Investment in Unconsolidated Joint Ventures

3 Months Ended

Mar. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Joint Ventures

On November 19, 2018, we formed the VAA joint venture with the Macquarie Group (“Macquarie”). In connection with the formation of VAA, we sold a 50% ownership interest in certain multifamily properties to Macquarie for a $236,800 cash payment, resulting in a gain on sale of assets of $154,100. We then immediately transferred our respective ownership interests in the multifamily projects ("VAA Portfolio") to VAA in exchange for a 50% voting interest and a 49% profit participation interest ("Class A interest") in VAA and note payable (“Mezzanine Loan”) in accordance with the terms of a contribution agreement (the “Contribution”). Upon completion of the Contribution, VAA owned and controlled 52 multifamily properties. VAA assumed all liabilities of those properties, including mortgage debt insured by the Department of Housing and Urban Development (“HUD”).

Concurrent with the Contribution, VAA issued Class B interests with a 2% profits participation interest and no voting rights to Daniel J. Moos, our former President and Chief Executive Officer (“Class B Member”). The Class B Member serves as the Manager of VAA.

Interest on the Mezzanine loan is limited to cash generated from the properties and matures concurrently with the termination of VAA. Accordingly, we account for our interest in the Mezzanine Loan as additional equity interest and includes any interest payments accrued as income from unconsolidated joint ventures.

On March 30, 2021, we sold a 50% ownership interest in the special purpose entity that owned Overlook at Allensville Phase II, a 144 unit multifamily property in Sevierville, Tennessee to Macquarie bank for $2,551 resulting in gain on sale of assets of $1,417. Concurrent with the sale, we each contributed our 50% ownership interests into VAA.

We also own a 20% ownership interest in a 20% interest in Gruppa Florentina, LLC ("Milano"), which operates several pizza parlors in Central and Northern California. Milano also has 23 franchised locations, including two operating, under the trade name Angelo & Vito’s Pizzerias.

The following is a summary of our investment in unconsolidated joint ventures:


	March 31, 2021		December 31, 2020
Assets (1)
Real estate	$	1,242,582	$	1,230,197
Other assets	100,206		113,537
Total assets	$	1,342,788	$	1,343,734
Liabilities and Partners Capital (1)
Mortgage notes payable	$	873,579	$	843,522
Mezzanine notes payable	245,356		239,878
Other liabilities	27,921		45,619
Our share of partners' capital	85,842		93,334
Outside partner's capital	110,090		121,381
Total liabilities and partners' capital	$	1,342,788	$	1,343,734
Investment in unconsolidated joint ventures
Our share of partners' capital	$	122,678	$	93,334
Our share of Mezzanine note payable	85,842		119,939
Basis adjustment (2)	(152,756)		(152,848)
Total investment in unconsolidated joint ventures	$	55,764	$	60,425

(1) These amounts include the assets of $1,280,899 and $1,279,197 of VAA at March 31, 2021 and December 31, 2020, respectively, and liabilities of $1,125,391 and $1,106,231 of VAA at March 31, 2021 and December 31, 2020, respectively.

(2) We amortize the difference between the cost of our investments in unconsolidated joint ventures and the book value of our underlying equity into income on a straight-line basis consistent with the lives of the underlying assets.

The following is a summary of our loss from investments in unconsolidated joint ventures:


	Three Months Ended March 31,
		2021		2020
Revenue (1)
Rental revenue		$	31,070	$	28,194
Other revenue		15,289		54,803
Total revenue		46,359		82,997
Expenses (1)
Operating expenses		28,039		63,827
Depreciation and amortization		8,062		9,168
Interest		14,175		15,593
Total expenses		50,276		88,588
Net loss		$	(3,917)	$	(5,591)
Our share of net loss in unconsolidated joint ventures		$	3,336	$	(260)

(1) These amounts include revenue of $32,685 and $29,559 of VAA during the three months ended March 31, 2021 and 2020, respectively, and expenses of $37,457 and $37,453 of VAA during the three months ended March 31, 2021 and 2020, respectively.