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Equity Investment in Unconsolidated Investments | 3 Months Ended
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Mar. 31, 2022
Equity Method Investments and Joint Ventures [Abstract] |
Equity Investment in a Limited Partnership | Note 4. Equity Investment in Unconsolidated Investments The Company owns interests in a limited partnership and three joint ventures. The Company accounts for its interests in these investments under the equity method of accounting (Note 2). The Company classifies distributions received from equity method investments using the cumulative earnings approach. Distributions received are considered returns on the investment and classified as cash inflows from operating activities. If, however, the investor’s cumulative distributions received, less distributions received in prior periods determined to be returns of investment, exceeds cumulative equity in earnings recognized, the excess is considered a return of investment and is classified as cash inflows from investing activities. Equity Investment in a Limited Partnership On August 3, 2020, the Company entered into a subscription agreement with Mavik Real Estate Special Opportunities Fund, LP (“RESOF”) whereby the Company committed to fund up to $50.0 million to purchase a limited partnership interest in RESOF. RESOF’s primary investment objective is to generate attractive risk-adjusted returns by purchasing performing and non-performing mortgages, loans, mezzanines and other credit instruments supported by underlying commercial real estate assets. RESOF may also opportunistically originate high-yield mortgages or loans in real estate special situations including rescue financings, bridge loans, restructurings and bankruptcies (including debtor-in-possession loans). The general partner of RESOF is Mavik Real Estate Special Opportunities Fund GP, LLC, which is a subsidiary of the Company’s sponsor, Terra Capital Partners. As of March 31, 2022 and December 31, 2021, the unfunded commitment was $16.4 million and $15.1 million, respectively. The Company evaluated its equity interest in RESOF and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interest in RESOF is accounted for as an equity method investment. As of March 31, 2022 and December 31, 2021, the Company owned 44.2% and 50.0% of the equity interest in RESOF, respectively. As of March 31, 2022 and December 31, 2021, the carrying value of the Company’s investment in RESOF was $40.2 million and $40.5 million, respectively. For both the three months ended March 31, 2022 and 2021, the Company recorded equity income from RESOF of $1.3 million and did not receive any distributions from RESOF. In connection with the equity investment in RESOF, the Company paid origination fees to the Manager totaling $0.5 million, to be amortized to equity income on a straight-line basis over the life of RESOF. The following tables present summarized financial information of the Company’s equity investment in RESOF. Amounts provided are the total amounts attributable to the investment and do not represent the Company’s proportionate share:
|  | March 31, 2022 |  | December 31, 2021
Investments at fair value (cost of $117,829,371 and $107,261,022, respectively) |  | $ | 119,003,881 |  |  | $ | 108,359,898 |
Other assets |  | 15,892,206 |  |  | 5,484,087 |
Total assets |  | 134,896,087 |  |  | 113,843,985 |
Revolving line of credit, net of financing costs |  | 16,834,326 |  |  | 14,909,717 |
Obligations under participation agreement (proceeds of $15,523,107 and $14,252,357, respectively) |  | 15,637,326 |  |  | 14,351,617 |
Other liabilities |  | 13,361,069 |  |  | 5,296,603 |
Total liabilities |  | 45,832,721 |  |  | 34,557,937 |
Partners’ capital |  | $ | 89,063,366 |  |  | $ | 79,286,048 |
|  |  | Three Months Ended March 31,
|  |  | 2022 |  | 2021
Total investment income |  |  | $ | 4,844,664 |  |  | $ | 2,042,100 |
Total expenses |  |  | 1,293,316 |  |  | 471,212 |
Net investment income |  |  | 3,551,348 |  |  | 1,570,888 |
Unrealized appreciation on investments |  |  | 69,051 |  |  | 53,697 |
Net increase in partners' capital resulting from operations |  |  | $ | 3,620,399 |  |  | $ | 1,624,585 |
Equity Investment in Joint Ventures As of March 31, 2022, the Company owned equity interests in three joint ventures that invest in real estate properties. The Company evaluated its equity interests in the joint ventures and determined it does not have a controlling financial interest and is not the primary beneficiary. Accordingly, the equity interests in the joint ventures are accounted for as equity method investments. The following table presents the Company’s ownership interests in its equity investments in the joint ventures and their respective carrying values:
|  |  |  | Ownership Interest at March 31, 2022 |  | Carrying Value at
Entity |  | Co-owner |  |  | March 31, 2022 |  | December 31, 2021
LEL Arlington JV LLC |  | Third party |  | 80% |  | $ | 23,962,388 |  |  | $ | 23,949,044 |
LEL NW 49th JV LLC |  | Third party |  | 80% |  | 4,838,353 |  |  | 5,306,467 |
TCG Corinthian FL Portfolio JV LLV (1) |  | Third Party |  | 90% |  | 22,615,435 |  |  | — |
|  |  |  |  |  | $ | 51,416,176 |  |  | $ | 29,255,511 |
_______________ (1)This investment was purchased in March 2022. The following tables present estimated combined summarized financial information of the Company’s equity investment in the joint ventures. Amounts provided are the total amounts attributable to the joint ventures and do not represent the Company’s proportionate share:
|  | March 31, 2022 |  | December 31, 2021
Net investments in real estate |  | $ | 198,906,122 |  |  | $ | 115,636,424 |
Other assets |  | 9,730,764 |  |  | 4,856,249 |
Total assets |  | 208,636,886 |  |  | 120,492,673 |
Mortgage loan payable |  | 145,641,352 |  |  | 83,445,235 |
Other liabilities |  | 1,887,030 |  |  | 1,305,572 |
Total liabilities |  | 147,528,382 |  |  | 84,750,807 |
Members’ capital |  | $ | 61,108,504 |  |  | $ | 35,741,866 |
|  |  | Three Months Ended March 31,
|  |  | 2022 |  | 2021
Revenues |  |  | $ | 2,450,438 |  |  | $ | — |
Operating expenses |  |  | (816,681) |  |  | — |
Depreciation expense |  |  | (690,831) |  |  | $ | — |
Interest expense |  |  | (1,085,561) |  |  | $ | — |
Unrealized gains |  |  | 235,511 |  |  | $ | — |
Net income |  |  | $ | 92,876 |  |  | $ | — |
For the three months ended March 31, 2022, the Company recorded equity income from the joint ventures of $0.1 million and received distributions from the joint ventures of $0.3 million. There was no such equity income or loss recorded or distributions received for the three months ended March 31, 2021. In connection with these investments, the Company paid origination fee to the Manager totaling $0.5 million, to be amortized to equity income over the life of the respective joint venture.

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- References No definition available. + Details
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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 http://asc.fasb.org/topic&trid=2196965 + Details
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