Investment in Unconsolidated Joint Venture

3 Months Ended

Mar. 31, 2017

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure

Note 12 – Investment in Unconsolidated Joint Venture

Through a wholly-owned subsidiary, we own a 50% interest in a 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, encompassing approximately 99,000 gross square feet.  On December 5, 2016, the joint venture closed on the acquisition of The Berkley through a wholly-owned special purpose entity (the “Property Owner”) for a purchase price of $68.885 million, of which $42.5 million was financed through a 10-year loan (the “Loan”) secured by The Berkley and the balance was paid in cash (half of which was funded indirectly by us).  The 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.  The Company and the joint venture partner are joint and several recourse carve-out guarantors under the Loan pursuant to Freddie Mac’s standard form of guaranty

This joint venture is a voting interest entity. 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 March 31, 2017 and December 31, 2016 is as follows (in thousands):

	March 31,		December 31,
	2017		2016
ASSETS
Real estate, net	$	53,982	$	54,310
Cash and cash equivalents		309		77
Restricted cash		330		52
Tenant and other receivables, net		42		101
Prepaid expenses and other assets, net		103		169
Intangible assets, net		13,960		14,362
Total assets	$	68,726	$	69,071
LIABILITIES
Mortgage payable, net	$	40,842	$	40,799
Accounts payable and accrued expenses		533		403
Total liabilities		41,375		41,202
MEMBERS' EQUITY
Members' equity		28,509		28,485
Accumulated deficit		(1,158)		(616)
Total members equity		27,351		27,869
Total liabilities and members' equity	$	68,726	$	69,071
Our investment in unconsolidated joint venture	$	13,676	$	13,939

The statement of operations for the unconsolidated joint venture for the three months ended March 31, 2017 is as follows (in thousands):

	Three Months
	Ended March
	31, 2017
Revenues
Rental revenues	$	795
Other income		1
Total revenues		796
Operating Expenses
Property operating expenses		197
Real estate taxes		12
General and administrative		3
Interest expense, net		349
Transaction related costs		5
Amortization		445
Depreciation		327
Total operating expenses		1,338
Net loss	$	(542)
Our equity in net loss from unconsolidated joint venture	$	(271)