Investments in Unconsolidated Entities

3 Months Ended

Mar. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

Investments carried at fair value

Based upon elections made at the date of investment, the Company reports the equity method investments in real estate ventures at fair value. For such investments, the Company increases or decreases the investment each reporting period by the change in the fair value and the Company reports the fair value adjustments in the Consolidated Statement of Operations in the ‘Gain (loss) on equity method investments carried at fair value’ line item. Changes in fair value of the Company's investment in Investors X (defined below) are impacted by distributions as the fair value is based on finite cash flows from the wind-down of that entity.

Investors X

The Company has elected to account for the equity method investment in Comstock Investors X, L.C. (“Investors X”), a Variable Interest Entity (“VIE”) that owns the Company’s residual homebuilding operations at fair value. Fair value is determined using a discounted cash flow model based on expected future cash flows for income and realization events of the underlying asset. Expected future cash flows includes contractually fixed revenues and expenses as well as estimates for future revenues and expenses where contracts do not currently exist. These estimates are based on prior experience as well as comparable, third party data.

As of March 31, 2021 and December 31, 2020, the fair value of the Company’s investment in Investors X is $3.5 million and $5.1 million, respectively. The Company received distributions of $1.7 million during the three months ended March 31, 2021 and recognized no gain or loss in fair value.

The Hartford

On December 30, 2019, the Company made an investment related to the purchase of a stabilized commercial office building located at 3101 Wilson Boulevard in the Clarendon area of Arlington County, Virginia (the “Hartford”). The Company owns a 2.5% equity interest in the asset at a cost of approximately $1.2 million. The Company has elected to account for the equity method investment in the Hartford at fair value. Fair value is determined using an income approach and sales comparable approach models. As of March 31, 2021 and December 31, 2020, the fair value of the Company’s investment in the Hartford was

$1.2 million. The fair value of the Company's investment in the Hartford remained at approximately $1.2 million during the three months ended March 31, 2021. The Company received no distributions during the three months ended March 31, 2021.

Fair value of equity method investments are classified as Level 3 of the fair value hierarchy. As of March 31, 2021 and December 31, 2020, the Company had equity method investments in real estate ventures at fair value of $4.7 million and $6.3 million, respectively. The table below shows the change in the Company’s investments in real estate ventures reported at fair value:


Fair value of investments as of December 31, 2020	$	6,307
Distributions	(1,660)
Change in fair value	18
Fair value of investments as of March 31, 2021	$	4,665

See Note 12 – Related Party Transactions for additional discussion of our investments in real estate ventures at fair value.

Investments using equity method

The Company accounts for its interest in its title insurance joint venture using the equity method of accounting and adjusts the carrying value for its proportionate share of earnings, losses and distributions. The investment in the unconsolidated joint venture was $17 thousand and $29 thousand as of March 31, 2021 and December 31, 2020, respectively, and is included within ‘Prepaid and other assets, net’ in the accompanying Consolidated Balance Sheets.

The Company’s share of loss for the three months ended March 31, 2021 and 2020 from this unconsolidated joint venture of $12 thousand and $3 thousand, respectively, is included in ‘Other income (loss), net’ in the accompanying Consolidated Statement of Operations. During the three months ended March 31, 2021 and 2020 the Company collected and recorded no distributions and $108 thousand, respectively, from this joint venture as a return on investment.