Real Estate, Net

3 Months Ended

Mar. 31, 2024

8. Real Estate, Net

The following is a summary of real estate, net, collectively, as of March 31, 2024 and December 31, 2023, respectively (dollar amounts in thousands):


	March 31, 2024		December 31, 2023
Land	$	133,522	$	137,883
Building and improvements	1,005,596		1,020,477
Furniture, fixture and equipment	41,792		38,706
Operating real estate	$	1,180,910	$	1,197,066
Accumulated depreciation	(74,229)		(65,247)
Operating real estate, net	$	1,106,681	$	1,131,819
Real estate held for sale, net (1)	$	47,540	$	—
Real estate, net (2)	$	1,154,221	$	1,131,819

(1)Real estate held for sale, net is recorded at the lower of the net carrying amount of the assets or the estimated fair value, net of selling costs. Includes one multi-family apartment property in a joint venture entity that owns several multi-family properties (and is not included in the repositioning referenced in (2) below) and certain single-family rental properties as of March 31, 2024.

(2)In September 2022, the Company announced a repositioning of its business through the opportunistic disposition over time of the Company's joint venture equity investments in multi-family properties and reallocation of its capital away from such assets to its targeted assets. Accordingly, the real estate, net related to certain joint venture equity investments in multi-family properties is included in assets of disposal group held for sale on the accompanying condensed consolidated balance sheets. In December 2023 and March 2024, certain of the joint venture equity investments in multi-family properties were determined to no longer meet held for sale criteria and the associated real estate, net was reclassified to real estate, net on the accompanying condensed consolidated balance sheets as of the respective dates. See Note 9 for additional information.

Multi-family Apartment Properties

As of March 31, 2024 and December 31, 2023, the Company owned joint venture equity investments in entities that own multi-family apartment communities, which the Company determined to be VIEs and for which the Company is the primary beneficiary. Accordingly, the Company consolidated the joint venture entities into its condensed consolidated financial statements (see Note 7). As of March 31, 2024, the Company determined that one of the multi-family apartment communities owned by an entity in which the Company holds a joint venture equity investment that is not in disposal group held for sale met the criteria to be classified as held for sale, transferred the property held by the joint venture entity from operating real estate to real estate held for sale and recognized no loss.

During the year ended December 31, 2023, the Company became the primary beneficiary of a VIE that owns a multi-family apartment community and in which the Company holds a preferred equity investment. Accordingly, the Company consolidated the VIE into its consolidated financial statements (see Note 7).

The multi-family apartment communities generally lease their apartment units to individual tenants at market rates for the production of rental income. These apartment units are generally leased at a fixed monthly rate with no option for the lessee to purchase the leased unit at any point.

Operating real estate, net is periodically evaluated for impairment. As of March 31, 2024, the Company determined that four multi-family properties owned by joint venture equity investments were impaired. The calculation of impairment amounts utilized fair values that were estimated based upon discounted cash flow analyses using property financial information and assumptions regarding market rent, revenue and expense growth, capitalization rates and equity return rates. Accordingly, the Company recognized a $32.8 million impairment of real estate in the three months ended March 31, 2024.

Single-family Rental Properties

As of March 31, 2024 and December 31, 2023, the Company owned single-family rental homes. These units are leased to individual tenants for the production of rental income and are generally leased at a fixed monthly rate with no option for the lessee to purchase the leased unit at any point.

As of March 31, 2024, the Company determined that certain single-family rental properties met the criteria to be classified as held for sale, transferred the properties from operating real estate to real estate held for sale and recognized a $4.0 million loss included in impairment of real estate for the three months ended March 31, 2024 on the accompanying condensed consolidated statements of operations. During the three months ended March 31, 2024, the Company sold several single-family rental properties for proceeds of approximately $0.9 million, recognizing a net gain on sale of approximately $0.1 million which is included in other (loss) income on the accompanying condensed consolidated statements of operations.

Lease Intangibles

Intangibles related to multi-family properties consist of the value of in-place leases and are included in other assets on the accompanying condensed consolidated balance sheets. The following table presents the components of lease intangibles, net as of March 31, 2024 and December 31, 2023, respectively (dollar amounts in thousands):


	March 31, 2024		December 31, 2023
Lease intangibles	$	56,656	$	54,581
Accumulated amortization	(55,705)		(52,203)
Lease intangibles, net	$	951	$	2,378

In September 2022, the Company announced a repositioning of its business through the opportunistic disposition over time of the Company's joint venture equity investments in multi-family properties and reallocation of its capital away from such assets to its targeted assets. Accordingly, the lease intangibles, net related to certain joint venture equity investments in multi-family properties are included in assets of disposal group held for sale on the accompanying condensed consolidated balance sheets. In December 2023 and March 2024, certain of the joint venture equity investments in multi-family properties were determined to no longer meet held for sale criteria and the associated lease intangibles, net were reclassified to other assets on the accompanying condensed consolidated balance sheets. See Note 9 for additional information.

Depreciation and Amortization Expense

The following table presents depreciation and amortization expenses for the three months ended March 31, 2024 and 2023, respectively (dollar amounts in thousands):


	For the Three Months Ended March 31,
	2024		2023
Depreciation expense on operating real estate	$	11,149	$	6,039
Amortization of lease intangibles related to operating real estate	1,427		—
Total depreciation and amortization	$	12,576	$	6,039