Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 05, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'TRANSCONTINENTAL REALTY INVESTORS INC | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0000733590 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Common Stock, Shares Outstanding | ' | 8,413,469 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_BALANCE_SHEETS_un
CONSOLIDATED BALANCE SHEETS (unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Real estate, at cost | $942,013 | $978,781 |
Real estate held for sale at cost, net of depreciation ($151 for 2013 and $4,658 for 2012) | 0 | 18,077 |
Real estate subject to sales contracts at cost, net of depreciation ($1,861 for 2013 and $16,412 for 2012) | 41,549 | 45,706 |
Less accumulated depreciation. | -149,085 | -145,614 |
Total real-estate | 834,477 | 896,950 |
Note and interest receivable | ' | ' |
Performing (including $59,444 in 2013 and $58,008 in 2012 from related parties) | 62,522 | 60,637 |
Non-performing | 685 | 723 |
Less allowance for doubtful accounts (including $2,097 in 2013 and 2012 from related parties) | -2,395 | -2,262 |
Total notes and interest receivable | 60,812 | 59,098 |
Cash and cash equivalents | 9,076 | 16,620 |
Related party receivables. | 3,856 | 0 |
Investments in unconsolidated joint ventures and investees | 5,508 | 5,439 |
Other assets: | 57,517 | 67,237 |
Total assets | 971,246 | 1,045,344 |
Liabilities: | ' | ' |
Notes and interest payable | 712,745 | 730,931 |
Notes related to real estate held for sale | 2,466 | 18,915 |
Notes related to real estate subject to sales contracts | 28,068 | 55,976 |
Stock-secured notes payable | 2,195 | 2,221 |
Related-party payables | 0 | 10,057 |
Deferred gain (from sales to related parties) | 53,096 | 53,096 |
Accounts payable and other liabilities (including $4,783 in 2013 and $4,282 in 2012 to related parties) | 37,047 | 41,019 |
Total liabilities | 835,617 | 912,215 |
Shareholders' equity: | ' | ' |
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares, issued and outstanding 30,000 shares in 2013 and 2012 (liquidation preference $100 per share). Series D: $0.01 par value, authorized,issued and outstanding 100,000 shares in 2013 and 2012 (liquidation preference $100 per share) | 1 | 1 |
Common stock, $0.01 par value, authorized 10,000,000 shares, issued 8,413,669 shares in 2013 and 2012 and outstanding 8,413,469 shares in 2013 and 2012 | 84 | 84 |
Treasury stock at cost, 200 shares in 2013 and 2012 | -2 | -2 |
Paid-in capital | 271,998 | 272,774 |
Retained earnings | -153,592 | -156,559 |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 118,489 | 116,298 |
Non-controlling interest | 17,140 | 16,831 |
Total shareholders' equity | 135,629 | 133,129 |
Total liabilities and shareholders' equity | $971,246 | $1,045,344 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
BALANCE SHEETS PARENTHETICALS | ' | ' |
Depreciation of Real Estate held for sale at cost | $151 | $4,658 |
Depreciation of Real Estate subject to sales contracts at cost | 1,861 | 16,412 |
Performing Notes and Interest Receivable from related parties | 59,444 | 58,008 |
Allowance for doubtful accounts from related parties | 2,097 | 2,097 |
Accounts payable and other liabilities from related parties | $4,783 | $4,282 |
Stockholders Equity par value | ' | ' |
Preferred stock Series C, par value | $0.01 | $0.01 |
Preferred stock Series C, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock Series C, shares issued | 30,000 | 30,000 |
Preferred stock Series C, shares outstanding | 30,000 | 30,000 |
Preferred stock Series C, liquidation preference per share | $100 | $100 |
Preferred stock Series D, par value | $0.01 | $0.01 |
Preferred stock Series D, shares authorized | 100,000 | 100,000 |
Preferred stock Series D, shares issued | 100,000 | 100,000 |
Preferred stock Series D, shares outstanding | 100,000 | 100,000 |
Preferred stock Series D, liquidation preference per share | $100 | $100 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 8,413,669 | 8,413,669 |
Common stock, shares outstanding | 8,413,469 | 8,413,469 |
Treasury stock, shares | 200 | 200 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Revenues: | ' | ' | ' | ' |
Rental and other property revenues (including $165 and $164 for the three months and $497 and $499 for the nine months ended 2013 and 2012, respectively, from related parties) | $26,616 | $26,915 | $78,901 | $79,136 |
Expenses: | ' | ' | ' | ' |
Property operating expenses (including $196 and $225 for the three months and $602 and $735 for the nine months ended 2013 and 2012, respectively, from related parties) | 13,198 | 13,343 | 37,535 | 38,254 |
Depreciation and amortization | 5,275 | 4,965 | 15,525 | 14,871 |
General and administrative (including $721 and $547 for the three months and $2,264 and $1,796 for the nine months ended 2013 and 2012, respectively, from related parties) | 1,545 | 968 | 4,990 | 4,176 |
Provision on impairment of notes receivable and real estate assets | 214 | 0 | 214 | 0 |
Advisory fee to related party | 2,168 | 2,198 | 6,377 | 6,719 |
Total operating expenses | 22,400 | 21,474 | 64,641 | 64,020 |
Net operating income | 4,216 | 5,441 | 14,260 | 15,116 |
Other income (expenses): | ' | ' | ' | ' |
Interest income (including $2,168 and $1,092 for the three months and $6,456 and $8,107 for the nine months ended 2013 and 2012, respectively, from related parties) | 2,131 | 1,031 | 6,427 | 8,129 |
Other income and expenses (including $0 and $1,500 for the three months and $0 and $4,500 for the nine months ended 2013 and 2012, respectively, from related parties) | 77 | 1,218 | 257 | 4,529 |
Mortgage and loan interest (including $397 and $714 for the three months and $1,323 and $2,193 for the nine months ended 2013 and 2012, respectively, from related parties) | -8,873 | -10,198 | -28,110 | -32,586 |
Deferred borrowing costs amortization | -90 | 552 | -3,468 | -2,299 |
Loan charges and prepayment penalties | 0 | -35 | -7,208 | -6,197 |
Loss on the sale of investments | -275 | 0 | -283 | -118 |
Earnings (losses) from unconsolidated joint ventures and investees | -30 | 5 | -28 | -58 |
Litigation-settlement | -2,739 | -130 | -2,727 | -135 |
Total other expenses | -9,799 | -7,557 | -35,140 | -28,735 |
Net loss before gain on land sales, non-controlling interest, and taxes | -5,583 | -2,116 | -20,880 | -13,619 |
Gain (loss) on land sales | 0 | 2,913 | -48 | 8,074 |
Net income (loss) from continuing operations before taxes | -5,583 | 797 | -20,928 | -5,545 |
Income tax benefit (expense) | -95 | -356 | 8,476 | 1,279 |
Net income (losses) from continuing operations | -5,678 | 441 | -12,452 | -4,266 |
Discontinued operations: | ' | ' | ' | ' |
Net loss from discontinued operations | -398 | -1,098 | -174 | -1,518 |
Gain on sale of real estate from discontinued operations | 127 | 82 | 24,392 | 5,173 |
Income tax benefit (expense) from discontinued operations | 95 | 356 | -8,476 | -1,279 |
Net income (loss) from discontinued operations | -176 | -660 | 15,742 | 2,376 |
Net income (loss.) | -5,854 | -219 | 3,290 | -1,890 |
Net income attributable to non-controlling interest | -97 | -43 | -323 | -297 |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | -5,951 | -262 | 2,967 | -2,187 |
Preferred dividend requirement | -279 | -277 | -830 | -831 |
Net income (loss) applicable to common shares | -6,230 | -539 | 2,137 | -3,018 |
Earnings per share - basic | ' | ' | ' | ' |
Net income (loss) from continuing operations - basic | ($0.72) | $0.01 | ($1.62) | ($0.64) |
Net income (loss) from discontinued operations - basic | ($0.02) | ($0.08) | $1.87 | $0.28 |
Net income (loss) applicable to common shares - basic | ($0.74) | ($0.07) | $0.25 | ($0.36) |
Earnings per share - diluted | ' | ' | ' | ' |
Net income (loss) from continuing operations -diluted | ($0.72) | $0.01 | ($1.62) | ($0.64) |
Net income (loss) from discontinued operations -diluted | ($0.02) | ($0.08) | $1.87 | $0.28 |
Net income (loss) applicable to common shares -diluted | ($0.74) | ($0.07) | $0.25 | ($0.36) |
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 |
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 |
Amounts attributable to Transcontinental Realty Investors, Inc. | ' | ' | ' | ' |
Net income (loss) from continuing operations | -5,775 | 398 | -12,775 | -4,563 |
Net-income (loss) from discontinued operations | -176 | -660 | 15,742 | 2,376 |
Net income (loss) | ($5,951) | ($262) | $2,967 | ($2,187) |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS PARENTHETICALS (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Statements Of Operations Parentheticals | ' | ' | ' | ' |
Rental and other property revenues, related parties | $165 | $164 | $497 | $499 |
Property operating expenses, related parties | 196 | 225 | 602 | 735 |
General and administrative expenses, related parties | 721 | 547 | 2,264 | 1,796 |
Interest income from related parties | 2,168 | 1,092 | 6,456 | 8,107 |
Other Income and expenses from related parties | 0 | 1,500 | 0 | 4,500 |
Mortgage and loan interest, related parties | $397 | $714 | $1,323 | $2,193 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Total Equity | Comprehensive Income (Loss) | Preferred Stock | Common Stock Shares | Common Stock Amount | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||||||
Balance at Dec. 31, 2012 | 133,129 | -159,156 | 1 | 8,413,669 | 84 | -2 | 272,774 | -156,559 | 0 | 16,831 |
Series C preferred stock dividends (7.0% per year) | ($157) | ' | ' | ' | ' | ' | ($157) | ' | ' | ' |
Series D preferred stock dividends (9.0% per year) | -673 | ' | ' | ' | ' | ' | -673 | ' | ' | ' |
Net income | 3,290 | 3,290 | ' | ' | ' | ' | ' | 2,967 | ' | 323 |
Sale of controlling interests | 54 | ' | ' | ' | ' | ' | 54 | ' | ' | ' |
Distributions to non-controlling interests | ($14) | ' | ' | ' | ' | ' | ' | ' | ' | ($14) |
Balances at Sep. 30, 2013 | 135,629 | -155,866 | 1 | 8,413,669 | 84 | -2 | 271,998 | -153,592 | 0 | 17,140 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Statement of Comprehensive Income (loss) | ' | ' | ' | ' |
Net income (losses) | ($5,951) | ($262) | $3,290 | ($1,890) |
Other comprehensive income (loss) | ' | ' | 0 | 0 |
Total comprehensive income (loss) | ' | ' | 3,290 | -1,890 |
Comprehensive income attributable to non-controlling interest | ' | ' | -323 | -297 |
Comprehensive income (loss) attributable to Transcontinental Realty Investors, Inc. | ' | ' | $2,967 | ($2,187) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash Flow From Operating Activities: | ' | ' |
Net Income (Loss) | $3,290 | ($1,890) |
Adjustments to reconcile net income (loss) applicable to common shares to net cash flows from operating activities: | ' | ' |
Loss (gain) on sale of land | 48 | -8,074 |
Gain on sale of income-producing properties | -24,392 | -5,173 |
Depreciation and amortization. | 16,036 | 16,663 |
Provision on impairment of note receivables and real estate assets | 214 | 0 |
Amortization of deferred borrowing costs | 3,473 | 2,316 |
Earnings from unconsolidated joint ventures and investees. | 8 | 3 |
Decrease (increase) in assets: | ' | ' |
Accrued interest receivable | -1,440 | -2,791 |
Other assets | 138 | -1,680 |
Prepaid expense | -1,932 | 2 |
Escrow | 6,007 | 1,794 |
Earnest money | 1,170 | 235 |
Rent receivables | 2,786 | -262 |
Related party receivables | -3,856 | 0 |
Decrease in liabilities: | ' | ' |
Accrued interest payable | -2,828 | -6,063 |
Related party payables | -10,057 | -17,218 |
Other liabilities. | -5,141 | -18,896 |
Net cash used in operating activities | -16,476 | -41,034 |
Cash Flow From Investing Activities: | ' | ' |
Proceeds from notes receivable | 0 | 11,993 |
Originations or advances on notes receivable | -488 | 13,400 |
Acquisition of land held for development | -7 | -18,948 |
Proceeds from sale of income-producing properties | 76,001 | 39,999 |
Proceeds from sale of land | 2,537 | 36,523 |
Proceeds from sale of investments | 0 | 132 |
Investment in unconsolidated real estate entities | -77 | 1,234 |
Improvement of land held for development | -373 | -190 |
Improvement of income-producing properties | -6,396 | -2,204 |
Acquisition of non-controlling interest | 0 | -69 |
Sale of controlling interest | 54 | 113 |
Construction and development of new properties | -326 | -4,664 |
Net cash provided by investing activities | 70,925 | 77,319 |
Cash Flow From Financing Activities: | ' | ' |
Proceeds from notes payable | 141,452 | 138,714 |
Recurring amortization of principal on notes payable | -11,356 | -17,741 |
Payments on maturing notes payable | -189,837 | -166,887 |
Deferred financing costs | -1,408 | -3,201 |
Distributions to non-controlling interests | -14 | -8 |
Preferred stock dividends - Series C | -157 | -159 |
Preferred stock dividends - Series D | -673 | -672 |
Net cash used in financing activities | -61,993 | -49,954 |
Net decrease in cash and cash equivalents | -7,544 | -13,669 |
Cash and cash equivalents, beginning of period | 16,620 | 19,991 |
Cash and cash equivalents, end of period | 9,076 | 6,322 |
Supplemental disclosures of cash flow information: | ' | ' |
Cash paid for interest | 18,322 | 29,965 |
Schedule of noncash investing and financing activities: | ' | ' |
Notes receivable received from related party | 0 | 6,000 |
Related party payable/receivable for ARL cost basis sales adjustment | 0 | 10,445 |
Acquisition of land for ARL cost basis sales adjustment | $0 | ($10,445) |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended | ||
Sep. 30, 2013 | |||
ORGANIZATION AND BASIS OF PRESENTATION: | ' | ||
ORGANIZATION AND BASIS OF PRESENTATION | ' | ||
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION | |||
Organization | |||
As used herein, the terms “TCI”, “the Company”, “we”, “our” or “us” refer to Transcontinental Realty Investors, Inc., a Nevada corporation. TCI is the successor to a California business trust which was organized on September 6, 1983, and commenced operations on January 31, 1984. Effective March 31, 2003, TCI’s financial results were consolidated in American Realty Investors, Inc. (“ARL”) Form 10-K and related consolidated financial statements. | |||
The Company is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). Subsidiaries of ARL own approximately 83.8% of the Company’s common stock. ARL’s common stock trades on the New York Stock Exchange under the symbol (“ARL”). We have no employees. | |||
TCI is a “C” corporation for U.S. federal income tax purposes and files an annual consolidated tax return with ARL and its ultimate parent, Realty Advisors Management, Inc. | |||
TCI owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (“IOT”). Effective July 17, 2009, IOT’s financial results were consolidated with those of ARL and TCI and their subsidiaries. Shares of IOT are traded on the New York Stock Exchange Euronext (“NYSE MKT”) under the symbol (“IOT”). | |||
TCI invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (“Pillar”) is the Company’s external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of TCI, and for setting the policies which guide it, the day-to-day operations of TCI are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with TCI’s business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to ARL and IOT. | |||
Regis Realty Prime, LLC (“Regis”) manages our commercial properties and provides brokerage services for our real estate portfolio. TCI engages third-party companies to lease and manage its apartment properties. TCI also has a development agreement with Unified Housing Foundation, Inc. (“UHF”), a non-profit corporation that provides management services for the development of residential apartment projects in the future. | |||
Properties | |||
We own or had interests in a total property portfolio of 55 income-producing properties as of September 30, 2013. The properties consisted of: | |||
• | 10 commercial buildings consisting of seven office buildings, one industrial warehouse and two retail centers comprising in aggregate approximately 2.3 million rentable square feet; | ||
• | 45 apartment communities totaling 8,033 units; excluding apartments being developed; and | ||
• | 4,105 acres of developed and undeveloped land. | ||
We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities but have not yet begun construction. At September 30, 2013, we had no apartment projects in development. The third-party developer typically holds a general partner, as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all required equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our consolidated financial statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developer’s partnership interests in exchange for any remaining unpaid developer fees. | |||
Basis of Presentation | |||
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2013, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. | |||
The year-end Consolidated Balance Sheet at December 31, 2012, was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Certain 2012 financial statement amounts have been reclassified to conform to the 2013 presentation, including adjustments for discontinued operations. | |||
Principles of Consolidation | |||
The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (VIE), in accordance with the provisions and guidance of ASC Topic 810 “Consolidation”, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (“EITF”) Issue 04-5, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary generally is the entity that provides financial support and bears a majority of the financial risks, authorizes certain capital transactions, or makes operating decisions that materially affect the entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation. | |||
In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. | |||
For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. | |||
Real Estate, Depreciation and Impairment | |||
Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements – 10-40 years; furniture, fixtures and equipment – 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360, “Property, Plant and Equipment”. Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under ASC Topic 360, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. | |||
Real Estate Held For Sale | |||
We periodically classify real estate assets as “held for sale”. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations. | |||
Cost Capitalization | |||
Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. | |||
We capitalize leasing costs which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. | |||
Fair Value Measurement | |||
We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. | |||
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows: | |||
Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. | |||
Level 1 – | |||
Level 2 – | Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
Level 3 – | Unobservable inputs that are significant to the fair value measurement. | ||
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||
Related Parties | |||
We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity. | |||
Newly Issued Accounting Pronouncements | |||
We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our Consolidated Financial Statements, including that which we have not yet adopted. We do not believe that any such guidance will have a material effect on our financial position or results of operations. |
REAL_ESTATE_ACTIVITY
REAL ESTATE ACTIVITY | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
REAL ESTATE ACTIVITY | ' | ||||
REAL ESTATE ACTIVITY [TextBlock] | ' | ||||
NOTE 2. REAL ESTATE ACTIVITY | |||||
Below is a summary of the real estate owned as of September 30, 2013 (dollars in thousands): | |||||
Apartments | $ | 588,035 | |||
Commercial properties | 212,286 | ||||
Land held for development | 141,692 | ||||
Real estate held for sale | 151 | ||||
Real estate subject to sales contract | 43,410 | ||||
Total real estate | 985,574 | ||||
Less accumulated depreciation | (151,097 | ) | |||
Total real estate, net of depreciation | $ | 834,477 | |||
The highlights of our significant real estate transactions for the nine months ended September 30, 2013, are listed below: | |||||
On January 8, 2013, the Company sold 14.52 acres of land known as Southwood located in Tallahassee, Florida, at a foreclosure auction to an independent third party for $0.5 million. This land parcel was previously sold on December 31, 2012, to One Realco Corporation, a related party, for a sales price of $0.6 million. The Company did not recognize or record the sale in accordance with ASC 360-20 due to TCI’s continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and the Company’s questionable recovery of investment cost. The Company determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. A sale to an independent third party, that met the requirements of ASC 360-20, took place on January 8, 2013, when the property was sold to a third party and sales proceeds were credited against the outstanding debt. There was no gain or loss on the land parcel sale. | |||||
On January 28, 2013, the Company sold a 314–unit apartment complex known as Verandas at City View located in Fort Worth, Texas, for a sales price of $25.3 million to an independent third party. The buyer assumed the existing debt of $18.2 million secured by the property. We recorded a gain of $6.2 million on the sale. | |||||
On March 14, 2013, the Company sold 13.90 acres of land known as Sheffield located in Grand Prairie, Texas, to an independent third party for a sales price of $2.3 million. The proceeds from the sale were used to pay off the multi-tract collateral debt, secured by the property. We recorded a nominal loss on the sale of the property. | |||||
On April 8, 2013, the Company recorded the transfer of ownership of Eton Square, a 225,566 square foot commercial building, located in Tulsa, Oklahoma, to the existing lender for satisfaction of the current mortgage note. There was a negotiated deficiency between the value of the property and the outstanding mortgage, resulting in a promissory note for $2.0 million provided by the seller. The promissory note is reduced by $1.0 million if timely payments are made in accordance with the note. The investment in the entity that owns this commercial building was previously sold on May 18, 2010, to TX Highland RS Corp, a related party, for a sales price of $13.7 million. The Company did not recognize or record the sale in accordance with ASC 360-20 due to TCI’s continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and the Company’s questionable recovery of investment cost. The Company determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. A sale to an independent third party, that met the requirements of ASC 360-20, took place on April 8, 2013, when the property was transferred to the existing lender and sales proceeds were credited against the outstanding debt. We recorded a nominal gain on the sale. | |||||
On April 12, 2013, the Company was granted full title to 0.2341 acres of land known as Minivest, located in Dallas, Texas, by an order of judgment. We paid real estate taxes and have been maintaining the property for the years 1993-2007. | |||||
On February 2, 2012, the Company and its subsidiary, 1340 Poydras, LLC, executed a Guarantor Settlement and Consent Agreement with the lender for the Amoco building, Petra CRE CDO 2007-1, Ltd (“Petra”) to transfer ownership of the Amoco building to a new entity, 1340 Owner, LLC, which is affiliated with the existing lender, Petra. Petra and its affiliate are independent third parties. TCI deferred the recognition of the sale in accordance with ASC 360-20 due to TCI’s continuing involvement related to the obligations under the note and guaranty agreements and the re-acquisition option. As of May 7, 2013, TCI and Petra settled the obligations set forth under the note and guaranty and terminated the re-acquisition option. TCI recorded the sale to the independent third party and recognized a gain of $11.9 million. In connection with the settlement of certain litigation which had been pending in the U. S. District Court, Eastern District of Louisiana, among Petra, TCI, and a subsidiary, on May 7, 2013, TCI issued a $5.0 million promissory note payable to the lender which is secured by an unrecorded confession of judgment and a collateral pledge to such lender of 135,000 shares of Series K convertible preferred stock of ARL issued on the same date to TCI. Such promissory note requires regular monthly payments, is pre-payable, and matures on March 5, 2015. The issuance of the $5.0 million promissory note and collateral to the lender resolved all claims of the lender against TCI including deficiency claims under a mortgage covering certain real property located in New Orleans, Louisiana. The note has prepayment provisions whereby if it is paid off by March 1, 2014, the balance of $3.5 million is forgiven and if paid off after March 1, 2014 but before March 1, 2015, $2.5 million will be forgiven and collateral returned to the Company and the judgment released. | |||||
On May 9, 2013, the Company sold 225 Baronne, a 422,037 square foot building, located in New Orleans, Louisiana, for a sales price of $1.5 million to an independent third party. Proceeds of sale were used to pay down a related party payable. We recorded a nominal gain on the sale. | |||||
On June 7, 2013, the Company sold a 206-unit apartment complex known as Laguna Vista, located in Farmers Branch, Texas, for a sale price of $24.8 million to an independent third party. We recorded a gain on sale of $6.1 million. | |||||
As of July 22, 2013, several subsidiaries of the Company entered into a Twenty-Second Amendment to the Agreement for Purchase and Sale for the sale of nine residential apartment complexes. According to the terms of the Agreement, the purchaser will assume the existing loans, secured by the property and the purchaser is in the process of obtaining approval from HUD for this transfer. According to this Amendment, the deposits received by the Company and the title company are now only refundable if HUD does not approve the transfer of assets. The original contract was dated December 5, 2012, and due to the restrictions on the consummation of the sale, the Company has decided that the purchase commitment is not firm and has not met the requirements to be considered held for sale. Upon the approval from HUD, we will reclassify the assets as held for sale. The properties included in this proposed transaction are Dorado Ranch, Huntington Ridge, Legends of El Paso, Mariposa Villas, Paramount Terrace, River Oaks, Savoy of Garland, Stonebridge at City Park, and Vistas at Pinnacle Park. | |||||
In December 2010, various commercial and land holdings were sold to FRE Real Estate, Inc., a related party. During the first three months of 2011, many of these transactions were rescinded as of the original transaction date and were subsequently sold to related parties under the same ownership as FRE Real Estate, Inc. As of September 30, 2013, one commercial building, Thermalloy, remains in FRE Real Estate, Inc. The Company did not recognize or record the sale in accordance with ASC 360-20 due to TCI’s continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and the Company’s questionable recovery of investment cost. The Company determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. | |||||
The properties that we have sold to a related party and have deferred the recognition of the sale are treated as “subject to sales contract” on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis. | |||||
As of September 30, 2013, there remains one apartment complex, one commercial building and 212 acres of land that we have sold to a related party and have deferred the recognition of the sale. These are treated as “subject to sales contract” on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis. The Company did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and the Company’s questionable recovery of investment cost. The Company determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. The buyers received no compensation for the facilitation of the bankruptcy or debt restructuring process. | |||||
We continue to invest in the development of apartment projects. During the nine months ended September 30, 2013, we have expended $0.3 million related to the construction or predevelopment of various apartment complexes. |
NOTES_AND_INTEREST_RECEIVABLE
NOTES AND INTEREST RECEIVABLE | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Note and interest receivable | ' | ||||||||
NOTES AND INTEREST RECEIVABLE | ' | ||||||||
NOTE 3. NOTES AND INTEREST RECEIVABLE | |||||||||
A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured. Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. | |||||||||
Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands): | |||||||||
Maturity | Interest | ||||||||
Borrower | Date | Rate | Amount | Security | |||||
Performing loans: | |||||||||
Miscellaneous related party notes (1) | Various | Various | $ 664 | Various secured interests | |||||
S Breeze I-V, LLC | 14-Jun | 5.00% | 3,078 | 6% Class A and 25% Class B Limited Partner Interests | |||||
Unified Housing Foundation, Inc. (Echo Station) (1) | Dec-32 | 12.00% | 1,481 | 100% Interest in Unified Housing of Temple, LLC | |||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1) | Dec-32 | 12.00% | 2,000 | Unsecured | |||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1) | Dec-32 | 12.00% | 6,363 | Membership interest in Housing for Seniors of Humble, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1) | Dec-32 | 12.00% | 4,663 | 100% Interest in Unified Housing of Austin, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1) | Dec-32 | 12.00% | 3,057 | 100% Interest in Unified Housing of Austin, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1) | Dec-32 | 12.00% | 6,000 | 100% Interest in Unified Housing of Vista Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1) | Dec-32 | 12.00% | 2,250 | 100% Interest in Unified Housing of Vista Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Parkside Crossing) (1) | Dec-32 | 12.00% | 1,936 | 100% Interest in Unified Housing of Parkside Crossing, LLC | |||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | Dec-32 | 12.00% | 4,812 | 100% Interest in Unified Housing of Sendero Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | Dec-32 | 12.00% | 5,174 | 100% Interest in Unified Housing of Sendero Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Timbers of Terrell) (1) | Dec-32 | 12.00% | 1,323 | 100% Interest in Unified Housing of Terrell, LLC | |||||
Unified Housing Foundation, Inc. (Tivoli) (1) | Dec-32 | 12.00% | 6,140 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (Tivoli) (1) | Dec-32 | 12.00% | 1,826 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (1) | 13-Dec | 5.00% | 6,000 | Unsecured | |||||
Accrued interest | 5,755 | ||||||||
Total Performing | $ 62,522 | ||||||||
Non-Performing loans: | |||||||||
Miscellaneous non-related party notes | Various | Various | 640 | Various secured and unsecured interests | |||||
Accrued interest | 45 | ||||||||
Total Non-Performing | $ 685 | ||||||||
Allowance for doubtful accounts | (2,395) | ||||||||
Total | $ 60,812 | ||||||||
(1) Related party notes | |||||||||
The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”). UHF is determined to be a related party to the company due to our significant investment in the performance of the collateral secured under the notes receivable and its consulting agreement with TCI. | |||||||||
Payments are due from surplus cash flow of operations. Sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes. These notes are cross-collateralized but to the extent cash is received from a specific UHF property, it is applied against any outstanding interest for the related-property note. The allowance on the UHF notes was a purchase allowance that was netted against the notes when acquired. | |||||||||
As of January 1, 2013, the Company agreed to extend the maturity on the surplus cash flow notes receivable from UHF for an additional term of five years in exchange for the early termination of the preferred interest rate. The original notes gave a five-year period of preferred interest at a rate of 5.25%, before returning to the original note rate of 12.0%. |
INVESTMENT_IN_UNCONSOLIDATED_J
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | ' | ||||||||
INVESTMENT IN UNCONSOLIDATED JOINT-VENTURES AND INVESTEES | ' | ||||||||
NOTE 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | |||||||||
Investments in unconsolidated joint ventures and other investees in which we have a 20% to 50% interest or otherwise exercise significant influence, are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses under the equity method of accounting. ARL is our parent company and is considered as an unconsolidated joint venture. | |||||||||
Investments in unconsolidated joint ventures and investees consist of the following: | |||||||||
Percentage ownership as of | |||||||||
30-Sep-13 | 30-Sep-12 | ||||||||
American Realty Investors, Inc.(1) | 1.99 | % | 1.99 | % | |||||
(1) Unconsolidated investment in parent company | |||||||||
Our interest in the common stock of ARL in the amount of 1.99% is accounted for under the equity method because we exercise significant influence over the operations and financial activities. Accordingly, the investments are carried at cost, adjusted for the Company’s proportionate share of earnings or losses. | |||||||||
On May 6, 2013, TCI acquired 135,000 shares of ARL Series K preferred stock for $270,000. It was pledged to Petra CRE CDO and used as collateral on a $5.0 million promissory note relating to the Amoco building settlement agreement. The par value per share is $2 and the liquidation preference is $22 per share. It is convertible to common stock at a rate of 5 to 1. | |||||||||
The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): | |||||||||
As of September 30, | 2013 | 2012 | |||||||
Real estate, net of accumulated depreciation | $ | 44,306 | $ | 45,901 | |||||
Notes receivable | 44,328 | 43,870 | |||||||
Other assets | 135,883 | 130,418 | |||||||
Notes payable | (60,237 | ) | (60,508 | ) | |||||
Other liabilities | (93,483 | ) | (84,628 | ) | |||||
Shareholders' equity | (70,797 | ) | (75,053 | ) | |||||
For the Nine Months Ended September 30, | 2013 | 2012 | |||||||
Revenue | $ | 9,450 | $ | 5,786 | |||||
Depreciation | (220 | ) | (194 | ) | |||||
Operating expenses | (6,420 | ) | (3,264 | ) | |||||
Gain (loss) on land sales | 611 | (1,507 | ) | ||||||
Loss on sale of investment | - | (361 | ) | ||||||
Interest expense | (4,773 | ) | (3,245 | ) | |||||
Loss from continuing operations | (1,352 | ) | (2,785 | ) | |||||
Income (loss) from discontinued operations | (15 | ) | 2,708 | ||||||
Net Loss | $ | (1,367 | ) | $ | (77 | ) | |||
Company's proportionate share of earnings | $ | (27 | ) | $ | (2 | ) | |||
NOTES_PAYABLE
NOTES PAYABLE. | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
NOTES PAYABLE. | ' | ||||||||||||||||
NOTES-PAYABLE | ' | ||||||||||||||||
NOTE 5. NOTES PAYABLE | |||||||||||||||||
Below is a summary of our notes and interest payable as of September 30, 2013 (dollars in thousands): | |||||||||||||||||
Notes Payable | Stock Loans | Accrued Interest | Total Debt | ||||||||||||||
Apartments | $ | 492,679 | $ | - | $ | 1,545 | $ | 494,224 | |||||||||
Commercial | 105,557 | - | 258 | 105,815 | |||||||||||||
Land | 95,215 | - | 2,090 | 97,305 | |||||||||||||
Real estate held for sale | 2,457 | - | 9 | 2,466 | |||||||||||||
Real estate subject to sales contract | 26,616 | - | 1,452 | 28,068 | |||||||||||||
Other | 15,120 | 2,195 | 281 | 17,596 | |||||||||||||
Total | $ | 737,644 | $ | 2,195 | $ | 5,635 | $ | 745,474 | |||||||||
On January 24, 2013, the Company refinanced the existing mortgage on Breakwater Bay apartments, a 176-unit complex located in Beaumont, Texas, for a new mortgage of $9.8 million. We paid off the existing mortgage of $9.1 million and $0.3 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. | |||||||||||||||||
On January 25, 2013, the Company refinanced the existing mortgage on Northside on Travis apartments, a 200-unit complex located in Sherman, Texas, for a new mortgage of $13.9 million. We paid off the existing mortgage of $13.5 million and $1.3 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. | |||||||||||||||||
On January 28, 2013, the Company refinanced the existing mortgage on Capitol Hill apartments, a 156-unit complex located in Little Rock, Arkansas, for a new mortgage of $9.4 million. We paid off the existing mortgage of $8.8 million and $0.3 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. | |||||||||||||||||
On February 12, 2013, the construction loan in the amount of $17.0 million that was taken out on May 13, 2010 to fund the development of Toulon apartments, a 240-unit complex located in Gautier, Mississippi, closed into permanent financing. The note accrues interest at 5.37% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on December 1, 2051. | |||||||||||||||||
On February 25, 2013, the Company refinanced the existing mortgage on Mansions of Mansfield apartments, a 208-unit complex located in Mansfield, Texas, for a new mortgage of $16.3 million. We paid off the existing mortgage of $15.8 million and $1.2 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2053. | |||||||||||||||||
On February 25, 2013, the Company refinanced the existing mortgage on Preserve at Pecan Creek apartments, a 192-unit complex located in Denton, Texas, for a new mortgage of $15.1 million. We paid off the existing mortgage of $14.6 million and $1.1 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2053. | |||||||||||||||||
On March 25, 2013, the Company refinanced the existing mortgage on Parc at Clarksville apartments, a 168-unit complex, located in Clarksville, Tennessee, for a new mortgage of $13.4 million. We paid off the existing mortgage of $13.0 million and $0.7 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on April 1, 2053. | |||||||||||||||||
On May 6, 2013, the Company signed a $5.0 million promissory note to Petra CRE CDO relating to the Amoco building settlement agreement. The promissory note is collateralized with the ARL Series K preferred stock acquired by the Company. | |||||||||||||||||
On June 7, 2013, a wholly-owned subsidiary of IOT entered into a Settlement and Release Agreement and a Loan Purchase Agreement in order to purchase the Mercer/Travelers land mortgage note due to BDF TCI Mercer III, LLC (“BDF”), the existing lender, at a discount. Under the agreement, IOT is required to make monthly deposits of $250,000 through August 6, 2013 or, if an extension option is exercised, September 5, 2013, with a final lump sum payment of $28,663,277 due October 4, 2013. Under these agreements, IOT also agreed to purchase an obligation known as the Lamar land loan, due by the Company, from BDF. The Lamar land loan is to be purchased for $1,836,723, requiring a cash payment of $336,723 due September 5, 2013 or, if the extension option is exercised, October 4, 2013, and two promissory notes of $750,000 each. The promissory notes will accrue interest at 5.0% and are due in full on the maturity dates, which will be six and twelve months from the closing date of September 5, 2013 or, if the extension option is exercised, October 4, 2013. During this time, IOT is still obligated to make monthly mortgage interest payments of $150,000 per month according to the Fourth Modification to the Forbearance Agreement. On October 5, 2013, the Loan Purchase Agreement was modified. IOT was required to pay an extension fee of $300,000 and the close was extended to November 5, 2013. IOT has the option to pay a second extension fee of $400,000 and extend the close to December 5, 2013. | |||||||||||||||||
On June 26, 2013, the Company refinanced the existing mortgage on Dorado Ranch apartments, a 224-unit complex located in Dallas, Texas, for a new mortgage of $16.6 million. We paid off the existing mortgage of $16.2 million and $1.4 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on July 1, 2053. | |||||||||||||||||
On June 26, 2013, the Company refinanced the existing mortgage on Legends of El Paso apartments, a 240-unit complex located in El Paso, Texas, for a new mortgage of $16.0 million. We paid off the existing mortgage of $15.2 million and $1.2 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on July 1, 2053. | |||||||||||||||||
On June 26, 2013, the Company refinanced the existing mortgage on Vistas of Pinnacle Park apartments, a 332-unit complex located in Dallas, Texas, for a new mortgage of $19.0 million. We paid off the existing mortgage of $18.6 million and $2 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on June 26, 2053. | |||||||||||||||||
On August 30, 2013, the Company obtained a loan of $1.9 million, secured by 4.02 acres of land known as Denham Springs, located in Denham Springs, Louisiana, 2.90 acres of land known as Sugar Mill, located in Baton Rouge, Louisiana, and 23.24 acres of land known as Cooks Lane, located in Fort Worth, Texas. The existing loan on Denham Springs land for $0.1 million was paid with the proceeds from the loan. | |||||||||||||||||
In conjunction with the development of various apartment projects and other developments, we drew down $0.3 million in construction loans during the nine months ended September 30, 2013. This was related to the permanent closing of the construction loan for Toulon apartments. | |||||||||||||||||
There are various land mortgages, secured by the property, that are in the process of a modification or extension to the original note due to expiration of the loan. We are in constant contact with these lenders, working together in order to modify the terms of these loans and we anticipate a timely resolution that is similar to the existing agreement or subsequent modification. | |||||||||||||||||
The properties that we have sold to a related party and have deferred the recognition of the sale are treated as “subject to sales contract” on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
RELATED PARTY TRANSACTIONS | ' | ||||||||||||
RELATED PARTY TRANSACTIONS [TextBlock] | ' | ||||||||||||
NOTE 6. RELATED PARTY TRANSACTIONS | |||||||||||||
The following table reconciles the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2013 (dollars in thousands): | |||||||||||||
Pillar | ARL | Total | |||||||||||
Related party payable, December 31, 2012 | $ | - | $ | (10,057 | ) | $ | (10,057 | ) | |||||
Cash transfers | 14,748 | - | 14,748 | ||||||||||
Advisory fees | (6,377 | ) | - | (6,377 | ) | ||||||||
Net income fee | (159 | ) | - | (159 | ) | ||||||||
Fees and commissions | (2,567 | ) | - | (2,567 | ) | ||||||||
Cost reimbursements | (1,984 | ) | - | (1,984 | ) | ||||||||
Interest expense | - | (137 | ) | (137 | ) | ||||||||
Expenses paid by advisor | (824 | ) | - | (824 | ) | ||||||||
Financing (mortgage payments) | 22 | - | 22 | ||||||||||
Sales/purchases transactions | 9,081 | - | 9,081 | ||||||||||
Series K preferred stock acquisition | - | (270 | ) | (270 | ) | ||||||||
Purchase of obligations | (11,940 | ) | 14,320 | 2,380 | |||||||||
Related party receivable, September 30, 2013 | $ | - | $ | 3,856 | $ | 3,856 | |||||||
During the ordinary course of business, we have related party transactions that include, but are not limited to, rental income, interest income, interest expense, general and administrative costs, commissions, management fees, and property expenses. In addition, we have assets and liabilities that include related party amounts. The related party amounts included in assets and liabilities, and the related party revenues and expenses received/paid are shown on the face of the financial statements. |
OPERATING_SEGMENTS
OPERATING SEGMENTS | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
OPERATING SEGMENTS | ' | ||||||||||||||||||||
OPERATING SEGMENTS [TextBlock] | ' | ||||||||||||||||||||
NOTE 7. OPERATING SEGMENTS | |||||||||||||||||||||
Our segments are based on our method of internal reporting which classifies our operations by property type. Our property types are grouped into commercial, apartments, land and other operating segments. Significant differences between and among the accounting policies of the operating segments as compared to the Consolidated Financial Statements principally involve the calculation and allocation of administrative and other expenses. Management evaluates the performance of each of the operating segments and allocates resources to them based on their net operating income and cash flow. | |||||||||||||||||||||
Items of income that are not reflected in the segments are interest, other income, gain on debt extinguishment, gain on condemnation award, equity in partnerships, and gains on sale of real estate. Expenses that are not reflected in the segments are provision for losses, advisory fees, net income and incentive fees, general and administrative, non-controlling interests and net loss from discontinued operations before gains on sale of real estate. | |||||||||||||||||||||
The segment labeled as “Other” consists of revenue and operating expenses related to the notes receivable and corporate debt. | |||||||||||||||||||||
Presented below is our reportable segments’ operating income for the three and nine months ended September 30, 2013 and 2012, including segment assets and expenditures (dollars in thousands): | |||||||||||||||||||||
Commercial | |||||||||||||||||||||
For the Three Months Ended September 30, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 5,786 | $ | 20,734 | $ | 2 | $ | 94 | $ | 26,616 | |||||||||||
Property operating expenses | 3,673 | 9,245 | 261 | 19 | 13,198 | ||||||||||||||||
Depreciation and amortization | 1,681 | 3,594 | - | - | 5,275 | ||||||||||||||||
Mortgage and loan interest | 1,394 | 5,301 | 1,525 | 653 | 8,873 | ||||||||||||||||
Deferred borrowing costs | 15 | 5 | 31 | 39 | 90 | ||||||||||||||||
Loan charges and prepayment penalties | - | - | - | - | - | ||||||||||||||||
Interest income | - | - | - | 2,131 | 2,131 | ||||||||||||||||
Gain on land sales | - | - | - | - | - | ||||||||||||||||
Segment operating income (loss) | $ | (977 | ) | $ | 2,589 | $ | (1,815 | ) | $ | 1,514 | $ | 1,311 | |||||||||
Capital expenditures | 2,998 | 37 | 83 | - | 3,118 | ||||||||||||||||
Real estate assets | 151,783 | 511,543 | 171,151 | - | 834,477 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Cost of sale | - | (127 | ) | - | - | (127 | ) | ||||||||||||||
Gain on sale | $ | - | $ | 127 | $ | - | $ | - | $ | 127 | |||||||||||
Commercial | |||||||||||||||||||||
For the Three Months Ended September 30, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 7,100 | $ | 19,810 | $ | - | $ | 5 | $ | 26,915 | |||||||||||
Property operating expenses | 3,999 | 9,206 | 135 | 3 | 13,343 | ||||||||||||||||
Depreciation and amortization | 1,418 | 3,547 | - | - | 4,965 | ||||||||||||||||
Mortgage and loan interest | 1,521 | 6,221 | 1,502 | 954 | 10,198 | ||||||||||||||||
Deferred borrowing costs | 22 | (632 | ) | 58 | - | (552 | ) | ||||||||||||||
Loan charges and prepayment penalties | - | - | 35 | - | 35 | ||||||||||||||||
Interest income | - | - | - | 1,031 | 1,031 | ||||||||||||||||
Gain on land sales | - | - | 2,913 | - | 2,913 | ||||||||||||||||
Segment operating income | $ | 140 | $ | 1,468 | $ | 1,183 | $ | 79 | $ | 2,870 | |||||||||||
Capital expenditures | 1,265 | 269 | - | - | 1,534 | ||||||||||||||||
Real estate assets | 169,652 | 561,375 | 178,098 | - | 909,125 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 3,000 | $ | - | $ | 17,410 | $ | - | $ | 20,410 | |||||||||||
Cost of sale | 2,834 | 84 | 15,112 | - | 18,030 | ||||||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Gain (loss) on sale | $ | 166 | $ | (84 | ) | $ | 2,913 | $ | - | $ | 2,995 | ||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations: | |||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment operating income | $ | 1,311 | $ | 2,870 | |||||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (1,545 | ) | (968 | ) | |||||||||||||||||
Provision on impairment of notes receivable and real estate assets | (214 | ) | - | ||||||||||||||||||
Advisory fee to related party | (2,168 | ) | (2,198 | ) | |||||||||||||||||
Other income | 77 | 1,218 | |||||||||||||||||||
Loss on sale of investment | (275 | ) | - | ||||||||||||||||||
Earnings (loss) from unconsolidated joint ventures and investees | (30 | ) | 5 | ||||||||||||||||||
Litigation settlement | (2,739 | ) | (130 | ) | |||||||||||||||||
Income tax expense | (95 | ) | (356 | ) | |||||||||||||||||
Net income (loss) from continuing operations | $ | (5,678 | ) | $ | 441 | ||||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets: | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment assets | $ | 834,477 | $ | 909,125 | |||||||||||||||||
Investments in real estate partnerships | 5,508 | 4,992 | |||||||||||||||||||
Notes and interest receivable | 60,812 | 56,449 | |||||||||||||||||||
Other assets | 70,449 | 73,699 | |||||||||||||||||||
Total assets | $ | 971,246 | $ | 1,044,265 | |||||||||||||||||
Commercial | |||||||||||||||||||||
For the Nine Months Ended September 30, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 17,619 | $ | 61,148 | $ | 36 | $ | 98 | $ | 78,901 | |||||||||||
Property operating expenses | 10,398 | 26,327 | 781 | 29 | 37,535 | ||||||||||||||||
Depreciation and amortization | 4,776 | 10,749 | - | - | 15,525 | ||||||||||||||||
Mortgage and loan interest | 4,519 | 17,231 | 4,304 | 2,056 | 28,110 | ||||||||||||||||
Deferred borrowing costs | 55 | 3,253 | 118 | 42 | 3,468 | ||||||||||||||||
Loan charges and prepayment penalties | - | 7,182 | - | 26 | 7,208 | ||||||||||||||||
Interest income | - | - | - | 6,427 | 6,427 | ||||||||||||||||
Loss on land sales | - | - | 48 | - | 48 | ||||||||||||||||
Segment operating income (loss) | $ | (2,129 | ) | $ | (3,594 | ) | $ | (5,215 | ) | $ | 4,372 | $ | (6,566 | ) | |||||||
Capital expenditures | 6,050 | 283 | 364 | - | 6,697 | ||||||||||||||||
Real estate assets | 151,783 | 511,543 | 171,151 | - | 834,477 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 26,974 | $ | 50,122 | $ | 2,250 | $ | - | $ | 79,346 | |||||||||||
Cost of sale | 14,914 | 37,790 | 2,298 | - | 55,002 | ||||||||||||||||
Gain (loss) on sale | $ | 12,060 | $ | 12,332 | $ | (48 | ) | $ | - | $ | 24,344 | ||||||||||
Commercial | |||||||||||||||||||||
For the Nine Months Ended September 30, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 21,413 | $ | 57,675 | $ | - | $ | 48 | $ | 79,136 | |||||||||||
Property operating expenses | 12,131 | 25,190 | 651 | 282 | 38,254 | ||||||||||||||||
Depreciation and amortization | 4,226 | 10,645 | - | - | 14,871 | ||||||||||||||||
Mortgage and loan interest | 4,501 | 20,148 | 4,484 | 3,453 | 32,586 | ||||||||||||||||
Deferred borrowing costs | 64 | 2,126 | 109 | - | 2,299 | ||||||||||||||||
Loan charges and prepayment penalties | - | 6,118 | 79 | - | 6,197 | ||||||||||||||||
Interest income | - | - | - | 8,129 | 8,129 | ||||||||||||||||
Gain on land sales | - | - | 8,074 | - | 8,074 | ||||||||||||||||
Segment operating income (loss) | $ | 491 | $ | (6,552 | ) | $ | 2,751 | $ | 4,442 | $ | 1,132 | ||||||||||
Capital expenditures | 2,004 | 504 | 40 | - | 2,548 | ||||||||||||||||
Real estate assets | 169,652 | 561,375 | 178,098 | - | 909,125 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 9,825 | $ | 47,131 | $ | 36,390 | $ | - | $ | 93,346 | |||||||||||
Cost of sale | 10,196 | 41,587 | 28,931 | - | 80,714 | ||||||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Gain (loss) on sale | $ | (371 | ) | $ | 5,544 | $ | 8,074 | $ | - | $ | 13,247 | ||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations: | |||||||||||||||||||||
For the Nine Months Ended | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment operating income (loss) | $ | (6,566 | ) | $ | 1,132 | ||||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (4,990 | ) | (4,176 | ) | |||||||||||||||||
Provision on impairment of notes receivable and real estate assets | (214 | ) | - | ||||||||||||||||||
Advisory fee to related party | (6,377 | ) | (6,719 | ) | |||||||||||||||||
Other income | 257 | 4,529 | |||||||||||||||||||
Loss on sale of investment | (283 | ) | (118 | ) | |||||||||||||||||
Earnings from unconsolidated joint ventures and investees | (28 | ) | (58 | ) | |||||||||||||||||
Litigation settlement | (2,727 | ) | (135 | ) | |||||||||||||||||
Income tax benefit | 8,476 | 1,279 | |||||||||||||||||||
Net loss from continuing operations | $ | (12,452 | ) | $ | (4,266 | ) | |||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets: | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment assets | $ | 834,477 | $ | 909,125 | |||||||||||||||||
Investments in real estate partnerships | 5,508 | 4,992 | |||||||||||||||||||
Notes and interest receivable | 60,812 | 56,449 | |||||||||||||||||||
Other assets | 70,449 | 73,699 | |||||||||||||||||||
Total assets | $ | 971,246 | $ | 1,044,265 | |||||||||||||||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||||||
DISCONTINUED OPERATIONS [TextBlock] | ' | ||||||||||||||||
NOTE 8. DISCONTINUED OPERATIONS | |||||||||||||||||
We apply the provisions of ASC Topic 360 “Property, Plant and Equipment”. ASC Topic 360 requires that long-lived assets that are to be disposed of by sale be measured at the lesser of (1) book value or (2) fair value less cost to sell. In addition, it requires that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. | |||||||||||||||||
Discontinued operations relates to properties that were either sold or held for sale as of the period ended September 30, 2013. Included in discontinued operations are a total of six and eleven properties for 2013 and 2012, respectively. Properties sold in 2013 have been reclassified to discontinued operations for current and prior year reporting periods. In 2013, we sold two apartment complexes (Laguna Vista and Verandas at City View), three commercial properties (225 Baronne, Amoco and Eton Square), and have one commercial property held for sale (Ergon). In 2012, we sold two apartment complexes (Portofino and Wildflower Villas) and three commercial properties (305 Baronne, Clarke Garage and Dunes Plaza). The gain on sale of the properties is also included in discontinued operations for those years. | |||||||||||||||||
The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands): | |||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Revenues | |||||||||||||||||
Rental and other property revenues | $ | (8 | ) | $ | 2,412 | $ | 3,760 | $ | 10,262 | ||||||||
Other income (expense) | - | (1,126 | ) | 20 | (187 | ) | |||||||||||
(8 | ) | 1,286 | 3,780 | 10,075 | |||||||||||||
Expenses | |||||||||||||||||
Property operating expenses | 154 | 1,945 | 1,744 | 6,779 | |||||||||||||
Interest expense | 4 | (256 | ) | 892 | 1,659 | ||||||||||||
Loan cost amortization | - | 5 | 4 | 17 | |||||||||||||
Loan fee expense | - | - | - | 849 | |||||||||||||
General and administrative | 232 | 227 | 823 | 551 | |||||||||||||
Depreciation and amortization | - | 463 | 511 | 1,794 | |||||||||||||
Losses from unconsolidated joint ventures and investees | - | - | (20 | ) | (56 | ) | |||||||||||
390 | 2,384 | 3,954 | 11,593 | ||||||||||||||
Loss from discontinued operations before gains on sale of real estate, taxes, and fees | (398 | ) | (1,098 | ) | (174 | ) | (1,518 | ) | |||||||||
Gain on sale of discontinued operations | 127 | 82 | 24,392 | 5,173 | |||||||||||||
Income (loss) from discontinued operations | (271 | ) | (1,016 | ) | 24,218 | 3,655 | |||||||||||
Income tax benefit (expense) | 95 | 356 | (8,476 | ) | (1,279 | ) | |||||||||||
Net income (loss) from discontinued operations | $ | (176 | ) | $ | (660 | ) | $ | 15,742 | $ | 2,376 | |||||||
Our application of ASC Topic 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2012 as income from discontinued operations. This does not have an impact on net income available to common shareholders and only impacts the presentation of these properties within the Consolidated Statements of Operations. |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 9 Months Ended |
Sep. 30, 2013 | |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY [TextBlock] | ' |
NOTE 9. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | |
Dynex Commercial, Inc. and Dynex Capital, Inc. | |
On February 13, 2013, the Court of Appeals, Fifth District of Texas at Dallas (the “Fifth Court of Appeals”) rendered an opinion involving Transcontinental Realty Investors, Inc. (the “Issuer” or “TCI”) in Case No. 05-04-01358-CV styled Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. v. Dynex Commercial, Inc. and Dynex Capital, Inc. The case was on appeal from the 68th Judicial District Court of Dallas County, Texas, had previously been appealed to the Fifth Court of Appeals and further appealed to the Supreme Court of the State of Texas which had remanded the instant case back to the Fifth Court of Appeals to address certain issues. The case had its origin with Dynex Commercial making loans to Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. (subsidiaries of Continental Mortgage & Equity Trust (“CMET”), an entity which merged into TCI in 1999 after the original suit was filed). Under the original loan commitment, $160,000,000 in loans were to be made to the entities. The loans were conditioned on the execution of a commitment between Dynex Commercial and Basic Capital Management, Inc. (“Basic”). | |
An original trial to a jury resulted in the jury awarding significant damages to Basic for “lost opportunity,” awarding damages in “increased costs” and “lost opportunity” damages to American Realty Trust, Inc. (“ART”) and damages of $960,646.28 in “increased costs” and $11,161,520 for “lost opportunity” damages in favor of TCI and its subsidiaries (a total of $12,122,166.28). The original Trial Court ignored the jury’s findings and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in Dynex’s favor; the Fifth Court of Appeals has now ruled that the JNOV was improper because there was sufficient evidence to support the jury’s findings. As a result, the Fifth Court of Appeals ordered the Trial Court to enter a new judgment consistent with the jury’s original findings. | |
The Fifth Court of Appeals also determined that TCI was entitled to damages for “lost opportunities” relating to tenant improvements and awarded TCI an additional $252,577. Issues relating to attorneys fees were also addressed with the Fifth Court of Appeals ordering the Trial Court to “re-try” the issue of attorney’s fees to determine the amount of fees to which TCI would be entitled on a “breach of commitment” claim. In addition, as a result of the changes in amounts awarded and passage of time, the Fifth Court of Appeals also ordered the Trial Court to recalculate the correct amounts of pre and post-judgment interest owed to Appellants. | |
While the fifteen year old controversy is not yet fully resolved, the Fifth Court of Appeals opinion is favorable to TCI, but TCI expects continued challenges by Dynex to the Fifth Court of Appeals opinion and any ultimate award of damages by the Trial Court. | |
Liquidity. Management believes that TCI will generate excess cash from property operations in 2013; such excess, however, will not be sufficient to discharge all of TCI’s obligations as they become due. Management intends to sell land and income-producing real estate, refinance real estate and obtain additional borrowings primarily secured by real estate to meet its liquidity requirements. | |
Partnership Buyouts. TCI is the limited partner in various partnerships related to the construction of residential properties. As permitted in the respective partnership agreements, TCI intends to purchase the interests of the general and any other limited partners in these partnerships subsequent to the completion of these projects. The amounts paid to buy out the non-affiliated partners are limited to development fees earned by the non-affiliated partners, and are set forth in the respective partnership agreements. | |
Litigation. The ownership of property and provision of services to the public as tenants entails an inherent risk of liability. Although the Company and its subsidiaries are involved in various items of litigation incidental to and in the ordinary course of its business, in the opinion of management, the outcome of such litigation will not have a material adverse impact upon the Company’s financial condition, results of operation or liquidity. | |
The Company is involved in and vigorously defending against, a number of deficiency claims with respect to assets that have been foreclosed by various lenders. Such claims are generally against a consolidated subsidiary as the borrower or the Company as a guarantor of indebtedness or performance. Some of these proceedings may ultimately result in an unfavorable determination for the Company and/or one of its consolidated subsidiaries. While we cannot predict the final result of such proceedings, management believes that the maximum exposure to the Company and its consolidated subsidiaries, if any, will not exceed approximately $20 million in the aggregate and will occur, if at all, in future years. |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2013 | |
EARNINGS PER SHARE | ' |
EARNINGS PER SHARE [TextBlock] | ' |
NOTE 10. EARNINGS PER SHARE | |
Earnings per share (“EPS”) have been computed pursuant to the provisions of ASC Topic 260 “Earnings Per Share”. The computation of basic EPS is calculated by dividing income available to common shareholders from continuing operations, adjusted for preferred dividends, by the weighted-average number of common shares outstanding during the period. Shares issued during the period shall be weighted for the portion of the period that they were outstanding. As of September 30, 2013, we have 5,000 shares of stock options outstanding, which will expire on January 1, 2015 if not exercised. These options are considered in the computation of diluted earnings per share if the effect of applying the “treasury stock” method is dilutive. We have 30,000 shares of Series C cumulative convertible preferred stock issued and outstanding. The stock has a liquidation preference of $100.00 per share. After September 30, 2006, the stock may be converted into common stock at 90% of the daily average closing price of the common stock for the prior five trading days. The effects of the Series C Cumulative Convertible Preferred Stock are included in the dilutive earnings per share if applying the if-converted method is dilutive. As of September 30, 2013, the preferred stock and the stock options were anti-dilutive and thus not included in the EPS calculation. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS [TextBlock] | ' |
NOTE 11. SUBSEQUENT EVENTS | |
On October 11, 2013, the Company refinanced the existing mortgage on 600 Las Colinas, a 510,173 square foot commercial building located in Irving, Texas, for a new mortgage of $41.0 million. TCI paid off the existing mortgage of $31.0 million and $5.3 million in closing costs and escrows. The note accrues interest at 5.31% and payments of interest and principal are due monthly based upon a 30-year amortization schedule, maturing on November 1, 2023. | |
On October 15, 2013, the Company recorded the transfer of ownership of a 26,000 square foot commercial building known as the Ergon building and 7.95 acres of land known as Jackson Capital City land, located in Jackson, Mississippi, to the existing lender for a settlement price of $3.7 million. The proceeds of this sale were used to pay down stock secured loans with Armed Forces Bank. |
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended | ||
Sep. 30, 2013 | |||
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | ' | ||
Organization | ' | ||
Organization | |||
As used herein, the terms “TCI”, “the Company”, “we”, “our” or “us” refer to Transcontinental Realty Investors, Inc., a Nevada corporation. TCI is the successor to a California business trust which was organized on September 6, 1983, and commenced operations on January 31, 1984. Effective March 31, 2003, TCI’s financial results were consolidated in American Realty Investors, Inc. (“ARL”) Form 10-K and related consolidated financial statements. | |||
The Company is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). Subsidiaries of ARL own approximately 83.8% of the Company’s common stock. ARL’s common stock trades on the New York Stock Exchange under the symbol (“ARL”). We have no employees. | |||
TCI is a “C” corporation for U.S. federal income tax purposes and files an annual consolidated tax return with ARL and its ultimate parent, Realty Advisors Management, Inc. | |||
TCI owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (“IOT”). Effective July 17, 2009, IOT’s financial results were consolidated with those of ARL and TCI and their subsidiaries. Shares of IOT are traded on the New York Stock Exchange Euronext (“NYSE MKT”) under the symbol (“IOT”). | |||
TCI invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (“Pillar”) is the Company’s external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of TCI, and for setting the policies which guide it, the day-to-day operations of TCI are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with TCI’s business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to ARL and IOT. | |||
Regis Realty Prime, LLC (“Regis”) manages our commercial properties and provides brokerage services for our real estate portfolio. TCI engages third-party companies to lease and manage its apartment properties. TCI also has a development agreement with Unified Housing Foundation, Inc. (“UHF”), a non-profit corporation that provides management services for the development of residential apartment projects in the future. | |||
Properties | ' | ||
Properties | |||
We own or had interests in a total property portfolio of 55 income-producing properties as of September 30, 2013. The properties consisted of: | |||
• | 10 commercial buildings consisting of seven office buildings, one industrial warehouse and two retail centers comprising in aggregate approximately 2.3 million rentable square feet; | ||
• | 45 apartment communities totaling 8,033 units; excluding apartments being developed; and | ||
• | 4,105 acres of developed and undeveloped land. | ||
We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities but have not yet begun construction. At September 30, 2013, we had no apartment projects in development. The third-party developer typically holds a general partner, as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all required equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our consolidated financial statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developer’s partnership interests in exchange for any remaining unpaid developer fees. | |||
Basis of presentation | ' | ||
Basis of Presentation | |||
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2013, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. | |||
The year-end Consolidated Balance Sheet at December 31, 2012, was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. Certain 2012 financial statement amounts have been reclassified to conform to the 2013 presentation, including adjustments for discontinued operations. | |||
Principles of Consolidation | ' | ||
Principles of Consolidation | |||
The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (VIE), in accordance with the provisions and guidance of ASC Topic 810 “Consolidation”, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (“EITF”) Issue 04-5, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary generally is the entity that provides financial support and bears a majority of the financial risks, authorizes certain capital transactions, or makes operating decisions that materially affect the entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation. | |||
In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. | |||
For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. | |||
Real estate, depreciation, and impairment | ' | ||
Real Estate, Depreciation and Impairment | |||
Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements – 10-40 years; furniture, fixtures and equipment – 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360, “Property, Plant and Equipment”. Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under ASC Topic 360, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. | |||
Real-estate held for sales | ' | ||
Real Estate Held For Sale | |||
We periodically classify real estate assets as “held for sale”. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations. | |||
Cost Capitalization | ' | ||
Cost Capitalization | |||
Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. | |||
We capitalize leasing costs which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. | |||
Fair value measurement | ' | ||
Fair Value Measurement | |||
We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. | |||
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows: | |||
Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. | |||
Level 1 – | |||
Level 2 – | Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||
Level 3 – | Unobservable inputs that are significant to the fair value measurement. | ||
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||
Related parties | ' | ||
Related Parties | |||
We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity. | |||
Newly issued accounting pronouncements | ' | ||
Newly Issued Accounting Pronouncements | |||
We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our Consolidated Financial Statements, including that which we have not yet adopted. We do not believe that any such guidance will have a material effect on our financial position or results of operations. |
REAL_ESTATE_Tables
REAL ESTATE (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
REAL ESTATE (Tables) | ' | ||||
Real estate owned | ' | ||||
Below is a summary of the real estate owned as of September 30, 2013 (dollars in thousands): | |||||
Apartments | $ | 588,035 | |||
Commercial properties | 212,286 | ||||
Land held for development | 141,692 | ||||
Real estate held for sale | 151 | ||||
Real estate subject to sales contract | 43,410 | ||||
Total real estate | 985,574 | ||||
Less accumulated depreciation | (151,097 | ) | |||
Total real estate, net of depreciation | $ | 834,477 |
NOTES_AND_INTEREST_RECEIVABLE_
NOTES AND INTEREST RECEIVABLE (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
NOTES AND INTEREST RECEIVABLE (Tables) | ' | ||||||||
Mortgage notes receivable consist of first, wraparound and junior mortgage loans | ' | ||||||||
Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands): | |||||||||
Maturity | Interest | ||||||||
Borrower | Date | Rate | Amount | Security | |||||
Performing loans: | |||||||||
Miscellaneous related party notes (1) | Various | Various | $ 664 | Various secured interests | |||||
S Breeze I-V, LLC | 14-Jun | 5.00% | 3,078 | 6% Class A and 25% Class B Limited Partner Interests | |||||
Unified Housing Foundation, Inc. (Echo Station) (1) | Dec-32 | 12.00% | 1,481 | 100% Interest in Unified Housing of Temple, LLC | |||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1) | Dec-32 | 12.00% | 2,000 | Unsecured | |||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1) | Dec-32 | 12.00% | 6,363 | Membership interest in Housing for Seniors of Humble, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1) | Dec-32 | 12.00% | 4,663 | 100% Interest in Unified Housing of Austin, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1) | Dec-32 | 12.00% | 3,057 | 100% Interest in Unified Housing of Austin, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1) | Dec-32 | 12.00% | 6,000 | 100% Interest in Unified Housing of Vista Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1) | Dec-32 | 12.00% | 2,250 | 100% Interest in Unified Housing of Vista Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Parkside Crossing) (1) | Dec-32 | 12.00% | 1,936 | 100% Interest in Unified Housing of Parkside Crossing, LLC | |||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | Dec-32 | 12.00% | 4,812 | 100% Interest in Unified Housing of Sendero Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | Dec-32 | 12.00% | 5,174 | 100% Interest in Unified Housing of Sendero Ridge, LLC | |||||
Unified Housing Foundation, Inc. (Timbers of Terrell) (1) | Dec-32 | 12.00% | 1,323 | 100% Interest in Unified Housing of Terrell, LLC | |||||
Unified Housing Foundation, Inc. (Tivoli) (1) | Dec-32 | 12.00% | 6,140 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (Tivoli) (1) | Dec-32 | 12.00% | 1,826 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (1) | 13-Dec | 5.00% | 6,000 | Unsecured | |||||
Accrued interest | 5,755 | ||||||||
Total Performing | $ 62,522 | ||||||||
Non-Performing loans: | |||||||||
Miscellaneous non-related party notes | Various | Various | 640 | Various secured and unsecured interests | |||||
Accrued interest | 45 | ||||||||
Total Non-Performing | $ 685 | ||||||||
Allowance for doubtful accounts | (2,395) | ||||||||
Total | $ 60,812 | ||||||||
(1) Related party notes |
INVESTMENT_IN_UNCONSOLIDATED_J1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | ' | ||||||||
Investments accounted for via the equity method | ' | ||||||||
Investments in unconsolidated joint ventures and investees consist of the following: | |||||||||
Percentage ownership as of | |||||||||
30-Sep-13 | 30-Sep-12 | ||||||||
American Realty Investors, Inc.(1) | 1.99 | % | 1.99 | % | |||||
Summary of the financial position and results of operations from unconsolidated joint ventures and other investees | ' | ||||||||
The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): | |||||||||
As of September 30, | 2013 | 2012 | |||||||
Real estate, net of accumulated depreciation | $ | 44,306 | $ | 45,901 | |||||
Notes receivable | 44,328 | 43,870 | |||||||
Other assets | 135,883 | 130,418 | |||||||
Notes payable | (60,237 | ) | (60,508 | ) | |||||
Other liabilities | (93,483 | ) | (84,628 | ) | |||||
Shareholders' equity | (70,797 | ) | (75,053 | ) | |||||
For the Nine Months Ended September 30, | 2013 | 2012 | |||||||
Revenue | $ | 9,450 | $ | 5,786 | |||||
Depreciation | (220 | ) | (194 | ) | |||||
Operating expenses | (6,420 | ) | (3,264 | ) | |||||
Gain (loss) on land sales | 611 | (1,507 | ) | ||||||
Loss on sale of investment | - | (361 | ) | ||||||
Interest expense | (4,773 | ) | (3,245 | ) | |||||
Loss from continuing operations | (1,352 | ) | (2,785 | ) | |||||
Income (loss) from discontinued operations | (15 | ) | 2,708 | ||||||
Net Loss | $ | (1,367 | ) | $ | (77 | ) | |||
Company's proportionate share of earnings | $ | (27 | ) | $ | (2 | ) |
Scheduled_principal_payments_o
Scheduled principal payments of notes payable (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Scheduled principal payments of notes payable | ' | ||||||||||||||||
Scheduled principal payments of notes payables | ' | ||||||||||||||||
Below is a summary of our notes and interest payable as of September 30, 2013 (dollars in thousands): | |||||||||||||||||
Notes Payable | Stock Loans | Accrued Interest | Total Debt | ||||||||||||||
Apartments | $ | 492,679 | $ | - | $ | 1,545 | $ | 494,224 | |||||||||
Commercial | 105,557 | - | 258 | 105,815 | |||||||||||||
Land | 95,215 | - | 2,090 | 97,305 | |||||||||||||
Real estate held for sale | 2,457 | - | 9 | 2,466 | |||||||||||||
Real estate subject to sales contract | 26,616 | - | 1,452 | 28,068 | |||||||||||||
Other | 15,120 | 2,195 | 281 | 17,596 | |||||||||||||
Total | $ | 737,644 | $ | 2,195 | $ | 5,635 | $ | 745,474 |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
RELATED PARTY TRANSACTIONS (Tables) | ' | ||||||||||||
Reconciliation of accounts receivable and accounts payable to related parties | ' | ||||||||||||
The following table reconciles the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2013 (dollars in thousands): | |||||||||||||
Pillar | ARL | Total | |||||||||||
Related party payable, December 31, 2012 | $ | - | $ | (10,057 | ) | $ | (10,057 | ) | |||||
Cash transfers | 14,748 | - | 14,748 | ||||||||||
Advisory fees | (6,377 | ) | - | (6,377 | ) | ||||||||
Net income fee | (159 | ) | - | (159 | ) | ||||||||
Fees and commissions | (2,567 | ) | - | (2,567 | ) | ||||||||
Cost reimbursements | (1,984 | ) | - | (1,984 | ) | ||||||||
Interest expense | - | (137 | ) | (137 | ) | ||||||||
Expenses paid by advisor | (824 | ) | - | (824 | ) | ||||||||
Financing (mortgage payments) | 22 | - | 22 | ||||||||||
Sales/purchases transactions | 9,081 | - | 9,081 | ||||||||||
Series K preferred stock acquisition | - | (270 | ) | (270 | ) | ||||||||
Purchase of obligations | (11,940 | ) | 14,320 | 2,380 | |||||||||
Related party receivable, September 30, 2013 | $ | - | $ | 3,856 | $ | 3,856 |
OPERATING_SEGMENTS_Tables
OPERATING SEGMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
OPERATING SEGMENTS (Tables) | ' | ||||||||||||||||||||
Segments operating income including segment assets and expenditures | ' | ||||||||||||||||||||
Presented below is our reportable segments’ operating income for the three and nine months ended September 30, 2013 and 2012, including segment assets and expenditures (dollars in thousands): | |||||||||||||||||||||
Commercial | |||||||||||||||||||||
For the Three Months Ended September 30, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 5,786 | $ | 20,734 | $ | 2 | $ | 94 | $ | 26,616 | |||||||||||
Property operating expenses | 3,673 | 9,245 | 261 | 19 | 13,198 | ||||||||||||||||
Depreciation and amortization | 1,681 | 3,594 | - | - | 5,275 | ||||||||||||||||
Mortgage and loan interest | 1,394 | 5,301 | 1,525 | 653 | 8,873 | ||||||||||||||||
Deferred borrowing costs | 15 | 5 | 31 | 39 | 90 | ||||||||||||||||
Loan charges and prepayment penalties | - | - | - | - | - | ||||||||||||||||
Interest income | - | - | - | 2,131 | 2,131 | ||||||||||||||||
Gain on land sales | - | - | - | - | - | ||||||||||||||||
Segment operating income (loss) | $ | (977 | ) | $ | 2,589 | $ | (1,815 | ) | $ | 1,514 | $ | 1,311 | |||||||||
Capital expenditures | 2,998 | 37 | 83 | - | 3,118 | ||||||||||||||||
Real estate assets | 151,783 | 511,543 | 171,151 | - | 834,477 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Cost of sale | - | (127 | ) | - | - | (127 | ) | ||||||||||||||
Gain on sale | $ | - | $ | 127 | $ | - | $ | - | $ | 127 | |||||||||||
Commercial | |||||||||||||||||||||
For the Three Months Ended September 30, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 7,100 | $ | 19,810 | $ | - | $ | 5 | $ | 26,915 | |||||||||||
Property operating expenses | 3,999 | 9,206 | 135 | 3 | 13,343 | ||||||||||||||||
Depreciation and amortization | 1,418 | 3,547 | - | - | 4,965 | ||||||||||||||||
Mortgage and loan interest | 1,521 | 6,221 | 1,502 | 954 | 10,198 | ||||||||||||||||
Deferred borrowing costs | 22 | (632 | ) | 58 | - | (552 | ) | ||||||||||||||
Loan charges and prepayment penalties | - | - | 35 | - | 35 | ||||||||||||||||
Interest income | - | - | - | 1,031 | 1,031 | ||||||||||||||||
Gain on land sales | - | - | 2,913 | - | 2,913 | ||||||||||||||||
Segment operating income | $ | 140 | $ | 1,468 | $ | 1,183 | $ | 79 | $ | 2,870 | |||||||||||
Capital expenditures | 1,265 | 269 | - | - | 1,534 | ||||||||||||||||
Real estate assets | 169,652 | 561,375 | 178,098 | - | 909,125 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 3,000 | $ | - | $ | 17,410 | $ | - | $ | 20,410 | |||||||||||
Cost of sale | 2,834 | 84 | 15,112 | - | 18,030 | ||||||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Gain (loss) on sale | $ | 166 | $ | (84 | ) | $ | 2,913 | $ | - | $ | 2,995 | ||||||||||
Commercial | |||||||||||||||||||||
For the Nine Months Ended September 30, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 17,619 | $ | 61,148 | $ | 36 | $ | 98 | $ | 78,901 | |||||||||||
Property operating expenses | 10,398 | 26,327 | 781 | 29 | 37,535 | ||||||||||||||||
Depreciation and amortization | 4,776 | 10,749 | - | - | 15,525 | ||||||||||||||||
Mortgage and loan interest | 4,519 | 17,231 | 4,304 | 2,056 | 28,110 | ||||||||||||||||
Deferred borrowing costs | 55 | 3,253 | 118 | 42 | 3,468 | ||||||||||||||||
Loan charges and prepayment penalties | - | 7,182 | - | 26 | 7,208 | ||||||||||||||||
Interest income | - | - | - | 6,427 | 6,427 | ||||||||||||||||
Loss on land sales | - | - | 48 | - | 48 | ||||||||||||||||
Segment operating income (loss) | $ | (2,129 | ) | $ | (3,594 | ) | $ | (5,215 | ) | $ | 4,372 | $ | (6,566 | ) | |||||||
Capital expenditures | 6,050 | 283 | 364 | - | 6,697 | ||||||||||||||||
Real estate assets | 151,783 | 511,543 | 171,151 | - | 834,477 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 26,974 | $ | 50,122 | $ | 2,250 | $ | - | $ | 79,346 | |||||||||||
Cost of sale | 14,914 | 37,790 | 2,298 | - | 55,002 | ||||||||||||||||
Gain (loss) on sale | $ | 12,060 | $ | 12,332 | $ | (48 | ) | $ | - | $ | 24,344 | ||||||||||
Commercial | |||||||||||||||||||||
For the Nine Months Ended September 30, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 21,413 | $ | 57,675 | $ | - | $ | 48 | $ | 79,136 | |||||||||||
Property operating expenses | 12,131 | 25,190 | 651 | 282 | 38,254 | ||||||||||||||||
Depreciation and amortization | 4,226 | 10,645 | - | - | 14,871 | ||||||||||||||||
Mortgage and loan interest | 4,501 | 20,148 | 4,484 | 3,453 | 32,586 | ||||||||||||||||
Deferred borrowing costs | 64 | 2,126 | 109 | - | 2,299 | ||||||||||||||||
Loan charges and prepayment penalties | - | 6,118 | 79 | - | 6,197 | ||||||||||||||||
Interest income | - | - | - | 8,129 | 8,129 | ||||||||||||||||
Gain on land sales | - | - | 8,074 | - | 8,074 | ||||||||||||||||
Segment operating income (loss) | $ | 491 | $ | (6,552 | ) | $ | 2,751 | $ | 4,442 | $ | 1,132 | ||||||||||
Capital expenditures | 2,004 | 504 | 40 | - | 2,548 | ||||||||||||||||
Real estate assets | 169,652 | 561,375 | 178,098 | - | 909,125 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 9,825 | $ | 47,131 | $ | 36,390 | $ | - | $ | 93,346 | |||||||||||
Cost of sale | 10,196 | 41,587 | 28,931 | - | 80,714 | ||||||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Gain (loss) on sale | $ | (371 | ) | $ | 5,544 | $ | 8,074 | $ | - | $ | 13,247 | ||||||||||
Segment information to the corresponding amounts in Statements of Operations | ' | ||||||||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations: | |||||||||||||||||||||
For the Three Months Ended | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment operating income | $ | 1,311 | $ | 2,870 | |||||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (1,545 | ) | (968 | ) | |||||||||||||||||
Provision on impairment of notes receivable and real estate assets | (214 | ) | - | ||||||||||||||||||
Advisory fee to related party | (2,168 | ) | (2,198 | ) | |||||||||||||||||
Other income | 77 | 1,218 | |||||||||||||||||||
Loss on sale of investment | (275 | ) | - | ||||||||||||||||||
Earnings (loss) from unconsolidated joint ventures and investees | (30 | ) | 5 | ||||||||||||||||||
Litigation settlement | (2,739 | ) | (130 | ) | |||||||||||||||||
Income tax expense | (95 | ) | (356 | ) | |||||||||||||||||
Net income (loss) from continuing operations | $ | (5,678 | ) | $ | 441 | ||||||||||||||||
For the Nine Months Ended | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment operating income (loss) | $ | (6,566 | ) | $ | 1,132 | ||||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (4,990 | ) | (4,176 | ) | |||||||||||||||||
Provision on impairment of notes receivable and real estate assets | (214 | ) | - | ||||||||||||||||||
Advisory fee to related party | (6,377 | ) | (6,719 | ) | |||||||||||||||||
Other income | 257 | 4,529 | |||||||||||||||||||
Loss on sale of investment | (283 | ) | (118 | ) | |||||||||||||||||
Earnings from unconsolidated joint ventures and investees | (28 | ) | (58 | ) | |||||||||||||||||
Litigation settlement | (2,727 | ) | (135 | ) | |||||||||||||||||
Income tax benefit | 8,476 | 1,279 | |||||||||||||||||||
Net loss from continuing operations | $ | (12,452 | ) | $ | (4,266 | ) | |||||||||||||||
Segment information to amounts in the Balance Sheets | ' | ||||||||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets: | |||||||||||||||||||||
September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Segment assets | $ | 834,477 | $ | 909,125 | |||||||||||||||||
Investments in real estate partnerships | 5,508 | 4,992 | |||||||||||||||||||
Notes and interest receivable | 60,812 | 56,449 | |||||||||||||||||||
Other assets | 70,449 | 73,699 | |||||||||||||||||||
Total assets | $ | 971,246 | $ | 1,044,265 |
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
DISCONTINUED OPERATIONS (Tables) | ' | ||||||||||||||||
Summary of revenue and expense information for the properties sold and held for sale | ' | ||||||||||||||||
The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands): | |||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Revenues | |||||||||||||||||
Rental and other property revenues | $ | (8 | ) | $ | 2,412 | $ | 3,760 | $ | 10,262 | ||||||||
Other income (expense) | - | (1,126 | ) | 20 | (187 | ) | |||||||||||
(8 | ) | 1,286 | 3,780 | 10,075 | |||||||||||||
Expenses | |||||||||||||||||
Property operating expenses | 154 | 1,945 | 1,744 | 6,779 | |||||||||||||
Interest expense | 4 | (256 | ) | 892 | 1,659 | ||||||||||||
Loan cost amortization | - | 5 | 4 | 17 | |||||||||||||
Loan fee expense | - | - | - | 849 | |||||||||||||
General and administrative | 232 | 227 | 823 | 551 | |||||||||||||
Depreciation and amortization | - | 463 | 511 | 1,794 | |||||||||||||
Losses from unconsolidated joint ventures and investees | - | - | (20 | ) | (56 | ) | |||||||||||
390 | 2,384 | 3,954 | 11,593 | ||||||||||||||
Loss from discontinued operations before gains on sale of real estate, taxes, and fees | (398 | ) | (1,098 | ) | (174 | ) | (1,518 | ) | |||||||||
Gain on sale of discontinued operations | 127 | 82 | 24,392 | 5,173 | |||||||||||||
Income (loss) from discontinued operations | (271 | ) | (1,016 | ) | 24,218 | 3,655 | |||||||||||
Income tax benefit (expense) | 95 | 356 | (8,476 | ) | (1,279 | ) | |||||||||||
Net income (loss) from discontinued operations | $ | (176 | ) | $ | (660 | ) | $ | 15,742 | $ | 2,376 | |||||||
Organization_and_significant_p
Organization and significant policies (Details) | Sep. 30, 2013 |
Organization and significant policies | ' |
Percentage of common stock by subsidiaries of ARL | 83.80% |
Percentage of common stock of Income Opportunity Realty Investors, Inc. By TCI | 81.10% |
Number of interests in a total property portfolio of income producing properties | 55 |
Number of commercial buildings | 10 |
Number of office buildings | 7 |
Number of industrial warehouse | 1 |
Number of retails centers | 2 |
Aggregate approximately rentable square feet in millions | 2.3 |
Number of apartment communities | 45 |
Apartment communities units total | 8,033 |
Area of acres of developed and undeveloped land | 4,105 |
Buildings and improvements minimum useful life | 10 |
Buildings and improvements maximum useful life | 40 |
Furniture, fixtures and equipment minimum useful life | 5 |
Furniture, fixtures and equipment maximum useful life | 10 |
Summary_of_real_estate_owned_a
Summary of real estate owned as of the end of the year (Details) (USD $) | Sep. 30, 2013 |
Summary of real estate owned as of the end of the year is listed: | ' |
Apartments | $588,035 |
Commercial properties | 212,286 |
Land held for development | 141,692 |
Real estate held for sale | 151 |
Real estate subject to sales contract | 43,410 |
Total real estate | 985,574 |
Less accumulated depreciation | -151,097 |
Total real estate, net of depreciation | $834,477 |
Real_estate_transactions_Detai
Real estate transactions (Details) | Verandas at City View | Sheffield | Laguna Vista |
Balance of real estate at Dec. 31, 2012 | 0 | ' | ' |
No of units | 314 | ' | 206 |
Sale price of land in millions | 25.3 | 2.3 | 24.8 |
Existing mortgage in millions | 18.2 | ' | ' |
Gain on sale of land parcel | 6.2 | ' | 6.1 |
Acres of land available | ' | 13.9 | ' |
Balance of real estate. at Sep. 30, 2013 | 0 | ' | ' |
NOTES_AND_INTEREST_RECEIVABLE_1
NOTES AND INTEREST RECEIVABLE CONSISTS OF THE FOLLOWING (Details) (USD $) | Sep. 30, 2013 |
Performing loans: | ' |
Miscellaneous related party notes (1) | $664 |
S Breeze I-V, LLC | 3,078 |
Unified Housing Foundation, Inc. (Echo Station) (1) | 1,481 |
Unified Housing Foundation, Inc. (Lakeshore Villas) (1) | 2,000 |
Unified Housing Foundation, Inc.. (Lakeshore Villas) (1) | 6,363 |
Unified Housing Foundation, Inc. (Limestone Canyon) (1) | 4,663 |
Unified Housing Foundation, Inc.. (Limestone Canyon) (1) | 3,057 |
Unified Housing Foundation, Inc. (Limestone Ranch) (1) | 6,000 |
Unified Housing Foundation, Inc.. (Limestone Ranch) (1) | 2,250 |
Unified Housing Foundation, Inc. (Parkside Crossing) (1) | 1,936 |
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | 4,812 |
Unified Housing Foundation, Inc.. (Sendero Ridge) (1) | 5,174 |
Unified Housing Foundation, Inc. (Timbers of Terrell) (1) | 1,323 |
Unified Housing Foundation, Inc. (Tivoli) (1) | 6,140 |
Unified Housing Foundation, Inc.. (Tivoli) (1) | 1,826 |
Unified Housing Foundation, Inc. (1) | 6,000 |
Accrued interest performing | 5,755 |
Total performing | 62,522 |
Miscellaneous non-related party notes | 640 |
Accrued interest non performing | 45 |
Total Non-Performing | 685 |
Allowances for doubtful accounts | -2,395 |
Total Financing Notes Receivable | $60,812 |
Results_of_operations_from_unc
Results of operations from unconsolidated subsidiaries and investees (dollars in thousands) (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Results of operations | ' | ' |
Real estate, net of accumulated depreciation | $44,306 | $45,901 |
Notes receivable | 44,328 | 43,870 |
Other assets; | 135,883 | 130,418 |
Notes payable | -60,237 | -60,508 |
Other liabilities | -93,483 | -84,628 |
Shareholders equity | -70,797 | -75,053 |
Revenue | 9,450 | 5,786 |
Depreciation | -220 | -194 |
Operating expenses | -6,420 | -3,264 |
Gain (losses) on land sale | 611 | -1,507 |
Loss on sale of investment | 0 | -361 |
Interest expenses. | -4,773 | -3,245 |
Loss from continuing operations | -1,352 | -2,785 |
Income (loss) from discontinued operations | -15 | 2,708 |
Net loss | -1,367 | -77 |
Companys proportionate share of earnings | ($27) | ($2) |
Summary_of_notes_and_interest_
Summary of notes and interest payable (Details) (USD $) | Sep. 30, 2013 |
Note Payable | ' |
Apartment | $492,679 |
Commercial. | 105,557 |
Land | 95,215 |
Real estate held for sale | 2,457 |
Real estate subject to sale contracts., | 26,616 |
Other | 15,120 |
Notes Payable | 737,644 |
Other, | 2,195 |
Stock Loans | 2,195 |
Apartments,. | 1,545 |
Commercial | 258 |
Lands | 2,090 |
Real estate held for sales | 9 |
Real estate subject to sales contract, | 1,452 |
Other. | 281 |
Accrued Interest | 5,635 |
Apartments, | 494,224 |
Commercials | 105,815 |
Land. | 97,305 |
Real estate held for sale. | 2,466 |
Real estate subject to sales contract. | 28,068 |
Others | 17,596 |
Total Debt | $745,474 |
Notes_issued_on_real_estate_De
Notes issued on real estate (Details) (USD $) | Oct. 04, 2013 | Jun. 07, 2013 | 6-May-13 |
Notes issued on real estate | ' | ' | ' |
Company signed a promissory note to Petra CRE CDO relating to the Amoco building settlement agreement in millions | ' | ' | 5 |
Amount of monthly deposits to be made as per the Settlement and Release Agreement and a Loan Purchase Agreement through September 5, 2013 | ' | $250,000 | ' |
Amount of final lump sum payment due | 28,663,277 | ' | ' |
The Lamar land loan is to be purchased for a total amount | 1,836,723 | ' | ' |
Lamar land loan cash payment | 336,723 | ' | ' |
Two promissory notesto be issued if the extension option is exercised | 750,000 | ' | ' |
Promissory notes will accrue interest at a rate | 5.00% | ' | ' |
During this time, IOT is still obligated to make monthly mortgage interest payments | 150,000 | ' | ' |
IOT was required to pay an extension fee | 300,000 | ' | ' |
IOT has the option to pay a second extension fee | $400,000 | ' | ' |
Denham_Springs_Real_Estate_Loa
Denham Springs Real Estate Loan (Details) | Aug. 30, 2013 |
Denham Springs Real Estate Loan | ' |
Company obtained a loan secured by acres of land in millions | 1.9 |
Denham Springs in acres | 4.02 |
Sugar Mill in acres | 2.9 |
Cooks Lane in acres | 23.24 |
The existing loan on Denham Springs land was paid with the proceeds from the loan in millions | 0.1 |
Mortagage_on_real_estate_Detai
Mortagage on real estate (Details) (USD $) | Breakwater Bay | Northside on Travis | Capitol Hill | Toulon | Mansions of Mansfield | Preserve at Pecan Creek | Parc at Clarksville | Dorado Ranch | Legends of El Paso apartments | Vistas of Pinnacle Park |
USD ($) | ||||||||||
Balance of mortagage at Dec. 31, 2012 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
No of units in apartments | 176 | 200 | 156 | 240 | 208 | 192 | 168 | 224 | 240 | 332 |
Amortization schedule in years | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 | 40 |
Balance of mortagage. at Sep. 30, 2013 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued interest (Percentage) at Sep. 30, 2013 | 2.50% | 2.50% | 2.50% | 5.37% | 2.50% | 2.50% | 2.50% | 2.50% | 2.50% | 2.50% |
New mortagage (Millions) at Sep. 30, 2013 | 9.8 | 13.9 | 9.4 | 17 | 16.3 | 15.1 | 13.4 | 16.6 | 16 | 19 |
paid off amt on existing mortagage (Millions) at Sep. 30, 2013 | 9.1 | 13.5 | 8.8 | ' | 15.8 | 14.6 | 13 | 16.2 | 15.2 | 18.6 |
Closing costs (Millions) at Sep. 30, 2013 | 0.3 | 1.3 | 0.3 | ' | 1.2 | 1.1 | 0.7 | 1.4 | 1.2 | 2 |
Related_party_transactions_Det
Related party transactions (Details) (USD $) | Pillar | ARI | Total |
Related party payable at Dec. 31, 2012 | ' | ($10,057) | ($10,057) |
Cash transfers | 14,748 | ' | 14,748 |
Advisory fees | -6,377 | ' | -6,377 |
Net income fee | -159 | ' | -159 |
Fees and commissions | -2,567 | ' | -2,567 |
Cost reimbursements | -1,984 | ' | -1,984 |
Interest expense | ' | -137 | -137 |
Expenses paid by advisor | -824 | ' | -824 |
Financing (mortgage payments) | 22 | ' | 22 |
Sales/Purchases transactions | 9,081 | ' | 9,081 |
Series K preferred stock acquisition | ' | -270 | -270 |
Purchase of obligations | -11,940 | 14,320 | 2,380 |
Related parties payable at Sep. 30, 2013 | ' | $3,856 | $3,856 |
Operating_Segments_information
Operating Segments information reconciliation with Statement of operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Operating Segments information reconciliation with Statement of operations | ' | ' | ' | ' |
Segment operating income (loss) | $1,311 | $2,870 | ($6,566) | $1,132 |
General and administrative | -1,545 | -968 | -4,990 | -4,176 |
Provisions on impairment of notes receivable and real estate asset | -214 | 0 | -214 | 0 |
Advisory fee | -2,168 | -2,198 | -6,377 | -6,719 |
Other income | 77 | 1,218 | 257 | 4,529 |
Loss on sale of investments | -275 | 0 | -283 | -118 |
Earnings from unconsolidated joint ventures and investees | -30 | 5 | -28 | -58 |
Litigation settlement | -2,739 | -130 | -2,727 | -135 |
Income tax benefit | -95 | -356 | 8,476 | 1,279 |
Net Income continuing operations | ($5,678) | $441 | ($12,452) | ($4,266) |
Operating_Segments_information1
Operating Segments information reconciliation with Consolidated Balance Sheets (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Operating Segments information reconciliation with Consolidated Balance Sheets | ' | ' |
Segment assets | $834,477 | $909,125 |
Investments in real estate partnerships | 5,508 | 4,992 |
Notes and interest receivable | 60,812 | 56,449 |
Other assets, | 70,449 | 73,699 |
Total assets; | $971,246 | $1,044,265 |
Summary_of_discontinued_operat
Summary of discontinued operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Revenue discontinued operations | ' | ' | ' | ' |
Rental and other property revenues | ($8) | $2,412 | $3,760 | $10,262 |
Other income (expense) | 0 | -1,126 | 20 | -187 |
Total revenue. | -8 | 1,286 | 3,780 | 10,075 |
Property operating expenses | 154 | 1,945 | 1,744 | 6,779 |
Interest expenses | 4 | -256 | 892 | 1,659 |
Loan cost amortization | 0 | 5 | 4 | 17 |
Loan fee expense | 0 | 0 | 0 | 849 |
General and administration | 232 | 227 | 823 | 551 |
Depreciation and amortization: | 0 | 463 | 511 | 1,794 |
Losses from unconsolidated joint ventures and investees | 0 | 0 | -20 | -56 |
Total expenses. | 390 | 2,384 | 3,954 | 11,593 |
Loss from discontinued operations before gains on sale of real estate, taxes, and fees | -398 | -1,098 | -174 | -1,518 |
Gain on sale of discontinued operations | 127 | 82 | 24,392 | 5,173 |
Income (loss) from discontinued operations. | -271 | -1,016 | 24,218 | 3,655 |
Income tax benefit (expenses) | 95 | 356 | -8,476 | -1,279 |
Net income (loss) from discontinued operations | ($176) | ($660) | $15,742 | $2,376 |
Recovered_Sheet1
Commitments and contingencies (Details) (USD $) | Feb. 13, 2013 |
Dynex Commercial, Inc. and Dynex Capital, Inc | ' |
Awarding significant damages to American Realty Trust, Inc. | $960,646 |
Increased costs damages in favor of TCI and its subsidairies | 11,161,520 |
Lost opportunity damages in favor of TCI and its subsidairies | 12,122,166 |
Loans to be made under the original loan commitment | 160,000,000 |
Additional lost opportunity damanges in favor of TCI and subsidiaries | $252,577 |
Stock_options_and_preferred_st
Stock options and preferred stock (Details) (USD $) | Sep. 30, 2013 |
Stock options and preferred stock | ' |
Shares of stock options outstanding | 5,000 |
Shares of Series C Cumulative Convertible Preferred Stock issued and outstanding | 30,000 |
Liquidation preference of stock per share | $100 |
Stock conversion percentage into common stock at of the daily average closing price of the common stock for the prior five trading days | 90.00% |
Subsequent_transactions_Detail
Subsequent transactions (Details) | Oct. 15, 2013 | Oct. 11, 2013 |
Subsequent transactions | ' | ' |
Company refinanced the existing mortgage on 600 Las Colinas in Square feet | ' | 510,173 |
Company refinanced the existing mortgage for a new mortgage in millions | ' | 41 |
TCI paid off the existing mortgage in millions | ' | 31 |
TCI paid off the closing costs and escrows in millions | ' | 5.3 |
The note accrues interest | ' | 5.31% |
Payments of interest and principal are due monthly based upon amortization schedule in years | ' | 30 |
Company recorded the transfer of ownership of a commercial building known as the Ergon building in square feet | 26,000 | ' |
Company recorded the transfer of ownership for Jackson Capital City land in acres | 8 | ' |
Company recorded the transfer of ownership to the existing lender for a settlement price in millions | 3.7 | ' |