Variable Interest Entities

6 Months Ended

Jun. 30, 2021

Variable Interest Entities [Abstract]

Other Real Estate Partnerships

The Other Real Estate Partnerships are variable interest entities ("VIEs") of the Operating Partnership and the Operating Partnership is the primary beneficiary, thus causing the Other Real Estate Partnerships to be consolidated by the Operating Partnership. In addition, the Operating Partnership is a VIE of the Company and the Company is the primary beneficiary.

The following table summarizes the assets and liabilities of the Other Real Estate Partnerships included in our consolidated balance sheets, net of intercompany amounts:


	June 30, 2021		December 31, 2020
ASSETS
Assets:
Net Investment in Real Estate	$	259,093	$	245,396


Operating Lease Right-of-Use Assets	13,130		13,173
Cash and Cash Equivalents	3,634		4,090

Deferred Rent Receivable	10,527		9,219
Prepaid Expenses and Other Assets, Net	9,266		8,077
Total Assets	$	295,650	$	279,955
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable, Net	$	2,487	$	6,292
Accounts Payable, Accrued Expenses and Other Liabilities	9,527		10,067
Operating Lease Liabilities	10,291		10,304
Rents Received in Advance and Security Deposits	3,730		4,130
Partners' Capital	269,615		249,162
Total Liabilities and Partners' Capital	$	295,650	$	279,955

Joint Ventures

Through a wholly-owned TRS of the Operating Partnership, we own a 49% interest in a joint venture ("Joint Venture I") and a 43% interest in another joint venture ("Joint Venture II", together with Joint Venture I, the "Joint Ventures"). The Joint Ventures were both formed for the purpose of developing, leasing, operating and selling land located in the Phoenix, Arizona metropolitan area. During the six months ended June 30, 2021, Joint Venture I sold its remaining acres of land and liquidated the venture.

Under the operating agreements for each of the Joint Ventures, we act as the managing member and are entitled to receive fees for providing management, leasing, development, construction supervision, disposition and asset management services. In addition, both of the Joint Ventures' operating agreements provide us the ability to earn incentive fees based on the ultimate financial performance of each of the Joint Ventures.

During the six months ended June 30, 2021 and 2020, we earned fees of $276 and $335, respectively, from the Joint Ventures related to asset management and development services we provided to the Joint Ventures, of which we deferred recognition of $47 and $148, respectively, due to our economic interest in the Joint Ventures. At June 30, 2021, we had an aggregate receivable from the Joint Ventures of $55.

Net income of the Joint Ventures for the six months ended June 30, 2021 and 2020 was $14,905 and $45, respectively. Included in net income during the six months ended June 30, 2021 is gain on sale of real estate of $15,028 related to the sale of 138 net developable acres of land for which our economic share of the gain on sale, inclusive of incentive fees, is $10,166. However, since the Company was the purchaser of the 138 net developable acres from Joint Venture I, we netted our portion of gain on sale and incentive fees against the basis of the land acquired.

As part of our assessment of the appropriate accounting treatment for the Joint Ventures, we reviewed the operating agreements of each Joint Venture in order to determine our rights and the rights of our joint venture partners, including whether those rights are protective or participating. Each operating agreement contains certain protective rights, such as the requirement of both members' approvals to sell, finance or refinance the property and to pay capital expenditures and operating expenditures outside of the approved budget. Also, we and our Joint Venture partners jointly (i) approve the annual budget, (ii) approve certain expenditures, (iii) review and approve the Joint Venture's tax return before filing, and (iv) approve each lease at a developed property. We consider the latter rights substantive participation rights that result in shared, joint power over the activities that most significantly impact the performance of each Joint Venture. As such, we concluded to account for our investments in each Joint Venture under the equity method of accounting.