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INVESTMENT IN VAA | 12 Months Ended
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Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract] |
INVESTMENT IN VAA |
NOTE 2. | INVESTMENT IN VAA
On November 19, 2018, TCI executed an agreement with Macquarie Group (“Macquarie”) to create a joint venture, Victory Abode Apartments, LLC (“VAA”) to address existing and future demand for quality multifamily residential housing through acquisition and development of sustainable Class A multifamily housing in focused secondary and tertiary markets. In connection with the formation of the joint venture, TCI contributed a portfolio of 49 income producing apartment complexes, and 3 development projects in various stages of construction. TCI received cash consideration of $236.8 million and recognized a gain of approximately $154.1 million. At the time of the transfer of the properties, the joint venture assumed all liabilities of those properties, including mortgage debt to the Department of Housing and Urban Development (“HUD”). VAA is equally owned and controlled by Abode JVP, LLC, a wholly-owned subsidiary of Southern and Summerset Intermediate Holdings 2 LLC (“Summerset”), a wholly-owned indirect subsidiary of Macquarie. Pursuant to the Agreement, Abode JVP, LLC and Summerset each own voting and profit participation rights of 50% and 49%, respectively (“Class A Members”). The remaining 2% of the profit participation interest is held by Daniel J. Moos ARL’s President and Chief Executive Officer (“Class B Member”) who serves also as the Manager of the joint venture. In addition, upon the closing of the agreement the Class B Member received a one-time consideration payment of $1.9 million. The Company accounts for its investment in VAA under the equity method of accounting. Under the equity method of accounting, our net equity in the investment is reflected within the Consolidated Balance Sheets in the caption ‘Investment in VAA’, and our share of the net income or loss from the joint venture is included within the Consolidated Statements of Operations in the caption ‘Earnings from VAA’. The joint venture agreements may designate different percentage allocations among investors for profits and losses; however, our recognition of joint venture income or loss generally follows the joint venture’s distribution priorities, which may change upon the achievement of certain investment return thresholds and other agreed upon adjustments. The following is a summary of the financial position and results of operations of VAA (dollars in thousands):
VAA |  | December 31, 2018
Balance Sheet |  |
Net real estate assets |  | $ | 1,257,557 |
Other assets |  |  | 67,020 |
Debt, net |  |  | (791,225 | )
Other liabilities |  |  | (280,288 | )
Total equity |  |  | (253,064 | )
|  | For the period November 19 to December 31, 2018
Results of Operations |  |
Total revenue |  | $ | 12,887 |
Total property, operating, and maintenance expenses |  |  | (4,507 | )
Total other expense |  |  | (18,102 | )
Net loss |  | $ | (9,722 | )
Below is a reconciliation of our allocation of income or loss from VAA (dollars in thousands):
|  | For the period November 19 to December 31, 2018
VAA net loss |  | $ | (9,722 | )
Adjustments to reconcile to income (loss) from VAA |  |  |  |
Interest expense on mezzanine loan |  |  | 2,815 |
In-place lease intangible amortization expense |  |  | 3,983 |
Depreciation basis differences |  |  | 3,012 |
Adjusted net income |  | $ | 88 |
Percentage ownership in VAA |  |  | 50 | %
Earnings from VAA |  | $ | 44 |
The following table shows the location of the income-producing properties held for investment by VAA as of December 31, 2018:
|  | Apartments
Location |  | No. |  | Units
Alabama |  |  | 1 |  |  |  | 168 |
Arkansas |  |  | 6 |  |  |  | 1,320 |
Colorado |  |  | 2 |  |  |  | 260 |
Florida |  |  | 2 |  |  |  | 388 |
Georgia |  |  | 1 |  |  |  | 222 |
Louisiana |  |  | 3 |  |  |  | 464 |
Mississippi |  |  | 1 |  |  |  | 196 |
Nevada |  |  | 1 |  |  |  | 308 |
North Carolina |  |  | 1 |  |  |  | 201 |
Tennessee |  |  | 4 |  |  |  | 708 |
Texas-Greater Dallas-Ft Worth |  |  | 13 |  |  |  | 2,323 |
Texas-Greater Houston |  |  | 1 |  |  |  | 176 |
Texas-Other |  |  | 13 |  |  |  | 2,458 |
Total |  |  | 49 |  |  |  | 9,192 |
At December 31, 2018, VAA apartment projects in development included (dollars in thousands):
Property |  | Location |  | No. of Units |  | Costs to Date (1) |  | Total Projected Costs (1)
Terra Lago apartments |  | Rowlett, TX |  |  | 451 |  |  | $ | 66,395 |  |  | $ | — |
Lakeside lofts apartments |  | Farmers Branch, TX |  |  | 494 |  |  |  | 50,357 |  |  |  | 80,622 |
Sawgrass Creek apartments Phase II |  | Tampa, FL |  |  | 143 |  |  |  | 25,113 |  |  |  | 26,799 |
Total |  |  |  |  | 1,088 |  |  | $ | 141,865 |  |  | $ | 107,421 |
(1) Costs include construction hard costs, construction soft costs and loan borrowing costs.

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- References No definition available. + Details
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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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