Investment in Unconsolidated Joint Venture

On November 10, 2017, the Company, the Joint Venture, BREIT LP and BREIT GP executed the Contribution Agreement whereby the Company agreed to contribute the LANDS portfolio to the Joint Venture in exchange for a combination of cash and a 10% ownership interest in the Joint Venture. BREIT LP owns a 90% interest in the Joint Venture and BREIT GP serves as the general partner of the Joint Venture. Each of BREIT LP and BREIT GP is a wholly-owned subsidiary of Blackstone Real Estate Income Trust, Inc. SIR LANDS Holdings, LLC holds the Company’s 10% interest in the Joint Venture.

The Company exercises significant influence, but does not control the Joint Venture. Accordingly, as of the First Closing Date and the Second Closing Date, the Company deconsolidated the First Closing Properties and Second Closing Properties and has accounted for its investment in the Joint Venture under the equity method of accounting. Income, losses, contributions and distributions are generally allocated based on the members’ respective equity interests.

As of December 31, 2018 and 2017, the book value of the Company’s investment in the Joint Venture was $14,085,399 and $8,133,156, respectively, which includes $7,640,166 and $5,515,754 of outside basis difference. The outside basis difference represents the Company’s transaction costs related to entering into the Joint Venture. During the years ended December 31, 2018 and 2017, $594,886 and $106,519, respectively, of amortization of this basis difference was included in equity in loss from unconsolidated joint venture on the accompanying consolidated statements of operations. During the year ended December 31, 2018, the Company received distributions of $530,100 related to its investment in the Joint Venture. No distributions were received during the year ended December 31, 2017.

Unaudited financial information for the Joint Venture as of December 31, 2018 and 2017, and for the year ended December 31, 2018 and for the period from November 15, 2017 to December 31, 2017, is summarized below:

Summarized financial information for the Joint Venture is:



	December 31,
	2018		2017
Assets:
Real estate assets, net	$	493,776,142	$	374,277,205
Other assets	24,091,229		15,328,440
Total assets	$	517,867,371	$	389,605,645
Liabilities and equity:
Notes payable, net	$	340,840,505	$	264,558,057
Other liabilities	21,501,680		11,525,292
Company’s capital	15,552,513		11,352,230
Other partner’s capital	139,972,673		102,170,066
Total liabilities and equity	$	517,867,371	$	389,605,645



	For the Year Ended December 31, 2018			For the Period from November 15, 2017 to December 31, 2017
Revenues	$	60,210,288		$	5,756,455
Expenses	87,653,451			11,330,228
Net loss	$	(27,443,163	)	$	(5,573,773	)

Company’s proportional net loss	$	(2,744,316	)	$	(557,377	)
Amortization of outside basis	(594,886		)	(106,519		)
Equity in loss of unconsolidated joint venture	$	(3,339,202	)	$	(663,896	)