Investments in Unconsolidated Joint Ventures

6 Months Ended

Jun. 30, 2024

Investments in Unconsolidated Joint Ventures

Investments in Unconsolidated Joint Ventures

Note 3 – Investments in Unconsolidated Joint Ventures

Prior to February 2023, we owned a 10% interest in the 250 North 10^th JV formed to acquire and operate 250 North 10^th, a 234-unit apartment building in Williamsburg, Brooklyn, New York.  On January 15, 2020, the 250 North 10^th 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 10^th Note”) secured by 250 North 10^th and the balance was paid in cash. The non-recourse 250 North 10^th Note bore interest at 3.39% for the duration of the loan term and had covenants, defaults and a non-recourse carve out guaranty executed by us.  We earned an acquisition fee at closing and were entitled to ongoing asset management fees and a promote upon the achievement of certain performance hurdles.  We sold our interest in this joint venture to our joint venture partner in February 2023 resulting in net proceeds of approximately $1.2 million after repayment of our Partner Loan and release from the mortgage guaranty, and we realized a net gain on the sale of approximately $3.1 million.  

Under the Recapitalization Transactions which closed on February 14, 2024, the real estate assets, encompassing 77 Greenwich, 237 11^th and Paramus, and related liabilities as well as the Corporate Credit Facility became part of TPHGreenwich. In addition, the maturity date of each of the 77G Mortgage Loan and the 77G Mezzanine Loan for 77 Greenwich was extended to October 23, 2025 with an option to extend for an additional year, and the maturity date of the Corporate Credit Facility was extended to June 30, 2026.

The following table provides a summary of the loans held by TPHGreenwich as of June 30, 2024 (in thousands):

Loan Name	Encumbered Asset	Initial Maturity Date	Effective Rate at June 30, 2024		Balance at June 30, 2024
Corporate Credit Facility	N/A	July 2026	10.33	%	$	53,953
77G Mortgage Loan	77 Greenwich	October 2025	12.83	%	$	99,011
77G Mezzanine Loan	77 Greenwich	October 2025	14.00	%	$	60,762
237 11th	237 11th	January 2025	5.46	%	$	60,000
Secured Line of Credit	Paramus, NJ	October 2024	2.50	%	$	11,725

The following table summarizes TPHGreenwich’s hedging instruments, all of which hedge variable rate debt, as of June 30, 2024 (in thousands):

	Fair Value Asset as of June 30,		Notional		All-In Capped		Interest Rate Cap Expiration
	2024		Amount		Rate		Date
Interest Rate Caps:
77G Mortgage Loan	$	9	$	97,000	5.50	%	2/15/2025
237 11th Loans		38	$	60,000	2.50	%	7/9/2024
237 11th Loans		—	$	60,000	2.50	%	1/9/2025
Included in prepaid expenses and other assets, net	$	47

As we did not control the 250 North 10^th JV, and do not control TPHGreenwich, we accounted for the joint venture under the equity method of accounting.  The balance sheet for the unconsolidated joint venture at June 30, 2024 is as follows (in thousands):

	June 30,
	2024
ASSETS
Real estate, net	$	90,647
Residential condominium units for sale		174,340
Cash and cash equivalents		137
Restricted cash		10,910
Tenant and other receivables, net		603
Prepaid expenses and other assets, net		396
Intangible assets, net		6,582
Total assets	$	283,615
LIABILITIES
Loans Payable, net	$	219,772
Corporate credit facility, net		53,953
Secured line of credit		11,725
Accounts payable and accrued expenses		8,587
Total liabilities		294,037
MEMBERS’ EQUITY
Members’ equity		6,276
Accumulated deficit		(16,698)
Total members’ deficit		(10,422)
Total liabilities and members’ deficit	$	283,615

The statements of operations for the unconsolidated joint ventures reflect the operations of 250 N 10^th from January 1, 2023 through the date of sale in February 2023 and TPHGreenwich from February 14, 2024 through June 30, 2024, are as follows (in thousands):

	For the Three Months Ended		For the Three Months Ended		For the Six Months Ended		For the Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2024		2023		2024		2023
Revenues
Rental revenues	$	1,431	$	—	$	2,263	$	1,788
Other income		40		—		40		—
Sales of residential condominium units		2,114		—		2,114		—
Total revenues		3,585		—		4,417		1,788
Operating Expenses
Property operating expenses		1,055		—		1,692		563
Real estate taxes		728		—		1,101		10
General and administrative		351		—		560		—
Cost of sales - residential condominium units		2,241		—		2,241		—
Transaction related costs		60		—		60		—
Amortization		194		—		541		299
Depreciation		419		—		631		437
Total operating expenses		5,048		—		6,826		1,309
Operating (loss) income		(1,463)		—		(2,409)		479
Interest expense		(8,130)		—		(13,081)		(483)
Interest expense - amortization of deferred finance costs		—		—		(1,220)		(31)
Interest income - change in fair market value of interest rate swap		5		—		12		—
Net loss	$	(9,588)	$	—	$	(16,698)	$	(35)
Our equity in net loss from unconsolidated joint ventures	$	—	$	—	$	(5,962)	$	—