Investment in Unconsolidated Ventures

We participate in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. U.S. GAAP requires consolidation of Variable Interest Entities (VIEs) in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance; and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether a venture is a VIE and whether we are the primary beneficiary and must consolidate a VIE. We perform this review initially at the time we enter into venture agreements and reassess upon reconsideration events.

At first quarter-end 2017, we had ownership interests in 16 ventures that we accounted for using the equity method, none of which are a VIE.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:



	Venture Assets				Venture Borrowings^(a)				Venture Equity				Our Investment
	First Quarter-End		Year-End		First Quarter-End		Year-End		First Quarter-End		Year-End		First Quarter-End		Year-End
	2017		2016		2017		2016		2017		2016		2017		2016
	(In thousands)
242, LLC ^(b)	$	23,530	$	26,503	$	—	$	1,107	$	22,905	$	23,136	$	10,904	$	10,934
CL Ashton Woods, LP ^(c)	3,064		2,653		—		—		2,948		2,198		2,067		1,107
CL Realty, LLC	8,056		8,048		—		—		7,964		7,899		3,982		3,950
CREA FMF Nashville LLC ^(b)	54,071		56,081		36,018		37,446		17,470		17,091		4,894		4,923
Elan 99, LLC	49,539		49,652		36,391		36,238		12,447		13,100		11,202		11,790
FMF Littleton LLC	70,434		70,282		45,744		44,446		23,634		23,798		6,086		6,128
FMF Peakview LLC	—		—		—		—		—		—		—		—
FOR/SR Forsyth LLC	10,794		10,672		1,569		1,568		9,233		8,990		8,310		8,091
HM Stonewall Estates, Ltd ^(c)	1,184		852		—		—		1,096		852		579		477
LM Land Holdings, LP ^(c)	26,424		25,538		3,851		3,477		21,573		20,945		9,900		9,685
MRECV DT Holdings LLC	4,318		4,155		—		—		4,318		4,144		3,886		3,729
MRECV Edelweiss LLC	5,276		3,484		—		—		5,276		3,484		5,027		3,358
MRECV Juniper Ridge LLC	4,169		4,156		—		—		4,169		4,156		3,428		3,741
MRECV Meadow Crossing II LLC	2,615		2,492		—		—		2,614		2,491		2,352		2,242
Miramonte Boulder Pass, LLC	9,333		10,738		3,126		4,006		4,710		5,265		4,505		5,330
Temco Associates, LLC	4,387		4,368		—		—		4,280		4,253		2,140		2,126
Other ventures	—		—		—		—		—		—		—		—
	$	277,194	$	279,674	$	126,699	$	128,288	$	144,637	$	141,802	$	79,262	$	77,611

Combined summarized income statement information for our ventures accounted for using the equity method follows:



	Venture Revenues				Venture Earnings (Loss)						Our Share of Earnings (Loss)
	First Quarter				First Quarter						First Quarter
	2017		2016		2017			2016			2017			2016
	(In thousands)
242, LLC ^(b)	$	12,738	$	—	$	8,465		$	(300	)	$	4,318		$	(150	)
CL Ashton Woods, LP ^(c)	1,782		696		750			367			959			439
CL Realty, LLC	199		133		2,465			47			1,232			23
CREA FMF Nashville LLC ^(b)	1,405		901		(170		)	(571		)	(54		)	(171		)
Elan 99, LLC	902		20		(653		)	(410		)	(588		)	(369		)
FMF Littleton LLC	1,415		321		(165		)	(170		)	(41		)	(42		)
FMF Peakview LLC	—		939		—			(248		)	—			(50		)
FOR/SR Forsyth LLC	—		—		(32		)	—			(28		)	—
HM Stonewall Estates, Ltd ^(c)	496		546		243			220			103			103
LM Land Holdings, LP^(c)	1,053		1,000		628			640			215			144
MRECV DT Holdings LLC	301		98		299			98			269			88
MRECV Edelweiss LLC	185		87		185			87			166			78
MRECV Juniper Ridge LLC	13		3		13			3			12			3
MRECV Meadow Crossing II LLC	122		—		122			(34		)	110			(31		)
Miramonte Boulder Pass, LLC	1,642		—		44			(125		)	(325		)	(62		)
Temco Associates, LLC	48		99		27			67			14			34
Other ventures	—		—		—			26			—			10
	$	22,301	$	4,843	$	12,221		$	(303	)	$	6,362		$	47

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^(a)	Total includes current maturities of $125,498,000 at first quarter-end 2017, of which $108,675,000 is non-recourse to us, and $89,756,000 at year-end 2016, of which $78,557,000 is non-recourse to us.


^(b)	Includes unamortized deferred gains on real estate we contributed to ventures. We recognize deferred gains as income as the real estate is sold to third parties. Deferred gains of $1,372,000 are reflected as a reduction to our investment in unconsolidated ventures at first quarter-end 2017.


^(c)	Includes unrecognized basis difference of $578,000 which is reflected as an increase of our investment in unconsolidated ventures at first quarter-end 2017. The difference will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

In first quarter 2017, we invested $1,915,000 in these ventures and received $6,485,000 in distributions. In first quarter 2016, we invested $3,019,000 in these ventures and received $2,871,000 in distributions. Distributions include both return of investments and distribution of earnings.

The increase in our share of earnings and distributions from these ventures in first quarter 2017 is primarily due to higher earnings from 242, LLC which benefited from the sale of 46 commercial acres for $9,719,000 generating $6,612,000 in earnings to the venture. Based on our 50% interest in the venture, our pro-rata share of the earnings associated with this sale was $3,306,000 and our pro-rata share of the total distributable cash was $4,348,000. In addition, CL Realty, LLC, a venture in which we own a 50% interest, sold certain mineral assets to us for $2,400,000. Subsequent to closing of this transaction, we received $1,200,000 from the venture, representing our pro-rata share of distributable cash.

In first quarter 2016, we sold our interest in FMF Peakview LLC (360⁰), a 304-unit multifamily joint venture project near Denver, generating $13,167,000 in net proceeds and recognizing a gain of $9,613,000 which is included in gain on sale of assets.