TAUBMAN CENTERS INC, 10-Q filed on 10/30/2019
Quarterly Report
v3.19.3
Document and Entity Information Document - shares
9 Months Ended
Sep. 30, 2019
Oct. 29, 2019
Entity Information [Line Items]    
Entity Central Index Key 0000890319  
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Sep. 30, 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 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 Q3  
Entity Common Stock, Shares Outstanding   61,220,405
Common Stock [Member]    
Entity Information [Line Items]    
Title of 12(b) Security Common Stock, $0.01 Par Value  
Trading Symbol TCO  
Security Exchange Name NYSE  
Series J Preferred Stock [Member]    
Entity Information [Line Items]    
Title of 12(b) Security 6.5% Series J Cumulative Redeemable Preferred Stock,No Par Value  
Trading Symbol TCO PR J  
Security Exchange Name NYSE  
Series K Preferred Stock [Member]    
Entity Information [Line Items]    
Title of 12(b) Security 6.25% Series K CumulativeRedeemable Preferred Stock,No Par Value  
Trading Symbol TCO PR K  
Security Exchange Name NYSE  
v3.19.3
CONSOLIDATED BALANCE SHEET - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Assets:    
Properties $ 4,805,995,000 $ 4,717,569,000
Accumulated depreciation and amortization (1,510,185,000) (1,404,692,000)
Real Estate Investment Property, Net 3,295,810,000 3,312,877,000
Investment in Unconsolidated Joint Ventures (Notes 1, 2, and 4) 825,138,000 673,616,000
Cash and cash equivalents (Note 13) 62,572,000 48,372,000
Restricted cash (Note 13) 662,000 94,557,000
Accounts and notes receivable (Note 1) 84,446,000 77,730,000
Accounts receivable from related parties 5,680,000 1,818,000
Operating lease right-of-use assets (Note 1) 174,633,000  
Deferred charges and other assets 87,911,000 135,136,000
Total Assets 4,536,852,000 4,344,106,000
Liabilities:    
Notes payable, net (Note 5) 3,634,165,000 3,830,195,000
Accounts payable and accrued liabilities 269,295,000 336,208,000
Operating lease liabilities (Note 1) 241,066,000  
Distributions in excess of investments in and net income of Unconsolidated Joint Ventures (Notes 1 and 4) 481,315,000 477,800,000
Total Liabilities 4,625,841,000 4,644,203,000
Commitments and contingencies (Notes 1, 5, 6, 7, 8, and 9)
Redeemable Noncontrolling Interest, Equity, Carrying Amount [Abstract]    
Redeemable noncontrolling interests (Note 6) 0 7,800,000
Equity (Deficit):    
Series B Non-Participating Convertible Preferred Stock, $0.001 par and liquidation value, 40,000,000 shares authorized, 26,413,117 and 24,862,994 shares issued and outstanding at September 30, 2019 and December 31, 2018 26,000 25,000
Common Stock, $0.01 par value, 250,000,000 shares authorized, 61,213,170 and 61,069,108 shares issued and outstanding at September 30, 2019 and December 31, 2018 612,000 611,000
Additional paid-in capital 740,314,000 676,097,000
Accumulated other comprehensive income (loss) (Note 12) (46,967,000) (25,376,000)
Dividends in excess of net income (Notes 1 and 7) (637,055,000) (744,230,000)
Stockholders' Equity Attributable to Parent 56,930,000 (92,873,000)
Noncontrolling interests (Notes 1 and 6) (145,919,000) (215,024,000)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest (88,989,000) (307,897,000)
Total Liabilities and Equity $ 4,536,852,000 $ 4,344,106,000
v3.19.3
CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 250,000,000 250,000,000
Common stock, shares issued 61,213,170 61,069,108
Common stock, shares outstanding 61,213,170 61,069,108
Series B Preferred Stock [Member]    
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, liquidation preference per share $ 0.001 $ 0.001
Preferred Stock, shares authorized 40,000,000 40,000,000
Preferred Stock, shares issued 26,413,117 24,862,994
Preferred Stock, shares outstanding 26,413,117 24,862,994
Series J Preferred Stock [Member]    
Preferred Stock, par value $ 0 $ 0
Preferred Stock, liquidation preference $ 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 $ 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
v3.19.3
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income (Loss) from Continuing Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest $ 32,684 $ 38,115 $ 79,299 $ 102,804
Revenues:        
Rental revenues (Note 1) 141,213   432,508  
Minimum rents (Note 1)   87,306 261,711
Overage rents 3,865 3,263 8,719 7,453
Expense recoveries (Note 1) 52,096 154,177
Management, leasing, and development services 1,927 860 4,035 2,480
Other (Note 1) 15,501 15,595 39,056 47,560
Total Revenues 162,506 159,120 484,318 473,381
Expenses:        
Maintenance, taxes, utilities, and promotion 40,786 38,149 118,506 113,871
Other operating (Note 1) 19,753 19,253 60,210 64,153
Management, leasing, and development services 1,895 476 2,917 1,186
General and administrative 9,632 8,530 26,762 25,545
Restructuring charges (Note 1) 876   1,585 (423)
Costs associated with shareholder activism (Note 1) 675 1,500 16,675 10,000
Interest expense 37,695 33,396 112,590 97,242
Depreciation and amortization 47,849 46,307 137,064 124,325
Operating Expenses 159,161 147,611 476,309 435,899
Nonoperating income, net (Notes 9 and 11) 11,108 8,700 26,468 13,858
Income before income tax benefit (expense), equity in income of Unconsolidated Joint Ventures, gain on partial disposition of ownership interest in Unconsolidated Joint Venture, and gain on remeasurement of ownership interest in Unconsolidated Joint Venture 14,453 20,209 34,477 51,340
Income tax benefit (expense) (Note 3) (2,021) 996 (4,924) 784
Equity in income of Unconsolidated Joint Ventures (Note 4) 20,252 16,910 49,746 50,680
Gain on partial disposition of ownership interest in Unconsolidated Joint Venture (Note 2) 138,696   138,696  
Gain on remeasurement of ownership interest in Unconsolidated Joint Venture (Note 2) 145,010   145,010  
Net income 316,390 38,115 363,005 102,804
Net income attributable to noncontrolling interests (Note 6) (94,648) (10,756) (107,118) (28,781)
Net income attributable to Taubman Centers, Inc. 221,742 27,359 255,887 74,023
Distributions to participating securities of TRG (Note 8) (597) (599) (1,817) (1,797)
Preferred stock dividends (5,784) (5,784) (17,353) (17,353)
Net income attributable to Taubman Centers, Inc. common shareholders 215,361 20,976 236,717 54,873
Other comprehensive income (loss) (Note 12):        
Unrealized gain (loss) on interest rate instruments (1,864) 1,552 (16,285) 11,384
Cumulative translation adjustment (9,952) (15,377) (20,463) (22,224)
Reclassification adjustment for amounts recognized in net income (396) (469) (2,242) (699)
Other comprehensive income (loss) (12,212) (14,294) (38,990) (11,539)
Comprehensive income 304,178 23,821 324,015 91,265
Comprehensive income attributable to noncontrolling interests (93,435) (6,610) (97,829) (25,435)
Comprehensive income attributable to Taubman Centers, Inc. $ 210,743 $ 17,211 $ 226,186 $ 65,830
Basic earnings per common share (Note 10) $ 3.52 $ 0.34 $ 3.87 $ 0.90
Diluted earnings per common share (Note 10) $ 3.48 $ 0.34 $ 3.84 $ 0.90
Weighted average number of common shares outstanding – basic 61,211,249 61,001,357 61,169,279 60,970,572
v3.19.3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($)
Total
Series K Preferred Stock [Member]
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Distributions in Excess of Net Income [Member]
Noncontrolling Interest [Member]
Series J Preferred Stock [Member]
Former Taubman Asia Redeemable Noncontrolling Interest [Member]
Balance at Dec. 31, 2017 $ (150,028,000)   $ 25,000 $ 608,000 $ 675,333,000 $ (6,919,000) $ (646,807,000) $ (172,268,000)    
Balance (in shares) at Dec. 31, 2017     39,438,114 60,832,918            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9), shares     (19,341) 21,802            
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9) 0                  
Share-based compensation under employee and director benefit plans (Note 8) 3,785,000     $ 2,000 3,783,000          
Share-based compensation under employee and director benefit plans (Note 8), shares       157,562            
Adjustments of noncontrolling interests (Note 6) (135,000)       (211,000) 26,000   50,000    
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interest) (1) (190,086,000)           (139,011,000)      
Cumulative Effect New Accounting Principle In Period Of Adoption           (678,000)        
Distributions to noncontrolling interests               (51,075,000)    
Other (1,015,000)         (678,000) (60,000) (277,000)    
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 6) 102,939,000           74,023,000 28,916,000    
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest (135,000)                 $ (135,000)
Unrealized gain (loss) on interest rate instruments and other 11,384,000         8,081,000   3,303,000    
Cumulative translation adjustment (22,224,000)         (15,777,000)   (6,447,000)    
Reclassification adjustment for amounts recognized in net income (699,000)         (496,000)   (203,000)    
Balance at Sep. 30, 2018 (246,079,000)   $ 25,000 $ 610,000 678,905,000 (15,763,000) (711,855,000) (198,001,000)    
Balance (in shares) at Sep. 30, 2018     39,418,773 61,012,282            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Common Stock, Dividends, Per Share, Declared       $ 1.965            
Preferred Stock, Dividends Per Share, Declared   $ 1.171875             $ 1.21875  
Balance at Jun. 30, 2018 (208,930,000)   $ 25,000 $ 610,000 676,217,000 (5,622,000) (692,485,000) (187,675,000)    
Balance (in shares) at Jun. 30, 2018     39,437,221 60,992,212            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9), shares     (18,448) 18,449            
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9) 0                  
Share-based compensation under employee and director benefit plans (Note 8) 2,744,000       2,744,000          
Share-based compensation under employee and director benefit plans (Note 8), shares       1,621            
Adjustments of noncontrolling interests (Note 6) (25,000)       (56,000) 6,000   25,000    
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interest) (1) (63,332,000)           (46,347,000)      
Distributions to noncontrolling interests               (16,985,000)    
Other (382,000)           (382,000)      
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 6) 38,140,000           27,359,000 10,781,000    
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest (25,000)                 (25,000)
Unrealized gain (loss) on interest rate instruments and other 1,552,000         1,103,000   449,000    
Cumulative translation adjustment (15,377,000)         (10,918,000)   (4,459,000)    
Reclassification adjustment for amounts recognized in net income (469,000)         (332,000)   (137,000)    
Balance at Sep. 30, 2018 (246,079,000)   $ 25,000 $ 610,000 678,905,000 (15,763,000) (711,855,000) (198,001,000)    
Balance (in shares) at Sep. 30, 2018     39,418,773 61,012,282            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Common Stock, Dividends, Per Share, Declared       $ 0.655            
Preferred Stock, Dividends Per Share, Declared   0.390625             0.40625  
Balance at Dec. 31, 2018 (307,897,000)   $ 25,000 $ 611,000 676,097,000 (25,376,000) (744,230,000) (215,024,000)    
Balance (in shares) at Dec. 31, 2018     39,362,994 61,069,108            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9), shares     (41,060) 45,511            
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9) 0                  
Issuance of equity for acquisition of interest in UJV     1,500,000              
Issuance of equity for acquisition of interest in unconsolidated joint venture (Note 2) 79,320,000   $ 1,000            
Share-based compensation under employee and director benefit plans (Note 8) 6,727,000     $ 1,000 6,726,000          
Share-based compensation under employee and director benefit plans (Note 8), shares     91,183 98,551            
Former Taubman Asia President redeemable equity adjustment 1,800,000       1,800,000          
Adjustments of noncontrolling interests (Note 6) (237,000)       55,691,000 (76,000)   (55,852,000)    
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interest) (1) (197,257,000)           (143,067,000)      
Partial disposition of ownership interest in Unconsolidated Joint Venture (Note 2) 0         8,185,000 (8,185,000)      
Cumulative Effect New Accounting Principle In Period Of Adoption 4,919,000           3,156,000 1,763,000    
Distributions to noncontrolling interests               (54,190,000)    
Payments for Repurchase of Redeemable Noncontrolling Interest                   (6,000,000)
Other (616,000)           (616,000)      
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 6) 363,242,000           255,887,000 107,355,000    
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest (237,000)                 (237,000)
Unrealized gain (loss) on interest rate instruments and other (16,285,000)         (11,375,000)   (4,910,000)    
Cumulative translation adjustment (20,463,000)         (16,760,000)   (3,703,000)    
Reclassification adjustment for amounts recognized in net income (2,242,000)         (1,565,000)   (677,000)    
Balance at Sep. 30, 2019 (88,989,000)   $ 26,000 $ 612,000 740,314,000 (46,967,000) (637,055,000) (145,919,000)    
Balance (in shares) at Sep. 30, 2019     40,913,117 61,213,170            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Common Stock, Dividends, Per Share, Declared       $ 2.03            
Preferred Stock, Dividends Per Share, Declared   1.171875             1.21875  
Balance at Jun. 30, 2019 (329,952,000)   $ 26,000 $ 612,000 739,046,000 (44,154,000) (802,809,000) (222,673,000)    
Balance (in shares) at Jun. 30, 2019     40,913,117 61,208,580            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9), shares       (3)            
Issuance of stock pursuant to Continuing Offer (Notes 8 and 9) 0                  
Share-based compensation under employee and director benefit plans (Note 8) 3,077,000       3,077,000          
Share-based compensation under employee and director benefit plans (Note 8), shares       4,593            
Adjustments of noncontrolling interests (Note 6) 0       (1,809,000)     1,809,000    
Dividends and distributions (excludes $6,000 of distributions attributable to redeemable noncontrolling interest) (1) (66,189,000)           (47,700,000)      
Partial disposition of ownership interest in Unconsolidated Joint Venture (Note 2) 0         8,185,000 (8,185,000)      
Distributions to noncontrolling interests               (18,489,000)    
Payments for Repurchase of Redeemable Noncontrolling Interest                   (6,000,000)
Other (103,000)           (103,000)      
Net income (excludes net loss attributable to redeemable noncontrolling interest) (Note 6) 316,390,000           221,742,000 94,648,000    
Net Income (Loss) Attributable to Redeemable Noncontrolling Interest 0                 $ 0
Unrealized gain (loss) on interest rate instruments and other (1,864,000)         (1,303,000)   (561,000)    
Cumulative translation adjustment (9,952,000)         (9,419,000)   (533,000)    
Reclassification adjustment for amounts recognized in net income (396,000)         (276,000)   (120,000)    
Balance at Sep. 30, 2019 $ (88,989,000)   $ 26,000 $ 612,000 $ 740,314,000 $ (46,967,000) $ (637,055,000) $ (145,919,000)    
Balance (in shares) at Sep. 30, 2019     40,913,117 61,213,170            
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Common Stock, Dividends, Per Share, Declared       $ 0.675            
Preferred Stock, Dividends Per Share, Declared   $ 0.390625             $ 0.40625  
v3.19.3
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash Flows From Operating Activities:    
Net income $ 363,005 $ 102,804
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 137,064 124,325
Provision for bad debts 4,359
Gain on partial disposition of ownership interest in Unconsolidated Joint Venture (Note 2) (138,696)  
Gain on remeasurement of ownership interest in Unconsolidated Joint Venture (Note 2) (145,010)  
Gain on Saks settlement - The Mall of San Juan (Note 9) (10,095)  
Gain on sale of peripheral land (1,034)
Fluctuation in fair value of equity securities (Note 11) 3,346 4,073
Income (loss) from Unconsolidated Joint Ventures net of distributions 3,304 (1,411)
Non-cash operating lease expense 1,527
Other 9,826 11,418
Increase (decrease) in cash attributable to changes in assets and liabilities:    
Receivables, deferred charges, and other assets (13,553) (15,426)
Accounts payable and accrued liabilities 9,661 (11,243)
Net Cash Provided By Operating Activities 213,687 209,719
Cash Flows From Investing Activities:    
Additions to properties (158,740) (220,744)
Partial reimbursement of Saks anchor allowance at The Mall of San Juan (Note 9) 20,000  
Proceeds from partial disposition of ownership interest in Unconsolidated Joint Venture (Note 2) 235,745  
Proceeds from sale of peripheral land 1,260
Proceeds from sale of equity securities (Note 11) 52,077 27,626
Insurance proceeds for capital items at The Mall of San Juan (Note 9) 948 5,768
Contributions to Unconsolidated Joint Ventures (Note 2) (47,849) (94,245)
Distributions from Unconsolidated Joint Ventures in excess of income 8,117 1,474
Other 69 67
Net Cash Provided By (Used In) Investing Activities 110,367 (278,794)
Cash Flows From Financing Activities:    
Proceeds from (payments to) revolving lines of credit, net (189,700) 215,741
Debt proceeds 800,000
Debt payments (8,430) (775,776)
Debt issuance costs (4,727)
Issuance of common stock and/or TRG Units in connection with incentive plans (706) (2,306)
Distributions to noncontrolling interests (60,190) (51,075)
Distributions to participating securities of TRG (1,817) (1,797)
Cash dividends to preferred shareholders (17,353) (17,353)
Cash dividends to common shareholders (123,897) (119,861)
Net Cash Provided By (Used In) Financing Activities (402,093) 42,846
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash (Note 13) (1,656) (4,884)
Net Decrease In Cash, Cash Equivalents, and Restricted Cash (79,695) (31,113)
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period (Note 13) 142,929 164,404
Cash, Cash Equivalents, and Restricted Cash at End of Period (Note 13) $ 63,234 $ 133,291
v3.19.3
Interim Financial Statements
9 Months Ended
Sep. 30, 2019
Notes to Financial Statements [Abstract]  
Interim Financial Statements Interim Financial Statements

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'" refer to TCO, TRG, and/or TRG's subsidiaries as the context may require. We own, manage, lease, acquire, dispose of, develop, and expand shopping centers and interests therein. Our owned portfolio as of September 30, 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, by ownership or contractual agreements, by TRG, the Manager, or Taubman Properties Asia LLC and its subsidiaries and affiliates (Taubman Asia). Shopping centers owned through joint ventures that are not controlled by us by 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. On May 1, 2018, all operations at the center, as well as the building and improvements, were transferred to The Staenberg Group (TSG), and 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 will defer recognition of a sale of the building and improvements until the foregoing termination right is no longer available to us, with this right ceasing upon TSG commencing a redevelopment. As of September 30, 2019, we did not believe the redevelopment was probable of beginning within one year, therefore the building and improvements, which had a net book value of approximately $60 million, were included within net properties on our Consolidated Balance Sheet. The shopping center has been excluded from our owned shopping center portfolio disclosure above.

The unaudited interim financial statements should be read in conjunction with the audited financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods have been made. The results of interim periods are not necessarily indicative of the results for a full year.

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 our consolidated businesses, 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 5) is an obligation of TRG or our consolidated subsidiaries. Note 5 also provides disclosure of guarantees provided by TRG to certain consolidated joint ventures and UJVs. Note 6 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 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 4 and 5). 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.

Ownership

In addition to common stock, we had three classes of preferred stock outstanding (Series B, J, and K) as of September 30, 2019. Dividends on the 6.5% Series J Cumulative Redeemable Preferred Stock (Series J Preferred Stock) and the 6.25% Series K Cumulative Redeemable Preferred Stock (Series K Preferred Stock) are cumulative and are paid on the last business day of each calendar quarter. We own corresponding Series J and Series K Preferred Equity interests in TRG that entitle us to income and distributions (in the form of guaranteed payments) in amounts equal to the dividends payable on TCO's Series J and Series K Preferred Stock.

We are also obligated to issue to the noncontrolling partners of TRG, upon subscription, one share of Series B Non-Participating Convertible Preferred Stock (Series B Preferred Share) per each unit of limited partnership in TRG (TRG Unit). Each Series B Preferred Share entitles the holder to one vote per share on all matters submitted to our shareholders. The holders of Series B Preferred Shares, voting as a class, have the right to designate up to four nominees for election as directors of TCO. On all other matters on which the holders of common stock are entitled to vote, including the election of directors, the holders of Series B Preferred Shares will vote with the holders of common stock. The holders of Series B Preferred Shares are not entitled to dividends or earnings of TCO. The Series B Preferred Shares are convertible into common stock at a ratio of 14,000 shares of Series B Preferred Stock for one share of common stock.

Outstanding voting securities of TCO at September 30, 2019 consisted of 26,413,117 shares of Series B Preferred Stock and 61,213,170 shares of common stock.

TRG

At September 30, 2019, TRG’s equity included two classes of preferred equity (Series J and K) 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 Series K Preferred Equity are owned by TCO and are eliminated in consolidation.

TCO's ownership in TRG at September 30, 2019 consisted of a 70% managing general partnership interest, as well as the Series J and Series K Preferred Equity interests. Our average ownership percentage in TRG for the nine months ended September 30, 2019 and 2018 was 70% and 71%, respectively. At September 30, 2019, TRG had 87,643,866 TRG Units outstanding, of which we owned 61,213,170 TRG Units. Disclosures about TRG Units outstanding exclude TRG Profits Units granted or other share-based grants for which TRG Units may eventually be issued (Note 8).

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 (the Revocable Trust).
Revenue Recognition

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 from customers that considers economic differences between revenue types. The following table summarizes our disaggregation of consolidated revenues for this purpose.
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2019
 
2018
 
2019
 
2018
Expense recoveries (1)

 
$
52,096

 

 
$
154,177

Shopping center and other operational revenues (2)
$
15,501

 
12,303

 
$
39,056

 
33,940

Management, leasing, and development services
1,927

 
860

 
4,035

 
2,480

Total revenue from contracts with customers
$
17,428

 
$
65,259

 
$
43,091

 
$
190,597


(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 three and nine months ended September 30, 2018. 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).

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 September 30, 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 September 30, 2019 were inconsequential.

Restructuring Charges

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. retail industry. During the three and nine months ended September 30, 2019, we incurred $0.9 million and $1.6 million, respectively, of expense related to our restructuring efforts. During the nine months ended September 30, 2018, we recorded a change in estimate to previously recognized restructuring charges resulting in a reversal of expense of $0.4 million. These expenses and changes in estimates thereto have been separately classified as Restructuring Charges on the Consolidated Statement of Operations and Comprehensive Income (Loss). As of September 30, 2019, an inconsequential amount of the restructuring charges recognized during 2018 and 2019 were unpaid and remained accrued.    











Costs Associated with Shareholder Activism

During the three and nine months ended September 30, 2019, we incurred $0.7 million and $16.7 million, respectively, of expense associated with activities related to shareholder activism, largely legal and advisory services. Expenses for the nine months ended September 30, 2019 include $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, which reimbursement represented a related party transaction. We received written certification from Land and Buildings that the actual billed fees and expenses as of the payment date exceeded $5.0 million. During the three and nine months ended September 30, 2018, expenses associated with activities related to shareholder activism were $1.5 million and $10.0 million, respectively.

Also included in the activism costs is 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 believe these benefits are 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). Unvested incentive benefits under the retention awards as of September 30, 2019 were $0.1 million, which will be recognized as service is rendered through December 31, 2019.

Management’s Responsibility to Evaluate Our 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 Quarterly Report on Form 10-Q.

Adoption of ASC Topic 842 ("Leases")

On January 1, 2019, we adopted ASC Topic 842, "Leases". ASC Topic 842 addresses off-balance sheet financing related to operating leases and introduces a new lessee model that brings substantially all leases onto the balance sheet. We adopted ASC Topic 842, recognizing operating lease liabilities and related right-of-use assets for ground and office leases under which we are the lessee on our Consolidated Balance Sheet, as of the date of adoption. These lease liabilities and related right-of-use assets will amortize over the remaining life of the respective leases. We also began expensing certain indirect leasing costs, which were capitalizable under the previous lease accounting standard. For the three and nine months ended September 30, 2019, we expensed $1.3 million and $4.2 million, respectively, of leasing costs under ASC Topic 842 that would have been capitalized under the previous accounting standard.
We implemented ASC Topic 842 using certain practical expedients. As a result of these elections, we did not reassess whether any existing contracts contained a lease, the lease classification of existing leases, or the initial direct costs of existing leases. In addition, in instances where we are the lessor, we elected to not separate non-lease components, most significantly certain common area maintenance recoveries, from the associated lease components. Due to this election, minimum rents and expense recoveries were combined into a single revenue line item, Rental Revenues, on our Consolidated Statement of Operations and Comprehensive Income (Loss). We also elected the optional transition method to apply the provisions of ASC Topic 842 as of the adoption date, rather than the earliest period presented. As such, the requirements of ASC Topic 842 were not applied in the comparative periods presented in our consolidated financial statements.
In connection with the adoption of ASC Topic 842, lease cancellation payments from our tenants are now included in Rental Revenues on our Consolidated Statement of Operations and Comprehensive Income (Loss) and recognized on a straight-line basis over the remaining lease term, if any. Lease cancellation income was previously accounted for under ASC Topic 606 and presented in Other revenue on our Consolidated Statement of Operations and Comprehensive Income (Loss).





Shopping center space is leased to tenants and certain anchors pursuant to lease agreements. Future rental revenues under operating leases in effect at September 30, 2019 for operating centers, assuming no new or renegotiated leases or option extensions on anchor agreements, is summarized as follows:
2019
$
108,070

2020
445,157

2021
400,262

2022
353,067

2023
319,611

Thereafter
847,619



Certain shopping centers, as lessees, have ground and office leases expiring at various dates through the year 2105. As of September 30, 2019, these leases had an average remaining lease term of approximately 51 years. One center has an option to extend the term for three, 10 year periods and another center has the option to extend the lease term for one additional 10 year period. As of September 30, 2019, these extension options were not considered reasonably assured of being exercised and therefore were excluded from the respective lease terms for these centers. We also lease certain of our office facilities and certain equipment. Office facility and equipment leases expire at various dates through the year 2022.
In order to determine the operating lease liabilities and related right-of-use assets for ground and office leases under which we are the lessee, we utilized a synthetic corporate yield curve to determine an incremental borrowing rate for each of our leases. Significant judgment was required to develop the yield curve, which utilized certain peer and market observations. As of September 30, 2019, the weighted average discount rate for operating leases reported on our Consolidated Balance Sheet was 5.8%. In instances where variable consideration not dependent upon an index or rate existed, such future payments were excluded from the determination of the related operating lease liability and right-of-use asset.
For leases existing as of the adoption date of ASC Topic 842, rent expense is recognized on a straight-line basis. Rental expense under operating leases was $4.2 million and $12.6 million for both the three and nine months ended September 30, 2019 and 2018, respectively. There was no contingent rent expense under operating leases for the three and nine months ended September 30, 2019 and 2018. Payables representing straight-line rent adjustments under lease agreements were $64.8 million as of December 31, 2018. These amounts are now presented within Operating Lease Liabilities on our Consolidated Balance Sheet upon adoption of ASC Topic 842.

The following is a schedule of future minimum rental payments required under operating leases:
2019
$
4,179

2020
13,646

2021
12,588

2022
13,983

2023
14,142

Thereafter
723,068



We own the retail space subject to a long-term participating lease at City Creek Center, a mixed-use property in Salt Lake City, Utah. City Creek Reserve, Inc. (CCRI), an affiliate of the LDS Church is the participating lessor. We own 100% of the leasehold interest in the retail buildings and property. CCRI has an option to purchase our interest at fair value at various points in time over the term of the lease. In addition to the minimum rent included in the table above, we may pay contingent rent based on the performance of the center.
International Market Place, a shopping center located in Waikiki, Honolulu, Hawaii, is subject to a long-term participating ground lease. In addition to minimum rent included in the table above, we may pay contingent rent based on the performance of the center.







Accounts Receivable and Uncollectible Tenant Revenues

In connection with the adoption of ASC Topic 842, 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 balances of our Consolidated Businesses and Unconsolidated Joint Ventures. 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 Unconsolidated Joint Ventures, and Distributions in Excess of Investments In and Net Income of Unconsolidated Joint Ventures balances on our Consolidated Balance Sheet.
v3.19.3
Acquisition, Partial Disposition of Ownership Interests, Redevelopment, and Development
9 Months Ended
Sep. 30, 2019
Acquisition, Partial Disposition of Ownership Interests, Redevelopment, and Development [Abstract]  
Disposition, Redevelopments, and Developments [Text Block] Acquisition, Partial Disposition of Ownership Interests, Redevelopment, and Development

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 13). 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 an Unconsolidated Joint Venture under the equity method.

Partial Disposition 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. Also, we may receive up to an additional $50 million of contingent consideration based on the 2019 performance of the three assets. As of September 30, 2019, we recognized no contingent consideration based on current estimates (Note 7).

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. A 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 Unconsolidated Joint Venture. In addition, upon the completion of the sale, we remeasured our remaining 17.15% interest in the shopping center to fair value, resulting in the recognition of a $145.0 million gain on remeasurement.

Following the CityOn.Xi’an and CityOn.Zhengzhou transactions, which are subject to customary closing conditions and are expected to close around year-end 2019, we will retain a 25% ownership interest in CityOn.Xi'an and a 24.5% ownership interest in CityOn.Zhengzhou. 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).

Redevelopment

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 for the remainder of 2019 as certain costs are incurred subsequent to the project's completion, including construction on certain tenant spaces.

Asia Development

Starfield Anseong

We have partnered with Shinsegae Group, our partner in Starfield Hanam, to build, lease, 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 and no longer expect to admit an additional capital partner during the development period. The shopping center is scheduled to open in late 2020. As of September 30, 2019, we had invested $142.8 million in the project, after cumulative currency translation adjustments. This investment is classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet.
v3.19.3
Income Taxes
9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes

Income Tax Expense (Benefit)

Our income tax expense (benefit) for the three and nine months ended September 30, 2019 and 2018 consisted of the following:

 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2019

2018
 
2019
 
2018
Federal current
$
(78
)
 
$
(433
)
 
$
38

 
$
(373
)
Federal deferred
681

 
(711
)
 
1,302

 
(1,059
)
Foreign current
1,191

(1) 
223

 
1,787

(1) 
857

Foreign deferred
157

 
50

 
1,592

(2) 
(74
)
State current
3

 
(113
)
 
44

 
(110
)
State deferred
67

 
(12
)
 
161

 
(25
)
Total income tax expense (benefit)
$
2,021


$
(996
)

$
4,924

 
$
(784
)


(1)
During the three and nine months ended September 30, 2019, we recognized $0.9 million of income tax expense related to a promote fee paid by our previous institutional partner in Starfield Hanam (Note 4).
(2)
During the nine months ended September 30, 2019, we recognized foreign deferred tax expense as we are no longer able to assert indefinite reinvestment in our China assets due to our pending sale of 50% of our interests in CityOn.Xi’an and CityOn.Zhengzhou to funds managed by Blackstone (Note 2). The tax expense is related to an excess of the Investments in the Unconsolidated Joint Ventures under GAAP accounting over the tax basis of our investments.

Deferred Taxes

Deferred tax assets and liabilities as of September 30, 2019 and December 31, 2018 were as follows:

 
2019
 
2018
Deferred tax assets:
 
 
 
Federal
$
4,427

 
$
5,662

Foreign
1,609

 
1,655

State
963

 
807

Total deferred tax assets
$
6,999

 
$
8,124

Valuation allowances
(1,860
)
 
(1,744
)
Net deferred tax assets
$
5,139

 
$
6,380

Deferred tax liabilities:
 
 
 

Foreign
$
3,224

 
$
2,454

Total deferred tax liabilities
$
3,224

 
$
2,454



We believe that it is more likely than not that 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.

v3.19.3
Investments in Unconsolidated Joint Ventures
9 Months Ended
Sep. 30, 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
September 30, 2019 and
December 31, 2018
CityOn.Xi'an (1)
 
50%
CityOn.Zhengzhou (1)
 
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)
In February 2019, we entered into agreements to sell 50% of our ownership interests in CityOn.Xi'an, CityOn.Zhengzhou, and Starfield Hanam. In September 2019, we completed the sale of 50% of our interest in Starfield Hanam. The remaining transactions are subject to customary closing conditions and are expected to close around year-end 2019 (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 Unconsolidated Joint Ventures differs from our share of the partnership or members’ equity reported on the combined balance sheet of the Unconsolidated Joint Ventures due to (i) the cost of our investment in excess of the historical net book values of the Unconsolidated Joint Ventures and (ii) TRG’s adjustments to the book basis, including intercompany profits on sales of services that are capitalized by the Unconsolidated Joint Ventures. Our additional basis allocated to depreciable assets is 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 Unconsolidated Joint Ventures for which accumulated distributions have exceeded investments in and net income of the Unconsolidated Joint Ventures. 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 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 our Unconsolidated Joint Ventures, followed by TRG's beneficial interest in the combined operations information. The combined financial information of the Unconsolidated Joint Ventures as of September 30, 2019 and December 31, 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 Unconsolidated Joint Ventures.

 
September 30,
2019
 
December 31,
2018
Assets:
 
 
 
Properties
$
3,811,327

 
$
3,728,846

Accumulated depreciation and amortization
(991,445
)
 
(869,375
)
 
$
2,819,882

 
$
2,859,471

Cash and cash equivalents
150,638

 
161,311

Accounts and notes receivable (1)
140,347

 
131,767

Operating lease right-of-use assets (1)
11,525

 
 
Deferred charges and other assets
132,844

 
140,444

 
$
3,255,236

 
$
3,292,993

 
 
 
 
Liabilities and accumulated equity (deficiency) in assets:
 

 
 

Notes payable, net 
$
3,109,843

 
$
2,815,617

Accounts payable and other liabilities
248,440

 
426,358

Operating lease liabilities (1)
13,280

 
 
TRG's accumulated deficiency in assets (1)
(217,864
)
 
(49,465
)
Unconsolidated Joint Venture Partners' accumulated equity in assets (1)
101,537

 
100,483

 
$
3,255,236

 
$
3,292,993

 
 
 
 
TRG's accumulated deficiency in assets (above)
$
(217,864
)
 
$
(49,465
)
TRG's investment in Starfield Anseong (Note 2) and advances to CityOn.Zhengzhou
185,135

 
140,743

TRG basis adjustments, including elimination of intercompany profit (2)
330,834

 
57,360

TCO's additional basis
45,718

 
47,178

Net investment in Unconsolidated Joint Ventures
$
343,823

 
$
195,816

Distributions in excess of investments in and net income of Unconsolidated Joint Ventures
481,315

 
477,800

Investment in Unconsolidated Joint Ventures
$
825,138

 
$
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 gain on remeasurement of ownership interest in Unconsolidated Joint Venture (Note 2).
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2019
 
2018
 
2019
 
2018
Revenues (1)
$
153,749

 
$
146,973

 
$
450,775

 
$
446,608

Maintenance, taxes, utilities, promotion, and other operating expenses (1)
$
54,441

 
$
50,140

 
$
158,851

 
$
155,321

Interest expense
35,926

 
33,199

 
104,637

 
99,316

Depreciation and amortization
31,861

 
32,791

 
98,501

 
98,727

Total operating costs
$
122,228

 
$
116,130

 
$
361,989

 
$
353,364

Nonoperating income, net (2)
837

 
563

 
2,161

 
1,491

Income tax expense
(2,023
)
 
(1,896
)
 
(5,669
)
 
(4,740
)
Net income
$
30,335

 
$
29,510

 
$
85,278

 
$
89,995

 
 
 
 
 
 
 
 
Net income attributable to TRG
$
15,545

 
$
15,193

 
$
43,993

 
$
46,435

Realized intercompany profit, net of depreciation on TRG’s basis adjustments
5,195

 
2,205

 
7,213

 
5,705

Depreciation of TCO's additional basis
(488
)
 
(488
)
 
(1,460
)
 
(1,460
)
Equity in income of Unconsolidated Joint Ventures
$
20,252

 
$
16,910

 
$
49,746

 
$
50,680

 
 
 
 
 
 
 
 
Beneficial interest in Unconsolidated Joint Ventures’ operations:
 

 
 

 
 

 
 

Revenues less maintenance, taxes, utilities, promotion, and other operating expenses
$
56,703

 
$
52,216

 
$
158,813

 
$
155,744

Interest expense
(17,798
)
 
(17,093
)
 
(52,579
)
 
(51,107
)
Depreciation and amortization
(17,662
)
 
(17,190
)
 
(53,808
)
 
(51,570
)
Income tax expense
(991
)
 
(1,023
)
 
(2,680
)
 
(2,387
)
Equity in income of Unconsolidated Joint Ventures
$
20,252

 
$
16,910

 
$
49,746

 
$
50,680



(1)
Upon adoption of ASC Topic 842, "Leases", uncollectible tenant revenues are now recorded in Rental Revenues (Note 1).
(2)
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 three and nine months ended September 30, 2019.

Related Party

We have a note receivable outstanding with CityOn.Zhengzhou, which was originally issued for the purpose of funding development costs. The balance of the note receivable was $42.3 million and $43.6 million as of September 30, 2019 and December 31, 2018, respectively, and was classified within Investment in Unconsolidated Joint Ventures on the Consolidated Balance Sheet.
v3.19.3
Beneficial Interest in Debt and Interest Expense
9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Beneficial interest in Debt and Interest Expense 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 Unconsolidated Joint Ventures 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:
 
 
 
 
 
 
 
September 30, 2019
$
3,634,165

 
$
3,109,843

 
$
3,343,487

 
$
1,541,841

December 31, 2018
3,830,195

 
2,815,617

 
3,539,588

 
1,437,445

 
 
 
 
 
 
 
 
Capitalized interest:
 

 
 

 
 

 
 

Nine Months Ended September 30, 2019
$
6,138

(1) 
$
189

 
$
6,120

(1) 
$
112

Nine Months Ended September 30, 2018
12,266

(1) 
9

 
12,202

(1) 
4

 
 
 
 
 
 
 
 
Interest expense:
 

 
 

 
 

 
 

Nine Months Ended September 30, 2019
$
112,590

 
$
104,637

 
$
103,692

 
$
52,579

Nine Months Ended September 30, 2018
97,242

 
99,316

 
88,219

 
51,107



(1)
We capitalize interest costs incurred in funding our equity contributions to development projects accounted for as Unconsolidated Joint Ventures. The capitalized interest cost is included in our basis in our investment in Unconsolidated Joint Ventures. Such capitalized interest reduces interest expense on the Consolidated Statement of Operations and Comprehensive Income (Loss) and in the table above is included within Consolidated Subsidiaries.

2019 Financings

In October 2019, we amended and restated our primary unsecured revolving line of credit, which extended the maturity date to February 2024 with two six month extension options. Following the amendment and restatement, the line of credit now bears interest at a range of LIBOR plus 1.05% to 1.60% based on our total leverage ratio with a facility fee in the range of 0.20% to 0.25%.
Concurrently 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 to February 2025. Payments for the reduction in the unsecured term loan were funded by our primary unsecured revolving line of credit. Following the amendment and restatement, the loan now bears interest at a range of LIBOR plus 1.15% to 1.80% based on our total leverage ratio. The LIBOR rate on this loan continues to be swapped to a fixed rate of 2.14% until February 2022, with the remaining $25 million swap notional allocated to our primary unsecured revolving line of credit.
Lastly, in October 2019, we exercised the final one year extension option on our $150 million loan for The Mall at Green Hills, which was scheduled to mature in December 2019. The loan will now mature in December 2020, and beginning in December 2019, the loan will bear interest at LIBOR plus 1.45%, which is a reduction from the current interest rate of LIBOR plus 1.60%.

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. 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 September 30, 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 September 30, 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 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 September 30, 2019 was $0.9 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 Unconsolidated Joint Venture, 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 September 30, 2019, the interest rate swap was a $1.2 million liability and in a receivable position for unpaid interest. We believe the likelihood of a payment under the guarantee to be remote.
v3.19.3
Noncontrolling Interests
9 Months Ended
Sep. 30, 2019
Noncontrolling Interest [Abstract]  
Noncontrolling Interests Noncontrolling Interests

Redeemable Noncontrolling Interests

Taubman Asia President

In September 2019, we reacquired René Tremblay's (the Former Asia President's) remaining 5% ownership interest in Taubman Asia for $6.0 million, which included the return of the $2.0 million previously contributed by the Former Asia President in connection with the prior repurchase transaction. The $6.0 million acquisition price is reflected as a distribution to noncontrolling interests on the Consolidated Statement of Cash Flows.

The Former Asia President had an ownership interest in Taubman Asia, which entitled him to 5% of Taubman Asia's dividends, with 85% of his dividends relating to investment activities withheld during his tenure as Asia President. These withholdings would have continued until he contributed and maintained his capital consistent with his percentage ownership interest, including all capital funded by TRG for Taubman Asia's operating and investment activities subsequent to the Former Asia President obtaining his ownership interest. TRG had a preferred investment in Taubman Asia to the extent the Former Asia President had not yet contributed capital commensurate with his ownership interest. The $6.0 million acquisition price for the ownership interest represented the fair value of the ownership interest less the amount required to return TRG's preferred interest. The 5% ownership interest became puttable in 2019.

Prior to the acquisition, we determined that the Former Asia President's ownership interest in Taubman Asia qualified as an equity award, considering its specific redemption provisions, and accounted for it as a contingently redeemable noncontrolling interest. We presented as temporary equity at each balance sheet date an estimate of the redemption value of the ownership interest, which was classified as Level 3 of the fair value hierarchy. As of December 31, 2018, the carrying amount of the ownership interest was $7.8 million and was classified as Redeemable Noncontrolling Interest on the Consolidated Balance Sheet. During the nine months ended September 30, 2019, the adjustments to the redemption value were recorded through equity.

In September 2016, we announced the appointment of Peter Sharp as president of Taubman Asia, succeeding the Former Asia President effective January 1, 2017. Peter Sharp resigned from Taubman Asia effective October 2019. Upon resignation, Peter Sharp's ownership interest in Taubman Asia was assigned to us. As of both September 30, 2019 and December 31, 2018, the carrying amount of this ownership interest was zero.

International Market Place

We own a 93.5% controlling interest in a joint venture that owns International Market Place in Waikiki, Honolulu, Hawaii. The 6.5% joint venture partner has no obligation and no right to contribute capital. We are entitled to a preferential return on our capital contributions. We have the right to purchase the joint venture partner's interest and the joint venture partner has the right to require us to purchase the joint venture partner's interest annually. The purchase price of the joint venture partner's interest will be based on fair value. Considering the redemption provisions, we account for the joint venture partner's interest as a contingently redeemable noncontrolling interest with a carrying value of zero at both September 30, 2019 and December 31, 2018. Any adjustments to the redemption value are recorded through equity.







Reconciliation of Redeemable Noncontrolling Interest
 
Three Months Ended September 30
 
Nine Months Ended September 30
 
2019
 
2018
 
2019
 
2018
Beginning Balance
$
6,000

 
$
7,500

 
$
7,800

 
$
7,500

Distributions
(6,000
)
 
 
 
(6,000
)
 
 
Allocation of net loss


 
(25
)
 
(237
)
 
(135
)
Former Asia President adjustment of redeemable equity
 
 
 
 
(1,800
)
 
 
Adjustments of redeemable noncontrolling interest


 
25

 
237

 
135

Ending Balance
$

 
$
7,500

 
$

 
$
7,500



Equity Balances of Non-redeemable Noncontrolling Interests

The net equity balance of the non-redeemable noncontrolling interests as of September 30, 2019 and December 31, 2018 included the following:
 
2019
 
2018
Non-redeemable noncontrolling interests:
 
 
 
Noncontrolling interests in consolidated joint ventures
$
(154,488
)
 
$
(156,470
)
Noncontrolling interests in partnership equity of TRG
8,569

 
(58,554
)
 
$
(145,919
)
 
$
(215,024
)


Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to the noncontrolling interests for the three months ended September 30, 2019 and 2018 included the following:
 
Three Months Ended September 30
 
2019
 
2018
Net income (loss) attributable to noncontrolling interests:
 
 
 
Non-redeemable noncontrolling interests:
 
 
 
Noncontrolling share of income of consolidated joint ventures
$
958

 
$
1,589

Noncontrolling share of income of TRG
93,690

 
9,192

 
$
94,648

 
$
10,781

Redeemable noncontrolling interest:

 
(25
)
 
$
94,648

 
$
10,756




Net income (loss) attributable to the noncontrolling interests for the nine months ended September 30, 2019 and 2018 included the following:
 
Nine Months Ended September 30
 
2019
 
2018
Net income (loss) attributable to noncontrolling interests:
 
 
 
Non-redeemable noncontrolling interests:
 
 
 
Noncontrolling share of income of consolidated joint ventures
$
3,456

 
$
4,523

Noncontrolling share of income of TRG
103,899

 
24,393

 
$
107,355

 
$
28,916

Redeemable noncontrolling interest:
(237
)
 
(135
)
 
$
107,118

 
$
28,781



Equity Transactions

The following table presents the effects of changes in TCO’s ownership interest in consolidated subsidiaries on TCO’s equity for the nine months ended September 30, 2019 and 2018:
 
Nine Months Ended September 30
 
2019
 
2018
Net income attributable to TCO common shareholders
$
236,717

 
$
54,873

Transfers (to) from the noncontrolling interest:
 

 
 

Increase (decrease) in TCO’s paid-in capital for adjustments of noncontrolling interest (1)
55,691

 
(211
)
Net transfers (to) from noncontrolling interests
55,691

 
(211
)
Change from net income attributable to TCO and transfers (to) from noncontrolling interests
$
292,408

 
$
54,662


(1)
In 2019 and 2018, adjustments of the noncontrolling interest were made as a result of changes in our ownership of TRG in connection with our share-based compensation under employee and director benefit plans (Note 8), issuances of common stock pursuant to the Continuing Offer (Note 9), and in connection with the accounting for the Former Asia President's redeemable ownership interest. In 2019, adjustments of the noncontrolling interest were also made as a result of issuances of TRG Units in connection with the acquisition of The Gardens Mall (Note 2).

Finite Life Entities

ASC Topic 480, “Distinguishing Liabilities from Equity” establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. At September 30, 2019, we held a controlling interest in a consolidated entity with a specified termination date in 2083. The noncontrolling owners' interest in this entity is to be settled upon termination by distribution or transfer of either cash or specific assets of the underlying entity. The estimated fair value of this noncontrolling interest was approximately $370 million at September 30, 2019, compared to a book value of $(154.5) million that is classified in Noncontrolling Interests on our Consolidated Balance Sheet. The fair value of the noncontrolling interest was calculated as the noncontrolling interest's effective ownership share of the underlying property's fair value. The property's fair value was estimated by considering its in-place net operating income, current market capitalization rate, and mortgage debt outstanding.
v3.19.3
Derivative and Hedging Activities
9 Months Ended
Sep. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative and Hedging Activities Derivative and Hedging Activities

Risk Management Objective and Strategies for Using Derivatives

We use derivative instruments, such as interest rate swaps and interest rate caps, primarily to manage exposure to interest rate risks inherent in variable rate debt and refinancings. We may also enter into forward starting swaps or treasury lock agreements to set the effective interest rate on a planned fixed-rate financing. Our interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. In a forward starting swap or treasury lock agreement that we cash settle in anticipation of a fixed rate financing or refinancing, we will receive or pay an amount equal to the present value of future cash flow payments based on the difference between the contract rate and market rate on the settlement date.

We do not use derivatives for trading or speculative purposes and currently do not have material derivatives that are not designated as hedging instruments under the accounting requirements for derivatives and hedging.

As of September 30, 2019, we had the following outstanding derivatives that were designated and are expected to be effective as cash flow hedges of the interest payments and/or the currency exchange rate on the associated debt.
Instrument Type

Ownership

Notional Amount

Swap Rate

Credit Spread on Loan

Total Swapped Rate on Loan

Maturity Date
Consolidated Subsidiaries:

 

 
 
 
 
 
 
 
 
 
Receive variable (LIBOR) /pay-fixed swap (1)
 
100
%
 
100,000

 
2.14
%
 
1.60
%
(1) 
3.74
%
(1) 
February 2022
Receive variable (LIBOR) /pay-fixed swap (1)
 
100
%
 
100,000

 
2.14
%
 
1.60
%
(1) 
3.74
%
(1) 
February 2022
Receive variable (LIBOR) /pay-fixed swap (1)
 
100
%
 
50,000

 
2.14
%
 
1.60
%
(1) 
3.74
%
(1) 
February 2022
Receive variable (LIBOR) /pay-fixed swap (1)
 
100
%
 
50,000

 
2.14
%
 
1.60
%
(1) 
3.74
%
(1) 
February 2022
Receive variable (LIBOR) /pay-fixed swap (2)
 
100
%
 
125,000

 
3.02
%
(2) 
1.60
%
(2) 
4.62
%
(2) 
March 2023
Receive variable (LIBOR) /pay-fixed swap (2)
 
100
%
 
75,000

 
3.02
%
(2) 
1.60
%
(2) 
4.62
%
(2) 
March 2023
Receive variable (LIBOR) /pay-fixed swap (2)
 
100
%
 
50,000

 
3.02
%
(2) 
1.60
%
(2) 
4.62
%
(2) 
March 2023
Receive variable (LIBOR) /pay-fixed swap (3)
 
100
%
 
12,000

 
2.09
%
 
1.40
%
 
3.49
%
 
March 2024
Unconsolidated Joint Ventures:

 


 

 
 

 
 

 
 

 
 
Receive variable (LIBOR) /pay-fixed swap (4)
 
50.1
%
 
159,504

 
1.83
%
 
1.75
%
 
3.58
%
 
December 2021
Receive variable (LIBOR) USD/pay-fixed Korean Won (KRW) cross-currency interest rate swap (5)
 
17.15
%
 
52,065 USD / 60,500,000 KRW

 
1.52
%
 
1.60
%
 
3.12
%
 
September 2020

(1)
The hedged forecasted transaction for each of these swaps is the first previously unhedged one month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow. As of September 30, 2019, these swaps were being used to manage interest rate risk on the $300 million unsecured term loan. As of September 30, 2019, the credit spread on this loan varied within a range of 1.25% to 1.90%, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 3.39% to 4.04%.
(2)
The hedged forecasted transaction for each of these swaps is the first previously unhedged one-month LIBOR-indexed interest payment accrued and made each month on a debt principal amount equal to the swap notional amount, regardless of the specific debt agreement from which they may flow beginning with the March 2019 effective date of these swaps. We are currently using these swaps to manage interest rate risk on the $250 million unsecured term loan. The credit spread on this loan can vary within a range of 1.25% to 1.90%, depending on our total leverage ratio at the measurement date, resulting in an effective rate in the range of 4.27% to 4.92% during the swap period.
(3)
The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on the U.S. headquarters building.
(4)
The notional amount on this swap is equal to the outstanding principal balance of the floating rate loan on International Plaza.
(5)
The notional amount on this swap is equal to the outstanding principal balance of the U.S. dollar construction loan for Starfield Hanam. There is a cross-currency interest rate swap to fix the interest rate on the loan and swap the related principal and interest payments from U.S. dollars to KRW in order to reduce the impact of fluctuations in interest rates and exchange rates on the cash flows of the joint venture. The currency swap exchange rate is 1,162.0.

Cash Flow Hedges

We recognize all changes in fair value for hedging instruments designated and qualifying for cash flow hedge accounting treatment as a component of Other Comprehensive Income (OCI).

Amounts reported in Accumulated Other Comprehensive Income (AOCI) related to currently outstanding interest rate derivatives are recognized as an adjustment to income as interest payments are made on our variable-rate debt. Realized gains or losses on settled derivative instruments included in AOCI are recognized as an adjustment to income over the term of the hedged debt transaction. Amounts reported in AOCI related to the cross-currency interest rate swap are recognized as an adjustment to income as transaction gains or losses arising from the remeasurement of foreign currency denominated loans are recognized and as actual interest and principal obligations are repaid.
We expect that approximately $4.9 million of AOCI of TCO and the noncontrolling interests will be reclassified from AOCI and recognized as an increase in expense in the following 12 months.

The following tables present the effect of derivative instruments on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2019 and 2018. The tables include the amount of gains or losses on outstanding derivative instruments recognized in OCI in cash flow hedging relationships and the location and amount of gains or losses reclassified from AOCI into income resulting from outstanding derivative instruments.
 
Amount of Gain or (Loss) Recognized in OCI on Derivative
 
Location of Gain or (Loss) Reclassified from AOCI into Income
 
Amount of Gain or (Loss) Reclassified from AOCI into Income
 
Three Months Ended September 30
 
 
 
Three Months Ended September 30
 
2019
 
2018
 
 
 
2019
 
2018
Derivatives in cash flow hedging relationships:
 
 
 
 

 
 
 
 
Interest rate contracts – consolidated subsidiaries
$
(2,059
)
 
$
756

 
Interest Expense
 
$
(400
)
 
$
506

Interest rate contracts – UJVs
(253
)
 
235

 
Equity in Income of UJVs
 
85

 
(1
)
Cross-currency interest rate contract – UJV
52

 
92

 
Equity in Income of UJVs
 
711

 
(36
)
Total derivatives in cash flow hedging relationships
$
(2,260
)
 
$
1,083

 
 
 
$
396

 
$
469



 
Amount of Gain or (Loss) Recognized in OCI on Derivative
 
Location of Gain or (Loss) Reclassified from AOCI into Income
 
Amount of Gain or (Loss) Reclassified from AOCI into Income
 
Nine Months Ended September 30
 
 
 
Nine Months Ended September 30
 
2019
 
2018
 
 
 
2019
 
2018
Derivatives in cash flow hedging relationships:
 
 
 
 

 
 
 
 
Interest rate contracts – consolidated subsidiaries
$
(16,583
)
 
$
8,674

 
Interest Expense
 
$
366

 
$
205

Interest rate contracts – UJVs
(1,953
)
 
2,101

 
Equity in Income of UJVs
 
354

 
(287
)
Cross-currency interest rate contract – UJV
9

 
(90
)
 
Equity in Income of UJVs
 
1,522

 
781

Total derivatives in cash flow hedging relationships
$
(18,527
)
 
$
10,685

 
 
 
$
2,242

 
$
699


We record all derivative instruments at fair value on the Consolidated Balance Sheet. The following table presents the location and fair value of our derivative financial instruments as reported on the Consolidated Balance Sheet as of September 30, 2019 and December 31, 2018.
 
 
 
Fair Value
 
Consolidated Balance Sheet Location
 
September 30,
2019
 
December 31,
2018
Derivatives designated as hedging instruments:
 
 
 
 
 
Asset derivatives:
 
 
 
 
 
Interest rate contracts – consolidated subsidiaries
Deferred Charges and Other Assets
 


 
$
3,530

Interest rate contract - UJV
Investment in UJVs
 


 
1,345

Cross-currency interest rate contract - UJV
Investment in UJVs
 
$
212

 


Total assets designated as hedging instruments
 
 
$
212