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Consolidation of Riverfront Investment Partners II, LLC. Riverfront Holdings II, LLC | 3 Months Ended
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Jun. 30, 2022
Consolidation Of Riverfront Investment Partners Ii Llc. Riverfront Holdings Ii Llc |
Consolidation of Riverfront Investment Partners II, LLC. Riverfront Holdings II, LLC | (12) Consolidation of Riverfront Investment Partners II, LLC. Riverfront Holdings II, LLC. On May 4, 2018, the Company and MRP Realty formed a Joint Venture to develop the second phase of the four phase master development known as Riverfront on the Anacostia in Washington, D.C. The purpose of the Joint Venture is to develop and own a 250,000-square-foot mixed-use development which supports 264 residential units and 6,937 square feet of retail. The Company contributed land with an agreed to value of $16,300,000 (cost basis of $4.6 million) and $6.2 million of cash to the Joint Venture for an 80% stake in the venture. MRP contributed capital of $5.6 million to the joint venture including development costs paid prior to formation of the joint venture and a $725,000 development fee. The Company further agreed to fund $13.75 million preferred equity financing at 7.5% interest rate all of which was advanced and repaid with interest in March 2021. The Company’s equity interest in the joint venture was previously accounted for under the equity method of accounting as MRP acts as the administrative agent of the joint venture and oversees and controls the day-to-day operations of the project. In March 2021, Phase II (The Maren) reached stabilization. Stabilization in this case means 90% of the individual apartments have been leased and are occupied by third party tenants. Upon reaching stabilization, the Company has, for a period of one year, the exclusive right to (i) cause the joint venture to sell the property or (ii) cause the Company’s and MRP’s percentage interests in the joint venture to be adjusted so as to take into account the contractual payouts assuming a sale at the value of the development at the time of this “Conversion election”. Reaching stabilization results in a change of control for accounting purposes as the veto rights of the minority shareholder lapsed and the Company became the primary beneficiary. As such, beginning March 31, 2021, the Company consolidated the assets (at fair value), liabilities and operating results of the joint venture. This consolidation resulted in a gain on remeasurement of investment in real estate partnership of $51,139,000 of which $13,965,000 was attributed to the noncontrolling interest. In accordance with the terms of the Joint Venture agreements, the Company used the fair value amount at date of conversion and calculated an adjusted ownership under the Conversion election. As such for financial reporting purposes effective March 31, 2021, the Company ownership is based upon this substantive profit sharing arrangement and is 70.41% on a prospective basis as agreed to by FRP and MRP. Maren consolidation at stabilization
|  | As of March 31, 2021
|  | Riverfront |  | Gain on |  |  |  |
|  | Holdings II, LLC |  | Remeasurement |  |  | Revised |
Land |  | $ | 6,472 |  |  | $ | 22,858 |  |  |  |  | $ | 29,330 |
Building and improvements, net |  |  | 87,269 |  |  |  | 23,531 |  |  |  |  |  | 110,800 |
Project under construction |  |  | 258 |  |  |  | — |  |  |  |  |  | 258 |
Value of leases in place |  |  | — |  |  |  | 4,750 |  |  |  |  |  | 4,750 |
Cash |  |  | 3,704 |  |  |  | — |  |  |  |  |  | 3,704 |
Cash held in escrow |  |  | 336 |  |  |  | — |  |  |  |  |  | 336 |
Accounts receivable |  |  | 707 |  |  |  | — |  |  |  |  |  | 707 |
Prepaid expenses |  |  | 197 |  |  |  | — |  |  |  |  |  | 197 |
Total Assets |  | $ | 98,943 |  |  | $ | 51,139 |  |  |  |  | $ | 150,082 |
Long-term Debt |  | $ | 88,000 |  |  | $ | — |  |  |  |  | $ | 88,000 |
Amortizable debt costs |  |  | (1,072 | ) |  |  | — |  |  |  |  |  | (1,072 | )
Other liabilities |  |  | 441 |  |  |  | — |  |  |  |  |  | 441 |
Equity – FRP |  |  | 7,026 |  |  |  | 37,174 |  |  |  |  |  | 44,200 |
Equity - MRP |  |  | 4,548 |  |  |  | 13,965 |  |  |  |  |  | 18,513 |
Total Liabilities and Capital |  | $ | 98,943 |  |  | $ | 51,139 |  |  |  |  | $ | 150,082 |

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