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Investment in Real Estate Partnership (Tables)
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Equity Method Investments
Summarized financial information for the Company’s investment in real estate partnership is as follows (in thousands):

 
 
Year Ended December 31,
 
 
2019
 
2018
Assets:
 
 
 
 
   Real estate, net
 
$
50,338

 
$
72,661

   Other assets
 
6,742

 
6,617

Total assets
 
57,080

 
79,278

Liabilities and equity:
 
 
 
 
   Notes payable
 
15,434

 
47,064

   Other liabilities
 
3,575

 
4,322

   Equity
 
38,071

 
27,892

Total liabilities and equity
 
57,080

 
79,278

Company’s share of equity
 
31,008

 
22,717

Cost of investment in excess of the Company’s share of underlying net book value
 
3,089

 
3,519

Carrying value of investment in real estate partnership
 
$
34,097

 
$
26,236


 
 
Year Ended December 31,
 
 
2019
 
2018
Rental revenues
 
$
14,253

 
$
17,180

Property expenses
 
(9,045
)
 
(6,687
)
Other expenses
 
(3,449
)
 
(7,848
)
Gain on sale of properties or disposal of assets
 
16,943

 
7,839

Net income
 
$
18,702

 
$
10,484

The table below presents the real estate partnership investment in which the Company held an ownership interest (in thousands):
 
 
 
The Company’s Investment as of December 31,
 
 
 
2019
 
2018
Real estate partnership
Ownership Interest
 
 
 
 
Pillarstone OP(1)(2)
81.4%
 
$
34,097

 
$
26,236

Total real estate partnership(3)
 
 
$
34,097

 
$
26,236


(1) The Company manages these real estate partnership investments and, where applicable, earns acquisition fees, leasing commissions, property management fees, and asset management fees.

(2) As of December 31, 2017, the Company had a net deferred gain of $18.0 million relating to the sale of properties to Pillarstone OP prior to the adoption of ASU 2017-05. These deferred gains were included in the Company’s investment above. Upon adoption, the Company recorded a cumulative-effect adjustment of $19.1 million to its beginning accumulated deficit as of January 1, 2018 on the Company’s Consolidated Statements of Changes in Equity.

(3) Representing eight property interests and 0.9 million square feet of GLA, as of December 31, 2019, and 11 property interests and 1.3 million square feet of GLA, as of December 31, 2018.

Real Estate Investment Financial Statements, Disclosure
As a result of the adoption of Topic 606 and ASC 610, the Company recognized the Company’s investment in Pillarstone OP under the equity method for the years ended December 31, 2019 and 2018. For the year ended December 31, 2017, Pillarstone OP was accounted for using the profit-sharing method.

The table below presents the Company’s share of net income from its investment in the real estate partnership which is included in equity in earnings of real estate partnership, net on the Company’s Consolidated Statements of Operations and Comprehensive Income (in thousands):
 
 
Year Ended December 31,
 
 
2019
 
2018
 
 
 
 
 
Pillarstone OP
 
$
15,076

 
$
8,431

Schedule of Guarantor Obligations
The Company's maximum exposure to loss relating to Pillarstone OP as of December 31, 2017 was as follows (in thousands):

Net carrying value
$
14,421

OP Unit Purchase Agreement
3,000

Notes payable
48,840

Maximum exposure to loss
$
66,261