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Investment in Unconsolidated Joint Ventures | 6 Months Ended
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Jun. 30, 2019
Investment in Unconsolidated Joint Ventures |
Investment in Unconsolidated Joint Ventures |
3. | Investment in Unconsolidated Joint Ventures
Our investment in unconsolidated joint ventures consists of a preferred equity investment and a mezzanine loan which is accounted for as unconsolidated joint ventures in accordance with GAAP. The following table summarizes our investment in unconsolidated joint ventures (dollar amounts in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | Type | ​ | Total | ​ | ​ | Currently | ​ | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | of | ​ | of | ​ | Preferred | ​ | ​ | Paid in | ​ | ​ | of | ​ | ​ | Investment | ​ | ​ | Carrying | ​
State | ​ | Properties | ​ | Investment | ​ | Return | ​ | ​ | Cash | ​ | ​ | Beds/ Units | ​ | ​ | Commitment | ​ | ​ | Value | ​
Arizona | ​ | ALF/MC/ILF | ​ | Preferred Equity | (1) | 15 | % | ​ | 8 | % | (2) | 585 | ​ | $ | 25,650 | ​ | $ | 24,324 | ​
Florida | ​ | ALF/ILF/MC | ​ | Mezzanine | (3) | 15 | % | ​ | 15 | % | ​ | 99 | ​ | ​ | 2,900 | (4) | ​ | 3,197 | (4)
Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 684 | ​ | $ | 28,550 | ​ | $ | 27,521 | ​
(1) | We have concluded that the JV is a variable interest entity (“VIE”) in accordance with GAAP. However, because we do not control the entity, nor do we have any role in the day-to-day management, we are not the primary beneficiary of the JV. Therefore, we account for the JV investment using the equity method.
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(2) | Effective second quarter of 2019, this JV was placed on cash basis due to delinquency of our preferred return.
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(3) | We evaluated this acquisition, development and construction (“ADC”) arrangement and determined that the characteristics are similar to jointly-owned investments or partnerships, and accordingly, this investment is accounted for as unconsolidated joint venture under the equity method of accounting instead of loan accounting.
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(4) | Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance.
The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | ​ | ​
​ | ​ | of | ​ | ​ | Capital | ​ | ​ | Income | ​ | ​ | Cash Interest | ​
Year | ​ | Properties | ​ | ​ | Contribution | ​ | ​ | Recognized | ​ | ​ | Received | ​
2019 | ​ | ALF/MC/ILF | ​ | $ | 293 | ​ | $ | 553 | ​ | $ | 727 | ​
​ | ​ | ALF/ILF/MC | ​ | ​ | — | ​ | ​ | 256 | ​ | ​ | 243 | ​
​ | ​ | ALF/MC | (1) | ​ | — | (1) | ​ | 404 | (1) | ​ | 432 | (1)
Total | ​ | ​ | ​ | $ | 293 | ​ | $ | 1,213 | ​ | $ | 1,402 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2018 | ​ | ALF/MC/ILF | ​ | ​ | 497 | ​ | ​ | 951 | ​ | ​ | 1,062 | ​
​ | ​ | ALF/ILF/MC | ​ | ​ | — | ​ | ​ | 255 | ​ | ​ | 194 | ​
​ | ​ | ALF/MC | (1) | ​ | — | (1) | ​ | 151 | (1) | ​ | — | (1)
Total | ​ | ​ | ​ | $ | 497 | ​ | $ | 1,357 | ​ | $ | 1,256 | ​
(1) | We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.
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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 810 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SX 210.3A-04) -URI http://asc.fasb.org/extlink&oid=116822174&loc=d3e355119-122828 Reference 2: 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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