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Investment in Unconsolidated Joint Ventures | 9 Months Ended
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Sep. 30, 2022
Equity Method Investments and Joint Ventures [Abstract] |
Investment in Unconsolidated Joint Ventures | Investment in Unconsolidated Joint Ventures On November 16, 2018, our SPC subsidiary formed Victory Abode Apartments, LLC ("VAA"), a joint venture with the Macquarie Group (“Macquarie”). VAA was formed as a result of a sale of the 50% ownership interest in 51 multifamily properties owned by us in exchange for a 50% voting interest / 49% profit participation interest ("Class A interest") in VAA a nd a note payable (“Mezzanine Loan”). Concurrent with the Contributi on, 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. In connection with the formation of VAA, ten of the initial properties were subject to an earn-out provision ("Earn Out") that provided for a remeasurement of value after a two-year period following the completion of construction. Upon the formation of VAA, we recorded an initial liability ("Earn Out Obligation") for the $10,000 advance on the Earn Out that we received from Macquarie. 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 were 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, 2022 (See Note 7 – Real Estate Activity). In accordance with the joint venture operating agreement, the Earn Out Obligation was paid from our share of subsequent distributions from VAA. On June 17, 2022, we entered into an agreement to sell 45 properties (“VAA Sale Portfolio”) held by VAA and one property held by our SPC subsidiary. On September 15, 2022, VAA, SPC, Macquarie and Pillar entered a Distribution and Holdback Property Agreement (“Distribution Agreement”), which provides the timing and ordering of the distribution of the net proceeds from the sale of the VAA Sale Portfolio, the repayment of the Mezzanine Loans, and the distribution of the remaining seven properties of VAA (“Holdback Portfolio”). On September 16, 2022, VAA completed the sale of the VAA Sale Portfolio for $1,810,700, resulting in gain on sale of $738,665 to the joint venture. In connection with sale, we received an initial distribution of $182,848 from VAA, which included the payment of the remaining balance of the Earn Out Obligation. On November 1, 2022, in connection with the sale of the VAA Sale Portfolio, we received an additional distribution from VAA (See Note 18 - Subsequent Events), which included the full operational control of the Holdback Portfolio and a cash payment of $203,936. We are in the process of assuming the mortgage notes payable on Holdback Portfolio. We plan to use our share of the proceeds from the sale of the VAA Sale Portfolio for additional investment in income-producing real estate, to pay down our debt and for general corporate purposes. Our ownership interest in VAA is held by SPC, and is therefore subject to the bond covenants of the three series of bonds that have been issued by SPC. These provisions include restrictions on the distribution of cash from SPC (See Note 12 - Bonds Payable). 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, 2022 |  | December 31, 2021
Assets (1) |  |  |  |
Assets held for sale |  | $ | — |  |  | $ | 1,135,769 |
Real estate |  | 141,670 |  |  | 142,629 |
Other assets (2) |  | 679,634 |  |  | 69,457 |
Total assets |  | $ | 821,304 |  |  | $ | 1,347,855 |
Liabilities and Partners' Capital (1) |  |  |  |
Liabilities on assets held for sale |  | $ | 7,326 |  |  | $ | 807,382 |
Mortgage notes payable |  | 85,825 |  |  | 83,955 |
Mezzanine notes payable |  | — |  |  | 242,942 |
Other liabilities |  | 28,945 |  |  | 25,970 |
Our share of partners' capital |  | 339,108 |  |  | 80,602 |
Outside partner's capital |  | 360,100 |  |  | 107,004 |
Total liabilities and partners' capital |  | $ | 821,304 |  |  | $ | 1,347,855 |
Investment in unconsolidated joint ventures |  |  |  |
Our share of partners' capital |  | $ | 339,108 |  |  | $ | 80,602 |
Our share of Mezzanine note payable |  | — |  |  | 125,306 |
Basis adjustment (3) |  | (25,709) |  |  | (144,287) |
Total investment in unconsolidated joint ventures |  | $ | 313,399 |  |  | $ | 61,621 |
(1) These amounts include the assets of VAA of $758,266 and $1,280,867 at September 30, 2022 and December 31, 2021, respectively, and liabilities of VAA of $87,079 and $329,891 at September 30, 2022 and December 31, 2021, respectively. (2) Includes cash and cash equivalents of $581,955 at September 30, 2022. (3) 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 from our investments in unconsolidated joint ventures:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenue (1) |  |  |  |  |  |  |
Rental revenue | $ | 3,342 |  |  | $ | 3,703 |  |  | $ | 11,305 |  |  | $ | 10,838 |
Other revenue | 15,417 |  |  | 15,230 |  |  | 41,119 |  |  | 44,903 |
Total revenue | 18,759 |  |  | 18,933 |  |  | 52,424 |  |  | 55,741 |
Expenses (2) |  |  |  |  |  |  |
Operating expenses | 17,335 |  |  | 17,225 |  |  | 53,866 |  |  | 48,043 |
Depreciation and amortization | 1,177 |  |  | 1,244 |  |  | 3,499 |  |  | 3,642 |
Interest | 5,368 |  |  | 5,994 |  |  | 17,396 |  |  | 17,931 |
Total expenses | 23,880 |  |  | 24,463 |  |  | 74,761 |  |  | 69,616 |
Loss from continuing operations | (5,121) |  |  | (5,530) |  |  | (22,337) |  |  | (13,875) |
Income from discontinued operations (3) | 704,700 |  |  | 2,021 |  |  | 712,648 |  |  | 5,363 |
Net income (loss) | $ | 699,579 |  |  | $ | (3,509) |  |  | $ | 690,311 |  |  | $ | (8,512) |
Equity in the income in unconsolidated joint ventures | $ | 464,143 |  |  | $ | 3,543 |  |  | $ | 471,385 |  |  | $ | 11,451 |
(1) These amounts include revenue of VAA of $3,591 and $3,862 for the three months ended September 30, 2022 and 2021, respectively, and $11,932 and $11,343 during the nine months ended September 30, 2022 and 2021, respectively. (2) These amounts include expenses of VAA of $9,003 and $10,191 for the three months ended September 30, 2022 and 2021, respectively, and $35,668 and $28,188 during the nine months ended September 30, 2022 and 2021, respectively. (3) These amounts represent the VAA Sale Portfolio.

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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 https://asc.fasb.org/topic&trid=2196965 + Details
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