Equity Investments, at Fair Value

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Investments, at Fair ValueThe Company's equity investments consist of, or have consisted of, preferred equity ownership interests in entities that invest in multi-family properties where the risks and payment characteristics are equivalent to an equity investment (or multi-family preferred equity ownership interests), equity ownership interests in entities that invest in single-family properties and invest in or originate residential loans (or single-family equity ownership interests) and joint venture equity investments in multi-family properties. The Company's equity investments are accounted for under the equity method and are presented at fair value on its consolidated balance sheets as a result of a fair value election.

The following table presents the Company's equity investments as of December 31, 2021 and 2020, respectively (dollar amounts in thousands):


	December 31, 2021			December 31, 2020
Investment Name	Ownership Interest	Fair Value		Ownership Interest	Fair Value
Multi-Family Preferred Equity Ownership Interests
Somerset Deerfield Investor, LLC	45%	$	19,965	45%	$	18,792
RS SWD Owner, LLC, RS SWD Mitchell Owner, LLC, RS SWD IF Owner, LLC, RS SWD Mullis Owner, LLC, RS SWD JH Mullis Owner, LLC and RS SWD Saltzman Owner, LLC (collectively)	43%	5,725		43%	5,140
Walnut Creek Properties Holdings, L.L.C.	36%	9,482		36%	8,803
DCP Gold Creek, LLC	44%	6,686		44%	6,357
1122 Chicago DE, LLC	53%	7,723		53%	7,222
Rigsbee Ave Holdings, LLC	56%	11,331		56%	10,222
Bighaus, LLC	42%	15,471		42%	14,525
FF/RMI 20 Midtown, LLC	51%	25,499		51%	23,936
Lurin-RMI, LLC	38%	9,548		38%	7,216
Palms at Cape Coral, LLC	34%	5,175		—	—
America Walks at Port St. Lucie, LLC	62%	30,383		—	—
EHOF-NYMT Sunset Apartments Preferred, LLC	57%	17,213		—	—
Lucie at Tradition Holdings, LLC	70%	16,597		—	—
BBA-EP320 II, L.L.C., BBA-Ten10 II, L.L.C., and Lexington on the Green Apartments, L.L.C. (collectively)	—	—		45%	11,441
Audubon Mezzanine Holdings, L.L.C. (Series A)	—	—		57%	11,456
EP 320 Growth Fund, L.L.C. (Series A) and Turnbury Park Apartments - BC, L.L.C. (Series A) (collectively)	—	—		46%	7,234
Towers Property Holdings, LLC	—	—		37%	12,119
Mansions Property Holdings, LLC	—	—		34%	11,679
Sabina Montgomery Holdings, LLC - Series B and Oakley Shoals Apartments, LLC - Series A (collectively)	—	—		43%	4,320
Gen1814, LLC - Series A, Highlands - Mtg. Holdings, LLC - Series A, and Polos at Hudson Investments, LLC - Series A (collectively)	—	—		37%	9,966
Axis Apartments Holdings, LLC, Arbor-Stratford Holdings II, LLC - Series B, Highlands - Mtg. Holdings, LLC - Series B, Oakley Shoals Apartments, LLC - Series C, and Woodland Park Apartments II, LLC (collectively)	—	—		53%	12,337
Total - Multi-Family Preferred Equity Ownership Interests		180,798			182,765

Joint Venture Equity Investments in Multi-Family Properties
GWR Cedars Partners, LLC	70%	3,770		—	—
GWR Gateway Partners, LLC	70%	6,670		—	—
Total - Joint Venture Equity Investments in Multi-Family Properties		10,440			—

Single-Family Equity Ownership Interests
Morrocroft Neighborhood Stabilization Fund II, LP	11%	19,143		11%	13,040
Constructive Loans, LLC (1)	—	29,250		—	—
Headlands Asset Management Fund III (Cayman), LP (Headlands Flagship Opportunity Fund Series I)	—	—		49%	63,290
Total - Single-Family Equity Ownership Interests		48,393			76,330
Total		$	239,631		$	259,095

(1)As of December 31, 2021, the Company has the option to purchase 50% of the issued and outstanding interests of an entity that originates residential loans. The Company accounts for this investment using the equity method and has elected the fair value option. After acquiring this investment, the Company purchased $94.0 million of residential loans from the entity for the year ended December 31, 2021.

The Company records its equity in earnings or losses from its multi-family preferred equity ownership interests under the hypothetical liquidation of book value method of accounting due to the structures and the preferences it receives on the distributions from these entities pursuant to the respective agreements. Under this method, the Company recognizes income or loss in each period based on the change in liquidation proceeds it would receive from a hypothetical liquidation of its investment. On January 1, 2020, the Company elected to account for its multi-family preferred equity ownership interests using the fair value option (see Note 2). Pursuant to the fair value election, changes in fair value of the Company's multi-family preferred equity ownership interests are reported in current period earnings for the years ended December 31, 2021 and 2020.

The following table presents income from multi-family preferred equity ownership interests for the years ended December 31, 2021, 2020, and 2019, respectively (dollar amounts in thousands). Income from these investments is presented in income from equity investments in the Company's accompanying consolidated statements of operations. Income from these investments during the years ended December 31, 2021 and 2020 includes $0.4 million and $0.3 million of net unrealized gains, respectively.


	For the Years Ended December 31,
Investment Name		2021		2020		2019
BBA-EP320 II, L.L.C., BBA-Ten10 II, L.L.C., and Lexington on the Green Apartments, L.L.C. (collectively)		$	1,304	$	1,260	$	1,167
Somerset Deerfield Investor, LLC		2,295		2,168		1,992
RS SWD Owner, LLC, RS SWD Mitchell Owner, LLC, RS SWD IF Owner, LLC, RS SWD Mullis Owner, LLC, RS SWD JH Mullis Owner, LLC and RS SWD Saltzman Owner, LLC (collectively)		585		551		539
Audubon Mezzanine Holdings, L.L.C. (Series A)		1,251		1,213		1,224
EP 320 Growth Fund, L.L.C. (Series A) and Turnbury Park Apartments - BC, L.L.C. (Series A) (collectively)		735		782		741
Walnut Creek Properties Holdings, L.L.C.		1,240		928		803
Towers Property Holdings, LLC		1,192		1,243		638
Mansions Property Holdings, LLC		1,148		1,198		615
Sabina Montgomery Holdings, LLC - Series B and Oakley Shoals Apartments, LLC - Series A (collectively)		412		454		188
Gen1814, LLC - Series A, Highlands - Mtg. Holdings, LLC - Series A, and Polos at Hudson Investments, LLC - Series A (collectively)		966		1,044		367
Axis Apartments Holdings, LLC, Arbor-Stratford Holdings II, LLC - Series B, Highlands - Mtg. Holdings, LLC - Series B, Oakley Shoals Apartments, LLC - Series C, and Woodland Park Apartments II, LLC (collectively)		1,193		1,293		267
DCP Gold Creek, LLC		780		701		—
1122 Chicago DE, LLC		908		835		—
Rigsbee Ave Holdings, LLC		1,683		1,148		—
Bighaus, LLC		1,786		1,002		—
FF/RMI 20 Midtown, LLC		3,059		686		—
Lurin-RMI, LLC		931		81		—
Palms at Cape Coral, LLC		342		—		—
America Walks at Port St. Lucie, LLC		1,678		—		—
EHOF-NYMT Sunset Apartments Preferred, LLC		661		—		—
Lucie at Tradition Holdings, LLC		484		—		—
Total Income - Multi-Family Preferred Equity Ownership Interests		$	24,633	$	16,587	$	8,541

For the year ended December 31, 2021, the Company recognized $2.8 million in premiums resulting from early redemption of multi-family preferred equity ownership interests included in equity investments, which are included in other income on the accompanying consolidated statements of operations. For the years ended December 31, 2020 and 2019, the Company recognized no premiums resulting from early redemption of multi-family preferred equity ownership interests included in equity investments.

Income from single-family equity ownership interests and joint venture equity investments in multi-family properties that are accounted for under the equity method using the fair value option is presented in income from equity investments in the Company's accompanying consolidated statements of operations. The following table presents income (loss) from these investments for the years ended December 31, 2021, 2020 and 2019, respectively (dollar amounts in thousands):


	For the Years Ended December 31,
Investment Name		2021		2020		2019
Single-Family Equity Ownership Interests
Morrocroft Neighborhood Stabilization Fund II, LP		$	6,378	$	1,519	$	843
Headlands Asset Management Fund III (Cayman), LP (Headlands Flagship Opportunity Fund Series I) (1)		(15)		9,513		3,776
Constructive Loans, LLC (2)		2,750		—		—
Total Income - Single Family Equity Ownership Interests		$	9,113	$	11,032	$	4,619

Joint Venture Equity Investments in Multi-Family Properties (3)
GWR Cedars Partners, LLC		$	60	$	—	$	—
GWR Gateway Partners, LLC		90		—		—
The Preserve at Port Royal Venture, LLC (4)		—		(949)		5,374
Evergreens JV Holdings, LLC (5)		—		—		5,107
Total Income (Loss) - Joint Venture Equity Investments in Multi-Family Properties		$	150	$	(949)	$	10,481

(1)The Company's equity investment was redeemed during the year ended December 31, 2021.

(2)Includes net unrealized gain of $2.8 million for the year ended December 31, 2021.

(3)Includes net unrealized gain of $0.2 million and no realized gains for the year ended December 31, 2021, net unrealized losses of $9.7 million and a realized gain of $8.8 million for the year ended December 31, 2020 and net unrealized gains of $0.3 million and a realized gain of $10.2 million for the year ended December 31, 2019.

(4)The Company's equity investment was redeemed during the year ended December 31, 2020.

(5)The Company's equity investment was redeemed during the year ended December 31, 2019.

Summary combined financial information for the Company’s equity investments as of December 31, 2021 and 2020, respectively, and for the years ended December 31, 2021, 2020, and 2019, respectively, is shown below (dollar amounts in thousands):


	December 31, 2021		December 31, 2020
Balance Sheets:
Real estate, net	$	727,963	$	917,392
Residential loans	38,423		268,693
Other assets	95,016		190,429
Total assets	$	861,402	$	1,376,514

Notes payable, net	$	469,120	$	649,241
Collateralized debt obligations	—		233,765
Other liabilities	80,672		23,734
Total liabilities	549,792		906,740
Members' equity	311,610		469,774
Total liabilities and members' equity	$	861,402	$	1,376,514


	For the Years Ended December 31,
	2021		2020		2019
Operating Statements: (1)
Rental revenues	$	87,147	$	80,339	$	63,265
Real estate sales	205,000		54,100		42,350
Cost of real estate sales	(140,800)		(32,779)		(25,534)
Interest income	3,875		14,438		9,214
Realized and unrealized (losses) gains, net	(7,693)		27,107		10,452
Other income	15,046		7,566		4,697
Operating expenses	(55,799)		(54,691)		(42,383)
Income before debt service, acquisition costs, and depreciation and amortization	106,776		96,080		62,061
Interest expense	(28,849)		(36,601)		(28,340)

Depreciation and amortization	(37,172)		(38,112)		(45,548)
Net income (loss)	$	40,755	$	21,367	$	(11,827)

(1)The Company records income (loss) from equity investments under either the hypothetical liquidation of book value method of accounting or the equity method using the fair value option. Accordingly, the combined net income (loss) shown above is not indicative of the income (loss) recognized by the Company from equity investments.