Note 3—Investments in Partnerships

The following table provides information about the carrying value of the Company’s investments in partnerships and ventures:


	At		At
	December 31,		December 31,
(in thousands)	2019		2018
Investment in Solar Ventures	$	289,123	$	126,339
Investments in U.S. real estate partnerships (includes zero and $898 related to VIEs) (1)		19,822		19,961
Investment in South Africa Workforce Housing Fund ("SAWHF")		7,732		8,779
Total investments in partnerships	$	316,677	$	155,079

⁽¹⁾

We do not consolidate any of the investees that were assessed to meet the definition of a VIE because the Company was deemed not to be the primary beneficiary.

Investments Related to the Solar Ventures

At December 31, 2019, the Company held 42.0%, 50.0%, 41.5% and 100% equity interests in Solar Construction Lending, LLC (“SCL”), Solar Permanent Lending, LLC (“SPL”), Solar Development Lending, LLC (“SDL”) and Renewable Energy Lending, LLC (“REL”), respectively (collectively referred to as the “Solar Ventures”).

At December 31, 2019, the carrying value of the Company’s equity investments in SCL, SPL and SDL was $153.9 million, zero and $135.2 million, respectively. None of these investees were assessed to constitute VIEs and the Company accounts for all of these investments using the equity method of accounting. At December 31, 2019, these joint ventures had $310.9 million of unfunded loan commitments to borrowers, which were anticipated to be funded primarily by capital within the joint ventures through a combination of idle capital and existing loan redemptions. To the extent capital within the joint ventures is not sufficient to meet their funding obligations additional capital contributions by the members would be required.

In December 2019, the Company and its capital partner in SDL and SCL executed various non-pro rata funding agreements pursuant to which our capital partner in SDL contributed in total $73.0 million of $91.0 million in capital calls and our capital partner in SCL contributed in total $58.0 million of $59.0 million in capital calls, while the Company contributed the balance. As a consequence of these capital contributions, our ownership interest in these ventures decreased in percentage terms.

The Company paid $5.1 million for the buyout of our prior investment partner’s ownership interest in REL, on June 1, 2018, which was allocated to the net assets acquired based upon their relative fair values. This allocation resulted in a cumulative basis adjustment of $4.5 million being allocated to the Company’s investments in SCL and SPL, an adjustment which represented the difference between the Company’s acquisition cost basis of its investments and the historical cost basis of the investments at the partnership level. During the third quarter of 2019, SPL’s remaining assets were conveyed to SCL, including the Company’s allocated basis adjustment. The combined basis difference is amortized over the remaining investment period of SCL. For the years ended December 31, 2019 and December 31, 2018, the amortization expense related to the basis difference was $0.9 million and $0.5 million, respectively. As of December 31, 2019, and December 31, 2018, the unamortized balance of the Company’s basis difference was $3.1 million and $4.0 million, respectively.

The following table provides information about the carrying amount of total assets and liabilities of all renewable energy related investees in which the Company had an equity method investment:


	At		At
	December 31,		December 31,
	2019		2018
(in thousands)
Total assets	$	706,792	$	279,960
Other liabilities (1)		22,135		12,833

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Other liabilities of these ventures is primarily comprised of interest reserves.

The following table provides information about the gross revenue, operating expenses and net income of all renewable energy related investees in which the Company had an equity method investment:


	For the year ended
	December 31,
(in thousands)	2019		2018
Gross revenue	$	55,905	$	27,327
Operating expenses		6,541		5,793
Net income and net income attributable to the entities		49,443		21,977

Investments in U.S. Real Estate Partnerships

At December 31, 2019, the $19.8 million reported carrying value of investments in U.S. real estate partnerships represented the Company’s 80% ownership interest in a joint venture that owns and operates a mixed-use town center and undeveloped land parcels in Spanish Fort, Alabama. The Company has the right to a preferred return on its unreturned capital contributions, as well as the right to share in excess cash flows of the real estate venture. As of December 31, 2019, the Company held a 79.9% economic interest based upon the partnership’s distribution waterfall. This entity was determined not to be a VIE because decision-making rights are shared equally among its members. Accordingly, the Company accounts for this investment using the equity method of accounting.

On December 20, 2019, the Company sold its three limited partner interests in three affordable housing partnerships in which our ownership interest had ranged from 74.25% to 74.92%. While these entities were deemed to be VIEs, the Company was not deemed to be their primary beneficiary. Therefore, the Company did not consolidate these entities and accounted for these investments using the equity method of accounting.

At December 31, 2019, the Company had no U.S. real estate partnerships in which the investments were determined to be VIEs. At December 31, 2018, four of the U.S. real estate partnerships in which we had investments were determined to be VIEs. The carrying value of the equity investments in these partnerships was $0.9 million. For one of the Company’s VIEs, because the underlying real estate was sold during the fourth quarter of 2017, the Company did not expect to make additional contributions to that investment. Because we were unable to quantify the maximum amount of additional capital contributions that we could have been required to fund in the future associated with our proportionate share of these investments, we measured our maximum exposure to loss based upon the carrying value of these investments. At December 31, 2018, our maximum exposure to loss due to our involvement with these VIEs was $0.9 million.

The following table provides information about the total assets, debt and other liabilities of the U.S. real estate partnerships in which the Company held an equity investment:


	At		At
	December 31,		December 31,
	2019		2018
(in thousands)
Total assets	$	51,718	$	56,238
Debt		6,426		6,530
Other liabilities		20,493		32,165

The following table provides information about the gross revenue, operating expenses and net loss of U.S. real estate partnerships in which the Company had an equity investment:


	For the year ended
	December 31,
(in thousands)	2019		2018
Gross revenue	$	2,575	$	2,383
Operating expenses		2,133		2,127
Net loss and net loss attributable to the entities		(2,427)		(794)

Investment in SAWHF

At December 31, 2019, the carrying value of the Company’s 11.85% equity investment in SAWHF was $7.7 million. As SAWHF was determined not to be a VIE, the Company accounts for this investment using the equity method of accounting.

The following table provides information about the carrying value of total assets and other liabilities of SAWHF:


	At		At
	December 31,		December 31,
	2019		2018
(in thousands)
Total assets	$	56,356	$	74,803
Other liabilities		130		496

The following table provides information about the gross revenue, operating expenses and net income (loss) of SAWHF:


	For the year ended
	December 31,
(in thousands)	2019		2018
Gross revenue	$	4,130	$	4,308
Operating expenses		1,003		2,277
Net income (loss) and net income (loss) attributable to the entity		781		(14,339)