Investment in Unconsolidated Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2021

Investment in Unconsolidated Joint Ventures

Summary of the preferred equity investments

The following table provides information regarding these preferred equity investments (dollar amounts in thousands):

Type

Total

Contractual

Number

Preferred

Cash

Carrying

State

Properties

Investment

Return

Portion

Beds/ Units

Value

Washington

ALF/MC

Preferred Equity

⁽¹⁾

12%-14%

—

6,340

⁽¹⁾

Washington

UDP

Preferred Equity

⁽²⁾

12%

—

13,000

⁽²⁾

Total

—

19,340

(1)

Invested $6,340 of preferred equity in an entity that for development 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%, depending upon timing of redemption. During the fourth quarter of 2021, the entity completed the development project and received its certificate of occupancy.

(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.

Summary of capital contributions, income recognized and cash interest received from investments in unconsolidated joint ventures

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, 2021, 2020 and 2019 (in thousands):


	Type
	of			Capital		Income		Cash Interest
Year	Properties			Contribution		Recognized		Earned
2021	ALF/MC	⁽¹⁾	$	—	$	450	$	412
	UDP	⁽²⁾		8,000		967		880
Total			$	8,000	$	1,417	$	1,292

2020	ALF/MC/ILF	⁽³⁾	$	58	$	231	$	231
	UDP	⁽¹⁾		6,340		169		169
	UDP	⁽²⁾		5,000		32		32
Total			$	11,398	$	432	$	432

2019	ALF/MC/ILF	⁽³⁾	$	472	$	1,029	$	1,580
	ALF/IL/MC	⁽⁴⁾		—		955		979
	ALF/MC	⁽⁵⁾		—		404		432
Total			$	472	$	2,388	$	2,991

(1)

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. During the fourth quarter of 2021, the entity completed the development project. We withheld a total of $1,425 related to this preferred equity investment.

(2)

During 2020, we 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. During the years ended December 30, 2021 and 2020, we withheld $2,324 and $1,453, respectively, a total of $3,777 related to this preferred equity investment.

(3)	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.

(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.