NOTE 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

On August 1, 2016, the Company entered into a joint venture, the Atlanta JV, with Three Wall Capital LLC and certain of its affiliates (“TWC”) to acquire an Aloft hotel in downtown Atlanta, Georgia. The Atlanta Aloft acquisition had a total purchase price of $43,550 and closed on August 22, 2016. The Company accounts for the Atlanta JV under the equity method. Condor owns 80% of the Atlanta JV with TWC owning the remaining 20%. The Atlanta JV is comprised of two companies: Spring Street Hotel Property II LLC, of which the operating partnership indirectly owns an 80% equity interest, and Spring Street Hotel OpCo II LLC, of which our TRS indirectly owns an 80% equity interest. TWC owns the remaining 20% equity interest in these two companies.

The purchase was partially funded with a $33,750 term loan secured by the property. The term loan, obtained from LoanCore Capital Credit REIT LLC, has an initial term of 24 months with three 12-month extension periods, which may be exercised at the Atlanta JV’s option subject to certain conditions and fees. The first of these extension options was exercised by the Atlanta JV on September 9, 2018. The interest rate is a floating rate calculated on the one-month LIBOR plus 5.0%, and as a condition at the time of the extension, the Atlanta JV purchased a LIBOR cap of 3.0%. The term loan remains outstanding at March 31, 2019 and has a current interest rate of 7.50%. The loan is non-recourse to the Atlanta JV, subject to specified exceptions. The loan is also non-recourse to Condor, except for certain customary carve-outs which are guaranteed by the Company.

Under the Atlanta JV agreement, the Atlanta JV is managed by TWC in accordance with business plans and budgets approved by both partners. Major decisions as detailed in the agreement also require joint approval. Condor may remove TWC as manager of the Atlanta JV and appoint a new manager only upon the occurrence of certain events. The Atlanta Aloft hotel is managed by Boast Hotel Management Company LLC (“Boast”), an affiliate of TWC. The Atlanta JV paid to Boast total management fees of $116 and $98 for the three months ended March 31, 2019 and 2018, respectively.

Net cash flow from the Atlanta JV is distributed each quarter first with a 10% annual preferred return on capital contributions to Condor, second with a 10% annual preferred return on capital contributions to TWC, and third with any remainder distributed to the partners based on their pro-rata equity ownership. Profits are allocated in the same proportion as net cash flow. Losses are allocated based on pro-rata equity ownership. Cash distributions totaling $200 and $360 in the three months ended March 31, 2019 and 2018, respectively, were received by the Company from the Atlanta JV. The Atlanta JV agreement also includes buy-sell rights for both members (generally after three years of hotel ownership for Condor and after five years for TWC) and Condor has a purchase option for TWC’s Atlanta JV ownership interest exercisable between the third and fifth anniversary of the hotel closing.

The following table represents the total assets, liabilities, and equity, including the Company’s share, of the Atlanta JV as of March 31, 2019 and December 31, 2018:


	As of
	March 31, 2019		December 31, 2018
Investment in hotel properties, net	$	46,611	$	46,933
Cash and cash equivalents		989		913
Restricted cash, property escrows		731		366
Accounts receivable, prepaid expenses, and other assets		375		294
Total Assets	$	48,706	$	48,506

Accounts payable, accrued expenses, and other liabilities	$	1,127	$	1,375
Land option liability		6,190		6,190
Long-term debt, net of deferred financing costs		33,665		33,608
Total Liabilities		40,982		41,173
Condor equity		6,179		5,866
TWC equity		1,545		1,467
Total Equity		7,724		7,333
Total Liabilities and Equity	$	48,706	$	48,506

The table below provides the components of net earnings, including the Company’s share of the Atlanta JV, for the three months ended March 31, 2019 and 2018.


	Three months ended March 31,
	2019		2018
Revenue
Room rentals and other hotel services	$	3,874	$	3,272
Operating Expenses
Hotel and property operations		2,177		2,005
Depreciation and amortization		371		357
Total operating expenses		2,548		2,362
Operating income		1,326		910
Net loss on derivative		(1)		(9)
Interest expense		(684)		(615)
Net earnings	$	641	$	286

Condor allocated earnings	$	513	$	229
TWC allocated earnings		128		57
Net earnings	$	641	$	286