INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

12 Months Ended

Dec. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure

NOTE 14 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

We indirectly own a 50% interest in a joint venture formed to acquire and operate 223 North 8th Street, Brooklyn, New York, a newly constructed 95-unit multi-family property, known as The Berkley, encompassing approximately 99,000 gross square feet.  On December 5, 2016, the joint venture closed on the acquisition of The Berkley through a wholly-owned special purpose entity (the “Property Owner”) for a purchase price of $68.885 million, of which $42.5 million was borrowed by the joint venture through the Property Owner pursuant to a 10-year loan (the “Loan”) secured by The Berkley and the balance was paid in the form of an equity investment (half of which was funded indirectly by us).  The Loan bears interest at the 30-day LIBOR rate plus 216 basis points, is interest only for five years, is pre-payable after two years with a 1% prepayment premium and has covenants and defaults customary for a Freddie Mac financing.  The Company and the joint venture partner are joint and several recourse carve-out guarantors under the Loan pursuant to Freddie Mac’s standard form of guaranty

This joint venture is a voting interest entity. As we do not control this joint venture, we account for it under the equity method of accounting.

The balance sheet for the unconsolidated joint venture at December 31, 2016 is as follows (in thousands):

	December 31,
	2016
ASSETS
Real estate, net	$	54,310
Cash and cash equivalents		77
Restricted cash		52
Tenant and other receivables, net		101
Prepaid expenses and other assets, net		169
Intangible assets, net		14,362
Total assets	$	69,071
LIABILITIES
Mortgage payable, net	$	40,799
Accounts payable and accrued expenses		403
Total liabilities		41,202
MEMBERS' EQUITY
Members' equity		28,485
Accumulated deficit		(616)
Total members equity		27,869
Total liabilities and members' equity	$	69,071
Our investment in unconsolidated joint venture	$	13,939

The statement of operations for the unconsolidated joint venture, from acquisition date through December 31, 2016, is as follows (in thousands):

	For the Period from
	December 5, 2016
	(acquisition date) to
	December 31, 2016
Revenues
Rental revenues	$	238
Total revenues		238
Operating Expenses
Property operating expenses		107
Real estate taxes		3
General and administrative		24
Interest expense, net		106
Transaction related costs		395
Amortization		126
Depreciation		93
Total operating expenses		854
Net loss	$	(616)
Our equity in net loss from unconsolidated joint venture	$	(308)