Note 12 – Investments in Unconsolidated Joint Ventures

Through a wholly-owned subsidiary, we own a 50% interest in a joint venture (the “Berkley Joint Venture”) formed to acquire and operate The Berkley, a newly built 95-unit multi-family property. In December 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 bore interest at the 30-day LIBOR rate plus 216 basis points, was interest only for five years, was pre-payable after two years with a 1% prepayment premium, had covenants and defaults customary for a Freddie Mac financing and had an effective interest rate of 3.92% at December 31, 2019. On February 28, 2020, in connection with a refinancing, the Berkley Joint Venture repaid the Berkley Loan in full and replaced it with a new 7-year, $33.0 million loan (the “New Berkley Loan”) which bears interest at a fixed rate of 2.717% and is interest only during the initial five years. It is pre-payable at any time and can be upsized by up to $6.0 million under certain circumstances. We and our joint venture partner are joint and several recourse carve-out guarantors under the New Berkley Loan.

Through a wholly-owned subsidiary, we own a 10% interest in a joint venture with TF Cornerstone (the “250 North 10th JV”) formed to acquire and operate 250 North 10th, a newly built 234-unit apartment building in Williamsburg, Brooklyn, New York. On January 15, 2020, the 250 North 10th JV closed on the acquisition of the property through a wholly-owned special purpose entity for a purchase price of $137.75 million, of which $82.75 million was financed through a 15-year mortgage loan (the “250 North 10th Loan”) secured by 250 North 10th and the balance was paid in cash. Our share of the equity totaling approximately $5.9 million was funded through a loan (the “Partner Loan”) from our joint venture partner. The Partner Loan bears interest at 7% and is prepayable any time within its four year term. Our partner has the option of having the Partner Loan repaid in our common stock if the price of our common stock exceeds $6.50 per share at the time of conversion. The non-recourse 250 North 10th Loan bears interest at 3.39% for the duration of the loan term and has covenants, defaults, and a non-recourse carve out guaranty executed by us. We earned an acquisition fee at closing and are entitled to ongoing asset management fees and a promote upon the achievement of certain performance hurdles.

As we do not control these joint ventures, we account for them under the equity method of accounting. The combined balance sheets for our unconsolidated joint ventures at March 31, 2020 and December 31, 2019 are as follows (in thousands):


	March 31,		December 31,
	2020		2019
	(unaudited)		(audited)
ASSETS

Real estate, net	$	170,755	$	50,508
Cash and cash equivalents		1,738		344
Restricted cash		786		435
Tenant and other receivables, net		78		42
Prepaid expenses and other assets, net		103		66
Intangible assets, net		28,431		11,757
Total assets	$	201,891	$	63,152

LIABILITIES

Mortgages payable, net	$	112,305	$	41,207
Accounts payable and accrued expenses		1,846		598
Total liabilities		114,151		41,805

MEMBERS’ EQUITY

Members’ equity		96,029		27,169
Accumulated deficit		(8,289)		(5,822)
Total members’ equity		87,740		21,347

Total liabilities and members’ equity	$	201,891	$	63,152

Our investments in unconsolidated joint ventures	$	20,764	$	10,673

The statements of operations for our unconsolidated joint ventures for the three months ended March 31, 2020 and 2019 are as follows (in thousands):


	For the Three		For the Three
	Months Ended		Months Ended
	March 31,		March 31,
	2020		2019
	(unaudited)		(unaudited)
Revenues
Rental revenues	$	2,998	$	836

Total revenues		2,998		836

Operating Expenses
Property operating expenses		706		263
Real estate taxes		11		11
General and administrative		2		2
Amortization		1,251		134
Depreciation		876		330

Total operating expenses		2,846		740

Operating income		152		96

Interest expense, net		(954)		(496)
Interest expense -amortization of deferred finance costs		(1,666)		(43)

Net loss	$	(2,468)	$	(443)

Our equity in net loss from unconsolidated joint ventures	$	(991)	$	(221)