Investments in Partially Owned Entities

6 Months Ended

Jun. 30, 2023

Investments In Partially Owned Entities [Abstract]

The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated).

Consolidated Variable Interest Entities (“VIEs”)

In accordance with accounting standards for consolidation of VIEs, the Company consolidates ERPOP on EQR’s financial statements. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP.

The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of June 30, 2023:


	Operating Properties (1), (2)
	Properties		Apartment Units
Consolidated Joint Ventures (VIE)		15		3,226

(1)

During the second quarter of 2023, the Company acquired its joint venture partner's 10% interest in a 200-unit apartment property for $4.6 million, of which the Company paid $3.7 million in cash and ERPOP issued $0.9 million of 3.00% Series Q Preference Units (see Note 3 for additional discussion). The property is now wholly owned. In connection with the buyout, the carrying amount of the Noncontrolling Interests – Partially Owned Properties totaling $3.7 million was reduced to zero and the remaining $0.9 million was recorded to paid in capital/general partner capital. The Company also repaid $64.7 million of mortgage debt at par prior to maturity in conjunction with the buyout.

(2)

The land parcel under one of the projects is subject to a long-term ground lease.

The following table provides consolidated assets and liabilities related to the Company's VIEs as of June 30, 2023 and December 31, 2022 (amounts in thousands):


	June 30, 2023		December 31, 2022
Consolidated Assets	$	579,832	$	691,880
Consolidated Liabilities	$	107,228	$	158,932

Certain consolidated joint ventures in which we have investments obtained mortgage debt to finance a portion of their activities. The following table and information summarizes the variable rate construction mortgage debt that is non-recourse to the Company at June 30, 2023 (aggregate and amounts borrowed under loan commitments in thousands):


	Recently Completed Operating Property
Number of joint ventures with debt financing		1
Aggregate loan commitments	$	73,344
Amounts borrowed under loan commitments (1)	$	67,876
Maturity dates	2025

(1)

See Note 9 for the proceeds of secured conventional floating rate debt under Mortgage Notes Payable and Note 14 for discussion of the loan repayment subsequent to June 30, 2023.

Investments in Unconsolidated Entities

The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest.

The following table and information summarizes the Company’s investments in unconsolidated entities as of June 30, 2023 and December 31, 2022 (amounts in thousands except for ownership percentage):


	June 30, 2023			December 31, 2022			Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE)	$	36,873		$	35,974		Varies
Projects Under Development and Land Held for Development (VIE)		242,391			218,043		62% - 95% (1)
Real Estate Technology Funds/Companies (VIE)		25,695			25,249		Varies
Other		(249	)		(242	)	Varies
Investments in Unconsolidated Entities	$	304,710		$	279,024

(1)

In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage.

The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of June 30, 2023:

Real Estate Holdings (1)

Projects Under Development (2), (5)

Projects Held for Development (2), (3)

Entities

Projects

Apartment Units (4)

Projects

Apartment Units (4)

Unconsolidated Joint Ventures (VIE)

2

6

1,982

4

1,334

(1)

Represents entities that hold various real estate investments.

(2)

Represents separate unconsolidated joint ventures for the purpose of developing multifamily rental properties.

(3)

Represents separate unconsolidated joint ventures that have not yet started.

(4)

Represents the intended number of apartment units to be developed.

(5)

The land parcel under one of the projects is subject to a long-term ground lease.

New Development Joint Ventures

The following table provides information on total unconsolidated development joint ventures entered into during the six months ended June 30, 2023 (amounts in thousands except for number of unconsolidated joint ventures and apartment units):


Number of unconsolidated joint ventures (1)		1
Apartment units (2)		368
Investments in unconsolidated entities – acquisitions	$	989

(1)

The entities qualify as VIEs, but the Company is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIE’s performance. Therefore, the entities are unconsolidated and recorded using the equity method of accounting. See Note 2 of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion.

(2)

Represents the intended number of apartment units to be developed.