Variable Interest Entities (VIEs)

6 Months Ended

Jun. 30, 2019

Note 15 - Variable Interest Entities ("VIEs")

Consolidated VIE

As of December 31, 2017, the Company consolidated a VIE entity as it had an option to acquire all the outstanding membership interests in the entity and had the obligation to fully fund the entity’s operations. In 2018, the Company exercised its option. Under an amended agreement, and upon satisfaction of certain closing conditions associated with exercising its option, the Company created a new majority-owned subsidiary, Uber Freight. Refer to Note 16 - Non-Controlling Interest for further information. Total assets included on the condensed consolidated balance sheets for this VIE as of December 31, 2018 and June 30, 2019 were $115 million and $132 million, respectively. Total liabilities included on the condensed consolidated balance sheets for this VIE as of December 31, 2018 and June 30, 2019 were not material.

Unconsolidated VIE

Mission Bay 3 & 4

The Mission Bay 3 & 4 joint venture (“JV”) refers to Event Center Office Partners, LLC (“ECOP”), a joint venture entity established in March 2018, by Uber and two companies (“LLC Partners”) to manage the operation of two office buildings owned by two ECOP wholly-owned subsidiaries. The Company contributed $136 million cash in exchange for a 45% interest in ECOP. Each of the two LLC Partners owns 45% and 10%, respectively. The amount of contributed cash was recorded as an investment for $136 million as of June 30, 2019. The remaining construction costs will be funded through a construction loan obtained by ECOP where the Company together with the two LLC Partners guarantee payments and performance of the loan when it becomes due and any payment of costs incurred by the lender under limited situations. The maximum collective guarantee liability is up to $50 million.

The Company evaluated the nature of its investment in ECOP and determined that ECOP is a VIE during the construction period; however, the Company is not the primary beneficiary as decisions are made jointly between parties and therefore does not have the power to direct activities that most significantly impact the VIE. The Company will reevaluate if ECOP meets the definition of a VIE upon specific reconsideration events, including completion of construction.

The maximum exposure to loss represents the potential loss recognized by the Company relating to these unconsolidated entities. The Company believes that its maximum exposure to loss is limited because it is a member of the limited liability company. The Company’s maximum exposure to loss differs from the carrying value of the variable interests. The maximum exposure to loss is dependent on the nature of the variable interests in the VIE and is limited to the investment balances and notional amounts of guarantees. As of December 31, 2018 and June 30, 2019, the carrying amount of assets and liabilities recognized on the condensed consolidated balance sheets related to the Company’s interests in unconsolidated VIEs and the Company’s maximum exposure to loss relating to unconsolidated VIEs was as follows (in millions):



	As of
	December 31, 2018		June 30, 2019
Investment	$	78	$	136
Additional cash contribution	58		—
Limited guarantee	50		50
Maximum exposure to loss	$	186	$	186

Uber has significant influence over ECOP and accounts for its investment in ECOP under the equity method. No equity earnings have been recognized as of June 30, 2019, since the sole activity of the ECOP consists of construction of the assets and costs incurred are capitalized. Once construction is complete, at each reporting period, the Company will adjust the carrying value of its investment to reflect its proportionate share of ECOP’s income or loss, and any impairments, with a corresponding credit or debit, respectively, to loss from equity method investment, net of tax in the condensed consolidated statements of operations. As of June 30, 2019, the Company determined that no impairment of its equity method investments existed.