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JOINT VENTURES AND PARTNERSHIPS | 6 Months Ended
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Jun. 30, 2021
JOINT VENTURES AND PARTNERSHIPS |
JOINT VENTURES AND PARTNERSHIPS | 5. JOINT VENTURES AND PARTNERSHIPS UDR has entered into joint ventures and partnerships with unrelated third parties to own, operate, acquire, renovate, develop, redevelop, dispose of, and manage real estate assets that are either consolidated and included in Real estate owned on the Consolidated Balance Sheets or are accounted for under the equity method of accounting, and are included in Investment in and advances to unconsolidated joint ventures, net, on the Consolidated Balance Sheets. The Company consolidates the entities that we control as well as any variable interest entity where we are the primary beneficiary. Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest. UDR’s joint ventures and partnerships are funded with a combination of debt and equity. Our losses are typically limited to our investment and except as noted below, the Company does not guarantee any debt, capital payout or other obligations associated with our joint ventures and partnerships. The Company recognizes earnings or losses from our investments in unconsolidated joint ventures and partnerships consisting of our proportionate share of the net earnings or losses of the joint ventures and partnerships. In addition, we may earn fees for providing management services for the communities held by the unconsolidated joint ventures and partnerships. The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of June 30, 2021 and December 31, 2020 (dollars in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Number of | ​ | Number of | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | Operating | ​ | Apartment | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ | Income/(loss) from investments
​ | ​ | ​ | ​ | Communities | ​ | Homes | ​ | Investment at | ​ | UDR’s Ownership Interest | ​ | ​ | Three Months Ended | ​ | Six Months Ended
​ |  | Location of |  | June 30, |  | June 30, |  | June 30, |  | December 31, | ​ | June 30, |  | ​ | December 31, |  | ​ | June 30, | ​ | June 30,
Joint Ventures |  | Properties |  | 2021 |  | 2021 |  | 2021 |  | 2020 | ​ | 2021 |  | ​ | 2020 |  | ​ | 2021 |  | 2020 | ​ | 2021 |  | 2020
Operating: | ​ |  | ​ |  | ​ |  | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  |  | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
UDR/MetLife I | ​ | Los Angeles, CA | ​ | 1 | ​ | 150 | ​ | $ | 25,095 | ​ | $ | 26,426 | ​ | 50.0 | % | ​ | 50.0 | % | ​ | $ | (839) | ​ | $ | (658) | ​ | $ | (1,314) | ​ | $ | (1,112)
UDR/MetLife II |  | Various |  | 7 |  | 1,250 |  | ​ | 184,568 |  | ​ | 151,353 | ​ | 50.0 | % | ​ | 50.0 | % | ​ | ​ | (153) | ​ | ​ | 10 | ​ | ​ | (2,837) | ​ | ​ | (81)
Other UDR/MetLife Joint Ventures (a) |  | Various |  | 5 |  | 1,437 |  | ​ | 74,178 |  | ​ | 82,072 | ​ | 50.6 | % | ​ | 50.6 | % | ​ | ​ | (3,367) | ​ | ​ | (2,312) | ​ | ​ | (6,752) | ​ | ​ | (4,124)
West Coast Development Joint Ventures (b) | ​ | Los Angeles, CA | ​ | — | ​ | — | ​ | ​ | 311 | ​ | ​ | 30,080 | ​ | 47.0 | % | ​ | 47.0 | % | ​ | ​ | — | ​ | ​ | (56) | ​ | ​ | 2,486 | ​ | ​ | (136)
Investment in and advances to unconsolidated joint ventures, net, before preferred equity investments and real estate technology investments |  |  | ​ | $ | 284,152 | ​ | $ | 289,931 | ​ |  |  | ​ |  | ​ | ​ | $ | (4,359) | ​ | $ | (3,016) | ​ | $ | (8,417) | ​ | $ | (5,453)
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Income/(loss) from investments
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | Investment at | ​ | Three Months Ended | ​ | Six Months Ended
Developer Capital Program |  | ​ |  | ​ |  | Years To | ​ | UDR |  | June 30, |  | December 31, |  | June 30, | ​ | June 30,
and Real Estate Technology Investments (c) |  | Location |  | Rate |  | Maturity | ​ | Commitment (d) |  | 2021 |  | 2020 |  | 2021 |  | 2020 |  | 2021 |  | 2020
Preferred equity investments: |  |  |  |  |  |  | ​ | ​ | ​ | ​ |  |  | ​ |  |  | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ |  | ​ |
1532 Harrison | ​ | San Francisco, CA | ​ | 11.0 | % | 1.0 | ​ | $ | 24,645 | ​ | $ | 36,040 | ​ | $ | 34,135 | ​ | ​ | 963 | ​ | ​ | 846 | ​ | $ | 1,892 | ​ | $ | 1,682
Junction | ​ | Santa Monica, CA | ​ | 12.0 | % | 1.1 | ​ | ​ | 8,800 | ​ | ​ | 12,413 | ​ | ​ | 11,699 | ​ | ​ | 364 | ​ | ​ | 323 | ​ | ​ | 714 | ​ | ​ | 637
1200 Broadway (e) (f) | ​ | Nashville, TN | ​ | 12.25 | % | 1.2 | ​ | ​ | 55,558 | ​ | ​ | 59,354 | ​ | ​ | 69,330 | ​ | ​ | 1,727 | ​ | ​ | 1,306 | ​ | ​ | 3,099 | ​ | ​ | 2,587
1300 Fairmount (f) | ​ | Philadelphia, PA | ​ | 8.5 | % | 2.1 | ​ | ​ | 51,393 | ​ | ​ | 62,075 | ​ | ​ | 59,544 | ​ | ​ | 1,275 | ​ | ​ | 1,191 | ​ | ​ | 2,531 | ​ | ​ | 2,357
Essex | ​ | Orlando, FL | ​ | 12.5 | % | 2.1 | ​ | ​ | 12,886 | ​ | ​ | 17,085 | ​ | ​ | 16,770 | ​ | ​ | 543 | ​ | ​ | 481 | ​ | ​ | 1,065 | ​ | ​ | 947
Modera Lake Merritt (f) | ​ | Oakland, CA | ​ | 9.0 | % | 2.8 | ​ | ​ | 27,250 | ​ | ​ | 32,334 | ​ | ​ | 30,928 | ​ | ​ | 714 | ​ | ​ | 652 | ​ | ​ | 1,405 | ​ | ​ | 1,226
Thousand Oaks (f) | ​ | Thousand Oaks, CA | ​ | 9.0 | % | 3.6 | ​ | ​ | 20,059 | ​ | ​ | 21,759 | ​ | ​ | 17,919 | ​ | ​ | 481 | ​ | ​ | 153 | ​ | ​ | 918 | ​ | ​ | 177
Vernon Boulevard (f) | ​ | Queens, NY | ​ | 13.0 | % | 4.0 | ​ | ​ | 40,000 | ​ | ​ | 45,169 | ​ | ​ | 42,360 | ​ | ​ | 1,431 | ​ | ​ | — | ​ | ​ | 2,804 | ​ | ​ | —
Makers Rise (f) (g) | ​ | Herndon, VA | ​ | 9.0 | % | 4.5 | ​ | ​ | 30,208 | ​ | ​ | 9,176 | ​ | ​ | — | ​ | ​ | 171 | ​ | ​ | — | ​ | ​ | 268 | ​ | ​ | —
121 at Watters (f) (h) | ​ | Allen, TX | ​ | 9.0 | % | 4.7 | ​ | ​ | 19,846 | ​ | ​ | 2,179 | ​ | ​ | — | ​ | ​ | 226 | ​ | ​ | — | ​ | ​ | 229 | ​ | ​ | —
Infield Phase I (i) | ​ | Kissimmee, FL | ​ | 14.0 | % | 2.9 | ​ | ​ | 16,044 | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​ | ​ | —
Real estate technology investments: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
RETV I | ​ | N/A | ​ | N/A | ​ | N/A | ​ | ​ | 18,000 | ​ | ​ | 28,696 | ​ | ​ | 20,587 | ​ | ​ | 6,055 | ​ | ​ | 4,696 | ​ | ​ | 8,106 | ​ | ​ | 4,550
RETV II | ​ | N/A | ​ | N/A | ​ | N/A | ​ | $ | 18,000 | ​ | ​ | 3,471 | ​ | ​ | 2,283 | ​ | ​ | 163 | ​ | ​ | — | ​ | ​ | 62 | ​ | ​ | —
Total Preferred Equity Investments and Real Estate Technology Investments | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 329,751 | ​ | ​ | 305,555 | ​ | ​ | 14,113 | ​ | ​ | 9,648 | ​ | ​ | 23,093 | ​ | ​ | 14,163
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Sold joint ventures and other investments in prior year | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (3) | ​ | ​ | 1,389 | ​ | ​ | (3) | ​ | ​ | 2,678
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total Joint Ventures and Developer Capital Program and Real Estate Technology Investments, net (a) | ​ | ​ | ​ | ​ | $ | 613,903 | ​ | $ | 595,486 | ​ | $ | 9,751 |  | $ | 8,021 | ​ | $ | 14,673 |  | $ | 11,388
(a) | As of June 30, 2021 and December 31, 2020, the Company’s negative investment in 13th and Market Properties LLC of $5.3 million and $4.7 million, respectively, is included in Other UDR/MetLife Joint Ventures in the table above and recorded in Accounts payable, accrued expenses, and other liabilities on the Consolidated Balance Sheet.
(b) | In J anuary 2021, the joint venture sold its remaining community, a 293 home operating community located in Los Angeles, California, for a sales price of approximately $121.0 million. As a result, the Company recorded a gain on the sale of approximately $2.5 million.
(c) | The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.
(d) | Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.
(e) | In April 2021, the balance was paid down by $12.5 million and the Company’s preferred return increased to 12.25%. The Company's preferred return will revert to 8.0% in February 2022 if no capital events occur prior to that date.
(f) | The Company’s preferred equity investment receives a variable percentage of the value created from the project upon a capital or liquidating event.
(g) | In January 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to
| develop and operate a 356 apartment home community in Herndon, Virginia. The Company’s preferred equity investment of $30.2 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.
(h) | In March 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 469 apartment home community in Allen, Texas. The Company’s preferred equity investment of $19.8 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.
(i) | In May 2021, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 384 apartment home community in Kissimmee, Florida. The Company’s preferred equity investment of $16.0 million earns a preferred return of 14.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and accounts for it under the equity method of accounting.
​ As of June 30, 2021 and December 31, 2020, the Company had deferred fees of $9.1 million and $8.4 million, respectively, which will be recognized through earnings over the weighted average life of the related properties, upon the disposition of the properties to a third party, or upon completion of certain development obligations. The Company recognized management fees of $2.2 million and $1.3 million for the three months ended June 30, 2021 and 2020, respectively, and $3.8 million and $2.7 million for the six months ended June 30, 2021 and 2020, respectively, for management of the communities held by the joint ventures and partnerships. The management fees are included in Joint venture management and other fees on the Consolidated Statements of Operations. The Company may, in the future, make additional capital contributions to certain of our joint ventures and partnerships should additional capital contributions be necessary to fund acquisitions or operations. We consider various factors to determine if a decrease in the value of our Investment in and advances to unconsolidated joint ventures, net is other-than-temporary. These factors include, but are not limited to, age of the venture, our intent and ability to retain our investment in the entity, the financial condition and long-term prospects of the entity, and the relationships with the other joint venture partners and its lenders. Based on the significance of the unobservable inputs, we classify these fair value measurements within Level 3 of the valuation hierarchy. The Company did not incur any other-than-temporary impairments in the value of its investments in unconsolidated joint ventures during the three and six months ended June 30, 2021 and 2020. Combined summary balance sheets relating to the unconsolidated joint ventures’ and partnerships’ (not just our proportionate share) are presented below as of June 30, 2021 and December 31, 2020 (dollars in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | June 30, | ​ | December 31,
​ |  | 2021 |  | 2020
Total real estate, net |  | $ | 2,138,303 |  | $ | 1,904,805
Real estate assets held for sale | ​ |  | — | ​ |  | 88,458
Cash and cash equivalents | ​ |  | 18,606 | ​ |  | 22,278
Other assets | ​ | ​ | 240,953 | ​ |  | 150,894
Total assets |  | $ | 2,397,862 |  | $ | 2,166,435
​ | ​ | ​ | ​ | ​ | ​ | ​
Third party debt, net | ​ | $ | 1,259,279 | ​ | $ | 1,188,710
Liabilities held for sale | ​ |  | — | ​ |  | 55,440
Accounts payable and accrued liabilities | ​ | ​ | 38,390 | ​ | ​ | 40,556
Total liabilities |  | ​ | 1,297,669 |  | ​ | 1,284,706
Total equity |  | $ | 1,100,193 |  | $ | 881,729
​ Combined summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share) is presented below for the three and six months ended June 30, 2021 and 2020 (dollars in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended | ​ | Six Months Ended
​ | ​ | June 30, | ​ | June 30,
​ |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total revenues |  | $ | 32,006 |  | $ | 37,312 |  | $ | 64,143 |  | $ | 78,626
Property operating expenses | ​ |  | 16,745 | ​ |  | 14,468 | ​ |  | 33,855 | ​ |  | 29,765
Real estate depreciation and amortization | ​ |  | 16,144 | ​ |  | 16,913 | ​ |  | 32,597 | ​ |  | 33,156
Gain/(loss) on sale of property | ​ | ​ | — | ​ | ​ | — | ​ | ​ | 34,757 | ​ | ​ | —
Operating income/(loss) | ​ |  | (883) | ​ | ​ | 5,931 | ​ |  | 32,448 | ​ | ​ | 15,705
Interest expense | ​ |  | (7,460) | ​ |  | (10,149) | ​ |  | (19,594) | ​ |  | (20,496)
Net realized/unrealized gain/(loss) on held investments | ​ | ​ | 38,350 | ​ | ​ | 29,312 | ​ | ​ | 46,838 | ​ | ​ | 29,312
Other income/(loss) | ​ | ​ | (14) | ​ | ​ | 117 | ​ | ​ | (1,671) | ​ | ​ | 109
Net income/(loss) |  | $ | 29,993 |  | $ | 25,211 |  | $ | 58,021 |  | $ | 24,630
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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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