In January 2021, the FASB issued ASU No. 2021-01 “Reference Rate Reform (Topic 848)” (“ASU 2021-01”). The amendments in ASU 2021-01 permit entities to elect certain optional expedients in connection with reference rate reform activities and their impact on debt, contract modifications and derivative instruments as it is expected the global market will transition from LIBOR and other interbank offered rates to alternative reference rates. The amendments in ASU 2021-01 are effective immediately and may be elected over time as reference rate reform activities occur through December 31, 2022. The Company has not elected the optional expedients, though it continues to evaluate the impact of the guidance and may apply elections as applicable as changes in the market occur.
Note 3 – Sale of Real Estate Assets
Sale of Alexan CityCentre Interests
On January 20, 2022, Alexan CityCentre, the underlying asset of an unconsolidated joint venture located in Houston, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $18.7 million, which included its original preferred equity investment of $18.2 million and accrued preferred return of $0.5 million.
Sale of Reunion Apartments
On February 25, 2022, Reunion Apartments, a property located in Orlando, Florida, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off for $12.5 million, which included principal repayment of $10.0 million, accrued interest of $1.5 million and an incremental payment of $1.0 million to achieve the minimum interest per the terms of the loan agreement.
Sale of The Hartley at Blue Hill
On February 28, 2022, The Hartley at Blue Hill, a property located in Chapel Hill, North Carolina, was sold. The mezzanine loan provided by the Company was paid off for $34.4 million, which included principal repayment of $31.0 million and accrued interest of $3.4 million. On April 29, 2022, the senior loan provided by the Company, which was secured by a parcel of land adjacent to The Hartley at Blue Hill property, was paid off for $5.0 million.
Sale of Motif
On March 24, 2022, Motif, a property located in Fort Lauderdale, Florida, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off for $87.2 million, which included principal repayment of $84.4 million and accrued interest of $2.8 million. The Company recorded a $3.9 million gain on sale representing its estimated promote interest share of proceeds that remained after the Company and joint venture members received full return of their capital contributions. The Company also has a $1.0 million receivable, which is included in due from affiliates in the Company’s consolidated balance sheet, representing the remaining proceeds that were not distributed as of quarter end.
Partial sale of Strategic Portfolio Interests
During 2022, three of the six assets underlying the Strategic joint venture (the “Strategic JV”), in which the Company had preferred equity investments, were sold as follows: Georgetown Crossing located in Savannah, Georgia sold on March 29, 2022; Park on the Square located in Pensacola, Florida sold on April 12, 2022; and The Commons located in Jacksonville, Florida sold on June 16, 2022. Upon the sales of Georgetown Crossing, Park on the Square and The Commons, the Company’s preferred equity investments therein were redeemed by the Strategic JV for $2.2 million, $5.9 million and $3.9 million, respectively. These redemption amounts included the Company’s original preferred equity investment, accrued preferred return and an exit fee. Refer to Note 7 for further information on the Strategic Portfolio.
Sale of Domain at The One Forty
On May 5, 2022, Domain at The One Forty, a property located in Garland, Texas, was sold. The mezzanine loan provided by the Company was paid off for $25.4 million, which included principal repayment and accrued interest. The Company recorded a $2.8 million gain on sale representing its estimated promote interest share of proceeds that remained after the Company and joint venture members received full return of their capital contributions. The Company also recorded a $0.5 million receivable, which is included in due from affiliates in the Company’s consolidated balance sheet, representing the remaining proceeds that were not distributed as of quarter end.