Investments in Unconsolidated Joint Ventures |
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Investments in Unconsolidated Joint Ventures | Note 14 – Investments in Unconsolidated Joint Ventures Prior to its sale in April 2022, we owned a 50% interest in a joint venture (the “Berkley JV”) formed to acquire and operate The Berkley, a recently built 95-unit multi-family property. In December 2016, the Berkley JV closed on the acquisition of The Berkley for a purchase price of $68.885 million. On February 28, 2020, in connection with a refinancing, the Berkley JV repaid the acquisition loan in full and replaced it with a new 7-year, $33.0 million loan (the “New Berkley Loan”) which bore interest at a fixed rate of 2.717% and was interest only during the initial five years. It was pre-payable at any time and could have been increased by up to $6.0 million under certain circumstances. We and our joint venture partner were joint and several recourse carve-out guarantors under the New Berkley Loan. In October 2021, we entered into a loan agreement with our joint venture partner (see Note 7 – Loans Payable and Secured Line of Credit – The Berkley Partner Loan). This property was sold in April 2022. See Note 15 – Subsequent Events for information regarding the sale. We own a 10% interest in the 250 North 10th JV formed to acquire and operate 250 North 10th, a recently built 234-unit apartment building in Williamsburg, Brooklyn, New York. In January 2020, the 250 North 10th JV closed on the acquisition of the property 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 Note”) 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 the Partner Loan from our joint venture partner. The Partner Loan bears interest at 7.0% which is payable to the extent of available cash flow 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 Note 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. See Note 7 - Loans Payable and Secured Line of Credit – 250 North 10th Note. As of March 31, 2022, the net carrying amount of our investment in this entity was $4.7 million and our maximum exposure to loss in this entity is limited to the carrying amount of our investment. As we do not control the 250 North 10th JV (and did not control the Berkley JV), we account for these joint ventures under the equity method of accounting. We entered into an interest rate swap on February 28, 2020 whereby we recognized our share of the fair value of the asset of approximately $840,000 during the three months ended March 31, 2022 and we recognized our share of the fair value liability of approximately $198,000 during the three months ended March 31, 2021. The combined balance sheets for our unconsolidated joint ventures at March 31, 2022 and December 31, 2021 are as follows (dollars in thousands):
The statements of operations for our unconsolidated joint ventures for the three months ended March 31, 2022 and 2021 are as follows (dollars in thousands):
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