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Investment in Unconsolidated Joint Ventures
 12 Months Ended
Dec. 31, 2022
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Unconsolidated Joint Ventures Investment in Unconsolidated Joint Ventures
On November 16, 2018, we formed the 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 the manager (“Class B Member”).
In connection with the formation of VAA, ten out of the initial 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") of $10,000 for the 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 in 2021 (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”) owned by VAA and one property owned by our SPC subsidiary.
On September 15, 2022, VAA, SPC, Macquarie and Pillar entered a Distribution and Holdback Property Agreement (“Distribution Agreement”), which provided 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 (“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 $738,444 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, we received an additional distribution from VAA, which included the full operational control of the VAA Holdback Portfolio (See Note 11 - Acquisitions) and a cash payment of $204,036. We are in the process of negotiating the assumption of the mortgage notes payable on the VAA Holdback Portfolio with the lenders.
We plan to use our share of the proceeds from the sale of the VAA Sale Portfolio to investment in additional income-producing real estate, pay down our debt and for general corporate purposes. Our ownership interest in VAA is held by SPC, and is therefore subject to the debt covenants of bonds issued by SPC. These provisions include restrictions on the distribution of cash from SPC (See Note 13 - Bonds Payable).
We also own a 20% ownership interest in Gruppa Florentina, LLC ("Milano"), which operates several pizza parlors in Central and Northern California. Milano also has 23 franchised locations, including two operating, under the trade name Angelo & Vito’s Pizzerias.
The following is a summary of our investment in unconsolidated joint ventures:
As of December 31,
20222021
Assets (1)
Assets from discontinued operations$— $1,135,769 
Real estate13,140 142,629 
Other assets102,302 69,457 
   Total assets$115,442 $1,347,855 
Liabilities and Partners Capital (1)
Liabilities from discontinued operations$8,824 $807,382 
Mortgage notes payable16,267 83,955 
Mezzanine notes payable— 242,942 
Other liabilities13,412 25,970 
Our share of partners' capital27,973 80,602 
Outside partner's capital48,966 107,004 
   Total liabilities and partners' capital$115,442 $1,347,855 
Investment in unconsolidated joint ventures
Our share of partners' capital$27,973 $80,602 
Our share of Mezzanine note payable and accrued interest— 125,306 
Basis adjustment (2)253 (144,287)
   Total investment in unconsolidated joint ventures$28,226 $61,621 
(1)    These amounts include the assets of $52,404 and $1,280,867 of VAA at December 31, 2022 and 2021, respectively, and liabilities of $1,988 and $1,137,273 of VAA at December 31, 2022 and 2021, 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 income (loss) from investments in unconsolidated joint ventures:
For the Years Ended December 31,
2022202120203/31/2024
Revenue (1)
   Rental revenue$11,362 $14,632 $13,402 
   Other revenue41,093 60,514 40,568 
      Total revenue52,455 75,146 53,970 
Expenses (1)
   Operating expenses55,831 66,503 45,870 
   Depreciation and amortization3,499 4,857 4,403 
   Interest15,839 23,744 24,231 
      Total expenses75,169 95,104 74,504 
Loss from continuing operations(22,714)(19,958)(20,534)
Income (loss) from discontinued operations (2)708,341 7,416 (4,567)
Net income (loss)$685,627 $(12,542)$(25,101)
Our share of net income (loss) in unconsolidated joint ventures$469,268 $14,634 $(379)
(1)    These amounts include revenue of $11,963, $15,336 and $14,024 of VAA during the years ended December 31, 2022, 2021 and 2020, respectively, and expenses of $36,076, $39,438 and $36,159 of VAA during the years ended December 31, 2022, 2021 and 2020, respectively.
(2)     The amount for the year ended December 31, 2022, includes $738,444 gain on sale of asset and $31,281 loss on early extinguishment of debt that were incurred in connection with the sale of the VAA Sale Portfolio.