Variable Interest Entity

9 Months Ended

Sep. 30, 2016

Variable Interest Entity, Measure of Activity [Abstract]

Variable Interest Entity

NOTE 21. VARIABLE INTEREST ENTITY

During the year ended December 31, 2015, the Company entered into a real estate venture (the “Beach Venture”) with an unaffiliated third party institutional investor (the “Venture Partner”), whereby the Beach Venture acquired approximately six acres of vacant beachfront property located in Daytona Beach, Florida. The Company acquired its 50% interest in the Beach Venture for approximately $5.7 million and serves as its general partner with day-to-day management responsibilities. The Beach Venture is structured such that the Company earns a base management fee and will receive a preferred interest as well as a promoted interest if certain return hurdles are achieved. The Company’s preferred interest represents the first 9% of the investment return achieved at the disposition of the property. GAAP requires consolidation of a variable interest entity (“VIE”) in which an enterprise has a controlling financial interest and is the primary beneficiary. Upon entering into the Beach Venture described above and as of September 30, 2016, the Company determined it has a controlling financial interest and is the primary beneficiary; therefore, the Beach Venture is a VIE and has been consolidated in the Company’s financial statements.

As of September 30, 2016, the Beach Venture has one asset totaling $11,613,782 consisting of the six acre vacant beachfront property. During the year ended December 31, 2015, the Company contributed 50%, or $5,664,787, to the Beach Venture for the initial property acquisition, with the other 50% contributed by the Venture Partner. The Beach Venture has been accounted for in real estate operations with the inter-company management fees totaling approximately $18,000 during the nine months ended September 30, 2016, eliminated upon consolidation. The Company and the Venture Partner are currently under contract for the Company to purchase the Venture Partner’s interest in the Beach Venture. There can be no assurances regarding the likelihood or timing of the potential purchase of the Venture Partner’s non-controlling interest by the Company or, if it does occur, the final terms including the purchase price.

The Beach Venture has received approval from the City planning board for the development of the site including construction of two structures that are intended to be occupied by two different branded restaurants. The Company expects that the Beach Venture will provide the capital for the development of the restaurants which is estimated to be approximately $6 million.