We had a preferred equity investment in an unconsolidated joint venture that owned four communities located in Arizona, providing independent living, assisted living and memory care services. During the fourth quarter of 2019, the JV signed a contract to sell the four properties comprising the JV (“Properties”). The contract was subject to standard due diligence and other contingencies to close, all of which were met in January 2020. Accordingly, based on the information available to us regarding alternatives and courses of action, we performed a recoverability test on the carrying value of our preferred equity investment and concluded that a portion of our preferred equity investment would not be recoverable. Therefore, we recorded an other-than-temporary impairment loss from investment in unconsolidated joint ventures of $5,500,000 and wrote our preferred equity investment down to the amount of expected proceeds at December 31, 2019. Upon sale of the Properties during the year ended December 31, 2020, we received liquidation proceeds totaling $17,848,000 and incurred an additional $758,000 of loss.

During 2020, we provided preferred capital contribution commitments to two joint ventures. We determined that each of these JVs meets the accounting criteria to be considered a variable interest entity (“VIE”). We are not the primary beneficiary of the VIEs as we do not have both: 1) the power to direct the activities that most significantly affect the VIE’s economic performance, and 2) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. However, we do have significant influence over the JVs. Therefore, we accounted for the joint venture investments using the equity method of accounting. The following table provides information regarding these preferred equity investments (dollar amounts in thousands):

(1)

Invested $6,340 of preferred equity in an entity that will develop a 95-unit ALF/MC in Washington. Our investment represents 15.5% of the estimated total investment. The preferred equity investment earns an initial cash rate of 7% increasing to 9% in year four until the internal rate of return (“IRR”) is 8%. After achieving an 8% IRR, the cash rate drops to 8% with an IRR ranging between 12% to 14%.

(2)

Entered into a preferred equity agreement in an entity that will develop and own a 267-unit ILF/ALF in Washington with a total investment commitment of $13,000. The preferred equity investment earns an initial cash rate of 8% with an IRR of 12%. Our investment represents 11.6% of the estimated total investment.

The following table summarizes our capital contributions, income recognized, and cash interest received related to our investments in unconsolidated joint ventures during the years ended December 31, 2020, 2019 and 2018 (in thousands):


	Type
	of			Capital			Income			Cash Interest
Year	Properties			Contribution			Recognized			Received
2020	ALF/MC/ILF	⁽¹⁾	$	58	⁽¹⁾	$	231	⁽¹⁾	$	231	⁽¹⁾
	UDP	⁽²⁾		6,340	⁽²⁾		169	⁽²⁾		168	⁽²⁾
	UDP	⁽³⁾		5,000	⁽³⁾		32	⁽³⁾		32	⁽³⁾
Total			$	11,398		$	432		$	431

2019	ALF/MC/ILF	⁽¹⁾	$	472	⁽¹⁾	$	1,029	⁽¹⁾	$	1,580	⁽¹⁾
	ALF/ILF/MC	⁽⁴⁾		—	⁽⁴⁾		955	⁽⁴⁾		979	⁽⁴⁾
	ALF/MC	⁽⁵⁾		—	⁽⁵⁾		404	⁽⁵⁾		432	⁽⁵⁾
Total			$	472		$	2,388		$	2,991

2018	ALF/MC/ILF	⁽¹⁾	$	670	⁽¹⁾	$	2,041	⁽¹⁾	$	1,975	⁽¹⁾
	ALF/IL/MC	⁽⁴⁾		—	⁽⁴⁾		511	⁽⁴⁾		396	⁽⁴⁾
	UDP-ALF/MC	⁽⁵⁾		—	⁽⁵⁾		312	⁽⁵⁾		—	⁽⁵⁾
Total			$	670		$	2,864		$	2,371

(1)	Relates to our preferred equity investment in an entity that owned four ALFs in Arizona discussed above with a total preferred return of 15%. During the year ended December 31, 2020, the properties comprising the JV were sold.

(2)	During the third quarter of 2020, we provided a total preferred equity investment of $6,340 to a JV for the development of a 95-unit ALF and MC.

(3)	Entered into a preferred equity agreement in an entity that will develop and own a 267-unit ILF/ALF in Washington with a total investment commitment of $13,000.

(4)

We had a $2,900 mezzanine loan commitment for a 99-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. Since interest payments were deferred and no interest was recorded for the first twelve months of the loan, we used the effective interest method in accordance with GAAP to recognize interest income and recorded the difference between the effective interest income and cash interest income to the loan principal balance. During the third quarter of 2019, the mezzanine loan was paid off.

(5)

We had a $3,400 mezzanine loan commitment for the development of a 127-unit seniors housing community in Florida with a total preferred return of 15%. The mezzanine loan was an ADC arrangement which we determined it to have characteristics similar to a jointly-owned arrangement and recorded it as an unconsolidated joint venture. During the first quarter of 2019, the mezzanine loan was paid off.