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Investment in Unconsolidated Joint Ventures | 9 Months Ended
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Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract] |
Investment in Unconsolidated Joint Ventures | 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. In connection with the formation of VAA, ten out of the 51 properties were subject to an earn-out provision ("Earn Out") that provides for a remeasurement of value after a two-year period following the completion of construction. Upon the formation of VAA, we recorded a liability ("Earn Out Obligation") for the $10,000 advance on the Earn Out that we received from Macquarie. Upon receipt of funds, both parties transferred their respective ownership interests in the multifamily properties 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 51 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 formation of the joint venture, VAA issued a Class B interest 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 an addition to our equity interest in VAA and include interest income on the Mezzanine loan in income from unconsolidated joint ventures. On March 30, 2021, we sold a 50% ownership interest in Overlook at Allensville Phase II, a 144 unit multifamily property in Sevierville, Tennessee to Macquarie for $2,551, resulting in gain on sale of $1,417. Concurrent with the sale, we each contributed our 50% ownership interests in Overlook at Allensville Phase II into VAA. On July 13, 2021, we received the arbitration result of a dispute regarding the measurement of the Earn Out Obligation. Our position and claims were declined, and the position of Macquarie was fully accepted. As a result, we are required to pay approximately $39,600 to Macquarie to satisfy the Earn Out Obligation, and therefore, recorded a charge of $29,600 during the nine months ended September 30, 2021 (See Note 7 – Real Estate Activity). In accordance with the the joint venture operating agreement, the Earn Out Obligation will be paid from our share of future distributions from VAA, which generally occur each six months. During the three months ended September 30, 2021, our $5,441 distribution from VAA was paid directly to Macquarie as a reduction of the Earn Out Obligation. 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:
|  | September 30, 2021 |  | December 31, 2020
Assets (1) |  |  |  |
Real estate |  | $ | 1,227,945 |  |  | $ | 1,230,197 |
Other assets |  | 114,626 |  |  | 113,537 |
Total assets |  | $ | 1,342,571 |  |  | $ | 1,343,734 |
Liabilities and Partners' Capital (1) |  |  |  |
Mortgage notes payable |  | $ | 870,000 |  |  | $ | 843,522 |
Mezzanine notes payable |  | 242,942 |  |  | 239,878 |
Other liabilities |  | 37,992 |  |  | 45,619 |
Our share of partners' capital |  | 81,676 |  |  | 93,334 |
Outside partner's capital |  | 109,961 |  |  | 121,381 |
Total liabilities and partners' capital |  | $ | 1,342,571 |  |  | $ | 1,343,734 |
Investment in unconsolidated joint ventures |  |  |  |
Our share of partners' capital |  | $ | 81,676 |  |  | $ | 93,334 |
Our share of Mezzanine note payable |  | 121,471 |  |  | 119,939 |
Basis adjustment (2) |  | (144,709) |  |  | (152,848) |
Total investment in unconsolidated joint ventures |  | $ | 58,438 |  |  | $ | 60,425 |
(1) These amounts include the assets of VAA of $1,277,069 and $1,279,197 at September 30, 2021 and December 31, 2020, respectively, and liabilities of VAA of $1,128,268 and $1,106,231 at September 30, 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 income (loss) from our investments in unconsolidated joint ventures:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Revenue (1) |  |  |  |  |  |  |
Rental revenue | $ | 33,563 |  |  | $ | 29,999 |  |  | $ | 96,670 |  |  | $ | 86,841 |
Other revenue | 17,080 |  |  | 15,182 |  |  | 50,131 |  |  | 44,018 |
Total revenue | 50,643 |  |  | 45,181 |  |  | 146,801 |  |  | 130,859 |
Expenses (2) |  |  |  |  |  |  |
Operating expenses | 32,052 |  |  | 29,629 |  |  | 91,305 |  |  | 84,310 |
Depreciation and amortization | 8,194 |  |  | 8,190 |  |  | 24,393 |  |  | 24,312 |
Other income | — |  |  | — |  |  | (2,356) |  |  | — |
Interest | 13,906 |  |  | 12,574 |  |  | 41,971 |  |  | 42,093 |
Total expenses | 54,152 |  |  | 50,393 |  |  | 155,313 |  |  | 150,715 |
Net loss | $ | (3,509) |  |  | $ | (5,212) |  |  | $ | (8,512) |  |  | $ | (19,856) |
Our equity in the income (loss) in unconsolidated joint ventures | $ | 3,543 |  |  | $ | 337 |  |  | $ | 11,451 |  |  | $ | (642) |
(1) These amounts include revenue of VAA of $35,572 and $31,591 during the three months ended September 30, 2021 and 2020, respectively, and $102,403 and $90,875 during the nine months ended September 30, 2021 and 2020, respectively. (2) These amounts include expenses of VAA of $39,880 and $37,287 during the three months ended September 30, 2021 and 2020, respectively, and $113,885 and $112,333 during the nine months ended September 30, 2021 and 2020, respectively.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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