Investments in Partially Owned Entities

6 Months Ended

Jun. 30, 2022

Investments In Partially Owned Entities [Abstract]

Investments in Partially Owned Entities

6. Investments in Partially Owned Entities

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, 2022:

	Operating Properties (1)				Project Under Development (2)
	Properties		Apartment Units		Project		Apartment Units
Consolidated Joint Ventures (VIE)		15		3,114		1		312

(1) During the second quarter of 2022, the Company acquired its joint venture partner’s 25% interest in a 432-unit apartment property for $32.2 million, and the property is now wholly owned.  In connection with the buyout, the carrying amount of the Noncontrolling Interests – Partially Owned Properties totaling $4.8 million was reduced to zero and the remaining $27.4 million was recorded to paid in capital/general partner capital.

(2) The land under this project is subject to a long-term ground lease.

The following table provides consolidated assets and liabilities related to the VIEs discussed above as of June 30, 2022 and December 31, 2021 (amounts in thousands):

	June 30, 2022		December 31, 2021
Consolidated Assets	$	660,062	$	912,955
Consolidated Liabilities	$	127,702	$	251,424

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, 2022 (aggregate and amounts borrowed under loan commitments in thousands):

	Recently Completed Operating Property (1)		Project Under Development
Number of joint ventures with debt financing		1		1
Aggregate loan commitments	$	67,589	$	73,344
Amounts borrowed under loan commitments (2)	$	64,856	$	11,512
Maturity dates	2023		2025

(1) The maturity date of the construction loan was extended on June 24, 2022 to June 25, 2023.

(2) See Note 9 for the current period proceeds of secured conventional floating rate debt under Mortgage Notes Payable.

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, 2022 and December 31, 2021 (amounts in thousands except for ownership percentage):

	June 30, 2022			December 31, 2021			Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE) (1)	$	36,396		$	36,024		Varies
Development Projects (VIE) (2)		110,657			72,488		62% - 90% (4)
Real Estate Technology (VIE) (3)		22,456			19,347		Varies
Other		(237	)		(411	)	Varies
Investments in Unconsolidated Entities	$	169,272		$	127,448

(1) Represents unconsolidated interests in entities with various real estate holdings.

(2) Represents unconsolidated interests in projects under development and land held for development.  See further discussion below.  

(3) Represents unconsolidated investments in real estate technology funds/companies.

(4) 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, 2022:

	Real Estate Holdings (1)		Projects Under Development (2)				Land Held for Development (2), (3)
	Entities		Projects		Apartment Units (4)		Projects		Apartment Units (4)
Unconsolidated Joint Ventures (VIE)		2		4		1,291		2		640

(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 but are expected to start construction in 2022.  One parcel is subject to a long-term ground lease.

(4) Represents the intended number of apartment units to be developed.