Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Other than the following, the Company's significant accounting policies have not changed materially from those described in its Annual Report on Form 10-K as of December 31, 2021.

Preferred Equity Investments

The Company invests in certain real estate development projects utilizing preferred equity investment instruments. Preferred equity investments pay the Company a fixed return on these investments, that consist of a current monthly return and a deferred return that is paid upon the maturity of the preferred equity investment or the sale of the underlying project and are in all material respects economically equivalent to the Company's real estate loan investments. The Company carries its investments in real estate loans at amortized cost with assessments made for expected loan loss allowances in the event recoverability of the principal amount becomes doubtful. The balances of real estate loans presented on the consolidated balance sheets consist of drawn amounts on the loans and preferred equity investments, net of unamortized deferred loan origination fees and current expected credit losses. Returns on the Company's preferred equity investments are included within the interest income and preferred equity returns line in its consolidated statements of operations.

Capitalization and Depreciation

The Company capitalizes tenant improvements, replacements of furniture, fixtures and equipment, as well as carpet, appliances, air conditioning units, certain common area items and other assets. Significant repair and renovation costs that improve the usefulness or extend the useful life of the properties are also capitalized. These assets are then depreciated on a straight-line basis over their estimated useful lives, as follows:

• Buildings: 30 - 50 years;

• Furniture, fixtures & equipment: 3 - 10 years;

• Improvements to buildings and land: 5 - 20 years; or

• Tenant improvements: shorter of economic life or lease term.

Operating expenses related to unit turnover costs, such as carpet cleaning and minor repairs are expensed as incurred.

Development projects owned by the Company and the related carrying costs, including interest, property taxes, insurance and allocated direct development salary costs during the construction period, are capitalized and reported in the accompanying Consolidated Balance Sheets as “Construction in progress” during the construction period. Upon completion and certification for occupancy of individual buildings within a development, amounts representing the completed portion of total estimated development costs for the project are transferred to “buildings and improvements”, "tenant improvements" and "furniture, fixtures and equipment" lines as real estate held for investment. Capitalization of interest, property taxes, insurance and allocated direct development salary costs cease upon the transfer and the assets are depreciated over their estimated useful lives.