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JOINT VENTURES AND PARTNERSHIPS (Tables)
12 Months Ended
Dec. 31, 2019
JOINT VENTURES AND PARTNERSHIPS  
Schedule of unconsolidated joint ventures and partnerships

The following table summarizes the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net, which are accounted for under the equity method of accounting as of December 31, 2019 and 2018 (dollars in thousands):

Number of

Number of

Apartment

 

Properties

Homes

Investment at

UDR’s Ownership Interest

  

Location of

  

December 31, 

  

December 31, 

  

December 31, 

  

December 31, 

December 31, 

  

December 31, 

 

Joint Venture

  

Properties

  

2019

    

2019

  

2019

  

2018

2019

  

2018

 

Operating and development:

  

  

  

  

  

  

  

  

 

UDR/MetLife I

Los Angeles, CA

1

operating community

150

$

28,812

$

30,839

50.0

%  

50.0

%

UDR/MetLife II (a)

 

Various

 

7

operating communities

 

1,250

 

150,893

 

296,807

50.0

%  

50.0

%

Other UDR/MetLife Joint Ventures

 

Various

 

5

operating communities

 

1,437

 

98,441

 

115,668

50.6

%  

50.6

%

UDR/MetLife Vitruvian Park® (a)

 

Addison, TX

 

 

 

 

71,730

%  

50.0

%

UDR/KFH (b)

 

Washington, D.C.

 

 

 

 

5,507

%  

30.0

%

West Coast Development Joint Ventures

Los Angeles, CA

1

operating community

293

34,907

36,143

47.0

%

47.0

%

Investment in and advances to unconsolidated joint ventures, net, before preferred equity investments and other investments

 

  

$

313,053

$

556,694

  

 

  

Investment at

Income from investments

Developer Capital Program

  

  

  

Years To

UDR

  

December 31, 

  

December 31, 

Year Ended December 31, 

and Other Investments (c)

  

Location

  

Rate

  

Maturity

Commitment (d)

  

2019

  

2018

    

2019

    

2018

    

2017

Preferred equity investments:

 

  

 

  

 

  

 

  

 

  

  

  

West Coast Development Joint Ventures (e)

 

Hillsboro, OR

 

6.5

%

N/A

$

$

17,064

$

65,417

$

(447)

$

865

$

23,230

1532 Harrison

San Francisco, CA

11.0

%

2.5

24,645

30,585

24,986

3,147

2,228

511

1200 Broadway (f)

Nashville, TN

8.0

%

2.8

55,558

63,958

58,982

4,888

2,970

370

Junction (g)

Santa Monica, CA

12.0

%

2.6

8,800

10,379

9,211

1,169

406

1300 Fairmount (h)

Philadelphia, PA

Variable

3.6

51,393

51,215

8,318

3,098

159

Essex (i)

Orlando, FL

12.5

%

3.7

12,886

14,804

9,940

1,639

258

Modera Lake Merritt (j)

Oakland, CA

9.0

%

4.3

27,250

22,653

1,067

Other investments:

The Portals

Washington, D.C.

11.0

%

1.4

38,559

48,181

43,167

5,012

3,692

839

Other investment ventures

N/A

N/A

N/A

$

18,000

13,598

4,154

$

4,053

$

(267)

$

(30)

Total Developer Capital Program and Other Investments

272,437

224,175

Total investment in and advances to unconsolidated joint ventures, net (k)

$

585,490

$

780,869

  

(a)In November 2019, the Company acquired the approximately 50% ownership interest not previously owned in 10 UDR/MetLife operating communities, one development community and four land parcels valued at $1.1 billion, or $564.2 million at UDR’s share, and sold its approximately 50% ownership interest in five UDR/MetLife operating communities valued at $645.8 million, or $322.9 million at UDR’s share, to MetLife, and recognized a net gain on sale of $114.9 million at our share, which is included in Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations. As a result, the Company consolidated the 10 operating communities, one development community and four land parcels, and they are no longer accounted for as equity method investments in an unconsolidated joint venture (see Note 3, Real Estate Owned). Upon closing of the transaction, the UDR/MetLife II joint venture holds seven operating communities and the UDR/MetLife Vitruvian Park® joint venture no longer holds any properties.
(b)As of January 1, 2019, the joint venture held three operating communities.

During 2019, the joint venture sold two communities with 368 homes, located in Arlington, Virginia, and Silver Spring, Maryland, for a combined sales price of approximately $118.3 million. As a result, the Company recorded total gains on the sales of approximately $10.6 million, which are included in Income/(loss) from unconsolidated entities on the Consolidated Statements of Operations.

In August 2019, the joint venture sold the third community, a 292 home operating community located in Washington, D.C., directly to the Company for a sales price at 100% of approximately $184.0 million, before $2.8 million of closing costs incurred by UDR at acquisition. The Company deferred its share of the gain on sale of approximately $23.8 million and recorded it as a reduction of the carrying amount of real estate assets owned (see Note 3, Real Estate Owned).

(c)The Developer Capital Program is the program through which the Company makes investments, including preferred equity investments, mezzanine loans or other structured investments that may receive a fixed yield on the investment and may include provisions pursuant to which the Company participates in the increase in value of the property upon monetization of the applicable property and/or holds fixed price purchase options.
(d)Represents UDR’s maximum funding commitment only and therefore excludes other activity such as income from investments.
(e)In January 2019, the Company increased its ownership interest from 49% to 100% in a 386 apartment home operating community located in Anaheim, California, for a cash purchase price of approximately $33.5 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

In January 2019, the Company increased its ownership interest from 49% to 100% in a 155 apartment home operating community located in Seattle, Washington, for a cash purchase price of approximately $20.0 million. As a result, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned). In connection with the purchase, the construction loan on the community was paid in full.

In January 2020, the Company increased its ownership interest from 49% to 100% in a 276 apartment home operating community located in Hillsboro, Oregon, for a cash purchase price of approximately $21.6 million. As a result, in January 2020, the Company consolidated the operating community and it is no longer accounted for as a preferred equity investment in an unconsolidated joint venture (see Note 3, Real Estate Owned).

(f)The Company’s preferred equity investment receives a variable percentage of the value created from the project upon a capital or liquidating event.
(g)In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 66 apartment home community located in Santa Monica, CA. The Company’s preferred equity investment of $8.8 million earns a preferred return of 12.0% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and, therefore, accounts for it under the equity method of accounting.
(h)In August 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 471 apartment home community located in Philadelphia, PA. The Company’s preferred equity investment of up to $51.4 million earns a preferred return between 8.5% and 12.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and, therefore, accounts for it under the equity method of accounting.
(i)In September 2018, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 330 apartment home community located in Orlando, FL. The Company’s preferred equity investment of up to $12.9 million earns a preferred return of 12.5% per annum. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and, therefore, accounts for it under the equity method of accounting.
(j)In April 2019, the Company entered into a joint venture agreement with an unaffiliated joint venture partner to develop and operate a 173 apartment home community located in Oakland, CA. The Company’s preferred equity investment of up to $27.3 million earns a preferred return of 9.0% per annum and receives a variable percentage of the value created from the project upon a capital or liquidating event. The unaffiliated joint venture partner is the managing member of the joint venture and the developer of the community. The Company has concluded that it does not control the joint venture and, therefore, accounts for it under the equity method of accounting.
(k)As of December 31, 2019, the Company’s negative investment in 13th and Market Properties LLC of $2.8 million is included in Other UDR/MetLife Joint Ventures in the table above and recorded in Accounts payable, accrued expenses, and other liabilities on the Consolidated Balance Sheet.
Schedule of combined financial information relating to unconsolidated joint ventures and partnerships operations (not just proportionate share)

Condensed summary financial information relating to the unconsolidated joint ventures’ and partnerships’ operations (not just our proportionate share), is presented below for the years ended December 31, 2019, 2018, and 2017 (dollars in thousands):

    

    

    

    

UDR/

    

    

Other

MetLife

West Coast

 

As of and For the

UDR/

UDR/

UDR/MetLife

Vitruvian

Development

 

Year Ended December 31, 2019

MetLife I

MetLife II

Joint Ventures

Park®

UDR/KFH

Joint Ventures

Total

Condensed Statements of Operations:

 

  

 

  

 

  

 

  

 

  

 

  

Total revenues

$

9,834

$

151,226

$

64,273

$

26,398

$

12,217

$

14,058

$

278,006

Property operating expenses

 

4,533

 

54,445

 

22,019

 

12,541

 

4,982

 

6,829

 

105,349

Real estate depreciation and amortization

 

5,787

 

44,077

 

35,001

 

9,832

 

5,746

 

5,440

 

105,883

Gain/(loss) on sale of real estate (a)

115,516

115,516

Operating income/(loss)

 

(486)

 

52,704

 

7,253

 

4,025

 

117,005

 

1,789

 

182,290

Interest expense

 

(3,070)

 

(44,825)

 

(17,399)

 

(5,948)

 

(4,300)

 

(4,656)

 

(80,198)

Net gain/(loss) on revaluation of assets and liabilities (b)

458,195

25,711

483,906

Other income/(loss)

 

 

 

 

 

 

159

 

159

Net income/(loss)

$

(3,556)

$

466,074

$

(10,146)

$

23,788

$

112,705

$

(2,708)

$

586,157

Condensed Balance Sheets:

 

  

 

  

 

  

 

  

 

  

 

 

  

Total real estate, net

$

120,055

$

663,492

$

621,335

$

$

$

140,224

$

1,545,106

Cash and cash equivalents

 

2,317

 

4,208

 

7,973

 

 

 

5,692

 

20,190

Other assets

 

1,053

 

9,777

 

5,400

 

 

 

1,305

 

17,535

Total assets

 

123,425

 

677,477

 

634,708

 

 

 

147,221

 

1,582,831

Third party debt, net

 

70,890

 

425,303

 

454,972

 

 

 

90,498

 

1,041,663

Accounts payable and accrued liabilities

 

4,037

 

9,303

 

9,757

 

 

 

3,440

 

26,537

Total liabilities

 

74,927

 

434,606

 

464,729

 

 

93,938

 

1,068,200

Total equity

$

48,498

$

242,871

$

169,979

$

$

$

53,283

$

514,631

(a)

Represent the gains on the sale of three operating communities at the UDR/KFH joint venture level, as described in note (b) to the table above summarizing the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net.

(b)

Represent the net gains on the revaluation of the assets and liabilities to fair value of 15 operating communities at the UDR/MetLife II joint venture level and one development community and four land parcels at the UDR/MetLife Vitruvian Park® joint venture level prior to their distribution to the Company or MetLife in November 2019, as described in note (a) to the table above summarizing the Company’s investment in and advances to unconsolidated joint ventures and partnerships, net. The net gain on revaluation of assets and liabilities to fair value was recognized at the joint venture level as the respective joint ventures distributed their equity interests in the real estate to the Company or MetLife at fair value.

For the approximately 50% ownership interest acquired in the 10 operating communities, one development community and four land parcels described above, the Company deferred its share of the net gain on revaluation of approximately $131.5 million and recorded it as a reduction of the carrying amount of real estate owned. (see Note 3, Real Estate Owned). For the 50% ownership interest acquired in the five communities by MetLife, the Company recognized a net gain on sale of $114.9 million at our share, when the communities were disposed of by the UDR/MetLife II joint venture.

    

UDR/

    

    

Other

MetLife

West Coast

 

As of and For the

UDR/

UDR/

UDR/MetLife

Vitruvian

Development

 

Year Ended December 31, 2018

MetLife I

MetLife II

Joint Ventures

Park®

UDR/KFH

Joint Ventures

Total

Condensed Statements of Operations:

  

  

  

 

  

 

  

 

  

Total revenues

$

3,187

$

158,738

$

61,967

$

26,096

$

20,703

$

16,392

$

287,083

Property operating expenses

 

3,066

 

56,403

 

21,998

 

13,732

 

8,318

 

8,830

 

112,347

Real estate depreciation and amortization

 

3,392

 

44,721

 

35,437

 

9,495

 

14,487

 

7,679

 

115,211

Operating income/(loss)

 

(3,271)

 

57,614

 

4,532

 

2,869

 

(2,102)

 

(117)

 

59,525

Interest expense

 

(1,872)

 

(49,118)

 

(17,408)

 

(6,051)

 

(6,739)

 

(6,175)

 

(87,363)

Other income/(loss)

 

 

 

 

 

 

148

 

148

Net income/(loss)

$

(5,143)

$

8,496

$

(12,876)

$

(3,182)

$

(8,841)

$

(6,144)

$

(27,690)

Condensed Balance Sheets:

 

  

 

  

 

  

 

  

 

  

 

 

  

Total real estate, net

$

124,112

$

1,609,903

$

653,729

$

315,541

$

182,970

$

281,729

$

3,167,984

Cash and cash equivalents

 

698

 

11,192

 

8,242

 

8,865

 

1,794

 

8,614

 

39,405

Other assets

 

1,074

 

18,670

 

4,904

 

2,241

 

1,320

 

1,610

 

29,819

Total assets

 

125,884

 

1,639,765

 

666,875

 

326,647

 

186,084

 

291,953

 

3,237,208

Third party debt, net

 

70,833

 

1,089,231

 

454,647

 

162,131

 

165,699

 

171,879

 

2,114,420

Accounts payable and accrued liabilities

 

1,935

 

21,258

 

9,753

 

14,968

 

1,860

 

9,943

 

59,717

Total liabilities

 

72,768

 

1,110,489

 

464,400

177,099

 

167,559

 

181,822

 

2,174,137

Total equity

$

53,116

$

529,276

$

202,475

$

149,548

$

18,525

$

110,131

$

1,063,071

    

    

UDR/

Other

MetLife

West Coast

For the

UDR/

UDR/

UDR/MetLife

Vitruvian

Development

 

Year Ended December 31, 2017

MetLife I

MetLife II

Joint Ventures

Park®

UDR/KFH

Joint Ventures

Total

Condensed Statements of Operations:

  

  

  

  

  

  

Total revenues

$

$

156,920

$

48,032

$

23,025

$

20,327

$

18,812

$

267,116

Property operating expenses

 

93

 

52,450

 

21,908

 

11,839

 

8,159

 

9,520

 

103,969

Real estate depreciation and amortization

 

 

45,144

 

32,625

 

7,169

 

14,480

 

7,387

 

106,805

 

(17)

 

(609)

 

 

 

 

72,216

 

71,590

Operating income/(loss)

 

(110)

 

58,717

 

(6,501)

 

4,017

 

(2,312)

 

74,121

 

127,932

Interest expense

 

 

(50,603)

 

(13,894)

 

(5,030)

 

(5,264)

 

(4,038)

 

(78,829)

Other income/(loss)

439

439

Net income/(loss)

$

(110)

$

8,114

$

(20,395)

$

(1,013)

$

(7,576)

$

69,644

$

48,664