Investment in Unconsolidated Joint Ventures

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Joint Ventures

On November 19, 2018, we formed the VAA joint venture with the Macquarie Group (“Macquarie”). In connection with the formation of VAA, we sold a 50% ownership interest in certain multifamily properties to Macquarie for a $236,800 cash payment, resulting in a gain on sale of assets of $154,100. We then immediately transferred our respective ownership interests in the multifamily projects ("VAA Portfolio") to VAA in exchange for a 50% voting interest / 49% profit participation interest ("Class A interest") in VAA and note payable (“Mezzanine Loan”) in accordance with the terms of a contribution agreement (the “Contribution”). Upon completion of the Contribution, VAA owned and controlled 52 multifamily properties. VAA assumed all liabilities of those properties, including mortgage debt insured by the Department of Housing and Urban Development (“HUD”).

Concurrent with the Contribution, VAA issued Class B interests with a 2% profits participation interest and no voting rights to Daniel J. Moos, our former President and Chief Executive Officer (“Class B Member”). The Class B Member serves as the Manager of VAA.

Interest on the Mezzanine loan is limited to cash generated from the properties and matures concurrently with the termination of VAA. Accordingly, we account for our interest in the Mezzanine Loan as additional equity interest and includes any interest payments accrued as income from unconsolidated joint ventures.

We also own a 20% ownership interest in a 20% 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,
	2020		2019
Assets (1)
Real estate	1,230,197		1,255,998
Other assets	113,537		107,006
Total assets	$	1,343,734	$	1,363,004
Liabilities and Partners Capital (1)
Mortgage notes payable	843,522		843,053
Mezzanine notes payable	239,878		240,422
Other liabilities	45,619		37,118
Our share of partners' capital	93,334		108,035
Outside partner's capital	121,381		134,376
Total liabilities and partners' capital	$	1,343,734	$	1,363,004
Investment in unconsolidated joint ventures
Our share of partners' capital	$	93,334	$	108,035
Our share of Mezzanine note payablestr	119,939		120,211
Basis adjustment (2)	(152,848)		(160,591)
Total investment in unconsolidated joint ventures	$	60,425	$	67,655

(1) These amounts include the assets of $1,280,827 and $1,305,179 of VAA at December 31, 2020 and 2019, respectively, and liabilities of $1,107,861 and $1,104,070 of VAA at December 31, 2020 and 2019, 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,
	2020		2019		2018
Revenue (1)
Rental revenue	$	117,336	$	109,746	$	11,568
Other revenue	57,515		59,069		53,603
Total revenue	174,851		168,815		65,171
Expenses (1)
Operating expenses	110,108		109,588		57,922
Depreciation and amortization	31,921		45,453		8,506
Interest	57,455		61,867		6,432
Total expenses	199,484		216,908		72,860
Net loss	$	(24,633)	$	(48,093)	$	(7,689)
Our share of net (loss) income in unconsolidated joint ventures	$	(379)	$	(2,313)	$	1,513

(1) These amounts include revenue of $123,115, $115,377 and $12,877 of VAA during the years ended December 31, 2020, 2019 and 2018, respectively, and expenses of $149,817, $165,773 and $22,609 of VAA during the years ended December 31, 2020, 2019 and 2018, respectively.