Investments in Unconsolidated Real Estate Entities

We hold a 15% equity interest in a joint venture (the “JV”) that previously held three industrial properties located at 3001, 3175 and 3233 Mission Oaks Boulevard in Ventura County. We accounted for our investment in this JV under the equity method of accounting.

On November 17, 2014, the JV sold two of the three properties located at 3001 and 3175 Mission Oaks Boulevard to an unrelated third party for a contract price of $54.5 million. As part of the disposition, the JV repaid the $41.5 million outstanding balance on the loan secured by the three properties. In connection with the sale of these two properties, the JV recognized a gain of $13.4 million. Our pro rata share of the net proceeds of the sale following loan satisfaction and payment of customary closing expenses was approximately $1.7 million.

On July 6, 2016, the Company acquired the remaining property located at 3233 Mission Oaks Boulevard (the “final JV property”), which comprised substantially all of the JV’s assets, from the JV for a contract price of $25.7 million. Prior to the acquisition, our ownership interest in the final JV property was 15.0%. Following the acquisition, we own 100% of the final JV property and are accounting for it on a consolidated basis (See Note 3). In connection with the JV’s sale of the final JV property, we wrote-off the related $0.6 million unamortized basis adjustment. Immediately after the sale of the final JV property, the carrying value of our investment in unconsolidated real estate entities was $3.6 million.

Following the sale of the final JV property, the JV distributed all of its available cash, with the exception of a small amount of working capital which was retained to cover any residual costs associated with the winding down of the JV. Our share of the JV distributions totaled $5.5 million, which exceeded the $3.6 million carrying value of our investment immediately after the sale of the final JV property. We recorded the $1.9 million of excess distributions as a realized gain in the line item “Equity in income from unconsolidated real estate entities” in the consolidated statements of operations.

The following table presents the combined summarized balance sheet of our unconsolidated joint venture. Amounts provided are attributable to the JV and do not represent our proportionate share, unless otherwise noted (in thousands).



	December 31,
	2016			2015
Assets	$	72		$	24,280
Liabilities	(31		)	(1,250		)
Partners’/members’ equity	$	41		$	23,030
Carrying value of the Company’s investment in unconsolidated real estate entities⁽¹⁾	$	—		$	4,087

(1)

The difference between the carrying value of our investment in unconsolidated real estate entities and our 15% share of the underlying equity in the net assets of the JV are basis differences resulting from the contribution of our JV equity interest as part of our formation transactions that occurred on July 24, 2013. As of December 31, 2016 and 2015, unamortized basis differences were $0.0 million and $0.6 million, respectively.

The following table presents the combined summarized results of operations of our unconsolidated joint venture. These amounts include the results of operations of (i) the properties located at 3001 and 3175 Mission Oaks Boulevard during the period prior to November 17, 2014, and (ii) the final JV property during the period prior to July 6, 2016, when we acquired the remaining 85% ownership interest in the final JV property. Amounts provided are attributable to the JV and do not represent our proportionate share (in thousands).



	Year Ended December 31,
	2016			2015			2014
Revenues	$	1,281		$	2,673		$	7,018
Expenses	(442		)	(1,911		)	(6,526		)
Gain on sale of properties	3,458			—			13,389
Net income	$	4,297		$	762		$	13,881

During the time that the JV owned the three properties, we performed property and construction management services for each property. We earned fees and commissions from managing the JV totaling $0.1 million, $0.2 million and $0.4 million during the years ended December 31, 2016, 2015 and 2014, respectively, which are included in the line item “Management, leasing and development services” in the consolidated statements of operations.