Investments in Unconsolidated Entities

6 Months Ended

Jun. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

7. Investments in Unconsolidated Entities

The Partnership has non-controlling investments in unconsolidated entities. The Partnership applies the equity method of accounting by initially recording these investments at cost, subsequently adjusted for accrued preferred returns, the Partnership’s share of earnings (losses) of the unconsolidated entities, cash contributions, and distributions. The carrying value of the equity investments represents the Partnership’s maximum exposure to loss. The Partnership is entitled to a preferred return on invested capital in each unconsolidated entity. The Partnership’s preferred return is reported as “Investment income” on the Partnership’s condensed consolidated statements of operations.

An affiliate of the Vantage unconsolidated entities guarantees a preferred return on the Partnership’s invested capital through a date approximately five years after commencement of construction in connection with the Vantage investments.

The following table provides the details of the investments in unconsolidated entities as of June 30, 2024 and December 31, 2023:


Property Name	Location	Units			Construction Commencement Date	Construction Completion Date	Carrying Value as of June 30, 2024		Carrying Value as of December 31, 2023
Current Investments
Vantage at Tomball	Tomball, TX		288		August 2020	April 2022	$	14,199,870		13,235,090
Vantage at Hutto	Hutto, TX		288		December 2021	December 2023		14,573,715		13,908,660
Vantage at Loveland	Loveland, CO		288		April 2021	N/A		23,954,586		20,464,906
Vantage at Helotes	Helotes, TX		288		May 2021	November 2022		15,090,681		15,090,681
Vantage at Fair Oaks	Boerne, TX		288		September 2021	May 2023		13,535,176		12,996,316
Vantage at McKinney Falls	McKinney Falls, TX		288		December 2021	N/A		15,024,657		13,131,272
Freestone Greeley	Greeley, CO		296		N/A	N/A		6,143,765		5,346,007
Freestone Cresta Bella	San Antonio, TX		296		February 2023	N/A		18,003,283		17,325,494
Valage Senior Living Carson Valley	Minden, NV		102	(1)	February 2023	N/A		8,839,675		8,608,322
The Jessam at Hays Farm	Huntsville, AL		318		July 2023	N/A		17,090,224		7,518,717
Freestone Greenville	Greenville, TX		300		April 2024	N/A		7,680,571		5,366,551
Freestone Ladera	Ladera, TX		288		N/A	N/A		3,804,461		3,661,230
							$	157,940,664	$	136,653,246

(1)

Valage Senior Living Carson Valley is a seniors housing property with 102 beds in 88 units.

The Partnership has remaining commitments to provide additional equity funding for certain unconsolidated entities as of June 30, 2024. See Note 16 for further details regarding the Partnership’s remaining funding commitments.

Activity in the First Six Months of 2024

Sales Activity:

The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the six months ended June 30, 2024:


Property Name	Location	Units		Month Sold	Gross Proceeds to the Partnership		Investment Income		Gain (loss) on Sale
Vantage at Coventry	Omaha, NE		294	(1)	$	50,000	$	-	$	50,000
Vantage at Westover Hills	San Antonio, TX		288	(2)		6,986		-		6,986
					$	56,986	$	-	$	56,986

(1)

In January 2024, the Partnership received sales proceeds of approximately $50,000 associated with final settlements of the Vantage at Coventry sale in January 2023. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.

(2)

In May 2024, the Partnership received sales proceeds of approximately $7,000 associated with final settlements of the Vantage at Westover Hills sale in May 2022. The Partnership recognized the amount in “Gain on sale of investment in an unconsolidated entity” on the Partnership’s condensed consolidated statement of operations.

During the first six months of 2024, the Partnership advanced funds beyond its original commitments to five Vantage unconsolidated entities totaling $5.8 million to cover additional construction and interest costs.

Activity in the First Six Months of 2023

Sales Activity:

The following table summarizes sales information of the Partnership’s investments in unconsolidated entities during the six months ended June 30, 2023:


Property Name	Location	Units		Month Sold	Gross Proceeds to the Partnership			Investment Income		Gain on Sale
Vantage at Stone Creek	Omaha, NE		294	January 2023	$	14,689,244		$	108,295	$	9,114,980
Vantage at Coventry	Omaha, NE		294	January 2023		13,220,218			135,501		6,258,133
Vantage at Murfreesboro	Murfreesboro, TN		288	(1)		(6,184	)		-		(6,184	)
Vantage at O'Connor	San Antonio, TX		288	(2)		(11,744	)		-		(11,744	)
Vantage at Conroe	Conroe, TX		288	June 2023		19,828,060			2,065,608		7,337,828
					$	47,719,594		$	2,309,404	$	22,693,013

(1)

In February 2023, the Partnership returned sales proceeds of approximately $6,200 associated with final settlements of the Vantage at Murfreesboro sale in March 2022. The Partnership recognized the amount in "Gain on sale of investment in an unconsolidated entity" on the Partnership’s condensed consolidated statements of operations.

(2)

In May 2023, the Partnership returned sales proceeds of approximately $12,000 associated with final settlements of the Vantage at O'Connor sale in July 2022. The Partnership recognized the amount in "Gain on sale of investment in an unconsolidated entity" on the Partnership's condensed consolidated statements of operations.

New Equity Commitments:

In February 2023, the Partnership executed an $8.2 million equity commitment to fund the construction of Valage Senior Living Carson Valley.

Summarized Unconsolidated Entity Level Financial Data

The following table provides summary combined financial information for the properties underlying the Partnership’s investments in unconsolidated entities for the three and six months ended June 30, 2024 and 2023:


	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2024			2023		2024			2023
Property revenues	$	4,411,360		$	3,272,517	$	8,196,677		$	7,021,960
Gain on sale of property	$	-		$	17,995,170	$	-		$	56,099,503
Net income (loss)	$	(3,025,880	)	$	16,950,286	$	(4,150,053	)	$	54,693,224