Real Estate Held for Sale in Consolidated VIEs

6 Months Ended

Jun. 30, 2018

Real Estate Held for Sale in Consolidated VIEs

On March 31, 2017, the Company determined that it became the primary beneficiary of Riverchase Landing and The Clusters, two VIEs that each own a multi-family apartment community and in which the Company held preferred equity investments. Accordingly, on this date, the Company consolidated both Riverchase Landing and The Clusters into its condensed consolidated financial statements (see Note 10).

During the second quarter of 2017, Riverchase Landing determined to actively market its multi-family apartment community for sale. Accordingly, the Company classified the real estate assets in Riverchase Landing as held for sale as of December 31, 2017 in the accompanying condensed consolidated balance sheets. The Company also ceased depreciation of the operating real estate assets and amortization of the related lease intangible asset in Riverchase Landing as of June 5, 2017. In March 2018, Riverchase Landing completed the sale of its multi-family apartment community and redeemed the Company's preferred equity investment. Riverchase Landing recognized a net gain on sale of approximately $2.3 million which is included in other income and is allocated to net income attributable to non-controlling interest in consolidated variable interest entities on the accompanying condensed consolidated statements of operations. The Company de-consolidated Riverchase Landing as of the date of the sale.

During the third quarter of 2017, The Clusters determined to actively market its multi-family apartment community for sale. The Company anticipates completing a sale to a third party buyer in 2018. Accordingly, the Company classified the real estate assets in The Clusters as held for sale as of June 30, 2018 and December 31, 2017 in the accompanying condensed consolidated balance sheets. The Company also ceased depreciation of the operating real estate assets and amortization of the related lease intangible asset in The Clusters as of September 1, 2017.

The following is a summary of the real estate held for sale in consolidated variable interest entities as of June 30, 2018 and December 31, 2017 (dollar amounts in thousands):



	June 30, 2018			December 31, 2017
Land	$	2,650		$	7,000
Building and improvements	25,944			53,468
Furniture, fixtures and equipment	860			2,150
Lease intangible	2,802			5,340
Real estate held for sale before accumulated depreciation and amortization	32,256			67,958
Accumulated depreciation⁽¹⁾	(418		)	(647		)
Accumulated amortization of lease intangible ⁽¹⁾	(2,336		)	(3,109		)
Real estate held for sale in consolidated variable interest entities	$	29,502		$	64,202


⁽¹⁾	There were no depreciation and amortization expenses for the three and six months ended June 30, 2018. Depreciation and amortization expense for the three and six months ended June 30, 2017 totaled $0.5 million and $2.2 million, respectively.

No gain or loss was recognized by the Company or allocated to non-controlling interests related to the initial classification of the real estate assets as held for sale.