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. We perform this review initially at the time we enter into venture agreements and reassess upon reconsideration events.

At year-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
	At Year-End
	2017		2016		2017		2016		2017		2016		2017		2016
	(In thousands)
242, LLC ^(b) ^(e)	$	19,525	$	26,503	$	—	$	1,107	$	19,357	$	23,136	$	9,131	$	10,934
CL Ashton Woods, LP ^(c)	124		2,653		—		—		104		2,198		83		1,107
CL Realty, LLC	4,528		8,048		—		—		4,344		7,899		2,172		3,950
CREA FMF Nashville LLC ^(b)	2,315		56,081		—		37,446		684		17,091		342		4,923
Elan 99, LLC ^(e)	49,080		49,652		36,348		36,238		11,204		13,100		10,078		11,790
FMF Littleton LLC	66,849		70,282		45,836		44,446		20,289		23,798		5,144		6,128
FMF Peakview LLC	—		—		—		—		—		—		—		—
FOR/SR Forsyth LLC	11,598		10,672		1,551		1,568		10,041		8,990		9,037		8,091
HM Stonewall Estates, Ltd	—		852		—		—		—		852		—		477
LM Land Holdings, LP ^(c)	19,479		25,538		—		3,477		12,074		20,945		5,935		9,685
MRECV DT Holdings LLC ^(e)	3,043		4,155		—		—		3,043		4,144		2,594		3,729
MRECV Edelweiss LLC/MRECV Lender VIII LLC ^(e)	8,127		3,484		—		—		8,127		3,484		7,189		3,358
MRECV Juniper Ridge LLC ^(e)	3,936		4,156		—		—		3,936		4,156		3,331		3,741
MRECV Meadow Crossing II LLC ^(e)	3,129		2,492		—		—		3,129		2,491		2,738		2,242
Miramonte Boulder Pass, LLC ^(e)	7,573		10,738		1,398		4,006		4,843		5,265		4,633		5,330
Temco Associates, LLC	4,448		4,368		—		—		4,345		4,253		2,172		2,126
Other ventures	—		—		—		—		—		—		—		—
	$	203,754	$	279,674	$	85,133	$	128,288	$	105,520	$	141,802	$	64,579	$	77,611

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



	Revenues						Earnings (Loss)									Our Share of Earnings (Loss)
	For the Year
	2017		2016		2015		2017			2016			2015			2017			2016			2015
	(In thousands)
242, LLC ^{(b) (e)}	$	13,073	$	5,835	$	20,995	$	8,021		$	1,259		$	9,588		$	4,096		$	668		$	4,919
CL Ashton Woods, LP	3,179		2,870		9,820		1,456			914			3,881			1,816			1,332			5,000
CL Realty, LLC	499		567		856		(1,155		)	237			424			(578		)	119			212
CREA FMF Nashville LLC ^{(b) (d)}	5,440		4,955		1,227		17,267			(1,420		)	(1,696		)	7,563			1,103			(1,696		)
Elan 99, LLC ^(e)	4,596		1,392		—		(1,896		)	(2,739		)	(49		)	(1,712		)	(2,465		)	(44		)
FMF Littleton LLC	6,366		3,116		120		192			(571		)	(367		)	48			(143		)	(92		)
FMF Peakview LLC	—		939		2,057		—			(248		)	(1,116		)	—			(50		)	(223		)
FOR/SR Forsyth LLC	—		—		—		(148		)	(65		)	—			(134		)	(58		)	—
HM Stonewall Estates, Ltd.	496		2,112		3,990		243			832			1,881			103			361			952
LM Land Holdings, LP ^(c)	22,127		10,001		10,956		10,629			7,288			8,251			3,563			2,458			3,342
MRECV DT Holdings LLC ^(e)	1,196		495		—		1,173			477			167			911			429			—
MRECV Edelweiss LLC/MRECV Lender VIII LLC ^(e)	1,018		416		—		1,016			409			151			789			368			137
MRECV Juniper Ridge LLC ^(e)	1,445		379		—		1,445			380			106			1,089			342			—
MRECV Meadow Crossing II LLC ^(e)	638		267		—		638			220			—			496			198			—
Miramonte Boulder Pass, LLC ^(e)	5,483		4,923		—		177			(399		)	(250		)	(197		)	(200		)	(125		)
PSW Communities, LP	—		—		29,986		—			—			2,688			—			—			1,169
TEMCO Associates, LLC	192		1,344		9,485		92			440			2,358			46			220			1,179
Other ventures	—		6,519		36,237		—			2,105			33,303			—			1,441			1,278
	$	65,748	$	46,130	$	125,729	$	39,150		$	9,119		$	59,320		$	17,899		$	6,123		$	16,008

_____________________


^(a)	Total includes current maturities of $84,098,000 at year-end 2017, of which $79,515,000 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 contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $548,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2017.


^(c)	Includes unrecognized basis difference of $448,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2017. This difference will be amortized as expense over the life of the investment and included in our share of earnings (loss) from the respective venture.


^(d)	Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016 in accordance with the partnership agreement.


^(e)	Included in our strategic asset sale to Starwood on February 8, 2018. Please read Note 22 - Subsequent Event for additional information regarding this transaction.

In 2017, we invested $4,548,000 in these ventures and received $34,439,000 in distributions; in 2016, we invested $6,089,000 in these ventures and received $13,419,000 in distributions; and in 2015, we invested $26,349,000 in these ventures and received $24,909,000 in distributions. Distributions include both return of investments and distributions of earnings.

In 2017, CREA FMF Nashville LLC (Acklen), sold a 320-unit multifamily project in Nashville for $71,750,000 and recognized a gain of $18,986,000. Our share of earnings was $7,783,000 and we received a distribution of $11,956,000 as a result of this sale.

In 2017, venture earnings from 242, LLC 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 2017, 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 2017, the venture recognized a non-cash impairment charge of $3,756,000 associated with a commercial tract on the Texas coast.

In 2016, we sold our interest in FMF Peakview LLC (360⁰), a 304-unit multifamily joint venture near Denver, generating $13,917,000 in net proceeds and recognized a gain of $10,363,000 which is included in gain on sale of assets.

We provided construction and development services for some of these ventures for which we receive fees. Fees for these services were $741,000 in 2017, $2,466,000 in 2016 and $1,856,000 in 2015, and are included in real estate revenues.