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 and a note payable (“Mezzanine Loan”). 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.

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 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.


	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.

(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.


	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.