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INVESTMENT IN VAA

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

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.

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 ‘Equity 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):

Balance Sheet	June 30, 2019
Net real estate assets	$	1,247,535
Other assets		56,474
Debt, net		(812,010	)
Other liabilities		(272,716	)
Total equity	$	(219,283	)

Results of Operations	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Total revenue	$	28,927		$	56,328
Total property, operating, and maintenance expenses		(14,313	)		(28,482	)
Interest expense		(14,799	)		(29,869	)
Depreciation and Amortization		(15,523	)		(30,756	)
Total other expense		(327	)		(1,002	)
Net loss	$	(16,035	)	$	(33,781	)

Below is a reconciliation of our allocation of income or loss from VAA.

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
VAA net loss	$	(16,035	)	$	(33,781	)
Adjustments to reconcile to income (loss) from VAA
Interest expense on mezzanine loan		6,401			12,490
In-place lease intangibles - amortization expense		8,429			16,765
Depreciation basis differences		733			1,944
Net loss	$	(472	)	$	(2,582	)
Percentage ownership in VAA		50	%		50	%
Loss from VAA	$	(236	)	$	(1,291	)