Assets and Liabilities of Disposal Group Held for Sale

12 Months Ended

Dec. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

Assets and Liabilities of Disposal Group Held for Sale

9. Assets and Liabilities of Disposal Group Held for Sale

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 Company determined that certain joint venture equity investments met the criteria to be classified as held for sale and transferred either the assets and liabilities of the respective Consolidated VIEs or its equity investment in the joint venture entity to assets and liabilities of disposal group held for sale.

During the year ended December 31, 2023, five of the entities in which the Company held a joint venture equity investment sold their multi-family apartment communities for approximately $219.2 million, subject to certain prorations and adjustments typical in such real estate transactions, and repaid the related mortgages payable in the amount of approximately $173.6 million. The sales generated net gains of approximately $6.0 million and losses on extinguishment of debt of approximately $2.0 million, both of which are included in other income on the accompanying consolidated statements of operations. The sales also generated net income attributable to non-controlling interest of approximately $2.2 million, resulting in net gains attributable to the Company's common shareholders of approximately $1.7 million.

In December 2023, the Company suspended the marketing of nine joint venture equity investments that were reported in assets and liabilities of disposal group held for sale primarily due to unfavorable market conditions and a lack of transactional activity in the multi-family market. As such, the Company determined that these joint venture equity investments no longer met the criteria to be classified as held for sale and transferred either the assets and liabilities of the respective Consolidated VIEs or its equity investment in the joint venture entity to their respective categories or equity investments, at fair value, respectively, on the accompanying consolidated balance sheets as of December 31, 2023. As a result of this transfer, the Company adjusted the carrying value of the long-lived assets in these Consolidated VIEs and recognized an approximately $16.2 million loss on reclassification of disposal group in the year ended December 31, 2023.

As of December 31, 2023, five joint venture equity investments were classified as disposal group held for sale on the accompanying consolidated balance sheets.

In March 2024, the Company suspended the marketing of one additional joint venture equity investment, determined that it no longer met the criteria to be classified as held for sale and transferred the assets and liabilities of the Consolidated VIE to their respective categories on the accompanying consolidated balance sheets as of March 31, 2024. As a result of this transfer, the Company adjusted the carrying value of the long-lived assets in the Consolidated VIE and recognized an approximately $14.6 million loss on reclassification of disposal group during the three months ended March 31, 2024.

During the year ended December 31, 2024, in response to productive negotiations with operating partners and increased transactional activity, the Company determined that eight joint venture equity investments met the criteria to be classified as held for sale and transferred the assets and liabilities of the respective Consolidated VIEs to assets and liabilities of disposal group held for sale on the accompanying consolidated balance sheets. As a result, the Company recognized a loss of approximately $3.7 million, which is included in impairment of real estate in the accompanying consolidated statements of operations. The Company sold its ownership interests in nine joint venture equity investments in multi-family properties which resulted in the de-consolidation of the joint venture entities' assets and liabilities and a gain on de-consolidation of approximately $5.6 million, which is included in other income in the accompanying consolidated statements of operations, for the year ended December 31, 2024.

During the year ended December 31, 2024, one of the entities in which the Company held a joint venture equity investment that is in disposal group held for sale sold its multi-family apartment community for approximately $56.4 million, subject to certain prorations and adjustments typical in such real estate transactions, and repaid the related mortgage payable in the amount of approximately $31.8 million. The sale generated a net gain of approximately $11.4 million and a loss on extinguishment of debt of approximately $1.6 million, both of which are included in other income on the accompanying consolidated statements of operations. The sale also generated net income attributable to non-controlling interest of approximately $1.1 million, resulting in net gain attributable to the Company's common stockholders of approximately $8.7 million.

As of December 31, 2024, two joint venture equity investments are classified as disposal group held for sale. The following table presents the carrying values of the major classes of assets and liabilities of disposal group held for sale as of December 31, 2024 and 2023, respectively (dollar amounts in thousands):


	December 31, 2024		December 31, 2023
Cash and cash equivalents	$	2,461	$	5,676

Real estate, net	111,032		407,834
Other assets	5,120		12,507
Total assets of disposal group held for sale (1)	$	118,613	$	426,017

Mortgages payable on real estate, net (2)	$	93,370	$	378,386
Other liabilities	3,695		7,638
Total liabilities of disposal group held for sale (1)	$	97,065	$	386,024

(1)Assets and liabilities of the disposal group held for sale are in Consolidated VIEs because the Company is the primary beneficiary.

(2)In March 2024, two entities in which the Company held joint venture equity investments entered into debt restructuring agreements with the respective senior lender for their mortgages payable. As part of the agreements, a portion of interest payments were deferred until the maturity date. The restructurings did not result in a change in the carrying amount of the mortgages payable and no gains were recorded. During the year ended December 31, 2024, the Company sold its ownership interests in these entities, which resulted in the de-consolidation of the mortgages payable subject to the debt restructuring agreements as of December 31, 2024.

Also included in the disposal group held for sale are non-controlling interests in Consolidated VIEs in the amount of $2.0 million and $3.2 million as of December 31, 2024 and 2023, respectively.

Real estate, net included in assets of disposal group held for sale is recorded at the lower of the net carrying amount of the assets or the estimated fair value, net of selling costs. Fair value for real estate was based upon a discounted cash flow analysis using property financial information and assumptions regarding market rent, revenue and expense growth, capitalization rates and return rates. During the year ended December 31, 2024, the Company recognized net impairment losses of $28.2 million for real estate, net in the disposal group held for sale, inclusive of losses recognized upon transfer into disposal group held for sale. During the years ended December 31, 2023 and 2022, the Company recognized net impairment losses of $89.5 million and $2.4 million, respectively. See Note 17 for descriptions of valuation methodologies utilized for other classes of assets and liabilities of disposal group held for sale.

The following table presents the pretax losses of the disposal group held for sale as of December 31, 2024 for the years ended December 31, 2024, 2023 and 2022, respectively (dollar amounts in thousands):


	For the Years Ended December 31,
		2024		2023		2022
Pretax loss of disposal group held for sale		$	(59,170)	$	(124,183)	$	(53,813)
Pretax loss of disposal group attributable to non-controlling interest in Consolidated VIEs		6,712		11,870		5,784
Pretax loss of disposal group attributable to Company's common stockholders		$	(52,458)	$	(112,313)	$	(48,029)