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Investment in Unconsolidated Joint Ventures | 3 Months Ended
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Mar. 31, 2020
Investment in Unconsolidated Joint Ventures |
Investment in Unconsolidated Joint Ventures |
3. | Investment in Unconsolidated Joint Ventures
The following table summarizes our investment in an unconsolidated joint venture as of March 31, 2020 (dollar amounts in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | Type | ​ | Total | ​ | ​ | Contractual | ​ | ​ | Number | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | of | ​ | of | ​ | Preferred | ​ | ​ | Cash | ​ | ​ | of | ​ | ​ | Investment | ​ | ​ | Carrying | ​
State | ​ | Properties | ​ | Investment | ​ | Return | ​ | ​ | Portion | ​ | ​ | Beds/ Units | ​ | ​ | Commitment | ​ | ​ | Value | ​
Arizona | ​ | ALF/MC/ILF | ​ | Preferred Equity | (1) | 15 | % | ​ | 8 | % | (2) | 585 | ​ | $ | — | ​ | $ | 19,061 | (3)
Total | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | 585 | ​ | $ | — | ​ | $ | 19,061 | ​
(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 the 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-down our preferred equity investment to its estimated fair value. See below for more detail.
During the fourth quarter of 2019, the JV in which we hold our preferred equity investment signed a contract to sell the four properties comprising the JV(“Properties”). 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, 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 investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to its estimated fair value. In April 2020, the Properties were sold and we received partial liquidation proceeds of $17,200,000. We anticipate receiving additional proceeds of approximately $1,300,000 and expect to recognize a loss on liquidation of unconsolidated joint ventures of approximately $600,000 in the second quarter of 2020 related to the dissolution of this joint venture. The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures for the three months ended March31, 2020 and 2019 (in thousands):
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Type | ​ | ​ | ​
​ | ​ | of | ​ | ​ | Capital | ​ | ​ | Income | ​ | ​ | Cash Interest | ​
Year | ​ | Properties | ​ | ​ | Contribution | ​ | ​ | Recognized | ​ | ​ | Received | ​
2020 | ​ | ALF/MC/ILF | ​ | $ | 58 | ​ | $ | 231 | ​ | $ | 231 | ​
Total | ​ | ​ | ​ | $ | 58 | ​ | $ | 231 | ​ | $ | 231 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
2019 | ​ | ALF/MC/ILF | ​ | $ | 293 | ​ | $ | 553 | ​ | $ | 552 | ​
​ | ​ | ALF/ILF/MC | (1) | ​ | — | (1) | ​ | 128 | (1) | ​ | 121 | (1)
​ | ​ | ALF/MC | (2) | ​ | — | (2) | ​ | 404 | (2) | ​ | 432 | (2)
Total | ​ | ​ | ​ | $ | 293 | ​ | $ | 1,085 | ​ | $ | 1,105 | ​
(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 the 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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