NOTE 13 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

Through a wholly-owned subsidiary, we own a 50% interest in a joint venture (the "Berkley Joint Venture") formed to acquire and operate 223 North 8th Street, Brooklyn, New York, a newly constructed 95‑unit multi-family property, known as The Berkley. On December 5, 2016, the joint venture closed on the acquisition of The Berkley through a wholly-owned special purpose entity for a purchase price of $68.885 million, of which $42.5 million was financed through a 10‑year loan (the “Berkley Loan”) secured by The Berkley and the balance was paid in cash (half of which was funded by us). The non-recourse Berkley Loan bears interest at the 30‑day LIBOR rate plus 216 basis points, is interest only for five years, is pre-payable after two years with a 1% prepayment premium and has covenants and defaults customary for a Freddie Mac financing. We and our joint venture partner are joint and several recourse carve-out guarantors under the Berkley Loan pursuant to Freddie Mac’s standard form of guaranty. The effective interest rate was 3.92% at December 31, 2019 and 4.66% at December 31, 2018.

As we do not control this joint venture, we account for it under the equity method of accounting.

The balance sheets for the unconsolidated joint venture at December 31, 2019 and 2018 are as follows (dollars in thousands):


	December 31,		December 31,
	2019		2018

ASSETS

Real estate, net	$	50,508	$	51,802
Cash and cash equivalents		344		201
Restricted cash		435		392
Tenant and other receivables, net		42		39
Prepaid expenses and other assets, net		66		43
Intangible assets, net		11,757		12,293
Total assets	$	63,152	$	64,770

LIABILITIES

Mortgage payable, net	$	41,207	$	41,135
Accounts payable and accrued expenses		598		583
Total liabilities		41,805		41,718

MEMBERS’ EQUITY

Members’ equity		27,169		27,236
Accumulated deficit		(5,822)		(4,184)
Total members’ equity		21,347		23,052

Total liabilities and members’ equity	$	63,152	$	64,770

Our investment in unconsolidated joint venture	$	10,673	$	11,526

The statements of operations for the unconsolidated joint venture for the years ended December 31, 2019, 2018, and 2017 are as follows (dollars in thousands):



	For the Year		For the Year		For the Year
	Ended		Ended		Ended
	December 31,		December 31,		December 31,
	2019		2018		2017

Revenues
Total revenues		3,314		3,447		3,372

Operating Expenses
Property operating expenses		956		1,033		944
Real estate taxes		45		45		47
General and administrative		10		7		26
Amortization		536		536		1,533
Depreciation		1,328		1,318		1,310

Total operating expenses		2,875		2,939		3,860

Operating income (loss)		439		508		(488)

Interest expense, net		(1,905)		(1,791)		(1,452)
Interest expense -amortization of deferred finance costs		(172)		(172)		(173)

Net loss	$	(1,638)	$	(1,455)	$	(2,113)

Our equity in net loss from unconsolidated joint venture	$	(819)	$	(728)	$	(1,057)