| INVESTMENT IN VAA |
| NOTE
2. |
INVESTMENT
IN VAA |
The
Company accounts for its investment in VAA under the equity method of accounting. Under the equity method of accounting, our net
equity in the investment is reflected within the Consolidated Balance Sheets in the caption ‘Investment in VAA’, and
our share of the net income or loss from the joint venture is included within the Consolidated Statements of Operations in the
caption ‘Equity earnings from VAA’. The joint venture agreements may designate different percentage allocations among
investors for profits and losses; however, our recognition of joint venture income or loss generally follows the joint venture’s
distribution priorities, which may change upon the achievement of certain investment return thresholds and other agreed upon adjustments.
The
following is a summary of the financial position and results of operations of VAA (dollars in thousands):
| |
|
For
the period ended June 30, |
|
| |
|
2020 |
|
|
2019 |
|
| Balance
Sheet |
|
|
|
|
|
|
| Net
real estate assets |
|
$ |
1,232,160 |
|
|
$ |
1,247,535 |
|
| Other
assets |
|
|
57,160 |
|
|
|
56,474 |
|
| Debt,
net |
|
|
(834,766 |
) |
|
|
(812,010 |
) |
| Other
liabilities |
|
|
(270,647 |
) |
|
|
(272,716 |
) |
| Total
equity |
|
|
(183,907 |
) |
|
|
(219,283 |
) |
| |
|
For
the Three Months Ended
June 30, |
|
|
For
the Six Months Ended
June 30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| Results
of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
| Total
revenue |
|
$ |
29,725 |
|
|
$ |
28,927 |
|
|
$ |
59,284 |
|
|
$ |
56,328 |
|
| Total
property, operating, and maintenance expenses |
|
|
(15,541 |
) |
|
|
(14,313 |
) |
|
|
(29,282 |
) |
|
|
(28,482 |
) |
| Interest
expense |
|
|
(14,193 |
) |
|
|
(14,799 |
) |
|
|
(29,267 |
) |
|
|
(29,869 |
) |
| Depreciation
and Amortization |
|
|
(7,763 |
) |
|
|
(15,523 |
) |
|
|
(15,420 |
) |
|
|
(30,756 |
) |
| Total
other expense |
|
|
(95 |
) |
|
|
(327 |
) |
|
|
(1,076 |
) |
|
|
(1,002 |
) |
| Net
loss |
|
$ |
(7,867 |
) |
|
$ |
(16,035 |
) |
|
$ |
(15,761 |
) |
|
$ |
(33,781 |
) |
Below
is a reconciliation of our allocation of income or loss from VAA.
| |
|
For
the Three Months Ended
June 30, |
|
|
For
the Six Months Ended
June 30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| VAA
net loss |
|
$ |
(7,867 |
) |
|
$ |
(16,035 |
) |
|
$ |
(15,761 |
) |
|
$ |
(33,781 |
) |
| Adjustments
to reconcile to income (loss) from VAA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
expense on mezzanine loan |
|
|
5,264 |
|
|
|
6,401 |
|
|
|
11,137 |
|
|
|
12,490 |
|
| In-place
lease intangibles - amortization expense |
|
|
— |
|
|
|
8,429 |
|
|
|
— |
|
|
|
16,765 |
|
| Depreciation
basis differences |
|
|
1,133 |
|
|
|
733 |
|
|
|
2,402 |
|
|
|
1,944 |
|
| Net
loss |
|
$ |
(1,470 |
) |
|
$ |
(472 |
) |
|
$ |
(2,222 |
) |
|
$ |
(2,582 |
) |
| Percentage
ownership in VAA |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
|
|
50 |
% |
| Loss
from VAA |
|
$ |
(735 |
) |
|
$ |
(236 |
) |
|
$ |
(1,111 |
) |
|
$ |
(1,291 |
) |
|