Investments in Unconsolidated Real Estate Entities

3 Months Ended

Mar. 31, 2021

Investments in Unconsolidated Real Estate Entities

Our investments in unconsolidated real estate consist of preferred equity investments in development projects, and are summarized as follows:


Development	Location	Units	Commitment Date	Preferred Return			Total Commitment		Amount Funded to Date
Lector85	Ybor City, FL	254	08/15/2019	13	%	(1)	$	9,900,000	$	9,900,000
Vernon Boulevard	Queens, NY	534	07/23/2020	13	%	(2)	15,000,000		15,000,000
Riverfront	West Sacramento, CA	285	11/30/2020	16	%		15,091,649		5,192,486
Total							$	39,991,649	$	30,092,486

(1) Will be reduced to 10% annually upon the later to occur of (i) stabilization of the development project or (ii) the one-year anniversary of the receipt of all temporary certificates of occupancy subject to certain financial conditions being satisfied.
(2) In addition to the preferred return, we receive a profit participation upon a liquidity event, pari passu alongside the preferred equity contribution from the Preferred Co-Investor.

The preferred equity investments are accounted for under the equity method of accounting. They have liquidation rights and priorities that are different from ownership percentages. As such, equity in earnings is determined using the hypothetical liquidation book value ("HLBV") method. Activity for the three months ended March 31, 2021 is as follows:


	Balance at						Balance at
Development	12/31/20		Contributions		Equity in Earnings		3/31/21
Lector85	$	11,396,026	$	—	$	321,750	$	11,717,776
Vernon Boulevard	15,886,169		—		514,682		16,400,851
Riverfront	2,718,266		2,512,338		115,022		5,345,626
Total	$	30,000,461	$	2,512,338	$	951,454	$	33,464,253

Activity during the three months ended March 31, 2020 for Lector85, our only preferred equity investment during that period, is as follows:


	Balance at						Balance at
Development	12/31/19		Contributions		Equity in Earnings		3/31/20
Lector85	$	4,961,868	$	5,210,937	$	240,096	$	10,412,901

Real Estate Note InvestmentDuring the three months ended March 31, 2021, we issued approximately $820,000 of our $10,000,000 B Note with the developer of Dolce Twin Creeks, Phase II, a 366-unit multifamily project in Allen Texas, bringing the total amount funded to $9,025,995.Net interest income from the Dolce B Note was $245,352 and $71,715 for the three months ended March 31, 2021 and 2020, respectively. No allowance was recorded on the Dolce B Note during the periods ended March 31, 2021 or 2020.