Investments in Unconsolidated Entities

6 Months Ended

Jun. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN UNCONSOLIDATED ENTITIES

Investments carried at fair value

Based upon elections made at the date of investment, the Company reports the equity method investments in real estate ventures at fair value. For such investments, the Company increases or decreases the investment each reporting period by the change in the fair value and the Company reports the fair value adjustments in the Condensed Consolidated Statement of Operations in the ‘Loss on equity method investments carried at fair value’ line item. Changes in fair value of the Company's investment in Investors X (defined below) are impacted by distributions as the fair value is based on finite cash flows from the wind-down of that entity.

Investors X

The Company has elected to account for the equity method investment in Comstock Investors X, L.C. (“Investors X”), a Variable Interest Entity (“VIE”) that owns the Company’s residual homebuilding operations at fair value. Fair value is determined using a discounted cash flow model based on expected future cash flows for income and realization events of the underlying asset. Expected future cash flows includes contractually fixed revenues and expenses as well as estimates for future revenues and expenses where contracts do not currently exist. These estimates are based on prior experience as well as comparable, third party data.

As of June 30, 2021 and December 31, 2020, the fair value of the Company’s investment in Investors X is $2.5 million and $5.1 million, respectively. The Company received distributions of $895 thousand and $2.5 million during the three and six months ended June 30, 2021 and recognized a $107 thousand loss in fair value. Our maximum loss exposure in this entity is limited to our investments.

The Hartford

On December 30, 2019, the Company made an investment related to the purchase of a stabilized commercial office building located at 3101 Wilson Boulevard in the Clarendon area of Arlington County, Virginia (the “Hartford”). The Company owns a 2.5% equity interest in the asset at a cost of approximately $1.2 million. The Company has elected to account for the equity method investment in the Hartford at fair value. Fair value is determined using an income approach and sales comparable approach models. As of June 30, 2021 and December 31, 2020, the fair value of the Company’s investment in the Hartford was $1.2 million. During the three and six months ended June 30, 2021, the Company recognized a loss of $24 thousand in fair value. The Company received no distributions during the three and six months ended June 30, 2021.

Fair value of equity method investments are classified as Level 3 of the fair value hierarchy. As of June 30, 2021 and December 31, 2020, the Company had equity method investments in real estate ventures at fair value of $3.7 million and $6.3 million, respectively. The table below shows the change in the Company’s investments in real estate ventures reported at fair value:


Fair value of investments as of December 31, 2020	$	6,307
Distributions	(2,543)
Change in fair value	(112)
Fair value of investments as of June 30, 2021	$	3,652

See Note 13 – Related Party Transactions for additional discussion of our investments in real estate ventures at fair value.

Investments using equity method

The Company accounts for its interest in its title insurance joint venture using the equity method of accounting and adjusts the carrying value for its proportionate share of earnings, losses and distributions. The investment in the unconsolidated joint venture was $17 thousand and $29 thousand as of June 30, 2021 and December 31, 2020, respectively, and is included within ‘Prepaid and other assets, net’ in the accompanying Condensed Consolidated Balance Sheets.

The Company’s share of earnings for the three and six months ended June 30, 2021 from this unconsolidated joint venture of $30 thousand and $18 thousand, respectively, is included in ‘Other income (loss), net’ in the accompanying Condensed Consolidated Statement of Operations. The Company’s share of earnings for the three and six months ended June 30, 2020 was $18 thousand and $15 thousand, respectively.

During the three and six months ended June 30, 2021, the Company collected distributions of $30 thousand from this joint venture as a return on investment. During the three and six months ended June 30, 2020, the Company collected no distributions and $108 thousand from this joint venture as a return on investment.