Equity Method Investment

9 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investment

Equity Method Investment

City Center

On February 25, 2016, the Company acquired a 37% interest in Durham City Center II, LLC (“City Center”) for purposes of developing a 22-story mixed use tower in Durham, North Carolina. During the nine months ended September 30, 2018, the Company invested an additional $5.1 million in City Center. As of September 30, 2018 and December 31, 2017, the Company had invested $15.9 million and $10.9 million, respectively, in City Center, and the carrying value of the Company's investment was $16.8 million and $11.4 million, respectively. The Company has agreed to guarantee 37% of the construction loan for City Center; however, the loan is collateralized by 100% of the assets of City Center. As of September 30, 2018 and December 31, 2017, $44.2 million and $29.2 million, respectively, had been drawn against the construction loan, of which $16.3 million and $11.2 million, respectively, was attributable to the Company's portion of the loan.

For the three and nine months ended September 30, 2018 and 2017, City Center did not have any operating activity, and therefore the Company did not receive any distributions or allocated income. 

Based on the terms of City Center’s operating agreement, the Company has concluded that City Center is a VIE and that the Company holds a variable interest. The Company does not have the power to direct the activities of the project that most significantly impact its performance. Accordingly, the Company is not the project’s primary beneficiary and, therefore, does not consolidate City Center in its consolidated financial statements.