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 second quarter-end 2017, we had ownership interests in 15 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
	Second Quarter-End		Year-End		Second Quarter-End		Year-End		Second Quarter-End		Year-End		Second Quarter-End		Year-End
	2017		2016		2017		2016		2017		2016		2017		2016
	(In thousands)
242, LLC ^(b)	$	23,014	$	26,503	$	—	$	1,107	$	22,822	$	23,136	$	10,863	$	10,934
CL Ashton Woods, LP ^(c)	1,350		2,653		—		—		1,296		2,198		939		1,107
CL Realty, LLC	7,989		8,048		—		—		7,900		7,899		3,950		3,950
CREA FMF Nashville LLC ^(b)	54,121		56,081		35,844		37,446		17,321		17,091		4,850		4,923
Elan 99, LLC	49,191		49,652		36,356		36,238		11,845		13,100		10,659		11,790
FMF Littleton LLC	70,541		70,282		46,158		44,446		23,618		23,798		6,083		6,128
FMF Peakview LLC	—		—		—		—		—		—		—		—
FOR/SR Forsyth LLC	11,195		10,672		1,545		1,568		9,627		8,990		8,664		8,091
HM Stonewall Estates, Ltd	—		852		—		—		—		852		—		477
LM Land Holdings, LP ^(c)	24,211		25,538		2,470		3,477		13,162		20,945		6,424		9,685
MRECV DT Holdings LLC	3,855		4,155		—		—		3,855		4,144		3,470		3,729
MRECV Edelweiss LLC/MRECV Lender VIII LLC	7,283		3,484		—		—		7,283		3,484		6,555		3,358
MRECV Juniper Ridge LLC	3,371		4,156		—		—		3,371		4,156		3,034		3,741
MRECV Meadow Crossing II LLC	2,850		2,492		—		—		2,850		2,491		2,565		2,242
Miramonte Boulder Pass, LLC	8,903		10,738		2,648		4,006		4,670		5,265		4,467		5,330
Temco Associates, LLC	4,406		4,368		—		—		4,302		4,253		2,151		2,126
Other ventures	—		—		—		—		—		—		—		—
	$	272,280	$	279,674	$	125,021	$	128,288	$	133,922	$	141,802	$	74,674	$	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)
	Second Quarter				First Six Months				Second Quarter						First Six Months						Second Quarter						First Six Months
	2017		2016		2017		2016		2017			2016			2017			2016			2017			2016			2017			2016
	(In thousands)
242, LLC ^(b)	$	—	$	—	$	13,073	$	—	$	(83	)	$	(164	)	$	8,382		$	(464	)	$	(41	)	$	(82	)	$	4,277		$	(232	)
CL Ashton Woods, LP ^(c)	846		993		2,628		1,689		348			151			1,098			518			473			324			1,432			763
CL Realty, LLC	—		113		199		246		(64		)	17			2,401			64			(32		)	8			1,200			31
CREA FMF Nashville LLC ^(b)	1,465		1,081		2,870		1,982		(150		)	(498		)	(320		)	(1,069		)	(43		)	(149		)	(97		)	(320		)
Elan 99, LLC	1,026		147		1,928		167		(601		)	(934		)	(1,254		)	(1,344		)	(541		)	(841		)	(1,129		)	(1,210		)
FMF Littleton LLC	1,596		526		3,011		847		(15		)	(178		)	(180		)	(348		)	(4		)	(44		)	(45		)	(86		)
FMF Peakview LLC	—		—		—		939		—			—			—			(248		)	—			—			—			(50		)
FOR/SR Forsyth LLC	—		—		—		—		(36		)	(17		)	(68		)	(17		)	(33		)	(15		)	(61		)	(15		)
HM Stonewall Estates, Ltd	—		580		496		1,126		—			294			243			514			—			124			103			227
LM Land Holdings, LP ^(c)	15,880		2,026		16,933		3,026		5,589			1,415			6,217			2,055			1,774			501			1,989			645
MRECV DT Holdings LLC	287		119		588		217		287			117			586			215			259			105			528			193
MRECV Edelweiss LLC/MRECV Lender VIII LLC	238		94		423		181		237			87			422			174			214			78			380			156
MRECV Juniper Ridge LLC	597		202		610		205		597			203			610			206			537			183			549			186
MRECV Meadow Crossing II LLC	237		29		359		29		236			16			358			(18		)	212			14			322			(17		)
Miramonte Boulder Pass, LLC	894		663		2,536		663		(40		)	(34		)	4			(159		)	(38		)	(17		)	(363		)	(79		)
Temco Associates, LLC	48		48		96		147		22			12			49			79			10			6			24			40
Other ventures	—		—		—		—		—			(83		)	—			(57		)	—			(7		)	—			3
	$	23,114	$	6,621	$	45,750	$	11,464	$	6,327		$	404		$	18,548		$	101		$	2,747		$	188		$	9,109		$	235

_____________________


^(a)	Total includes current maturities of $123,991,000 at second quarter-end 2017, of which $107,075,000 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 second quarter-end 2017.


^(c)	Includes unrecognized basis difference of $436,000 which is reflected as an increase of our investment in unconsolidated ventures at second 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 six months 2017, we invested $3,617,000 in these ventures and received $14,942,000 in distributions. In first six months 2016, we invested $4,658,000 in these ventures and received $3,981,000 in distributions. Distributions include both return of investments and distribution of earnings.

The increase in our share of earnings from our unconsolidated ventures in second quarter 2017 compared with second quarter 2016 is primarily due to higher earnings from LM Land Holdings, LP which benefited from the sale of 42 commercial acres for $13,600,000 generating venture earnings of $10,683,000, of which $6,321,000 was deferred and will be recognized as development is completed. Based on our 37.5% interest in this venture, our pro-rata share of the earnings associated with this sale was $1,636,000 and our pro-rata share of the distributable cash was $4,411,000.

In addition, the increase in our share of earnings and distributions from our unconsolidated ventures in first six months 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. 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 we recognized a gain of $9,613,000 which is included in gain on sale of assets.