deferred Charges Other Assets
12 Months Ended
Dec. 31, 2019
Deferred Charges and Other Assets [Abstract]  
Deferred Charges and Other Assets [Text Block] Deferred Charges and Other Assets

Deferred charges and other assets at December 31, 2019 and 2018 are summarized as follows:

 
2019
 
2018
Leasing costs
$
59,552


$
52,507

Accumulated amortization
(9,904
)

(7,577
)
 
$
49,648


$
44,930

In-place leases, net
1,766


3,122

Investment in Simon common shares (Note 17)


 
48,738

Revolving credit facilities' deferred financing costs, net
8,229


4,374

Insurance deposit (Note 17)
11,213


10,121

Deposits
956


975

Prepaid expenses
6,091


6,671

Deferred tax asset, net
5,032


6,380

Other, net
9,724


9,825

 
$
92,659


$
135,136



Simon Property Group L.P. Unit Conversions

In December 2017, we converted our investment in 340,124 partnership units of Simon Property Group L.P. (the Simon Operating Partnership) to Simon common shares. Upon conversion, we recognized a gain of $11.6 million, which was included within Nonoperating Income, Net on the Consolidated Statement of Operations and Comprehensive Income (Loss). The gain was calculated based on the change in fair value of the Simon share prices at the date of conversion from the carrying value. The Simon Operating Partnership units were previously accounted for at cost. The Simon common shares were recorded in Deferred Charges and Other Assets on the Consolidated Balance Sheet at December 31, 2018 based on the common share price at each date and are now accounted for as equity securities at fair value as a result of the adoption of ASU No. 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" (Note 1). We owned 290,124 Simon common shares as of December 31, 2018. Changes in fair value from the conversion date to December 31, 2018 were recorded in Nonoperating Income, Net on the Consolidated Statement of Operations and Comprehensive Income (Loss) (Note 17).

Sale of Simon Common Shares

During 2018, we sold 300,000 Simon common shares at an average price of $182.37 per share. In January 2019, we sold our remaining 290,124 Simon common shares at an average price of $179.52 per share. Proceeds from the sales were used to pay down our revolving lines of credit.
v3.19.3.a.u2
Notes Payable, Net
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block] Notes Payable, Net

Notes payable, net at December 31, 2019 and 2018 consist of the following:
 
2019
 
2018
 
Stated Interest Rate as of 12/31/2019
 
Maturity Date
 
Number of Extension Options
 
Facility Amount
 
Cherry Creek Shopping Center
$
550,000


$
550,000

 
3.85%
 
06/01/28
 
 
 
 
 
City Creek Center
75,359

(1) 
77,068

(1) 
4.37%
 
08/01/23
 
 
 
 
 
Great Lakes Crossing Outlets
193,515


198,625

 
3.60%
 
01/06/23
 
 
 
 

 
The Mall at Green Hills
150,000


150,000

 
LIBOR+1.45% LIBOR capped at 3.00%
 
12/01/20


 
 
 
International Market Place
250,000


250,000

 
LIBOR + 2.15%
 
08/09/21

Two, one-year options
 
 
 
The Mall at Short Hills
1,000,000


1,000,000

 
3.48%
 
10/01/27
 
 
 
 
 
Twelve Oaks Mall
292,311

 
296,815

 
4.85%
 
03/06/28
 
 
 
 
 
U.S. Headquarters
12,000


12,000

 
LIBOR + 1.40% Swapped to 3.49%
 
03/01/24
 
 
 
 
 
$65M Revolving Credit Facility


 
34,675

 
LIBOR + 1.40%
 
04/25/20
 
 
 
65,000

(2) 
$1.1B Revolving Credit Facility
675,000

(3) (4) 
725,000

 
LIBOR + 1.38%
(3) 
02/01/24
 
Two, six-month options
 
1,100,000

(3) 
$300M Unsecured Term Loan


 
300,000

(5) 

(5) 

 
 
 
 
 
$275M Unsecured Term Loan
275,000

(4) (5) (6) 

 
LIBOR + 1.55%
(6) 
02/01/25
 
 
 
 
 
$250M Unsecured Term Loan
250,000

(7) 
250,000

 
LIBOR + 1.60%
(7) 
03/31/23
 
 
 
 
 
Deferred Financing Costs, Net
(12,857
)
 
(13,988
)
 
 
 
 
 
 
 
 
 
 
$
3,710,327

 
$
3,830,195

 
 
 
 
 
 
 
 

 


(1)
TRG has provided a limited guarantee of the repayment of the City Creek Center loan, which could be triggered only upon a decline in center occupancy to a level that we believe is remote.
(2)
The unused borrowing capacity at December 31, 2019 was $55.3 million, after considering $9.7 million of letters of credit outstanding on the facility.
(3)
TRG is the borrower under the $1.1 billion primary unsecured revolving credit facility. As of December 31, 2019, the interest rate on the facility was a range of LIBOR plus 1.05% to 1.60% and a facility fee of 0.20% to 0.25% based on our total leverage ratio. The unused borrowing capacity at December 31, 2019 was $367.5 million. The LIBOR rate is swapped to a fixed rate of 2.14% until February 2022 on $25 million of the $1.1 billion TRG revolving credit facility. This results in an effective interest rate in the range of 3.19% to 3.74% until February 2022 on $25 million of the credit facility balance (Note 10).
(4)
The $1.1 billion primary unsecured revolving line of credit includes an accordion feature, which in combination with the $275 million unsecured term loan would increase our maximum aggregate total commitment to $2.0 billion between the two facilities if fully exercised, subject to obtaining additional lender commitments, customary closing conditions, covenant compliance, and minimum asset values for the unencumbered asset pool. As of December 31, 2019, we could not fully utilize the accordion feature unless additional assets were added to the unencumbered asset pool.
(5)
In October 2019, we amended and restated our unsecured term loan, which reduced the loan amount from $300 million to $275 million and extended the maturity date from February 2022 to February 2025. The $300 million loan bore interest at a range of LIBOR plus 1.25% to 1.90% based on our total leverage ratio. The LIBOR rate was swapped to a fixed interest rate of 2.14%, resulting in an effective interest rate in the range of 3.39% to 4.04%.
(6)
The $275 million unsecured term loan bears interest at a range of LIBOR plus 1.15% to 1.80% based on our total leverage ratio. The LIBOR rate is swapped to a fixed rate of 2.14% until February 2022, which results in an effective interest rate in the range of 3.29% to 3.94% until February 2022.
(7)
The $250 million unsecured term loan includes an accordion feature, which would increase our maximum aggregate total commitment to $400 million if fully exercised, subject to obtaining additional lender commitments, customary closing conditions, covenant compliance, and minimum asset values for the unencumbered asset pool. As of December 31, 2019, we could not utilize the accordion feature unless additional assets were added to the unencumbered asset pool. The loan bears interest at a range of LIBOR plus 1.25% to 1.90% based on our total leverage ratio. Through the term of the loan, the LIBOR rate is swapped to a fixed rate of 3.02%, which results in an effective interest rate in the range of 4.27% to 4.92% (Note 10).
(8)
Amounts in table may not add due to rounding.

Notes payable are collateralized by properties with a net book value of $1.7 billion at December 31, 2019.

The following table presents scheduled principal payments on notes payable as of December 31, 2019:

2020
$
161,747

 
2021
262,329

(1) 
2022
12,867

 
2023
502,278

 
2024
692,715

(2) 
Thereafter
2,091,249

 
Total principal maturities
$
3,723,185

 
Net unamortized deferred financing costs
(12,857
)
 
Total notes payable, net
$
3,710,327

 

(1)
Includes $250.0 million with two one-year extension options.
(2)
Includes $675.0 million with two, six-month extension options

2020 Maturities

The loan for The Mall at Green Hills matures in December 2020. We are currently evaluating options related to refinancing this loan.

Debt Covenants and Guarantees

Certain loan agreements contain various restrictive covenants, including the following corporate covenants on our primary unsecured revolving line of credit, as well as our unsecured term loans and the loan on International Market Place: a minimum net worth requirement, a maximum total leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, a maximum recourse secured debt ratio, and a maximum payout ratio. In addition, our primary unsecured revolving line of credit and unsecured term loans have unencumbered pool covenants, which currently apply to Beverly Center, Dolphin Mall, and The Gardens on El Paseo on a combined basis as of December 31, 2019. These covenants include a minimum number and minimum value of eligible unencumbered assets, a maximum unencumbered leverage ratio, a minimum unencumbered interest coverage ratio, and a minimum unencumbered asset occupancy ratio. As of December 31, 2019, the corporate total leverage ratio was the most restrictive covenant. We were in compliance with all of our covenants and loan obligations as of December 31, 2019. The maximum payout ratio covenant limits the payment of distributions generally to 95% of funds from operations, as defined in the loan agreements, except as required to maintain our tax status, pay preferred distributions, and for distributions related to the sale of certain assets.

In connection with the August 2018 financing at International Market Place, TRG has provided an unconditional guarantee of the loan principal balance and all accrued but unpaid interest during the term of the loan. The $250 million loan is interest only during the initial three year term with principal amortization required during the extension periods, if exercised. Accrued but unpaid interest as of December 31, 2019 was $0.8 million. We believe the likelihood of a repayment under the guarantee to be remote.

In connection with the $175 million additional financing at International Plaza, which is owned by an UJV, TRG provided an unconditional and several guarantee of 50.1% of all obligations and liabilities related to an interest rate swap that was required on the debt for the term of the loan. As of December 31, 2019, the interest rate swap was a $0.8 million liability and accrued but unpaid interest was less than $0.1 million. We believe the likelihood of a payment under the guarantee to be remote.











Beneficial Interest in Debt and Interest Expense

TRG's beneficial interest in the debt, capitalized interest, and interest expense of our consolidated subsidiaries and our UJVs is summarized in the following table. TRG's beneficial interest in the consolidated subsidiaries excludes debt and interest related to the noncontrolling interest in Cherry Creek Shopping Center (50%) and International Market Place (6.5%).
 
At 100%
 
At Beneficial Interest
 
 
Consolidated Subsidiaries
 
Unconsolidated Joint Ventures
 
Consolidated Subsidiaries
 
Unconsolidated Joint Ventures
 
Debt as of:
 
 
 
 
 
 
 
 
December 31, 2019
$
3,710,327


$
3,049,737


$
3,419,625


$
1,508,506

 
December 31, 2018
3,830,195


2,815,617


3,539,588


1,437,445

 












 
Capitalized interest:
 


 


 


 

 
Year Ended December 31, 2019
$
7,807

(1) 
$
330


$
7,767

(1) 
$
196

 
Year Ended December 31, 2018
15,221

(1) 
30


15,133

(1) 
18

 












 
Interest expense:
 


 


 


 

 
Year Ended December 31, 2019
$
148,407


$
139,756


$
136,694