Investments in Unconsolidated Entities and International Investments

3 Months Ended

Mar. 31, 2026

Investments in Unconsolidated Entities and International Investments

Investments in Unconsolidated Entities and International Investments

6. Investment in Unconsolidated Entities and International Investments

Real Estate Joint Ventures and Investments

Joint ventures are common in the real estate industry. We use joint ventures to finance properties, develop new properties and diversify our risk in a particular property or portfolio of properties. As discussed in Note 2, we held joint venture interests in 88 properties as of March 31, 2026.

Certain of our joint venture properties are subject to various rights of first refusal, buy-sell provisions, put and call rights, or other sale or marketing rights for partners which are customary in real estate joint venture agreements and the industry. We and our partners in these joint ventures may initiate these provisions (subject to any applicable lock up or similar restrictions), which may result in either the sale of our interest or the use of available cash or borrowings, or the use of limited partnership interests in the Operating Partnership, to acquire the joint venture interest from our partner.

We may provide financing to joint venture properties primarily in the form of interest bearing loans. As of March 31, 2026 and December 31, 2025, we had construction loans and other advances to these related parties totaling $40.7 million and $48.3 million, respectively, which are included in deferred costs and other assets in the accompanying consolidated balance sheets.

Taubman Realty Group

Subsequent to the TRG Acquisition discussed in Note 4, 11 of the former TRG properties are accounted for as equity method investments and are presented in the summary financial information later in this Note.

The table below represents summary financial information of TRG up to the date of the TRG Acquisition discussed in Note 4.


		For the Three Months Ended
		March 31,
				2025
Total revenues			$	176,313
Operating income before other items				74,157
Consolidated net income				49,784
Our share of net income				44,120
Amortization of excess investment				(50,487)

Other Platform Investments

During the fourth quarter of 2024, J.C. Penney completed an all-equity transaction where it acquired the retail operations of SPARC Group. The combined business was renamed Catalyst post transaction. As of March 31, 2026, we own a 31.3% noncontrolling interest in Catalyst. Additionally, we continue to hold a 33.3% noncontrolling interest in SPARC Holdings, the former owner of SPARC Group, which now primarily holds a 25% interest in Catalyst. For the three month periods ending March 31, 2026 and 2025, Catalyst recognized a net pre-tax loss related to transition activities, our share of which was $4.2 million and $24.0 million, respectively, which is included in Loss due to disposal, exchange, or revaluation of equity interests, net in the consolidated statements of operations and comprehensive income.

As of March 31, 2026, we own a 45% noncontrolling interest in Rue Gilt Groupe, a 50% noncontrolling ownership interest in Jamestown and a 39.4% noncontrolling interest in Phoenix Retail, LLC, the owner and operator of Express and Bonobos direct to consumer businesses in the United States.

The table below represents combined summary financial information, after intercompany eliminations, of our other platform investments.


		For the Three Months Ended
		March 31,
		2026			2025
Total revenues		$	2,253,797		$	2,391,468
Operating income (loss) before other items			(343,080)			(256,146)
Consolidated net income (loss)			(385,681)			(297,436)
Share of net income (loss), net of tax			(82,043)			(61,130)
Amortization of excess investment			(692)			(692)

European Investments

At March 31, 2026, we owned 59,280,541 shares, or approximately 20.7%, of Klépierre, which had a quoted market price of $37.30 per share. During the first quarter of 2026, we exchanged 4,074,711 shares of Klépierre to settle the conversion of €110.3 million of the Operating Partnership’s exchangeable bonds, which are exchangeable at the option of the bondholder into shares of Klépierre. In connection with these transactions, we recorded a non-cash gain of $64.3 million, which is included in gain on acquisition of controlling interest, sale or disposal of, or recovery on, assets and interests in unconsolidated entities and impairment, net in the consolidated statement of operations and comprehensive income. These non-cash investing and financing activities are excluded from our consolidated statements of cash flows. The table below represents summary financial information with respect to our investment in Klépierre. This information is based on applicable Euro:USD exchange rates and after our conversion of Klépierre’s results to GAAP.


			For the Three Months Ended
			March 31,
			2026			2025
Total revenues			$	389,201		$	345,734
Operating income before other items				176,167			144,514
Consolidated net income				129,171			108,335
Our share of net income				23,768			22,434
Amortization of excess investment				(3,542)			(3,167)

We have an interest in a European investee that had interests in 12 Designer Outlet properties as of March 31, 2026 and December 31, 2025, eight of which are consolidated by us as of March 31, 2026. As of March 31, 2026, our legal percentage ownership interests in these properties ranged from 23% to 94%.

In addition, we have a 50.0% noncontrolling interest in a European property management and development company that provides services to the Designer Outlet properties.

Asian Joint Ventures

We conduct our international Premium Outlet operations in Japan through a joint venture with Mitsubishi Estate Co., Ltd. We have a 40% noncontrolling ownership interest in this joint venture. The carrying amount of our investment in this joint venture was $251.8 million and $245.0 million as of March 31, 2026 and December 31, 2025, respectively, including all related components of accumulated other comprehensive income (loss). We conduct our international Premium Outlet operations in South Korea through a joint venture with Shinsegae International Co. We have a 50% noncontrolling ownership interest in this joint venture. The carrying amount of our investment in this joint venture was $221.4 million and $216.8 million as of March 31, 2026 and December 31, 2025, respectively, including all related components of accumulated other comprehensive income (loss).

We have an interest in two full-price mall operating joint venture properties located in the People’s Republic of China and two full-price mall operating joint venture properties located in South Korea. Our ownership in these properties ranges from 17% to 49%.

Summary Financial Information

The following tables present a summary of the combined balance sheets and statements of operations of our equity method investments and share of income from such investments, excluding our investments in Klépierre and our other platform investments.

COMBINED BALANCE SHEETS


		March 31,			December 31,
		2026			2025
Assets:
Investment properties, at cost		$	21,425,679		$	22,077,749
Less - accumulated depreciation			9,907,158			9,020,481
			11,518,521			13,057,268
Cash and cash equivalents			1,498,298			1,264,619
Tenant receivables and accrued revenue, net			594,048			605,756
Right-of-use assets, net			115,191			108,349
Deferred costs and other assets			639,371			572,826
Total assets		$	14,365,429		$	15,608,818
Liabilities and Partners’ Deficit:
Mortgages		$	16,419,497		$	16,374,773
Accounts payable, accrued expenses, intangibles, and deferred revenue			1,119,227			1,117,855
Lease liabilities			116,950			99,837
Other liabilities			389,828			334,246
Total liabilities			18,045,502			17,926,711
Preferred units			67,450			67,450
Partners’ deficit			(3,747,524)			(2,385,343)
Total liabilities and partners’ deficit		$	14,365,429		$	15,608,818
Our Share of:
Partners’ deficit		$	(1,635,892)		$	(1,247,554)
Add: Excess Investment			3,071,349			2,773,173
Our net Investment in unconsolidated entities, at equity		$	1,435,457		$	1,525,619

Excess Investment represents the unamortized difference of our investment over our share of the equity in the underlying net assets of the joint ventures or other investments acquired and has been determined to relate to the fair value of the investment properties, intangible assets, including goodwill, and debt premiums and discounts. We amortize excess investment over the life of the related depreciable components of assets acquired, typically no greater than 40 years, the terms of the applicable leases, the estimated useful lives of the finite lived intangibles, and the applicable debt maturity, respectively. The amortization is included in the reported amount of income from unconsolidated entities.

COMBINED STATEMENTS OF OPERATIONS


	For the Three Months Ended
	March 31,
	2026		2025
REVENUE:
Lease income	$	921,792	$	749,807
Other income		105,180		94,066
Total revenue		1,026,972		843,873
OPERATING EXPENSES:
Property operating		214,941		166,647
Depreciation and amortization		185,164		159,012
Real estate taxes		66,398		58,793
Repairs and maintenance		26,281		20,763
Advertising and promotion		24,932		22,150
Other		72,285		56,847
Total operating expenses		590,001		484,212
Operating Income Before Other Items		436,971		359,661
Interest expense		(205,038)		(170,368)
Net Income	$	231,933	$	189,293
Third-Party Investors’ Share of Net Income	$	116,464	$	96,594
Our Share of Net Income		115,469		92,699
Amortization of Excess Investment		(47,657)		(14,465)
Income from Unconsolidated Entities	$	67,812	$	78,234

Our share of income from unconsolidated entities in the above table, aggregated with our share of results from our investments in Klépierre and TRG prior to the TRG Acquisition, as well as our other platform investments, before any applicable taxes, is presented in income from unconsolidated entities in the accompanying consolidated statements of operations and comprehensive income, except as otherwise noted.