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Investment in Unconsolidated Joint Ventures | 12 Months Ended
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Dec. 31, 2019
Investment in Unconsolidated Joint Ventures |
Investment in Unconsolidated Joint Ventures | 6. Investment in Unconsolidated Joint Ventures 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 | ​ | ILF/ALF/MC | ​ | Preferred Equity | (1) | 15 | % | ​ | 8 | % | (2) | 585 | ​ | $ | — | ​ | $ | 19,003 | (3)
Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 585 | ​ | $ | — | ​ | $ | 19,003 | ​
(1) | We have concluded that the JV is a 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) | During the fourth quarter of 2019, we recorded an impairment loss of $5,500 to write our preferred equity investment down to its estimated sale price. See below for more detail.
As previously discussed, in October 2019, the JV in which we hold our preferred equity investment signed a letter of intent for the sale of the four properties comprising the JV (the “Properties”). Concurrently, the JV was pursuing a refinancing alternative to take advantage of lower interest rates in today’s market. Based upon the information available to us regarding available alternatives and courses of action, we performed a recoverability test on the carrying value of our preferred equity investment and concluded the preferred equity was not impaired at September 30, 2019. In November 2019, the JV signed a contract to sell the Properties. Additionally, its refinancing efforts came to a halt. The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action as of December 31, 2019, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment will not be recoverable. Therefore, we recorded an impairment loss from investments in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. ​ The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the years ended December 31, 2019, 2018 and 2017 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | ​ | ​
​ | ​ | of | ​ | ​ | Capital | ​ | ​ | Income | ​ | ​ | Cash Interest | ​
Year | ​ | Properties | ​ | ​ | Contribution | ​ | ​ | Recognized | ​ | ​ | Received | ​
2019 | ​ | ILF/ALF/MC | ​ | $ | 472 | ​ | $ | 1,029 | ​ | $ | 1,580 | ​
​ | ​ | ILF/ALF/MC | (1) | ​ | — | (1) | ​ | 955 | (1) | ​ | 979 | (1)
​ | ​ | ALF/MC | (2) | ​ | — | (2) | ​ | 404 | (2) | ​ | 432 | (2)
Total | ​ | ​ | ​ | $ | 472 | ​ | $ | 2,388 | ​ | $ | 2,991 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2018 | ​ | ILF/ALF/MC | ​ | $ | 670 | ​ | $ | 2,041 | ​ | $ | 1,975 | ​
​ | ​ | ILF/ALF/MC | (1) | ​ | — | (1) | ​ | 511 | (1) | ​ | 396 | (1)
​ | ​ | ALF/MC | (2) | ​ | — | (2) | ​ | 312 | (2) | ​ | — | (2)
Total | ​ | ​ | ​ | $ | 670 | ​ | $ | 2,864 | ​ | $ | 2,371 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2017 | ​ | ILF/ALF/MC | ​ | $ | 1,101 | ​ | $ | 1,560 | ​ | $ | 1,436 | ​
​ | ​ | ILF/ALF/MC | ​ | ​ | — | (1) | ​ | 511 | (1) | ​ | 302 | (1)
​ | ​ | UDP-ALF/MC | ​ | ​ | 2,747 | (2) | ​ | 192 | (2) | ​ | — | (2)
Total | ​ | ​ | ​ | $ | 3,848 | ​ | $ | 2,263 | ​ | $ | 1,738 | ​
(1) | We had a $2,900 mezzanine loan commitment for a 99-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. 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 loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.
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(2) | 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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