9. Investments in Unconsolidated Real Estate Joint Ventures

As of December 31, 2019, the Company had equity interests in unconsolidated real estate joint ventures involved in the development of multifamily apartment and townhome communities, as well as single-family master planned communities. In addition, the Company owns a 50% equity interest in the Altman Companies, a developer and manager of multifamily apartment communities.

Investments in unconsolidated real estate joint ventures are accounted for as unconsolidated VIEs. See Note 4 for information regarding the Company’s investments in consolidated VIEs.

Investments in unconsolidated real estate joint ventures consisted of the following (in thousands):



	December 31,
	2019			Ownership(1)	2018
Altis at Lakeline - Austin Investors, LLC	$	242	%	34.47	$	4,531
Altis at Grand Central Capital, LLC		2,653		11.07		2,549
Altis Promenade Capital, LLC		2,126		6.61		2,195
Altis at Bonterra - Hialeah, LLC		618		96.73		21,602
Altis Ludlam - Miami Investor, LLC		1,081		33.30		675
Altis Suncoast Manager, LLC		753		33.30		1,857
Altis Pembroke Gardens, LLC		1,277		0.41		1,284
Altis Fairways, LLC		1,880		0.42		1,876
Altis Wiregrass, LLC		1,792		2.22		1,897
Altis LH-Miami Manager, LLC		811		3.43		—
Altis Vineland Pointe Manager, LLC		4,712		50.00		—
Altis Miramar East/West		2,631		5.00		—
The Altman Companies, LLC (2)		14,745		50.00		14,893
ABBX Guaranty, LLC		3,750		50.00		2,500
Sunrise and Bayview Partners, LLC		1,562		50.00		1,439
PGA Design Center Holdings, LLC		996		40.00		691
CCB Miramar, LLC		5,999		70.00		1,575
BBX/Label Chapel Trail Development, LLC		1,126		46.75		4,515
L03/212 Partners, LLC		2,087		3.41		—
PGA Lender, LLC		2,111		45.88		—
Sky Cove, LLC		4,178		26.25		—
All other investments in real estate joint ventures		200				659
Total	$	57,330			$	64,738

(1)

The Company’s ownership percentage in each real estate joint venture represents the Company’s percentage of the contributed capital in each venture. The operating agreements for many of these ventures provide for a disproportionate allocation of distributions to the extent that certain investors receive specified returns on their investments, and as a result, these percentages do not necessarily reflect the Company’s economic interest in the expected distributions from such ventures.

(2)

The investment in The Altman Companies, LLC includes $2.3 million of transaction costs that were incurred in connection with the formation of the joint venture. See additional information below in this Note 9 regarding the Company’s acquisition of its interest in the Altman Companies, LLC.

Unconsolidated Variable Interest Entities

In accordance with the applicable accounting guidance for the consolidation of VIEs, the Company analyzes its investments in real estate joint ventures to determine if such entities are VIEs, and to the extent that such entities are VIEs, if the Company is the primary beneficiary. Based on the Company’s analysis of the forecasted cash flows and structure of these ventures, including the respective operating agreements governing these entities and any relevant financial agreements, such as financing arrangements, the Company has determined that its real estate joint ventures are VIEs in which the Company is not the primary beneficiary, and therefore, the Company accounts for its investments in the real estate joint ventures under the equity method of accounting. The Company’s conclusion that it is not the primary beneficiary of these entities is primarily based on the determination that the Company does not have the power to direct activities of the entities that most significantly affect their economic performance. In many of the joint ventures, the Company is not the operating manager and has limited protective rights under the operating agreements, while in certain joint ventures, the investors share decision-making authority in a manner that prevents any individual investor from exercising power over such entities.

The Company’s maximum exposure to loss in its unconsolidated real estate joint ventures was $59.8 million as of December 31, 2019.

Basis Differences

The aggregate difference between the Company’s investments in unconsolidated real estate joint ventures and its underlying equity in the net assets of such ventures was $9.2 million and $11.9 million as of December 31, 2019 and 2018, respectively, which includes $8.5 million and $10.3 million associated with the Company’s investment in the Altman Companies and certain multifamily apartment developments which were acquired for cash consideration based on their estimated fair values as of the acquisition date, as described below, and $0.7 million and $1.6 million associated with the capitalization of interest on real estate development projects.

Equity in Net Earnings of Unconsolidated Real Estate Joint Ventures

For the years ended December 31, 2019, 2018 and 2017, the Company’s equity in net earnings of unconsolidated real estate joint ventures was $37.9 million, $14.2 million and $12.5 million, respectively.

Equity earnings for the year ended December 31, 2019 includes $29.2 million and $5.0 million in equity earnings from the Altis at Bonterra and the Altis at Lakeline joint ventures, respectively, which includes the Company’s share of gains recognized by the ventures upon the sale of their respective multifamily apartment communities. Equity earnings for the year ended December 31, 2018 includes $9.3 million in equity earnings from the Addison on Millenia joint venture, which includes the Company’s share of the gain recognized by the venture upon the sale of its multifamily apartment community. Equity earnings for the year ended December 31, 2017 includes $11.0 million in equity earnings from the Hialeah Communities joint venture, which reflects the Company’s share of the profits recognized by the venture upon the sale of single-family homes in its master planned community.

The Altman Companies, LLC

In November 2018, the Company acquired a 50% equity interest in the Altman Companies, a joint venture between the Company and Joel Altman (“JA”) engaged in the development, construction, and management of multifamily apartment communities, for cash consideration of $14.6 million, including $2.3 million in transaction costs.

The Altman Companies owns 100% of the membership interests in Altman Development Company and Altman Management Company and 60% of the membership interests in Altman-Glenewinkel Construction and generates revenues from the performance of development, general contractor, leasing, and property management services to joint ventures that are formed to invest in development projects originated by the Altman Companies. In addition, the Company and JA invest in the managing member of such joint ventures based on their relative ownership percentages in the Altman Companies.

Pursuant to the operating agreement of the Altman Companies, the Company will acquire an additional 40% equity interest in the Altman Companies from JA for a purchase price of $9.4 million in January 2023, and JA can also, at his option or in other predefined circumstances, require the Company to purchase his remaining 10% equity interest in the Altman Companies for $2.4 million. However, JA will retain his membership interests, including his decision making rights, in the managing member of any development joint ventures that are originated prior to the Company’s acquisition of additional equity interests in the Altman Companies. In addition, in certain circumstances, the Company may acquire the 40% membership interests in Altman-Glenewinkel Construction that are not owned by the Altman Companies for a purchase price based on prescribed formulas in the operating agreement of Altman-Glenewinkel Construction.

Under the terms of the operating agreement of the Altman Companies, the venture is being jointly managed by the Company and JA until the Company’s acquisition of the additional 40% equity interest from JA, with the partners sharing decision making authority for all significant operating and financing decisions. To the extent that the parties cannot reach consensus on a matter, the operating agreement generally provides that a third party will resolve such matter; however, for certain decisions, the operating agreement provides that the venture cannot proceed with such matters without approval from both parties.

In connection with its investment in the Altman Companies, the Company acquired interests in the managing member of seven multifamily apartment developments, including four developments in which the Company had previously invested as a non-managing member, for aggregate cash consideration of $8.8 million. In addition, the Company and JA have each contributed $3.8 million to ABBX Guaranty, LLC, a joint venture established to provide guarantees on the indebtedness and construction cost overruns of new real estate joint ventures formed by the Altman Companies.

Summarized Financial Information of Certain Unconsolidated Real Estate Joint Ventures

The tables below set forth financial information, including condensed statements of financial condition and operations, related to Altis at Bonterra – Hialeah, LLC (in thousands):



	December 31,
	2019		2018
Assets
Cash	$	855		3,777
Restricted cash		559		256
Real estate		—		55,734
Other assets		—		134
Total assets	$	1,414		59,901
Liabilities and Equity
Notes payable	$	—		38,641
Other liabilities		751		571
Total liabilities		751		39,212
Total equity		663		20,689
Total liabilities and equity	$	1,414		59,901


	For the Years Ended December 31,
	2019		2018		2017
Total revenues	$	4,498		6,510		1,851
Gain on sale of real estate		33,843		—		—
Other expenses		(4,480)		(5,937)		(2,657)
Net earnings	$	33,861		573		(806)
Equity in net earnings of unconsolidated real estate joint venture - Altis at Bonterra - Hialeah, LLC	$	29,221		544		(766)

The tables below set forth financial information, including condensed statements of financial condition and operations, related Addison on Millenia joint venture (in thousands):



		December 31,
		2019	2018
Assets
Cash	$	—	68
Properties and equipment		—	—
Other assets		—	86
Total assets	$	—	154
Liabilities and Equity
Notes payable	$	—	—
Other liabilities		—	12
Total liabilities		—	12
Total equity		—	142
Total liabilities and equity	$	—	154



	For the Years Ended December 31,
		2019	2018	2017
Net gains on sales of real estate assets	$	—	22,203		—
Other revenue		—	3,858		1,303
Total revenues	$	—	26,061		1,303
Total expenses		—	(2,266)		(1,794)
Net earnings (losses)		—	23,795		(491)
Equity in net earnings of unconsolidated real estate joint venture - The Addison at Millenia Investment, LLC	$	—	9,283		(146)

The tables below set forth financial information, including condensed statements of financial condition and operations, related to Altis at Lakeline – Austin Investors, LLC (in thousands):



	December 31,
	2019		2018
Assets
Cash	$	628		2,403
Restricted cash		5		229
Real estate		—		42,940
Other assets		144		108
Total assets	$	777		45,680
Liabilities and Equity
Notes payable	$	—		33,467
Other liabilities		—		1,835
Total liabilities		—		35,302
Total equity		777		10,378
Total liabilities and equity	$	777		45,680



	For the Years Ended December 31,
	2019		2018		2017
Total revenues	$	1,458		5,842		3,528
Gain on sale of real estate		17,178		—		—
Other expenses		(1,801)		(6,746)		(6,028)
Net earnings	$	16,835		(904)		(2,500)
Equity in net earnings of unconsolidated real estate joint venture - Altis at Lakeline - Austin Investors, LLC	$	5,029		(312)		(862)