3. Consolidated Variable Interest Entities

FAR

BB&T’s preferred equity interest in FAR entitled it to a $285 million preference amount plus the related priority return. Based on FAR’s amended and restated limited liability company agreement, FAR was required to make distributions quarterly or more frequently as approved by FAR’s Board of Managers, of excess cash flows from its operations and the orderly disposition of its assets to redeem the preferred membership interests. As such, the Class A units, which represented the preferred equity interest in FAR, previously held by BB&T were considered mandatorily redeemable and were reflected as debt obligations in the Company’s Consolidated Statement of Financial Condition at December 31, 2014 and the priority return is considered interest expense in the Company’s Consolidated Statements of Operations.

The activities of FAR are governed by an amended and restated limited liability company agreement which grants the Board of Managers decision-making authority over FAR. Prior to May 6, 2015, the Board had four members, two members elected by the Company and two members elected by BB&T. Upon redemption of BB&T’s preferred interest in FAR on May 6, 2015, FAR became a wholly-owned subsidiary of BBX Capital and the two Board members designated by BB&T resigned. FAR was no longer a variable interest entity as of May 6, 2015.

The carrying amount of the assets and liabilities of FAR and the classification of these assets and liabilities in the Company’s Statement of Financial Condition at December 31, 2014 was as follows (in thousands):



		December 31,
		2014
Cash and interest bearing deposits in banks	$	4,976
Restricted cash		-
Loans held-for-sale		35,423
Loans receivable, net		18,972
Real estate held-for-investment		19,129
Real estate held-for-sale		13,745
Properties and equipment, net		7,561
Other assets		638
Total assets	$	100,444
BB&T preferred interest in FAR, LLC	$	12,348
Principal and interest advances on residential loans		11,171
Other liabilities		1,315
Total liabilities	$	24,834

JRG/BBX Development, LLC (“North Flagler”)

In October 2013, an indirect wholly-owned subsidiary of BBX Capital entered into the North Flagler joint venture with JRG USA, and in connection with the formation of the joint venture JRG USA assigned to the joint venture a contract to purchase for $10.8 million a 4.5 acre real estate parcel overlooking the Intracoastal Waterway in West Palm Beach Florida. During 2015, the zoning district surrounding this property was changed to permit up to 15 stories in building height from 4 stories in building height. BBX Capital is entitled to receive 80% of any joint venture distributions to the extent of our capital investment and 70% of any joint venture distributions thereafter. We are the managing member and have control of all aspects of the operations of the joint venture.

In May 2015, the North Flagler joint venture purchased the 4.5 acre parcel for $10.8 million and on the same day sold the property to a third party developer for $20.0 million. Included in the Company’s Statements of Operation in net gains on sales of assets for the three and six months ended June 30, 2015 was a $7.8 million gain on the property sale. Net sales proceeds in the amount of $2.3 million were distributed to the noncontrolling member.

The carrying amount of the remaining assets and liabilities of North Flagler and the classification of these assets and liabilities in the Company’s Statements of Financial Condition was as follows (in thousands):



		June 30,	December 31,
		2015	2014
Cash and interest bearing deposits in banks	$	123	17
Real estate held-for-investment		-	816
Other assets		13	379
Total assets	$	136	1,212
Other liabilities	$	32	116
Noncontrolling interest	$	16	132