Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 26, 2014 | Jun. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'TRANSCONTINENTAL REALTY INVESTORS INC | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-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 | 'FY | ' | ' |
Entity Public Float | ' | ' | $12,113,336 |
CONSOLIDATED_BALANCE_SHEETS_do
CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share and par value amounts) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Assets {1} | ' | ' |
Real estate, at cost | $777,974 | $978,781 |
Real estate held for sale at cost, net of depreciation ($2,390 in 2013 and $4,658 in 2012) | 16,427 | 18,077 |
Real estate subject to sales contracts at cost, net of depreciation ($1,949 in 2013 and $16,412 in 2012) | 29,353 | 45,706 |
Less accumulated depreciation | -127,952 | -145,614 |
Total real estate | 695,802 | 896,950 |
NOTES AND INTEREST RECEIVABLE | ' | ' |
Performing (including $66,431 in 2013 and $58,007 in 2012 from related parties) | 69,626 | 60,637 |
Non-Performing | 543 | 723 |
Less allowance for estimated losses (including $2,097 in 2013 and 2012, respectively, from related parties) | -2,262 | -2,262 |
Total notes and interest receivable | 67,907 | 59,098 |
Cash and cash equivalents | 16,086 | 13,001 |
Restricted cash | 31,799 | 33,983 |
Investments in unconsolidated subsidiaries and investees | 1,697 | 5,439 |
Receivable from related party | 52,380 | 0 |
Other assets | 32,000 | 36,873 |
Total assets | 897,671 | 1,045,344 |
Liabilities: | ' | ' |
Notes and interest payable | 562,734 | 733,152 |
Notes related to assets held for sale | 17,100 | 18,915 |
Notes related to subject to sales contracts | 23,011 | 55,976 |
Payable to related party | 0 | 10,057 |
Deferred revenue (from sales to related parties) | 53,096 | 53,096 |
Accounts payable and other liabilities (including $4,697 in 2013 and $4,282 in 2012 from related parties) | 50,160 | 41,019 |
Total liabilities | 706,101 | 912,215 |
Shareholders' equity: | ' | ' |
Preferred Stock, authorized 10,000,000 shares, Series C: $.01 par value, authorized, issued and outstanding 30,000 shares in 2013 and 2012, respectively, (liquidation preference $100 per share). Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2013 and 2012, respectively | 1 | 1 |
Common Stock, $.01 par value, authorized 10,000,000 shares; issued 8,413,669 in 2013 and 2012, respectively, and outstanding 8,413,469 in 2013 and 2012, respectively | 84 | 84 |
Treasury stock at cost; 200 shares in 2013 and 2012 | -2 | -2 |
Paid-in capital | 271,720 | 272,774 |
Retained earnings | -98,029 | -156,559 |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 173,774 | 116,298 |
Non-controlling interest | 17,796 | 16,831 |
Total equity | 191,570 | 133,129 |
Total liabilities and equity | $897,671 | $1,045,344 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
BALANCE SHEETS PARENTHETICALS | ' | ' |
Depreciation of Real Estate held for sale at cost | $2,390 | $4,658 |
Depreciation of Real Estate subject to sales contracts at cost | 1,949 | 16,412 |
Performing Notes and Interest Receivable from related parties | 66,431 | 58,007 |
Allowance for doubtful accounts from related parties | 2,097 | 2,097 |
Accounts payable and other liabilities from related parties | $4,697 | $4,282 |
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 (dollars in thousands, except per share amounts) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenues: | ' | ' | ' |
Rental and other property revenues (including $670, $587 and $223 for the year ended 2013, 2012 and 2011, respectively, from related parties) | $86,237 | $86,615 | $77,935 |
Expenses: | ' | ' | ' |
Property operating expenses (including $766, $957 and $972 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 40,948 | 42,329 | 41,984 |
Depreciation | 17,174 | 16,141 | 13,967 |
General and administrative (including $2,765, $2,427 and $3,088 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 6,323 | 5,090 | 8,971 |
Provision on impairment of notes receivable and real estate assets | 11,320 | 2,330 | 35,039 |
Net income fee to related party | 4,089 | 180 | 54 |
Advisory fee to related party | 8,494 | 8,915 | 9,958 |
Total operating expenses | 88,348 | 74,985 | 109,973 |
Operating income (loss) | -2,111 | 11,630 | -32,038 |
Other income (expense): | ' | ' | ' |
Interest income (including $13,823, $11,677 and $5,275 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 13,790 | 11,725 | 5,720 |
Other income (including $0, $6,000 and $0 for the year ended 2013, 2012 and 2011, respectively, from related parties) | 7,862 | 6,303 | 2,441 |
Mortgage and loan interest (including $1,761, $3,153 and $2,176 for the year ended 2013, 2012 and 2011, respectively, from related parties) | -31,637 | -36,243 | -36,221 |
Deferred borrowing costs amortization | -2,588 | -637 | -1,560 |
Loan charges and prepayment penalties | -5,219 | -3,574 | -439 |
Gain (loss) on the sale of investments | -283 | 125 | -514 |
Earnings from unconsolidated joint ventures and investees | -172 | -66 | 242 |
Litigation settlement | -20,313 | -173 | -225 |
Total other expenses | -38,560 | -22,540 | -30,556 |
Loss before gain (loss) on land sales, non-controlling interest, and taxes | -40,671 | -10,910 | -62,594 |
Gain (loss) on land sales | -1,073 | 6,935 | 17,011 |
Loss from continuing operations before tax | -41,744 | -3,975 | -45,583 |
Income tax benefit (expense) | 40,485 | -1,445 | -357 |
Net loss from continuing operations | -1,259 | -5,420 | -45,940 |
Discontinued operations: | ' | ' | ' |
Loss from discontinued operations | -3,915 | -9,346 | -19,320 |
Gain on sale of real estate from discontinued operations | 97,405 | 5,217 | 18,300 |
Income tax benefit (expense) from discontinued operations | -32,722 | 1,445 | 357 |
Net income (loss) from discontinued operations | 60,768 | -2,684 | -663 |
Net income (loss) | 59,509 | -8,104 | -46,603 |
Net (income) loss attributable to non-controlling interest | -979 | -220 | 282 |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | 58,530 | -8,324 | -46,321 |
Preferred dividend requirement | -1,110 | -1,112 | -1,110 |
Net income (loss) applicable to common shares | 57,420 | -9,436 | -47,431 |
Earnings per share - basic | ' | ' | ' |
Loss from continuing operations - basic | ($0.40) | ($0.80) | ($5.59) |
Income (loss) from discontinued operations - basic | $7.22 | ($0.32) | ($0.08) |
Net income (loss) applicable to common shares - basic | $6.82 | ($1.12) | ($5.67) |
Earnings per share - diluted | ' | ' | ' |
Loss from continuing operations -diluted | ($0.40) | ($0.80) | ($5.59) |
Income (loss) from discontinued operations -diluted | $7.22 | ($0.32) | ($0.08) |
Net income (loss) applicable to common shares -diluted | $6.82 | ($1.12) | ($5.67) |
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,370,729 |
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 8,413,469 | 8,370,729 |
Amounts attributable to Transcontinental Realty Investors, Inc. | ' | ' | ' |
Loss from continuing operations, | -2,238 | -5,640 | -45,658 |
Income (loss) from discontinued operations, | 60,768 | -2,684 | -663 |
Net income (loss), | $58,530 | ($8,324) | ($46,321) |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS PARENTHETICALS (dollars in thousands, except per share amounts) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Statements Of Operations Parentheticals | ' | ' | ' |
Rental and other property revenues, related parties | $670 | $587 | $223 |
Property operating expenses, related parties | 766 | 957 | 972 |
General and administrative expenses, related parties | 2,765 | 2,427 | 3,088 |
Interest income from related parties | 13,823 | 11,677 | 5,275 |
Other Income and expenses from related parties | 0 | 6,000 | 0 |
Mortgage and loan interest, related parties | $1,761 | $3,153 | $2,176 |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (dollars in thousands) (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, 2010 | 183,448 | -105,122 | 1 | 8,113,669 | 81 | -2 | 271,682 | -101,914 | 0 | 13,600 |
Series D preferred stock dividends (7% per year) | ($900) | ' | ' | ' | ' | ' | ($900) | ' | ' | ' |
Series C preferred stock dividends (8.5% per year) | -210 | ' | ' | ' | ' | ' | -210 | ' | ' | ' |
Net loss. | -46,603 | -45,930 | ' | ' | ' | ' | ' | -46,321 | ' | -282 |
Issuance of common stock | 1,530 | ' | ' | 300,000 | 3 | ' | 1,527 | ' | ' | ' |
Sale of controlling interest | 4,019 | ' | ' | ' | ' | ' | 1,787 | ' | ' | 2,232 |
Balance at Dec. 31, 2011 | 141,284 | -151,052 | 1 | 8,413,669 | 84 | -2 | 273,886 | -148,235 | ' | 15,550 |
Series D preferred stock dividends, (7% per year) | -902 | ' | ' | ' | ' | ' | -902 | ' | ' | ' |
Series C preferred stock dividends, (8.5% per year) | -210 | ' | ' | ' | ' | ' | -210 | ' | ' | ' |
Net income (loss). | -8,104 | -8,104 | ' | ' | ' | ' | ' | -8,324 | ' | 220 |
Issuance of common stock | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of controlling interest | 1,138 | ' | ' | ' | ' | ' | ' | ' | ' | 1,138 |
Acquisition of controlling interest | -69 | ' | ' | ' | ' | ' | ' | ' | ' | -69 |
Distributions to non-controlling interests | -8 | ' | ' | ' | ' | ' | ' | ' | ' | -8 |
Repurchase/sale of treasury shares, net | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Dec. 31, 2012 | 133,129 | -159,156 | 1 | 8,413,669 | 84 | -2 | 272,774 | -156,559 | ' | 16,831 |
Series D preferred stock dividends. (7% per year) | -900 | ' | ' | ' | ' | ' | -900 | ' | ' | ' |
Series C preferred stock dividends. (8.5% per year) | -210 | ' | ' | ' | ' | ' | -210 | ' | ' | ' |
Net income. | 59,509 | 59,509 | ' | ' | ' | ' | ' | 58,530 | ' | 979 |
Issuance of common stock | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of controlling interest | 56 | ' | ' | ' | ' | ' | 56 | ' | ' | ' |
Acquisition of controlling interest. | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Distributions to non-controlling interests. | -14 | ' | ' | ' | ' | ' | ' | ' | ' | -14 |
Repurchase/sale of treasury shares, net. | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Dec. 31, 2013 | 191,570 | -99,647 | 1 | 8,413,669 | 84 | -2 | 271,720 | -98,029 | 0 | 17,796 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (dollars in thousands) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Statement of Comprehensive Income (loss) | ' | ' | ' |
Net income (loss.), | $59,509 | ($8,104) | ($46,603) |
Unrealized gain on investment securities | 0 | 0 | 0 |
Total other comprehensive loss | 0 | 0 | 0 |
Comprehensive income (loss) | 59,509 | -8,104 | -46,603 |
Comprehensive (income) loss attributable to non-controlling interest | -979 | -220 | 282 |
Comprehensive income (loss) attributable to Transcontinental Realty Investors, Inc. | $58,530 | ($8,324) | ($46,321) |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Cash Flow From Operating Activities: | ' | ' | ' |
Net Income (loss) | $59,509 | ($8,104) | ($46,603) |
Adjustments to reconcile net income (loss) applicable to common shares to net cash used in operating activities: | ' | ' | ' |
(Gain) loss on sale of land, | 1,073 | -6,935 | -17,011 |
Gain on sale of income producing properties | -97,405 | -5,217 | -18,300 |
Depreciation and amortization | 21,404 | 22,488 | 23,034 |
Provision on impairment of notes receivable and real estate assets | 11,320 | 4,730 | 52,128 |
Amortization of deferred borrowing costs, | 1,349 | 2,428 | 2,365 |
Earnings from unconsolidated subsidiaries and investees, | 142 | 11 | -695 |
(Increase) decrease in assets: | ' | ' | ' |
Accrued interest receivable, | -8,432 | -5,517 | -4,050 |
Other assets, | -1,443 | -3,462 | -799 |
Prepaid expense, | -1,722 | -236 | 2,083 |
Escrow, | 3,625 | 1,157 | 18,837 |
Earnest money, | -310 | 235 | 1,385 |
Rent receivables, | 2,445 | -1,094 | -6,158 |
Increase (decrease) in liabilities: | ' | ' | ' |
Accrued interest payable, | -5,262 | -7,498 | 8,743 |
Related party payables, | -62,437 | -7,408 | -29,795 |
Other liabilities, | 9,449 | -10,316 | 717 |
Net cash used in operating activities | -66,695 | -24,738 | -14,119 |
Cash Flow From Investing Activities: | ' | ' | ' |
Proceeds from notes receivables | 0 | 11,993 | 16,924 |
Originations of notes receivables | -458 | 13,477 | -22,421 |
Acquisition of land held for development | -83 | -18,948 | -43,193 |
Acquisition of income producing properties | 0 | 0 | 6,526 |
Proceeds from sales of income producing properties | 261,495 | 31,751 | 29,628 |
Proceeds from sale of land | 13,671 | 36,648 | 104,093 |
Proceeds from sale of investments | 0 | 132 | 586 |
Investment in unconsolidated real estate entities | 3,600 | 780 | -319 |
Improvement of land held for development | -399 | -184 | -1,562 |
Improvement of income producing properties | -7,681 | -2,201 | -3,657 |
Acquisition of non-controlling interest | 0 | -69 | 0 |
Sale of controlling interest, | 56 | 113 | 4,019 |
Construction and development of new properties | -1,152 | -5,683 | -46,774 |
Net cash provided by investing activities | 269,049 | 67,809 | 43,850 |
Cash Flow From Financing Activities: | ' | ' | ' |
Proceeds from notes payable | 202,535 | 139,459 | 117,441 |
Recurring amortization of principal on notes payable | -15,761 | -21,541 | -16,383 |
Payments on maturing notes payable | -386,710 | -163,553 | -120,922 |
Deferred financing costs | 1,791 | -3,305 | -1,555 |
Distributions to non-controlling interests | -14 | -8 | 0 |
Common stock issuance | 0 | 0 | 1,530 |
Preferred stock dividends - Series C | -210 | -212 | -210 |
Preferred stock dividends - Series D | -900 | -901 | -900 |
Net cash used in financing activities | -199,269 | -50,061 | -20,999 |
Net increase (decrease) in cash and cash equivalents | 3,085 | -6,990 | 8,732 |
Cash and cash equivalents, beginning of period | 13,001 | 19,991 | 11,259 |
Cash and cash equivalents, end of period | 16,086 | 13,001 | 19,991 |
Supplemental disclosures of cash flow information: | ' | ' | ' |
Cash paid for interest | 37,776 | 44,737 | 56,641 |
Cash paid for income taxes, net of refunds | 0 | 0 | 0 |
Schedule of noncash investing and financing activities: | ' | ' | ' |
Affiliate payable/receivable for ARL cost basis sales adjustment | 0 | 10,445 | -34,234 |
Acquisition of land for ARL cost basis sales adjustment | 0 | -10,445 | 34,234 |
Note receivable allowance | 0 | 0 | 0 |
Notes receivable received from affiliate | 0 | 6,000 | 20,387 |
Sale of notes receivable to affiliate | $0 | ($20,387) | $0 |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended | ||
Dec. 31, 2013 | |||
ORGANIZATION AND BASIS OF PRESENTATION: | ' | ||
ORGANIZATION AND BASIS OF PRESENTATION | ' | ||
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
FASB Accounting Standards Codification. The Company presents its financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). In June 2009, the Financial Accounting Standards Board (“FASB”) completed its accounting guidance codification project. The FASB Accounting Standards Codification (“ASC”) became effective for the Company’s financial statements issued subsequent to June 30, 2009 and is the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. As of the effective date, the company refers to the ASC Codification as the sole source of authoritative literature. | |||
Organization and business. Transcontinental Realty Investors, Inc., a Nevada corporation, is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). TCI is the successor to a California business trust that was organized on September 6, 1983 and commenced operations on January 31, 1984. On November 30, 1999, TCI acquired all of the outstanding shares of beneficial interest of Continental Mortgage and Equity Trust (“CMET”), a real estate company, in a tax-free exchange of shares, issuing 1,181 shares of its common stock for each outstanding CMET share. Prior to January 1, 2000, TCI elected to be treated as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). During the third quarter of 2000, due to a concentration of ownership TCI no longer met the requirement for tax treatment as a REIT. Effective March 31, 2003, TCI’s financial results were consolidated in the American Realty Investors, Inc. (“ARL”) Form 10-K and related consolidated financial statements. | |||
TCI is a “C” corporation for U.S. federal income tax purposes and files an annual consolidated income tax return with ARL, whose common stock is traded on the New York Stock Exchange under the symbol (“ARL”). Subsidiaries of ARL own approximately 83.8% of the Company’s common stock. | |||
On July 17, 2009, the Company acquired an additional 2,518,934 shares of common stock of Income Opportunity Realty Investors, Inc. (“IOT”), and in doing so, increased its ownership from approximately 25% to over 80% of the shares of common stock of IOT outstanding. Upon acquisition of the additional shares in 2009, IOT’s results of operations began consolidating with those of the Company for tax and financial reporting purposes. As of December 31, 2013, TCI owned 81.1% of the outstanding IOT common shares. Shares of IOT are traded on the New York Euronext Exchange (“NYSE MKT”) under the symbol (“IOT”). | |||
At the time of the acquisition, the historical accounting value of IOT’s assets was $112 million and liabilities were $43 million. In that the shares of IOT acquired by TCI were from a related party, the values recorded by TCI are IOT’s historical accounting values at the date of transfer. The Company’s fair valuation of IOT’s assets and liabilities at the acquisition date approximated IOT’s book value. The net difference between the purchase price and historical accounting basis of the assets and liabilities acquired was $26.9 million and has been reflected by TCI as deferred income. The deferred income will be recognized upon the sale of the land that IOT held on its books as of the date of sale, to an independent third party. | |||
TCI’s Board of Directors is responsible for directing the overall affairs of TCI and for setting the strategic policies that guide the Company. As of April 30, 2011, the Board of Directors delegated the day-to-day management of the Company to Pillar Income Asset Management, Inc. (“Pillar”), a Nevada corporation under a written Advisory Agreement that is reviewed annually by TCI’s Board of Directors. The directors of TCI are also directors of ARL and IOT. The Chairman of the Board of Directors of TCI also serves as the Chairman of the Board of Directors of ARL and IOT. The officers of TCI also serve as officers of ARL, IOT and Pillar. | |||
Effective since April 30, 2011, Pillar, the sole shareholder of which is Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is Realty Advisors, Inc. (“RAI”), a Nevada corporation, the sole shareholder of which is Realty Advisors Management, Inc. (“RAMI”), a Nevada corporation, the sole shareholder of which is a trust known as the May Trust, became the Company’s external Advisor and Cash Manager. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities. Pillar also arranges, for the Company’s benefit, debt and equity financing with third party lenders and investors. Pillar also serves as an Advisor and Cash Manager to TCI and IOT. As the contractual advisor, Pillar is compensated by TCI under an Advisory Agreement that is more fully described in Part III, Item 10. “Directors, Executive Officers and Corporate Governance – The Advisor”. TCI has no employees. Employees of Pillar render services to TCI in accordance with the terms of the Advisory Agreement. Prime Income Asset Management, LLC (“Prime”) served as the Company’s contractual Advisor prior to April 30, 2011. | |||
Effective since January 1, 2011, Regis Realty Prime, LLC, dba Regis Property Management, LLC (“Regis”), the sole member of which is Realty Advisors, LLC, manages our commercial properties and provides brokerage services. Regis receives property management fees and leasing commissions in accordance with the terms of its property-level management agreement. Regis is also entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement. See Part III, Item 10. “Directors, Executive Officers and Corporate Governance – Property Management and Real Estate Brokerage”. TCI engages third-party companies to lease and manage its apartment properties. | |||
On January 1, 2012, the Company entered into 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. This development agreement was terminated December 31, 2013. The Company has also invested in surplus cash notes receivables from UHF and has sold several residential apartment properties to UHF in prior years. Due to this ongoing relationship and the significant investment in the performance of the collateral secured under the notes receivable, UHF has been determined to be a related party. | |||
Our primary business is the acquisition, development and ownership of income-producing residential and commercial real estate properties. In addition, we opportunistically acquire land for future development in in-fill or high-growth suburban markets. From time to time and when we believe it appropriate to do so, we will also sell land and income-producing properties. We generate revenues by leasing apartment units to residents and leasing office, industrial and retail space to various for-profit businesses as well as certain local, state and federal agencies. We also generate revenues from gains on sales of income-producing properties and land. At December 31, 2013, we owned 36 residential apartment communities comprising of 6,078 units, nine commercial properties comprising an aggregate of approximately 2.3 million square feet, and an investment in 4,100 acres of undeveloped and partially developed land. | |||
Basis of presentation. The accompanying Consolidated Financial Statements include our accounts, our 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 it is 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 are included in consolidated net income. TCI’s investment in ARL is accounted for under the equity method. Our investment in Garden Centura, L.P. was accounted for under the equity method until December 28, 2011, when it was sold to a third party. | |||
The Company in accordance with the VIE guidance in ASC 810 “Consolidations” consolidates 33 and 44 multifamily residential properties located throughout the United States at December 31, 2013 and December 31, 2012, respectively, ranging from 32 units to 332 units. Assets totaling $343,889,000 and $503,580,000 at December 31, 2013 and 2012, respectively, are consolidated and included in “Real estate, at cost” on the balance sheet and are all collateral for their respective mortgage notes payable, none of which are recourse to the partnership in which they are in or to the Company. Assets totaling $16,427,000 and $18,077,000 at December 31, 2013 and 2012, respectively, are consolidated and included in “Real estate held for sale at cost” on the balance sheet and are all collateral for their respective mortgage notes payable, none of which are recourse to the partnership in which they are in or to the Company. | |||
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). We continually evaluate 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. | |||
Any properties that are treated as “subject to sales contract” on the Consolidated Balance Sheets and are listed in detail in Schedule III, “Real Estate and Accumulated Depreciation” are those in which we have not recognized the legal sale according to the guidance in ASC 360-20 due to various factors, disclosed in each sale transaction under Item 1 Significant Real Estate Acquisitions/Dispositions and Financing. Any sale transaction where the guidance reflects that a sale had not occurred, the asset involved in the transaction, including the debt and property operations, remained on the books of the Company. We continue to charge depreciation to expense as a period costs for the property until such time as the property has been classified as held for sale in accordance with guidance reflected in ASC 360-10-45 “Impairment or Disposal of Long-Lived Assets”. | |||
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 the Company’s board of directors and after an active program to sell the asset has commenced. 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 to no longer market as an asset for sale, 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 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. The cost of buildings and improvements includes the purchase price of property, legal fees and other acquisition costs. Costs directly related to planning, developing, initial leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. Capitalized development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development. | |||
A variety of costs are incurred in the acquisition, development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. Our capitalization policy on development properties is guided by ASC Topic 835-20 “Interest – Capitalization of Interest” and ASC Topic 970 “Real Estate - General”. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the receipt of certificates of occupancy, but no later than one year from cessation of major construction activity. We cease capitalization on the portion (1) substantially completed and (2) occupied or held available for occupancy, and we capitalize only those costs associated with the portion under construction. | |||
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: | |||
Level 1 | — | Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. | |
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. | |||
Recognition of revenue. Our revenues, which are composed largely of rental income, include rents reported on a straight-line basis over the lease term. In accordance with ASC 805 “Business Combinations”, we recognize rental revenue of acquired in-place “above-” and “below-market” leases at their fair values over the terms of the respective leases. | |||
Reimbursements of operating costs, as allowed under most of our commercial tenant leases, consist of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs, and are recognized as revenue in the period in which the recoverable expenses are incurred. We record these reimbursements on a “gross” basis, since we generally are the primary obligor with respect to purchasing goods and services from third-party suppliers; we have discretion in selecting the supplier and have the credit risk with respect to paying the supplier. | |||
Rental income for residential property leases is recorded when due from residents and is recognized monthly as earned, which is not materially different than on a straight-line basis as lease terms are generally for periods of one year or less. An allowance for doubtful accounts is recorded for all past due rents and operating expense reimbursements considered to be uncollectible | |||
Sales and the associated gains or losses of real estate assets are recognized in accordance with the provisions of ASC Topic 360-20, “Property, Plant and Equipment—Real Estate Sale”. The specific timing of a sale is measured against various criteria in ASC 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met, the Company defers some or all of the gain recognition and accounts for the continued operations of the property by applying the finance, leasing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria are met. | |||
Non-performing notes receivable. We consider a note receivable to be non-performing when the maturity date has passed without principal repayment and the borrower is not making interest payments in accordance with the terms of the agreement. | |||
Interest recognition on notes receivable. We record interest income as earned in accordance with the terms of the related loan agreements. Prior to January 1, 2012, on cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income was only recognized to the extent that cash was received. As of January 1, 2012, due to the consistency of cash received on the surplus cash notes, we recorded interest as earned. | |||
Allowance for estimated losses. We assess the collectability of notes receivable on a periodic basis, of which the assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. See Note 3 “Notes and Interest Receivable” for details on our notes receivable. | |||
Cash equivalents. For purposes of the Consolidated Statements of Cash Flows, all highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. Restricted cash consists of cash reserved primarily for specific uses such as insurance, property taxes and replacement reserves. | |||
Concentration of credit risk. The Company maintains its cash balances at commercial banks and through investment companies, the deposits of which are insured by the Federal Deposit Insurance Corporation (FDIC). At December 31, 2013 and 2012, the Company maintained balances in excess of the insured amount. | |||
Earnings per share. Income (loss) per share is presented in accordance with ASC 620 “Earnings per Share”. Income (loss) per share is computed based upon the weighted average number of shares of common stock outstanding during each year. | |||
Use of estimates. In the preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America, it is necessary for management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expense for the year ended. Actual results could differ from those estimates. | |||
Income taxes. The Company is a “C Corporation” for U.S. federal income tax purposes. For tax periods ending before August 31, 2012, the Company filed an annual consolidated income tax return with ARL and IOT and their subsidiaries. ARL was the common parent for the consolidated group. After that date, the Company and the rest of the ARL group joined the RAMI consolidated group for tax purposes. The income tax expense (benefit) for the 2011 tax period in the accompanying financial statement was calculated under a tax sharing and compensating agreement between ARL, TCI and IOT. That agreement continued until August 31, 2012 at which time a new tax sharing and compensating agreement was entered into by ARL, TCI, IOT and RAMI for the remainder of 2012. The agreement specifies the manner in which the group will share the consolidated tax liability and also how certain tax attributes are to be treated among members of the group. | |||
Recent accounting pronouncements. There were no recent accounting pronouncements that our company has not implemented that materially affect our financial statements. |
REAL_ESTATE_ACTIVITY
REAL ESTATE ACTIVITY | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
REAL ESTATE ACTIVITY | ' | ||||||||
REAL ESTATE ACTIVITY | ' | ||||||||
NOTE 2. REAL ESTATE | |||||||||
A summary of our real estate owned as of the end of the year is listed below (dollars in thousands): | |||||||||
2013 | 2012 | ||||||||
Apartments | $ | 433,141 | $ | 609,093 | |||||
Apartments under construction | - | - | |||||||
Commercial properties | 203,823 | 216,343 | |||||||
Land held for development | 141,010 | 153,345 | |||||||
Real estate held for sale | 18,817 | 22,735 | |||||||
Real estate subject to sales contract | 31,302 | 62,118 | |||||||
Total real estate, at cost, less impairment | 828,093 | 1,063,634 | |||||||
Less accumulated deprecation | (132,291 | ) | (166,684 | ) | |||||
Total real estate, net of depreciation | $ | 695,802 | $ | 896,950 | |||||
Expenditures for repairs and maintenance are charged to operations as incurred. Significant betterments are capitalized. When assets are sold or retired, their costs and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period. | |||||||||
Depreciation is computed on a straight line basis over the estimated useful lives of the assets as follows: | |||||||||
Land improvements | 25 to 40 years | ||||||||
Buildings and improvements | 10 to 40 years | ||||||||
Tenant improvements | Shorter of useful life or terms of related lease | ||||||||
Furniture, fixtures and equipment | 3 to 7 years | ||||||||
Provision for Impairment | |||||||||
The provision on impairment of notes receivable, investment in real estate partnerships, and real estate assets was $11.3 million for the period ended December 31, 2013. This was an increase of $9.0 million as compared to the prior year expense of $2.3 million. In the current year, impairment was recorded as an additional loss in the commercial, land, and notes receivable portfolios. In our commercial portfolio, a recent third party appraisal determined the fair value of a building located in Dallas, Texas that resulted in an impairment of $9.6 million. In our land portfolio, an impairment of $1.5 million resulted due to a decision made by Management on overall strategy relating to land development which would result in probable deed transfer or foreclosure on a secured portion of debt. In our notes receivable portfolio, an impairment of $0.2 million resulted from the collectability of certain notes. | |||||||||
In the prior period, impairment was recorded as an additional loss on investment in the land portfolio. A sale of adjacent land determined the fair value on a Waco, Texas land holding that resulted in an impairment reserve of $1.2 million. A comparable sale determined the fair value of a Florida land holding that resulted in an impairment reserve of $0.5 million. The remaining impairment of $0.6 million resulted from an appraisal done by a third party which determined the fair value of an Arkansas land holding. | |||||||||
Fair Value Measurement | |||||||||
The Company applies the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures,” to the valuation of real estate assets. The Company is required to assess the fair value of its consolidated real estate assets with indicators of impairment. The value of impaired real estate assets is determined using widely accepted valuation techniques, including discounted cash flow analyses on the expected cash flow of each asset, as well as the income capitalization approach, which considers prevailing market capitalization rates, analyses of recent comparable sales transactions, information from actual sales negotiations and bona fide purchase offers received from third parties. The methods used to measure fair value may produce an amount that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. | |||||||||
The fair value measurements used in these evaluations are considered to be Level 2 and 3 valuations within the fair value hierarchy in the accounting rules, as there are significant observable (Level 2) and unobservable inputs (Level 3). Examples of Level 2 inputs the Company utilizes in its fair value calculations are appraisals and bona fide purchase offers from third parties. Examples of Level 3 inputs the Company utilizes in its fair value calculations are discount rates, market capitalization rates, expected lease rental rates, timing of new leases, an estimate of future sales prices and comparable sales prices of similar assets, if available. All of the impairment charges outlined above were recorded in the statements of operations, either in continuing operations or discontinued operations. | |||||||||
Fair Value Measurements Using (dollars in thousands): | |||||||||
31-Dec-13 | Fair Value | Level 1 | Level 2 | Level 3 | |||||
Land | $ | 849 | $ | --- | $ | 849 | $ | --- | |
Commercial | $ | 26,194 | $ | --- | $ | 26,194 | $ | --- | |
Land with a carrying amount of $2,355,768 was written down to its fair value of $849,468 resulting in an impairment charge of $1,506,300 in 2013. The method used to determine the fair value was to take the debt balance on the collateralized acres plus the book value of the uncollateralized acres. | |||||||||
A commercial building with a carrying amount of $35,794,331 was written down to its fair value of $26,194,331 resulting in an impairment charge of $9,600,000 in 2013. The Level 2 input used to determine the fair value above was a third party appraisal. | |||||||||
Fair Value Measurements Using (dollars in thousands): | |||||||||
31-Dec-12 | Fair Value | Level 1 | Level 2 | Level 3 | |||||
Land | $ | 2,699 | $ | --- | $ | 1,800 | $ | 899 | |
Commercial | $ | 9,660 | $ | --- | $ | 9,660 | $ | --- | |
Land with a carrying amount of $5,029,254 was written down to its fair value of $2,699,175 resulting in an impairment charge of $2,330,079 in 2012. Level 2 inputs used to determine the fair values above include bona fide purchase offers and third party appraisals. The Level 3 inputs used to determine the fair values above include comparable sales prices of similar assets. | |||||||||
A commercial building with a carrying amount of $12,060,247 was written down to its fair value of $9,660,247 resulting in an impairment charge of $2,400,000 in 2012. The method used to determine the fair value was agreement with lender as to value based on their evaluation of the property. | |||||||||
Fair Value Measurements Using (dollars in thousands): | |||||||||
31-Dec-11 | Fair Value | Level 1 | Level 2 | Level 3 | |||||
Land | $ | 55,806 | $ | --- | $ | 55,806 | $ | --- | |
Residential | $ | 30,539 | $ | --- | $ | --- | $ | 30,539 | |
Commercial | $ | 11,934 | $ | --- | $ | 11,934 | $ | --- | |
Land with a carrying amount of $86,696,927 was written down to its fair value of $55,806,297 resulting in an impairment charge of $30,890,630 in 2011. Level 2 observable inputs used to determine the fair value includes bona fide purchase offers and third party appraisals. | |||||||||
Residential properties with a carrying amount of $35,717,146 were written down to their fair value of $30,539,462 resulting in an impairment charge of $5,177,684 in 2011. Level 3 unobservable inputs were used to determine the fair value includes a valuation technique, the income capitalization approach, which considers prevailing market capitalization rates. | |||||||||
Commercial properties with a carrying amount of $20,427,936 were written down to their fair value of $11,933,620 resulting in an impairment charge of $8,494,316 in 2011. Level 2 observable inputs used to determine the fair value includes bona fide purchase offers. | |||||||||
The following is a brief description of the most significant property acquisitions and sales in 2013: | |||||||||
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 February 12, 2014, TCI exercised the first prepayment option date on the settlement with Petra CRE CDO relating to the Amoco Building. Per the agreement, TCI paid $1.2 million to settle all obligations and the remaining balance of the note and accrued interest of $3.5 million was forgiven. | |||||||||
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. | |||||||||
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 $10.4 million. The proceeds of this sale were used to pay down stock secured loans with Armed Forces Bank. | |||||||||
On December 20, 2013, the Company sold nine residential apartment complexes to an independent third party for the sales price of $189.6 million. The properties included in the sale were Dorado Ranch, a 224 unit apartment complex located in Odessa, Texas, Huntington Ridge, a 198 unit apartment complex located in Desoto, Texas, Legends of El Paso, a 240 unit apartment complex located in El Paso, Texas, Mariposa Villas, a 216 unit apartment complex located in Dallas, Texas, Paramount Terrace, a 181 unit apartment complex located in Amarillo, Texas, River Oaks, a 180 unit apartment complex located in Wylie, Texas, Savoy of Garland, a 144 unit apartment complex located in Garland, Texas, Stonebridge at City Park, a 240 unit apartment complex located in Houston, Texas and Vistas of Pinnacle Park, a 332 unit apartment complex located in Dallas, Texas. The buyer assumed the combined debt of $115.1 million secured by the properties. TCI recorded a combined gain of $73.5 million. | |||||||||
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 December 31, 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. | |||||||||
As of December 31, 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. | |||||||||
Acquisitions from our parent, ARL, have previously been reflected at the fair value purchase price. Upon discussion with the SEC and in review of the guidance pursuant to ASC 250-10-45-22 to 24, we have adjusted those assets, in the prior year, to reflect a basis equal to ARL’s cost basis in the asset at the time of the sale. The related party payables to ARL were reduced for the lower asset price. | |||||||||
NOTES_AND_INTEREST_RECEIVABLE
NOTES AND INTEREST RECEIVABLE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
NOTES 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 and unsecured interests | |||||
S Breeze I-V, LLC | 14-Jun | 5.00% | 3,180 | 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% | 7,966 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (1) | 13-Dec | 5.00% | 6,000 | Unsecured | |||||
Accrued interest | 12,757 | ||||||||
Total Performing | $ 69,626 | ||||||||
Non-Performing loans: | |||||||||
Miscellaneous non-related party notes | Various | Various | 507 | Various secured and unsecured interests | |||||
Accrued interest | 36 | ||||||||
Total Non-Performing | $ 543 | ||||||||
Allowance for estimated losses | (2,262) | ||||||||
Total | $ 67,907 | ||||||||
(1) Related party notes | |||||||||
Junior Mortgage Loans. We may invest in junior mortgage loans, secured by mortgages that are subordinate to one or more prior liens either on the fee or a leasehold interest in real estate. Recourse on such loans ordinarily includes the real estate on which the loan is made, other collateral and personal guarantees by the borrower. At December 31, 2013, 6.4% of our assets were invested in junior and wraparound mortgage loans. | |||||||||
As of December 31, 2013, the obligors on $53.7 million or 93.6% of the mortgage notes receivable portfolio were due from related entities. The Company recognized $12.2 million of interest income from these related party notes receivables. Also at that date, $0.5 million or 0.9% of the mortgage notes receivable portfolio was non-performing. | |||||||||
The Company has various notes receivable from Unified Housing foundation, Inc. (“UHF”). UHF is determined to be a related party due to our significant investment in the performance of the collateral secured under the notes receivable. Payments are due from surplus cash flow of operations. Sales 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. | |||||||||
We record interest income as earned in accordance with the terms of the related loan agreements. Prior to January 1, 2012, on cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income was only recognized to the extent cash was received. As of January 1, 2012, due to the consistency of cash received on the surplus cash notes, we are recording interest as earned. | |||||||||
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 related. The original notes gave a five-year period of preferred interest rate at 5.25%, before returning to the original note rate of 12%. | |||||||||
ALLOWANCE_FOR_ESTIMATED_LOSSES
ALLOWANCE FOR ESTIMATED LOSSES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
NOTES AND INTEREST RECEIVABLE | ' | ||||||||||||
ALLOWANCE FOR ESTIMATED LOSSES | ' | ||||||||||||
NOTE 4. ALLOWANCE FOR ESTIMATED LOSSES | |||||||||||||
The allowance account was reviewed and there were no additional allowances recorded for receivables in 2013. The decrease in 2012 was due to two notes that were written off, both of which were fully reserved. The decrease in 2011 was due to a loan payment that had an allowance. The table below shows our allowance for estimated losses (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Balance January 1, | $ | 2,262 | $ | 3,942 | $ | 4,741 | |||||||
Decrease in provision | - | (1,680 | ) | (799 | ) | ||||||||
Balance December 31, | $ | 2,262 | $ | 2,262 | $ | 3,942 | |||||||
INVESTMENT_IN_UNCONSOLIDATED_J
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | ' | ||||||||||||
INVESTMENT IN UNCONSOLIDATED JOINT-VENTURES AND INVESTEES | ' | ||||||||||||
NOTE 5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | |||||||||||||
Investments in unconsolidated subsidiaries, jointly owned companies and other investees in which we have a 20% to 50% interest or otherwise exercise significant influence are carried at cost, adjusted for the Company’s proportionate share of their undistributed earnings or losses, via the equity method of accounting. ARL is our parent company and is considered as an unconsolidated joint venture. | |||||||||||||
Investments accounted for via the equity method consists of the following: | |||||||||||||
Percentage ownership as of December 31, | |||||||||||||
2013 | 2012 | 2011(2) | |||||||||||
American Realty Investors, Inc. (1) | 1.99% | 1.99% | 2.05% | ||||||||||
_______________________ | |||||||||||||
-1 | Unconsolidated investment in parent company | ||||||||||||
-2 | Other investee. The Company's 5% investment in Garden Centura, L.P. was sold on December 28, 2011. | ||||||||||||
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 companies’ proportionate share of earnings or losses. On December 28, 2011, we sold our 5% investment in Garden Centura, L.P. | |||||||||||||
The market values, other than unconsolidated subsidiaries, as of the year ended December 31, 2013, 2012 and 2011 were not determinable as there were no readily traded markets for these entities. The following is a summary of the financial position and results of operations from our unconsolidated subsidiaries and investees (dollars in thousands): | |||||||||||||
2013 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 11,944 | $ | - | $ | 11,944 | |||||||
Notes Receivable | 45,179 | - | 45,179 | ||||||||||
Other assets | 130,535 | - | 130,535 | ||||||||||
Notes payable | (56,103 | ) | - | (56,103 | ) | ||||||||
Other liabilities | (62,998 | ) | - | (62,998 | ) | ||||||||
Shareholders' equity/partners' capital | (68,557 | ) | - | (68,557 | ) | ||||||||
Rents and interest and other income | $ | 21,658 | $ | - | $ | 21,658 | |||||||
Depreciation | (285 | ) | - | (285 | ) | ||||||||
Operating expenses | (23,487 | ) | - | (23,487 | ) | ||||||||
Gain on land sales | 618 | - | 618 | ||||||||||
Interest expense | (7,173 | ) | - | (7,173 | ) | ||||||||
Loss from continuing operations | (8,669 | ) | - | (8,669 | ) | ||||||||
Loss from discontinued operations | (15 | ) | - | (15 | ) | ||||||||
Net loss | $ | (8,684 | ) | $ | - | $ | (8,684 | ) | |||||
Company's proportionate share of loss (1) | $ | (172 | ) | $ | - | $ | (172 | ) | |||||
(1) Loss represents continued and discontinued operations | |||||||||||||
2012 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 45,860 | $ | - | $ | 45,860 | |||||||
Notes Receivable | 44,371 | - | 44,371 | ||||||||||
Other assets | 130,420 | - | 130,420 | ||||||||||
Notes payable | (61,720 | ) | - | (61,720 | ) | ||||||||
Other liabilities | (85,069 | ) | - | (85,069 | ) | ||||||||
Shareholders' equity/partners' capital | (73,862 | ) | - | (73,862 | ) | ||||||||
Rents and interest and other income | $ | 8,198 | $ | - | $ | 8,198 | |||||||
Depreciation | (263 | ) | - | (263 | ) | ||||||||
Operating expenses | (4,062 | ) | - | (4,062 | ) | ||||||||
Loss on land sales | (2,785 | ) | - | (2,785 | ) | ||||||||
Interest expense | (4,234 | ) | - | (4,234 | ) | ||||||||
Loss from continuing operations | (3,146 | ) | - | (3,146 | ) | ||||||||
Income from discontinued operations | 2,691 | - | 2,691 | ||||||||||
Net loss | $ | (455 | ) | $ | - | $ | (455 | ) | |||||
Company's proportionate share of loss (1) | $ | (9 | ) | $ | - | $ | (9 | ) | |||||
(1) Loss represents continued and discontinued operations | |||||||||||||
2011 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 60,703 | $ | 71,987 | $ | 132,690 | |||||||
Notes Receivable | 27,447 | - | 27,447 | ||||||||||
Other assets | 138,927 | 4,441 | 143,368 | ||||||||||
Notes payable | (59,744 | ) | (47,091 | ) | (106,835 | ) | |||||||
Other liabilities | (88,647 | ) | (2,849 | ) | (91,496 | ) | |||||||
Shareholders' equity/partners' capital | (78,686 | ) | (26,488 | ) | (105,174 | ) | |||||||
Rents and interest and other income | $ | 8,021 | $ | 7,096 | $ | 15,117 | |||||||
Depreciation | 56 | (3,133 | ) | (3,077 | ) | ||||||||
Operating expenses | (8,196 | ) | (3,999 | ) | (12,195 | ) | |||||||
Gain on land sales | 23,646 | - | 23,646 | ||||||||||
Interest expense | (7,562 | ) | (2,307 | ) | (9,869 | ) | |||||||
Income (loss) from continuing operations | 15,965 | (2,343 | ) | 13,622 | |||||||||
Income from discontinued operations | 9,864 | - | 9,864 | ||||||||||
Net income (loss) | $ | 25,829 | $ | (2,343 | ) | $ | 23,486 | ||||||
Company's proportionate share of earnings (loss) (1) | $ | 530 | $ | (117 | ) | $ | 413 | ||||||
(1) Earnings (loss) represent continued and discontinued operations | |||||||||||||
NOTES_PAYABLE
NOTES PAYABLE. | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
NOTES PAYABLE. | ' | ||||||||||||||||
NOTES-PAYABLE | ' | ||||||||||||||||
NOTE 6. NOTES AND INTEREST PAYABLE | |||||||||||||||||
Below is a summary of our notes and interest payable as of December 31, 2013 (dollars in thousands): | |||||||||||||||||
Notes Payable | Stock Secured | Accrued | Total Debt | ||||||||||||||
Loans | Interest | ||||||||||||||||
Apartments | $ | 359,566 | $ | - | $ | 1,207 | $ | 360,773 | |||||||||
Commercial | 108,344 | - | 285 | 108,629 | |||||||||||||
Land | 76,468 | - | 117 | 76,585 | |||||||||||||
Real estate held for sale | 17,058 | - | 42 | 17,100 | |||||||||||||
Real estate subject to sales contract | 21,494 | - | 1,518 | 23,012 | |||||||||||||
Other | 14,471 | 2,243 | 32 | 16,746 | |||||||||||||
Total | $ | 597,401 | $ | 2,243 | $ | 3,201 | $ | 602,845 | |||||||||
The scheduled principal payments of our notes payable over the next five years and thereafter are due as follows (dollars in thousands): | |||||||||||||||||
Year | Amount | ||||||||||||||||
2014 | $ 134,524 | ||||||||||||||||
2015 | 22,007 | ||||||||||||||||
2016 | 61,099 | ||||||||||||||||
2017 | 6,013 | ||||||||||||||||
2018 | 5,862 | ||||||||||||||||
Thereafter | 370,139 | ||||||||||||||||
Total | $ 599,644 | ||||||||||||||||
Interest payable at December 31, 2013 was $3.2 million. Interest accrues at rates ranging from 1.0% to 12.5% per annum and mature between 2014 and 2053. The mortgages were collateralized by deeds of trust on real estate having a net carrying value of $682.5 million. Of the total notes payable, the senior debt is $574.6 million, junior debt is $17.2 million, and other debt is $7.8 million. Included in other debt are property tax loans of $0.3 million. | |||||||||||||||||
With respect to the additional notes payable due to the acquisition of properties or refinancing of existing mortgages, a summary of some of the more significant transactions is discussed below: | |||||||||||||||||
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 7, 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 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. | |||||||||||||||||
On October 11, 2013, the Company refinanced the existing mortgage on 600 Las Colinas, a 510,841 square foot commercial building located in Irving, Texas, for a new mortgage of $41 million. We paid off the existing mortgage of $31 million and $5.3 million in closing costs and escrows. The note accrues interest at 5.31% and payments of principal and interest are due monthly based upon a 30-year amortization schedule, maturing on November 1, 2023. | |||||||||||||||||
On December 30, 2013, TCI and IOT paid off the Mercer/Travelers land and the Lamar land loans according to the Settlement and Release Agreement and a Loan Purchase Agreement executed on June 7, 2013. According to the terms of the agreement, TCI and IOT purchased, at a discount, the Mercer/Travelers land mortgage note due to BDF TCI Mercer III, LLC (“BDF”), the existing lender, for $29,635,211. The agreement also included the purchase of an obligation, known as the Lamar land loan, by a subsidiary of TCI, from BDF for $1,864,789, which was not discounted. The total settlement price of the agreement for the two loans was $31,500,000. The result of this agreement was a jointly recognized gain of $7.5 million for the discount received. Prior to the loan payoffs, TCI and IOT incurred extension fees of $1.08 million. | |||||||||||||||||
On December 30, 2013, RAI, a related party, obtained a $20.0 million mortgage to First NBC Bank on the behalf of IOT and TCI, secured by 178.1 acres of land owned by IOT and by 100.05 acres of land owned by TCI. IOT and TCI have executed a promissory note to RAI for the same terms as the First NBC loan with a maturity of December 30, 2016 and a variable interest rate of Prime plus 1.5% with an interest rate floor of 6%. Based off the land valuation, $12.4 million is allocated to IOT and $7.6 million of the loan is allocated to TCI. | |||||||||||||||||
In conjunction with the development of various apartment projects and other developments, we drew down $0.3 million in construction loans during the twelve months ended December 31, 2013. This was related to the permanent closing of the construction loan for Toulon apartments. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
RELATED PARTY TRANSACTIONS | ' | |||||||||||||
RELATED PARTY TRANSACTIONS | ' | |||||||||||||
NOTE 7. RELATED PARTY TRANSACTIONS AND FEES | ||||||||||||||
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. | ||||||||||||||
The Company has historically engaged in and may continue to engage in certain business transactions with related parties, including but not limited to asset acquisition and dispositions. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest. | ||||||||||||||
Effective since April 30, 2011, Pillar, the sole shareholder of which is Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is RAI, a Nevada corporation, the sole shareholder of which is RAMI., a Nevada corporation, the sole shareholder of which is a trust known as the May Trust, became the Company’s external Advisor and Cash Manager. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities. Pillar also arranges, for the Company’s benefit, debt and equity financing with third party lenders and investors. Pillar also serves as an Advisor and Cash Manager to TCI and IOT. As the contractual advisor, Pillar is compensated by TCI under an Advisory Agreement that is more fully described in Part III, Item 10. “Directors, Executive Officers and Corporate Governance – The Advisor”. TCI has no employees. Employees of Pillar render services to TCI in accordance with the terms of the Advisory Agreement. Prime Income Asset Management, LLC (“Prime”) served as the Company’s contractual Advisor prior to April 30, 2011. | ||||||||||||||
Effective since January 1, 2011, Regis Realty Prime, LLC, dba Regis Property Management, LLC (“Regis”), the sole member of which is Realty Advisors, LLC, manages our commercial properties and provides brokerage services. Regis receives property management fees, construction management fees and leasing commissions in accordance with the terms of its property-level management agreement. Regis is also entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement. See Part III, Item 10. “Directors, Executive Officers and Corporate Governance – Property Management and Real Estate Brokerage”. TCI engages third-party companies to lease and manage its apartment properties. | ||||||||||||||
Below is a description of the related party transactions and fees between Pillar, Prime and Regis: | ||||||||||||||
Fees, expenses and revenue paid to and/or received from our advisor: | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Advisory | $ | 8,494 | $ | 8,915 | $ | 9,958 | ||||||||
Construction advisory | - | 181 | 2,429 | |||||||||||
Mortgage brokerage and equity refinancing | 1,878 | 1,873 | 812 | |||||||||||
Net income | 4,089 | 180 | 54 | |||||||||||
Property acquisition | - | 20 | - | |||||||||||
$ | 14,461 | $ | 11,169 | $ | 13,253 | |||||||||
Other Expense: | ||||||||||||||
Cost reimbursements | $ | 2,585 | $ | 2,247 | $ | 2,908 | ||||||||
Interest paid | 157 | 1,194 | 1,048 | |||||||||||
$ | 2,742 | $ | 3,441 | $ | 3,956 | |||||||||
Revenue: | ||||||||||||||
Rental | $ | 670 | $ | 587 | $ | 434 | ||||||||
Fees paid to Regis and related parties: | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Property acquisition | $ | - | $ | 71 | $ | - | ||||||||
Property management, construction management and leasing commissions | 436 | 2,087 | 1,759 | |||||||||||
Real estate brokerage | 4,055 | 2,263 | - | |||||||||||
$ | 4,491 | $ | 4,421 | $ | 1,759 | |||||||||
The Company received rental revenue of $0.7 million in 2013, $0.6 million in 2012, and $0.4 million in 2011 from Pillar, Prime and its related parties for properties owned by the Company, including Addison Hanger, Browning Place, and Eagle Crest. | ||||||||||||||
As of December 31, 2013, the Company had notes and interest receivables of $66.4 million due from related parties. See Part 2, Item 8. Note 3. “Notes and Interest Receivable”. During the current period, TCI recognized $12.2 million of interest income from these related party notes receivables. | ||||||||||||||
On January 1, 2012, the Company entered into 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. This development agreement was terminated December 31, 2013. The Company has also invested in surplus cash notes receivables from UHF and has sold several residential apartment properties to UHF in prior years. Due to this ongoing relationship and the significant investment in the performance of the collateral secured under the notes receivable, UHF has been determined to be a related party. | ||||||||||||||
The Company is part of a tax sharing and compensating agreement with respect to federal income taxes between ARL, TCI and IOT and their subsidiaries that was entered into in July of 2009. That agreement continued until August 31, 2012, at which time a new tax sharing and compensating agreement was entered into by ARL, TCI, IOT and RAMI for the remainder of 2012. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory tax rate of 35%. | ||||||||||||||
The following table reconciles the beginning and ending balances of related party payables as of December 31, 2013 (dollars in thousands): | ||||||||||||||
Pillar | ARL | Total | ||||||||||||
Related party payable, December 31, 2012 | $ | - | $ | (10,057 | ) | $ | (10,057 | ) | ||||||
Cash transfers | 3,028 | - | 3,028 | |||||||||||
Advisory fees | (8,494 | ) | - | (8,494 | ) | |||||||||
Net income fee | (4,089 | ) | - | (4,089 | ) | |||||||||
Fees and commissions | (2,977 | ) | - | (2,977 | ) | |||||||||
Cost reimbursements | (2,585 | ) | - | (2,585 | ) | |||||||||
Interest (to) from advisor | - | (157 | ) | (157 | ) | |||||||||
Expenses paid by advisor | (1,456 | ) | - | (1,456 | ) | |||||||||
Financing (mortgage payments) | (967 | ) | - | (967 | ) | |||||||||
Sales/Purchases transactions | 70,261 | - | 70,261 | |||||||||||
Series K preferred stock acquisition | - | (270 | ) | (270 | ) | |||||||||
Tax sharing expense | 7,763 | - | 7,763 | |||||||||||
Purchase of obligations | (60,484 | ) | 62,864 | 2,380 | ||||||||||
Related party receivable, December 31, 2013 | $ | - | $ | 52,380 | $ | 52,380 | ||||||||
Below are transactions that involve a related party: | ||||||||||||||
On December 30, 2013, RAI, a related party, obtained a $20.0 million mortgage to First NBC Bank on the behalf of IOT and TCI, secured by 178.1 acres of land owned by IOT and by 100.05 acres of land owned by TCI. Based off the land valuation, $12.4 million is allocated to IOT and $7.6 million of the loan is allocated to TCI. IOT and TCI have executed a promissory note to RAI for the same terms as the First NBC loan with a maturity of December 30, 2016, and a variable interest rate of prime plus 1.5% with an interest rate floor of 6%. Based off the land valuation, $12.4 million is allocated to IOT and $7.6 million of the loan is allocated to TCI. | ||||||||||||||
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 December 31, 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 | ||||||||||||||
Acquisitions from our parent, ARL, have previously been reflected at the fair value purchase price. Upon discussion with the SEC and in review of the guidance pursuant to ASC 250-10-45-22 to 24, we have adjusted those assets, in the prior year, to reflect a basis equal to ARL’s cost basis in the asset at the time of the sale. The related party payables to ARL were reduced for the lower asset price. |
DIVIDENDS
DIVIDENDS | 12 Months Ended |
Dec. 31, 2013 | |
DIVIDENDS: | ' |
DIVIDENDS | ' |
NOTE 8. DIVIDENDS | |
TCI’s Board of Directors established a policy that dividend declarations on common stock would be determined on an annual basis following the end of each year. In accordance with that policy, no dividends on TCI’s common stock were declared for 2013, 2012, or 2011. Future distributions to common stockholders will be determined by the Board of Directors in light of conditions then existing, including the Company’s financial condition and requirements, future prospects, restrictions in financing agreements, business conditions and other factors deemed relevant by the Board. |
PREFERRED_STOCK
PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2013 | |
PREFERRED STOCK | ' |
PREFERRED STOCK | ' |
NOTE 9. PREFERRED STOCK | |
TCI issued 30,000 shares of Series C Preferred Stock. TCI’s Series C Cumulative Convertible Preferred Stock consists of a maximum of 30,000 shares with a liquidation preference of $100.00 per share. Dividends are payable at the annual rate of $7.00 per share annually or $1.75 per quarter. After September 30, 2006, the Series C Preferred Stock may be converted into Common stock at 90.0% of the daily average closing price of the common stock for the prior five trading days. The Series C Preferred Stock is redeemable for cash at any time at the option of TCI. At December 31, 2013, 30,000 shares of Series C Preferred Stock were issued and outstanding. | |
In November 2006, TCI issued 100,000 shares of Series D Preferred Stock with a liquidation preference of $100 per share. The preferred stock is not convertible into any other security, requires dividends payable at the initial rate of 7% annually. The dividend rate increases ratably from 7% to 9% in future periods and can be redeemed at any point after September 30, 2011. In the fourth quarter of 2012, a preferred stockholder submitted a redemption request that is currently in dispute and we believe will be resolved in 2014. |
STOCK_OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2013 | |
STOCK OPTIONS: | ' |
STOCK OPTIONS | ' |
NOTE 10. STOCK OPTIONS | |
In October 2000, TCI’s stockholders approved the Director’s Stock Option Plan (the “Director’s Plan”) which provides for options to purchase up to 140,000 shares of TCI’s common stock. Options granted pursuant to the Director’s Plan are immediately exercisable and expire on the earlier of the first anniversary of the date on which a Director ceases to be a Director or 10 years from the date of grant. Effective December 15, 2005 the plan was terminated. As of December 31, 2013, there were 5,000 stock options outstanding which were exercisable at $14.25 per share. These options will expire January 1, 2015, if not exercised. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
INCOME TAXES | ' | ||||||||||||
INCOME TAXES | ' | ||||||||||||
NOTE 11. INCOME TAXES | |||||||||||||
For 2013, 2012 and 2011, TCI had net losses for federal tax purposes. | |||||||||||||
For tax periods ending before August 31, 2012, the Company was part of the ARL consolidated federal return. After that date, the Company and the rest of the ARL group joined the RAMI consolidated group for tax purposes. The income tax expense (benefit) for the 2011 period in the accompanying financial statement was calculated under a tax sharing and compensating agreement between ARL, TCI and IOT. That agreement continued until August 31, 2012, at which time a new tax sharing and compensating agreement was entered into by ARL, TCI, IOT and RAMI for the remainder of 2012. For 2012, RAMI, ARL, TCI and IOT had a combined net taxable loss and TCI recorded no current tax (benefit) or expense. For 2013, TCI consolidated with IOT had a net taxable loss and the remainder of the group had net taxable income resulting in a tax (benefit) to TCI. The expense (benefit) in each year was calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory rate of 35%. | |||||||||||||
Current expense (benefit) is attributable to (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Income from continuing operations | $ | (24,598 | ) | $ | (10,401 | ) | $ | (14,460 | ) | ||||
Income from discontinued operations | 16,835 | 10,401 | 14,460 | ||||||||||
Tax benefit | $ | (7,763 | ) | $ | - | $ | - | ||||||
Of the total 2013 tax benefit, $6,802 comes from RAMI and $961 from ARL. | |||||||||||||
The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follows (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Computed "expected" income tax (benefit) expense | $ | 26,998 | $ | (4,211 | ) | $ | (16,008 | ) | |||||
Book to tax differences for partnerships not consolidated for tax purposes | (33,565 | ) | (3,831 | ) | (6,442 | ) | |||||||
Book to tax differences of depreciation and amortization | 1,222 | 1,434 | 1,140 | ||||||||||
Book to tax differences in gains on sale of property | (20,308 | ) | (4,835 | ) | (7,020 | ) | |||||||
Book provision for loss | 3,962 | 1,656 | 10,132 | ||||||||||
Partial valuation allowance against current net operating loss benefit | 16,835 | 10,401 | 14,460 | ||||||||||
Other | 4,856 | (614 | ) | 3,738 | |||||||||
Total | $ | - | $ | - | $ | - | |||||||
Alternative minimum tax | $ | - | $ | - | $ | - | |||||||
Deferred income taxes reflect the tax effects of temporary timing differences between carrying amounts of assets and liabilities reflected on the financial statements and the amounts used for income tax purposes. TCI’s tax basis in its net assets differs from the amount at which its net assets are reported for financial statement purposes, principally due to the accounting for gains and losses on property sales, and depreciation on owned properties. The tax effects of temporary differences and net operating loss carry forwards that give rise to the deferred tax assets are presented below (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net operating losses | $ | 71,071 | $ | 53,857 | $ | 42,337 | |||||||
AMT credits | 1,374 | 1,374 | 1,374 | ||||||||||
Basis difference of: | |||||||||||||
Real estate holdings | (3,045 | ) | (15,159 | ) | (13,514 | ) | |||||||
Notes receivable | 860 | 860 | 1,726 | ||||||||||
Investments | (4,703 | ) | (4,757 | ) | (5,346 | ) | |||||||
Notes payable | 12,496 | 16,598 | 22,966 | ||||||||||
Deferred gains | 10,806 | 11,370 | 14,985 | ||||||||||
Total | $ | 88,859 | $ | 64,143 | $ | 64,528 | |||||||
Deferred tax valuation allowance | (88,859 | ) | (64,143 | ) | (64,528 | ) | |||||||
Net deferred tax asset | $ | - | $ | - | $ | - | |||||||
Recognition of the benefits of deferred tax assets will require TCI to generate future taxable income. There is no assurance that TCI will generate earnings in future years. Therefore, TCI has established a valuation allowance for deferred tax assets of approximately $88,859,000, $64,143,000 and $64,528,000 as of December 31, 2013, 2012 and 2011, respectively. | |||||||||||||
TCI has tax net operating loss carryforwards of approximately $184.2 million expiring through the year 2032. The alternative minimum tax credit balance did not change in 2013 and remains at approximately $1,374,000. The credit has no expiration date. | |||||||||||||
FUTURE_MINIMUM_RENTAL_INCOME_U
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | ' | ||||
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | ' | ||||
NOTE 12. FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | |||||
TCI’S real estate operations include the leasing of commercial properties (office buildings, industrial warehouses and retail centers). The leases thereon expire at various dates through 2025. The following is a schedule of minimum future rents on non-cancelable operating leases at December 31, 2013 (dollars in thousands): | |||||
Year | Amount | ||||
2014 | $ | 15,158 | |||
2015 | 14,678 | ||||
2016 | 12,264 | ||||
2017 | 9,790 | ||||
2018 | 8,652 | ||||
Thereafter | 16,647 | ||||
Total | $ | 77,189 |
OPERATING_SEGMENTS
OPERATING SEGMENTS | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
OPERATING SEGMENTS | ' | ||||||||||||||||||||
OPERATING SEGMENTS | ' | ||||||||||||||||||||
NOTE 13. OPERATING SEGMENTS | |||||||||||||||||||||
Our segments are based on management’s method of internal reporting which classifies its operations by property type. The segments are commercial, apartments, land and other. Significant differences among the accounting policies of the operating segments as compared to the Consolidated Financial Statements principally involve the calculation and allocation of administrative expenses. Management evaluates the performance of each of the operating segments and allocates resources to them based on their 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, 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 the Company’s reportable segments’ operating income including segment assets and expenditures for the years 2013, 2012 and 2011 (dollars in thousands): | |||||||||||||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 26,931 | $ | 59,155 | $ | 39 | $ | 112 | $ | 86,237 | |||||||||||
Property operating expenses | 13,916 | 26,018 | 976 | 38 | 40,948 | ||||||||||||||||
Depreciation | 6,550 | 10,624 | - | - | 17,174 | ||||||||||||||||
Mortgage and loan interest | 6,057 | 17,147 | 5,685 | 2,748 | 31,637 | ||||||||||||||||
Deferred borrowing costs amortization | 61 | 2,265 | 195 | 67 | 2,588 | ||||||||||||||||
Loan charges and prepayment penalties | 150 | 3,937 | 1,080 | 52 | 5,219 | ||||||||||||||||
Interest income | - | - | - | 13,790 | 13,790 | ||||||||||||||||
Loss on land sales | - | - | (1,073 | ) | - | (1,073 | ) | ||||||||||||||
Segment operating income (loss) | $ | 197 | $ | (836 | ) | $ | (8,970 | ) | $ | 10,997 | $ | 1,388 | |||||||||
Capital expenditures | 7,188 | 315 | 387 | - | 7,890 | ||||||||||||||||
Assets | 141,752 | 379,264 | 158,359 | - | 679,375 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 26,974 | $ | 239,676 | $ | 5,999 | $ | - | $ | 272,649 | |||||||||||
Less: Cost of sale | 14,914 | 154,331 | 7,072 | - | 176,317 | ||||||||||||||||
Deferred current gain | - | - | |||||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain (loss) on sale | $ | 12,060 | $ | 85,345 | $ | (1,073 | ) | $ | - | $ | 96,332 | ||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 30,846 | $ | 55,693 | $ | 25 | $ | 51 | $ | 86,615 | |||||||||||
Property operating expenses | 16,721 | 24,582 | 589 | 437 | 42,329 | ||||||||||||||||
Depreciation | 5,657 | 10,484 | - | - | 16,141 | ||||||||||||||||
Mortgage and loan interest | 5,920 | 19,844 | 6,250 | 4,229 | 36,243 | ||||||||||||||||
Deferred borrowing costs amortization | 86 | 397 | 154 | - | 637 | ||||||||||||||||
Loan charges and prepayment penalties | - | 3,495 | 79 | - | 3,574 | ||||||||||||||||
Interest income | - | - | - | 11,725 | 11,725 | ||||||||||||||||
Gain on land sales | - | - | 6,935 | - | 6,935 | ||||||||||||||||
Segment operating income (loss) | $ | 2,462 | $ | (3,109 | ) | $ | (112 | ) | $ | 7,110 | $ | 6,351 | |||||||||
Capital expenditures | 2,454 | 839 | - | - | 3,293 | ||||||||||||||||
Assets | 165,697 | 540,045 | 173,132 | - | 878,874 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 9,825 | $ | 47,131 | $ | 37,799 | $ | - | $ | 94,755 | |||||||||||
Less: Cost of sale | (10,152 | ) | (41,587 | ) | (31,479 | ) | - | (83,218 | ) | ||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain (loss) on sale | $ | (327 | ) | $ | 5,544 | $ | 6,935 | $ | - | $ | 12,152 | ||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2011 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 28,008 | $ | 49,536 | $ | 132 | $ | 259 | $ | 77,935 | |||||||||||
Property operating expenses | 16,568 | 23,645 | 1,573 | 198 | 41,984 | ||||||||||||||||
Depreciation | 4,416 | 9,551 | - | - | 13,967 | ||||||||||||||||
Mortgage and loan interest | 6,403 | 19,278 | 6,957 | 3,583 | 36,221 | ||||||||||||||||
Deferred borrowing costs amortization | 136 | 236 | 1,184 | 4 | 1,560 | ||||||||||||||||
Loan charges and prepayment penalties | - | 292 | 147 | - | 439 | ||||||||||||||||
Interest income | - | - | - | 5,720 | 5,720 | ||||||||||||||||
Gain on land sales | - | - | 17,011 | 17,011 | |||||||||||||||||
Segment operating income (loss) | $ | 485 | $ | (3,466 | ) | $ | 7,282 | $ | 2,194 | $ | 6,495 | ||||||||||
Capital expenditures | 3,286 | 1,248 | 4,103 | - | 8,637 | ||||||||||||||||
Assets | 172,446 | 550,892 | 197,301 | - | 920,639 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 103,811 | $ | 21,590 | $ | 163,050 | $ | - | $ | 288,451 | |||||||||||
Less: Cost of sale | (108,243 | ) | (14,933 | ) | (154,122 | ) | - | (277,298 | ) | ||||||||||||
Deferred current gain | - | - | - | - | - | ||||||||||||||||
Recognized prior deferred gain | 7,287 | 8,788 | 8,083 | - | 24,158 | ||||||||||||||||
Gain on sale | $ | 2,855 | $ | 15,445 | $ | 17,011 | $ | - | $ | 35,311 | |||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations (dollars in thousands): | |||||||||||||||||||||
For Twelve Months Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Segment operating income | $ | 1,388 | $ | 6,351 | $ | 6,495 | |||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (6,323 | ) | (5,090 | ) | (8,971 | ) | |||||||||||||||
Provision on impairment of notes receivable and real estate assets | (11,320 | ) | (2,330 | ) | (35,039 | ) | |||||||||||||||
Net income fee to related party | (4,089 | ) | (180 | ) | (54 | ) | |||||||||||||||
Advisory fee to related party | (8,494 | ) | (8,915 | ) | (9,958 | ) | |||||||||||||||
Other income | 7,862 | 6,303 | 2,441 | ||||||||||||||||||
Gain (loss) on the sale of investments | (283 | ) | 125 | (514 | ) | ||||||||||||||||
Earnings from unconsolidated joint ventures and investees | (172 | ) | (66 | ) | 242 | ||||||||||||||||
Litigation settlement | (20,313 | ) | (173 | ) | (225 | ) | |||||||||||||||
Income tax benefit (expense) | 40,485 | (1,445 | ) | (357 | ) | ||||||||||||||||
Loss from continuing operations | $ | (1,259 | ) | $ | (5,420 | ) | $ | (45,940 | ) | ||||||||||||
SEGMENT ASSET RECONCILIATION TO TOTAL ASSETS | |||||||||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): | |||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Segment assets | $ | 679,375 | $ | 878,874 | $ | 920,639 | |||||||||||||||
Investments in real estate partnerships | 1,697 | 5,439 | 6,362 | ||||||||||||||||||
Notes and interest receivable | 67,907 | 59,098 | 77,371 | ||||||||||||||||||
Other assets | 132,265 | 83,856 | 88,251 | ||||||||||||||||||
Assets held for sale | 16,427 | 18,077 | 67,701 | ||||||||||||||||||
Total assets | $ | 897,671 | $ | 1,045,344 | $ | 1,160,324 |
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||
DISCONTINUED OPERATIONS | ' | ||||||||||||
NOTE 14. DISCONTINUED OPERATIONS | |||||||||||||
The Company applies 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 repositioned as held for sale as of the year ended 2013, 2012 and 2011. Income from discontinued operations relates to 16, 21 and 34 properties that were sold or held for sale in 2013, 2012 and 2011, respectively. The following table summarizes revenue and expense information for these properties sold and held-for-sale (dollars in thousands): | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Revenues: | |||||||||||||
Rental and other property revenues | $ | 26,036 | $ | 34,774 | $ | 46,620 | |||||||
26,036 | 34,774 | 46,620 | |||||||||||
Expenses: | |||||||||||||
Property operating expenses | 12,201 | 18,161 | 25,187 | ||||||||||
Depreciation | 4,231 | 6,349 | 9,067 | ||||||||||
General and administrative | 935 | 961 | 1,269 | ||||||||||
Provision on impairment of notes receivable and real estate assets | - | 2,400 | 9,968 | ||||||||||
Total operating expenses | 17,367 | 27,871 | 45,491 | ||||||||||
Other income (expense): | |||||||||||||
Other income (expense) | 29 | 14 | (24 | ) | |||||||||
Mortgage and loan interest | (6,139 | ) | (10,806 | ) | (18,808 | ) | |||||||
Deferred borrowing costs amortization | (3,009 | ) | (1,790 | ) | (805 | ) | |||||||
Loan charges and prepayment penalties | (3,245 | ) | (3,472 | ) | (1,265 | ) | |||||||
Earnings from unconsolidated subsidiaries and investees | 30 | 55 | 453 | ||||||||||
Litigation settlement | (250 | ) | (250 | ) | - | ||||||||
Total other expenses | (12,584 | ) | (16,249 | ) | (20,449 | ) | |||||||
Loss from discontinued operations before gain on sale of real estate and taxes | (3,915 | ) | (9,346 | ) | (19,320 | ) | |||||||
Gain on sale of real estate from discontinued operations | 97,405 | 5,217 | 18,300 | ||||||||||
Income tax benefit (expense) | (32,722 | ) | 1,445 | 357 | |||||||||
Income (loss) from discontinued operations | $ | 60,768 | $ | (2,684 | ) | $ | (663 | ) | |||||
The Company’s application of ASC Topic 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2013, 2012 and 2011 as income from discontinued operations. The application of ASC Topic 360 does not have an impact on net income available to common shareholders. ASC Topic 360 only impacts the presentation of these properties within the Consolidated Statements of Operations. | |||||||||||||
QUARTERLY_RESULTS_OF_OPERATION
QUARTERLY RESULTS OF OPERATIONS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Schedule of Quarterly Financial Information (Tables) | ' | ||||||||||||||||
QUARTERLY RESULTS OF OPERATIONS | ' | ||||||||||||||||
NOTE 15. QUARTERLY RESULTS OF OPERATIONS | |||||||||||||||||
The following is a tabulation of TCI’s quarterly results of operations for the years 2013, 2012 and 2011 (unaudited, dollars in thousands): | |||||||||||||||||
For the Three Months Ended 2013 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2013 | |||||||||||||||||
Revenue and other property revenues | $ | 20,383 | $ | 20,636 | $ | 20,831 | $ | 24,387 | |||||||||
Total operating expenses | 17,824 | 17,730 | 18,921 | 33,873 | |||||||||||||
Operating (loss) income | 2,559 | 2,906 | 1,910 | (9,486 | ) | ||||||||||||
Other expenses | (12,275 | ) | (5,657 | ) | (8,675 | ) | (11,953 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (9,716 | ) | (2,751 | ) | (6,765 | ) | (21,439 | ) | |||||||||
Loss on land sales | (48 | ) | - | - | (1,025 | ) | |||||||||||
Income tax benefit | 2,368 | 5,213 | 319 | 32,585 | |||||||||||||
Net income (loss) from continuing operations | (7,396 | ) | 2,462 | (6,447 | ) | 10,121 | |||||||||||
Net income from discontinuing operations | 4,398 | 9,680 | 593 | 46,098 | |||||||||||||
Net income (loss) | (2,998 | ) | 12,142 | (5,854 | ) | 56,219 | |||||||||||
Net loss attributable to non-controlling interest | (111 | ) | (115 | ) | (97 | ) | (656 | ) | |||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (279 | ) | (280 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (3,383 | ) | $ | 11,750 | $ | (6,230 | ) | $ | 55,283 | |||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.92 | ) | $ | 0.25 | $ | (0.81 | ) | $ | 1.09 | |||||||
Income from discontinued operations | 0.52 | 1.15 | 0.07 | 5.48 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.4 | $ | (0.74 | ) | $ | 6.57 | |||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.92 | ) | $ | 0.24 | $ | (0.81 | ) | $ | 1.04 | |||||||
Income from discontinued operations | 0.52 | 1.1 | 0.07 | 5.24 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.34 | $ | (0.74 | ) | $ | 6.28 | |||||||
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 8,796,699 | 8,413,469 | 8,791,655 | |||||||||||||
For the Three Months Ended 2012 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2012 | |||||||||||||||||
Revenue and other property revenues | $ | 20,446 | $ | 20,956 | $ | 21,422 | $ | 23,791 | |||||||||
Total operating expenses | 18,597 | 17,349 | 17,972 | 21,067 | |||||||||||||
Operating income | 1,849 | 3,607 | 3,450 | 2,724 | |||||||||||||
Other expenses | (5,541 | ) | (7,736 | ) | (5,905 | ) | (3,358 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (3,692 | ) | (4,129 | ) | (2,455 | ) | (634 | ) | |||||||||
Gain (loss) on land sales | 423 | 4,738 | 2,913 | (1,139 | ) | ||||||||||||
Income tax benefit (expense) | (301 | ) | 647 | (237 | ) | (1,554 | ) | ||||||||||
Net income (loss) from continuing operations | (3,570 | ) | 1,256 | 221 | (3,327 | ) | |||||||||||
Net income (loss) from discontinuing operations | (558 | ) | 1,201 | (440 | ) | (2,887 | ) | ||||||||||
Net income (loss) | (4,128 | ) | 2,457 | (219 | ) | (6,214 | ) | ||||||||||
Net income (loss) attributable to non-controlling interest | (79 | ) | (175 | ) | (43 | ) | 77 | ||||||||||
Preferred dividend requirement | (277 | ) | (277 | ) | (277 | ) | (281 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (4,484 | ) | $ | 2,005 | $ | (539 | ) | $ | (6,418 | ) | ||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.47 | ) | $ | 0.1 | $ | (0.01 | ) | $ | (0.42 | ) | ||||||
Income (loss) from discontinued operations | (0.07 | ) | 0.14 | (0.05 | ) | (0.34 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.54 | ) | $ | 0.24 | $ | (0.06 | ) | $ | (0.76 | ) | ||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.47 | ) | $ | 0.08 | $ | (0.01 | ) | $ | (0.42 | ) | ||||||
Income (loss) from discontinued operations | (0.07 | ) | 0.12 | (0.05 | ) | (0.34 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.54 | ) | $ | 0.2 | $ | (0.06 | ) | $ | (0.76 | ) | ||||||
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 9,622,951 | 8,413,469 | 8,413,469 | |||||||||||||
For the Three Months Ended 2011 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2011 | |||||||||||||||||
Revenue and other property revenues | $ | 18,428 | $ | 20,701 | $ | 21,067 | $ | 17,739 | |||||||||
Total operating expenses | 23,534 | 15,854 | 20,253 | 50,332 | |||||||||||||
Operating (loss) income | (5,106 | ) | 4,847 | 814 | (32,593 | ) | |||||||||||
Other expenses | (8,058 | ) | (8,383 | ) | (8,056 | ) | (6,059 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (13,164 | ) | (3,536 | ) | (7,242 | ) | (38,652 | ) | |||||||||
Gain on land sales | 796 | 1,285 | 1,435 | 13,495 | |||||||||||||
Income tax benefit (expense) | 112 | (4,193 | ) | 2,211 | 1,513 | ||||||||||||
Net loss from continuing operations | (12,256 | ) | (6,444 | ) | (3,596 | ) | (23,644 | ) | |||||||||
Net income (loss) from discontinuing operations | 208 | (7,788 | ) | 4,107 | 2,810 | ||||||||||||
Net income (loss) | (12,048 | ) | (14,232 | ) | 511 | (20,834 | ) | ||||||||||
Net income (loss) attributable to non-controlling interest | 85 | 46 | 384 | (233 | ) | ||||||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (279 | ) | (280 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (12,237 | ) | $ | (14,463 | ) | $ | 616 | $ | (21,347 | ) | ||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (1.51 | ) | $ | (0.79 | ) | $ | (0.41 | ) | $ | (2.87 | ) | |||||
Income (loss) from discontinued operations | 0.03 | (0.93 | ) | 0.49 | 0.33 | ||||||||||||
Net income (loss) applicable to common shares | $ | (1.48 | ) | $ | (1.72 | ) | $ | 0.08 | $ | (2.54 | ) | ||||||
Weighted average common shares used in computing earnings per share | 8,240,136 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (1.51 | ) | $ | (0.79 | ) | $ | (0.41 | ) | $ | (2.87 | ) | |||||
Income (loss) from discontinued operations | 0.03 | (0.93 | ) | 0.49 | 0.33 | ||||||||||||
Net income (loss) applicable to common shares | $ | (1.48 | ) | $ | (1.72 | ) | $ | 0.08 | $ | (2.54 | ) | ||||||
Weighted average common shares used in computing diluted earnings per share | 8,240,136 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Quarterly results presented differ from those previously reported in TCI’s Form 10-Q due to the reclassification of the operations of properties sold or held for sale to discontinued operations in accordance with ASC Topic 360. |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 12 Months Ended |
Dec. 31, 2013 | |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | ' |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | ' |
NOTE 16. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | |
Liquidity. Management believes that TCI will generate excess cash from property operations in 2014; such excess, however, will not be sufficient to discharge all of TCI’s obligations as they become due. Management intends to sell income-producing assets, 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 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 nonaffiliated partners are limited to development fees earned by the non-affiliated partners, and are set forth in the respective partnership agreements. | |
Other Litigation. TCI is also involved in various other lawsuits arising in the ordinary course of business. Management is of the opinion that the outcome of these lawsuits will have no material impact on TCI’s financial condition, results of operations 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 | 12 Months Ended |
Dec. 31, 2013 | |
EARNINGS PER SHARE | ' |
EARNINGS PER SHARE | ' |
NOTE 17. EARNINGS PER SHARE | |
Earnings per share. Earnings per share (“EPS”) have been computed pursuant to the provisions of ASC 260 “Earnings Per Share”. The computation of basic EPS is calculated by dividing income available to common shareholders 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. | |
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 December 31, 2013, we have 5,000 shares of stock options outstanding. These options will expire 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. At December 31, 2013, the preferred stock and the stock options were anti-dilutive and thus not included in the EPS calculation. | |
As of December 31, 2013, the preferred stock and the stock options were anti-dilutive and therefore not included in the EPS calculation. | |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
NOTE 18. SUBSEQUENT EVENTS | |
The date to which events occurring after December 31, 2013, the date of the most recent balance sheet, have been evaluated for possible adjustment to the financial statements or disclosure is March 31, 2014, which is the date on which the financial statements were available to be issued. | |
On January 29, 2014, the Company entered into a sales contract to sell 1010 Common, a 512,593 square foot commercial building, located in New Orleans, LA, for a sales price of $16.6 million. Due to the small amount of firm money, we have determined that the contract has not met the requirements to be considered held for sale. Upon a larger firm deposit, we will reclassify the asset as held for sale. | |
On February 6, 2014, the Company sold a 232-unit apartment complex known as Pecan Pointe located in Temple, TX, for a sales price of $23.1 million to an independent third party. The buyer assumed the existing debt of $16.5 million secured by the property. We recorded a gain of $5.8 million. | |
On February 12, 2014, the Company exercised the first prepayment option date on the settlement with Petra CRE CDO relating to the Amoco Building. Per the agreement, the Company paid $1.2 million to settle all obligations and the remaining balance of the note and accrued interest of $3.5 million was forgiven. | |
On February 13, 2014, the Company acquired 0.75 acres of land adjacent to the Mandahl Bay Land located in St. Thomas, VI, for a sales price of $89,454. | |
On February 28, 2014, the Company refinanced the existing mortgage on Parc at Denham Springs apartments, a 224-unit complex located in Denham Springs, LA, for a new mortgage of $19.2 million. We paid off the existing mortgage of $19.2 million and $1.6 million in closing costs. The note accrues interest at 3.75% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing April 1, 2051. | |
On March 28, 2014, TCI secured financing of $40.0 million. The note has a term of five years at an interest rate of 12.0%. The note is interest only for the first year with quarterly principal payments due of $500,000. The loan is secured by various equity interests in residential apartments. |
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | ' | ||
FASB Accounting Standards Codification. | ' | ||
FASB Accounting Standards Codification. The Company presents its financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). In June 2009, the Financial Accounting Standards Board (“FASB”) completed its accounting guidance codification project. The FASB Accounting Standards Codification (“ASC”) became effective for the Company’s financial statements issued subsequent to June 30, 2009 and is the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. As of the effective date, the company refers to the ASC Codification as the sole source of authoritative literature. | |||
Organization and business | ' | ||
Organization and business. Transcontinental Realty Investors, Inc., a Nevada corporation, is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). TCI is the successor to a California business trust that was organized on September 6, 1983 and commenced operations on January 31, 1984. On November 30, 1999, TCI acquired all of the outstanding shares of beneficial interest of Continental Mortgage and Equity Trust (“CMET”), a real estate company, in a tax-free exchange of shares, issuing 1,181 shares of its common stock for each outstanding CMET share. Prior to January 1, 2000, TCI elected to be treated as a Real Estate Investment Trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”). During the third quarter of 2000, due to a concentration of ownership TCI no longer met the requirement for tax treatment as a REIT. Effective March 31, 2003, TCI’s financial results were consolidated in the American Realty Investors, Inc. (“ARL”) Form 10-K and related consolidated financial statements. | |||
TCI is a “C” corporation for U.S. federal income tax purposes and files an annual consolidated income tax return with ARL, whose common stock is traded on the New York Stock Exchange under the symbol (“ARL”). Subsidiaries of ARL own approximately 83.8% of the Company’s common stock. | |||
On July 17, 2009, the Company acquired an additional 2,518,934 shares of common stock of Income Opportunity Realty Investors, Inc. (“IOT”), and in doing so, increased its ownership from approximately 25% to over 80% of the shares of common stock of IOT outstanding. Upon acquisition of the additional shares in 2009, IOT’s results of operations began consolidating with those of the Company for tax and financial reporting purposes. As of December 31, 2013, TCI owned 81.1% of the outstanding IOT common shares. Shares of IOT are traded on the New York Euronext Exchange (“NYSE MKT”) under the symbol (“IOT”). | |||
At the time of the acquisition, the historical accounting value of IOT’s assets was $112 million and liabilities were $43 million. In that the shares of IOT acquired by TCI were from a related party, the values recorded by TCI are IOT’s historical accounting values at the date of transfer. The Company’s fair valuation of IOT’s assets and liabilities at the acquisition date approximated IOT’s book value. The net difference between the purchase price and historical accounting basis of the assets and liabilities acquired was $26.9 million and has been reflected by TCI as deferred income. The deferred income will be recognized upon the sale of the land that IOT held on its books as of the date of sale, to an independent third party. | |||
TCI’s Board of Directors is responsible for directing the overall affairs of TCI and for setting the strategic policies that guide the Company. As of April 30, 2011, the Board of Directors delegated the day-to-day management of the Company to Pillar Income Asset Management, Inc. (“Pillar”), a Nevada corporation under a written Advisory Agreement that is reviewed annually by TCI’s Board of Directors. The directors of TCI are also directors of ARL and IOT. The Chairman of the Board of Directors of TCI also serves as the Chairman of the Board of Directors of ARL and IOT. The officers of TCI also serve as officers of ARL, IOT and Pillar. | |||
Effective since April 30, 2011, Pillar, the sole shareholder of which is Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is Realty Advisors, Inc. (“RAI”), a Nevada corporation, the sole shareholder of which is Realty Advisors Management, Inc. (“RAMI”), a Nevada corporation, the sole shareholder of which is a trust known as the May Trust, became the Company’s external Advisor and Cash Manager. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities. Pillar also arranges, for the Company’s benefit, debt and equity financing with third party lenders and investors. Pillar also serves as an Advisor and Cash Manager to TCI and IOT. As the contractual advisor, Pillar is compensated by TCI under an Advisory Agreement that is more fully described in Part III, Item 10. “Directors, Executive Officers and Corporate Governance – The Advisor”. TCI has no employees. Employees of Pillar render services to TCI in accordance with the terms of the Advisory Agreement. Prime Income Asset Management, LLC (“Prime”) served as the Company’s contractual Advisor prior to April 30, 2011. | |||
Effective since January 1, 2011, Regis Realty Prime, LLC, dba Regis Property Management, LLC (“Regis”), the sole member of which is Realty Advisors, LLC, manages our commercial properties and provides brokerage services. Regis receives property management fees and leasing commissions in accordance with the terms of its property-level management agreement. Regis is also entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement. See Part III, Item 10. “Directors, Executive Officers and Corporate Governance – Property Management and Real Estate Brokerage”. TCI engages third-party companies to lease and manage its apartment properties. | |||
On January 1, 2012, the Company entered into 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. This development agreement was terminated December 31, 2013. The Company has also invested in surplus cash notes receivables from UHF and has sold several residential apartment properties to UHF in prior years. Due to this ongoing relationship and the significant investment in the performance of the collateral secured under the notes receivable, UHF has been determined to be a related party. | |||
Our primary business is the acquisition, development and ownership of income-producing residential and commercial real estate properties. In addition, we opportunistically acquire land for future development in in-fill or high-growth suburban markets. From time to time and when we believe it appropriate to do so, we will also sell land and income-producing properties. We generate revenues by leasing apartment units to residents and leasing office, industrial and retail space to various for-profit businesses as well as certain local, state and federal agencies. We also generate revenues from gains on sales of income-producing properties and land. At December 31, 2013, we owned 36 residential apartment communities comprising of 6,078 units, nine commercial properties comprising an aggregate of approximately 2.3 million square feet, and an investment in 4,100 acres of undeveloped and partially developed land. | |||
Basis of presentation | ' | ||
Basis of presentation. The accompanying Consolidated Financial Statements include our accounts, our 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 it is 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 are included in consolidated net income. TCI’s investment in ARL is accounted for under the equity method. Our investment in Garden Centura, L.P. was accounted for under the equity method until December 28, 2011, when it was sold to a third party. | |||
The Company in accordance with the VIE guidance in ASC 810 “Consolidations” consolidates 33 and 44 multifamily residential properties located throughout the United States at December 31, 2013 and December 31, 2012, respectively, ranging from 32 units to 332 units. Assets totaling $343,889,000 and $503,580,000 at December 31, 2013 and 2012, respectively, are consolidated and included in “Real estate, at cost” on the balance sheet and are all collateral for their respective mortgage notes payable, none of which are recourse to the partnership in which they are in or to the Company. Assets totaling $16,427,000 and $18,077,000 at December 31, 2013 and 2012, respectively, are consolidated and included in “Real estate held for sale at cost” on the balance sheet and are all collateral for their respective mortgage notes payable, none of which are recourse to the partnership in which they are in or to the Company. | |||
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). We continually evaluate 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. | |||
Any properties that are treated as “subject to sales contract” on the Consolidated Balance Sheets and are listed in detail in Schedule III, “Real Estate and Accumulated Depreciation” are those in which we have not recognized the legal sale according to the guidance in ASC 360-20 due to various factors, disclosed in each sale transaction under Item 1 Significant Real Estate Acquisitions/Dispositions and Financing. Any sale transaction where the guidance reflects that a sale had not occurred, the asset involved in the transaction, including the debt and property operations, remained on the books of the Company. We continue to charge depreciation to expense as a period costs for the property until such time as the property has been classified as held for sale in accordance with guidance reflected in ASC 360-10-45 “Impairment or Disposal of Long-Lived Assets”. | |||
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 the Company’s board of directors and after an active program to sell the asset has commenced. 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 to no longer market as an asset for sale, 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 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. The cost of buildings and improvements includes the purchase price of property, legal fees and other acquisition costs. Costs directly related to planning, developing, initial leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. Capitalized development costs include interest, property taxes, insurance, and other direct project costs incurred during the period of development. | |||
A variety of costs are incurred in the acquisition, development and leasing of properties. After determination is made to capitalize a cost, it is allocated to the specific component of a project that is benefited. Determination of when a development project is substantially complete and capitalization must cease involves a degree of judgment. Our capitalization policy on development properties is guided by ASC Topic 835-20 “Interest – Capitalization of Interest” and ASC Topic 970 “Real Estate - General”. The costs of land and buildings under development include specifically identifiable costs. The capitalized costs include pre-construction costs essential to the development of the property, development costs, construction costs, interest costs, real estate taxes, salaries and related costs and other costs incurred during the period of development. We consider a construction project as substantially completed and held available for occupancy upon the receipt of certificates of occupancy, but no later than one year from cessation of major construction activity. We cease capitalization on the portion (1) substantially completed and (2) occupied or held available for occupancy, and we capitalize only those costs associated with the portion under construction. | |||
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: | |||
Level 1 | — | Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. | |
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. | |||
Recognition of revenue | ' | ||
Recognition of revenue. Our revenues, which are composed largely of rental income, include rents reported on a straight-line basis over the lease term. In accordance with ASC 805 “Business Combinations”, we recognize rental revenue of acquired in-place “above-” and “below-market” leases at their fair values over the terms of the respective leases. | |||
Reimbursements of operating costs, as allowed under most of our commercial tenant leases, consist of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs, and are recognized as revenue in the period in which the recoverable expenses are incurred. We record these reimbursements on a “gross” basis, since we generally are the primary obligor with respect to purchasing goods and services from third-party suppliers; we have discretion in selecting the supplier and have the credit risk with respect to paying the supplier. | |||
Rental income for residential property leases is recorded when due from residents and is recognized monthly as earned, which is not materially different than on a straight-line basis as lease terms are generally for periods of one year or less. An allowance for doubtful accounts is recorded for all past due rents and operating expense reimbursements considered to be uncollectible | |||
Sales and the associated gains or losses of real estate assets are recognized in accordance with the provisions of ASC Topic 360-20, “Property, Plant and Equipment—Real Estate Sale”. The specific timing of a sale is measured against various criteria in ASC 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met, the Company defers some or all of the gain recognition and accounts for the continued operations of the property by applying the finance, leasing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria are met. | |||
Non-performing notes receivable | ' | ||
Non-performing notes receivable. We consider a note receivable to be non-performing when the maturity date has passed without principal repayment and the borrower is not making interest payments in accordance with the terms of the agreement. | |||
Interest recognition on notes receivable | ' | ||
Interest recognition on notes receivable. We record interest income as earned in accordance with the terms of the related loan agreements. Prior to January 1, 2012, on cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income was only recognized to the extent that cash was received. As of January 1, 2012, due to the consistency of cash received on the surplus cash notes, we recorded interest as earned. | |||
Allowance for estimated losses | ' | ||
Allowance for estimated losses. We assess the collectability of notes receivable on a periodic basis, of which the assessment consists primarily of an evaluation of cash flow projections of the borrower to determine whether estimated cash flows are sufficient to repay principal and interest in accordance with the contractual terms of the note. We recognize impairments on notes receivable when it is probable that principal and interest will not be received in accordance with the contractual terms of the loan. The amount of the impairment to be recognized generally is based on the fair value of the partnership’s real estate that represents the primary source of loan repayment. See Note 3 “Notes and Interest Receivable” for details on our notes receivable. | |||
Cash Equivalents | ' | ||
Cash equivalents. For purposes of the Consolidated Statements of Cash Flows, all highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents. | |||
Earnings Per Share | ' | ||
Earnings per share. Income (loss) per share is presented in accordance with ASC 620 “Earnings per Share”. Income (loss) per share is computed based upon the weighted average number of shares of common stock outstanding during each year. | |||
Use of Estimates | ' | ||
Use of estimates. In the preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America, it is necessary for management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expense for the year ended. Actual results could differ from those estimates. | |||
Income Taxes | ' | ||
Income taxes. The Company is a “C Corporation” for U.S. federal income tax purposes. For tax periods ending before August 31, 2012, the Company filed an annual consolidated income tax return with ARL and IOT and their subsidiaries. ARL was the common parent for the consolidated group. After that date, the Company and the rest of the ARL group joined the RAMI consolidated group for tax purposes. The income tax expense (benefit) for the 2011 tax period in the accompanying financial statement was calculated under a tax sharing and compensating agreement between ARL, TCI and IOT. That agreement continued until August 31, 2012 at which time a new tax sharing and compensating agreement was entered into by ARL, TCI, IOT and RAMI for the remainder of 2012. The agreement specifies the manner in which the group will share the consolidated tax liability and also how certain tax attributes are to be treated among members of the group. | |||
Recent accounting pronouncements | ' | ||
Recent accounting pronouncements. There were no recent accounting pronouncements that our company has not implemented that materially affect our financial statements. |
REAL_ESTATE_Tables
REAL ESTATE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
REAL ESTATE (Tables) | ' | ||||||||
Real estate owned | ' | ||||||||
A summary of our real estate owned as of the end of the year is listed below (dollars in thousands): | |||||||||
2013 | 2012 | ||||||||
Apartments | $ | 433,141 | $ | 609,093 | |||||
Apartments under construction | - | - | |||||||
Commercial properties | 203,823 | 216,343 | |||||||
Land held for development | 141,010 | 153,345 | |||||||
Real estate held for sale | 18,817 | 22,735 | |||||||
Real estate subject to sales contract | 31,302 | 62,118 | |||||||
Total real estate, at cost, less impairment | 828,093 | 1,063,634 | |||||||
Less accumulated deprecation | (132,291 | ) | (166,684 | ) | |||||
Total real estate, net of depreciation | $ | 695,802 | $ | 896,950 | |||||
Depreciation_and_Useful_Life_T
Depreciation and Useful Life (Tables) | 12 Months Ended | |
Dec. 31, 2013 | ||
Depreciation and Useful Life (Table) | ' | |
Depreciation and Useful Life (Table) | ' | |
Depreciation is computed on a straight line basis over the estimated useful lives of the assets as follows: | ||
Land improvements | 25 to 40 years | |
Buildings and improvements | 10 to 40 years | |
Tenant improvements | Shorter of useful life or terms of related lease | |
Furniture, fixtures and equipment | 3 to 7 years |
NOTES_AND_INTEREST_RECEIVABLE_
NOTES AND INTEREST RECEIVABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
NOTES AND INTEREST RECEIVABLE (Tables) | ' | ||||||||
Mortgage notes receivable consist of first, wraparound and junior mortgage loans | ' | ||||||||
Maturity | Interest | ||||||||
Borrower | Date | Rate | Amount | Security | |||||
Performing loans: | |||||||||
Miscellaneous related party notes (1) | Various | Various | $ 664 | Various secured and unsecured interests | |||||
S Breeze I-V, LLC | 14-Jun | 5.00% | 3,180 | 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% | 7,966 | 100% Interest in Unified Housing of Tivoli, LLC | |||||
Unified Housing Foundation, Inc. (1) | 13-Dec | 5.00% | 6,000 | Unsecured | |||||
Accrued interest | 12,757 | ||||||||
Total Performing | $ 69,626 | ||||||||
Non-Performing loans: | |||||||||
Miscellaneous non-related party notes | Various | Various | 507 | Various secured and unsecured interests | |||||
Accrued interest | 36 | ||||||||
Total Non-Performing | $ 543 | ||||||||
Allowance for estimated losses | (2,262) | ||||||||
Total | $ 67,907 | ||||||||
(1) Related party notes |
INVESTMENT_IN_UNCONSOLIDATED_J1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | ' | ||||||||||||
Investments accounted for via the equity method | ' | ||||||||||||
Investments accounted for via the equity method consists of the following: | |||||||||||||
Percentage ownership as of December 31, | |||||||||||||
2013 | 2012 | 2011(2) | |||||||||||
American Realty Investors, Inc. (1) | 1.99% | 1.99% | 2.05% | ||||||||||
_______________________ | |||||||||||||
-1 | Unconsolidated investment in parent company | ||||||||||||
-2 | Other investee. The Company's 5% investment in Garden Centura, L.P. was sold on December 28, 2011. | ||||||||||||
Summary of the financial position and results of operations from unconsolidated joint ventures and other investees | ' | ||||||||||||
2013 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 11,944 | $ | - | $ | 11,944 | |||||||
Notes Receivable | 45,179 | - | 45,179 | ||||||||||
Other assets | 130,535 | - | 130,535 | ||||||||||
Notes payable | (56,103 | ) | - | (56,103 | ) | ||||||||
Other liabilities | (62,998 | ) | - | (62,998 | ) | ||||||||
Shareholders' equity/partners' capital | (68,557 | ) | - | (68,557 | ) | ||||||||
Rents and interest and other income | $ | 21,658 | $ | - | $ | 21,658 | |||||||
Depreciation | (285 | ) | - | (285 | ) | ||||||||
Operating expenses | (23,487 | ) | - | (23,487 | ) | ||||||||
Gain on land sales | 618 | - | 618 | ||||||||||
Interest expense | (7,173 | ) | - | (7,173 | ) | ||||||||
Loss from continuing operations | (8,669 | ) | - | (8,669 | ) | ||||||||
Loss from discontinued operations | (15 | ) | - | (15 | ) | ||||||||
Net loss | $ | (8,684 | ) | $ | - | $ | (8,684 | ) | |||||
Company's proportionate share of loss (1) | $ | (172 | ) | $ | - | $ | (172 | ) | |||||
(1) Loss represents continued and discontinued operations | |||||||||||||
2012 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 45,860 | $ | - | $ | 45,860 | |||||||
Notes Receivable | 44,371 | - | 44,371 | ||||||||||
Other assets | 130,420 | - | 130,420 | ||||||||||
Notes payable | (61,720 | ) | - | (61,720 | ) | ||||||||
Other liabilities | (85,069 | ) | - | (85,069 | ) | ||||||||
Shareholders' equity/partners' capital | (73,862 | ) | - | (73,862 | ) | ||||||||
Rents and interest and other income | $ | 8,198 | $ | - | $ | 8,198 | |||||||
Depreciation | (263 | ) | - | (263 | ) | ||||||||
Operating expenses | (4,062 | ) | - | (4,062 | ) | ||||||||
Loss on land sales | (2,785 | ) | - | (2,785 | ) | ||||||||
Interest expense | (4,234 | ) | - | (4,234 | ) | ||||||||
Loss from continuing operations | (3,146 | ) | - | (3,146 | ) | ||||||||
Income from discontinued operations | 2,691 | - | 2,691 | ||||||||||
Net loss | $ | (455 | ) | $ | - | $ | (455 | ) | |||||
Company's proportionate share of loss (1) | $ | (9 | ) | $ | - | $ | (9 | ) | |||||
(1) Loss represents continued and discontinued operations | |||||||||||||
2011 | Unconsolidated Subsidiaries | Other | Total | ||||||||||
Investees | |||||||||||||
Real estate, net of accumulated depreciation | $ | 60,703 | $ | 71,987 | $ | 132,690 | |||||||
Notes Receivable | 27,447 | - | 27,447 | ||||||||||
Other assets | 138,927 | 4,441 | 143,368 | ||||||||||
Notes payable | (59,744 | ) | (47,091 | ) | (106,835 | ) | |||||||
Other liabilities | (88,647 | ) | (2,849 | ) | (91,496 | ) | |||||||
Shareholders' equity/partners' capital | (78,686 | ) | (26,488 | ) | (105,174 | ) | |||||||
Rents and interest and other income | $ | 8,021 | $ | 7,096 | $ | 15,117 | |||||||
Depreciation | 56 | (3,133 | ) | (3,077 | ) | ||||||||
Operating expenses | (8,196 | ) | (3,999 | ) | (12,195 | ) | |||||||
Gain on land sales | 23,646 | - | 23,646 | ||||||||||
Interest expense | (7,562 | ) | (2,307 | ) | (9,869 | ) | |||||||
Income (loss) from continuing operations | 15,965 | (2,343 | ) | 13,622 | |||||||||
Income from discontinued operations | 9,864 | - | 9,864 | ||||||||||
Net income (loss) | $ | 25,829 | $ | (2,343 | ) | $ | 23,486 | ||||||
Company's proportionate share of earnings (loss) (1) | $ | 530 | $ | (117 | ) | $ | 413 | ||||||
(1) Earnings (loss) represent continued and discontinued operations |
Scheduled_principal_payments_o
Scheduled principal payments of notes payable (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Scheduled principal payments of notes payable | ' | ||
Scheduled principal payments of notes payables | ' | ||
The scheduled principal payments of our notes payable over the next five years and thereafter are due as follows (dollars in thousands): | |||
Year | Amount | ||
2014 | $ 134,524 | ||
2015 | 22,007 | ||
2016 | 61,099 | ||
2017 | 6,013 | ||
2018 | 5,862 | ||
Thereafter | 370,139 | ||
Total | $ 599,644 | ||
Interest payable at December 31, 2013 was $3.2 million. Interest accrues at rates ranging from 1.0% to 12.5% per annum and mature between 2014 and 2053. The mortgages were collateralized by deeds of trust on real estate having a net carrying value of $682.5 million. Of the total notes payable, the senior debt is $574.6 million, junior debt is $17.2 million, and other debt is $7.8 million. Included in other debt are property tax loans of $0.3 million. |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
RELATED PARTY TRANSACTIONS (Tables) | ' | |||||||||||||
Description of the related party transactions and fees | ' | |||||||||||||
Below is a description of the related party transactions and fees between Pillar, Prime and Regis: | ||||||||||||||
Fees, expenses and revenue paid to and/or received from our advisor: | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Advisory | $ | 8,494 | $ | 8,915 | $ | 9,958 | ||||||||
Construction advisory | - | 181 | 2,429 | |||||||||||
Mortgage brokerage and equity refinancing | 1,878 | 1,873 | 812 | |||||||||||
Net income | 4,089 | 180 | 54 | |||||||||||
Property acquisition | - | 20 | - | |||||||||||
$ | 14,461 | $ | 11,169 | $ | 13,253 | |||||||||
Other Expense: | ||||||||||||||
Cost reimbursements | $ | 2,585 | $ | 2,247 | $ | 2,908 | ||||||||
Interest paid | 157 | 1,194 | 1,048 | |||||||||||
$ | 2,742 | $ | 3,441 | $ | 3,956 | |||||||||
Revenue: | ||||||||||||||
Rental | $ | 670 | $ | 587 | $ | 434 | ||||||||
Fees paid to Regis and related parties: | ||||||||||||||
2013 | 2012 | 2011 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Property acquisition | $ | - | $ | 71 | $ | - | ||||||||
Property management, construction management and leasing commissions | 436 | 2,087 | 1,759 | |||||||||||
Real estate brokerage | 4,055 | 2,263 | - | |||||||||||
$ | 4,491 | $ | 4,421 | $ | 1,759 | |||||||||
Reconciliation of accounts receivable and accounts payable to related parties | ' | |||||||||||||
The following table reconciles the beginning and ending balances of related party payables as of December 31, 2013 (dollars in thousands): | ||||||||||||||
Pillar | ARL | Total | ||||||||||||
Related party payable, December 31, 2012 | $ | - | $ | (10,057 | ) | $ | (10,057 | ) | ||||||
Cash transfers | 3,028 | - | 3,028 | |||||||||||
Advisory fees | (8,494 | ) | - | (8,494 | ) | |||||||||
Net income fee | (4,089 | ) | - | (4,089 | ) | |||||||||
Fees and commissions | (2,977 | ) | - | (2,977 | ) | |||||||||
Cost reimbursements | (2,585 | ) | - | (2,585 | ) | |||||||||
Interest (to) from advisor | - | (157 | ) | (157 | ) | |||||||||
Expenses paid by advisor | (1,456 | ) | - | (1,456 | ) | |||||||||
Financing (mortgage payments) | (967 | ) | - | (967 | ) | |||||||||
Sales/Purchases transactions | 70,261 | - | 70,261 | |||||||||||
Series K preferred stock acquisition | - | (270 | ) | (270 | ) | |||||||||
Tax sharing expense | 7,763 | - | 7,763 | |||||||||||
Purchase of obligations | (60,484 | ) | 62,864 | 2,380 | ||||||||||
Related party receivable, December 31, 2013 | $ | - | $ | 52,380 | $ | 52,380 |
Schedule_of_Future_Minimum_Ren
Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Schedule of Future Minimum Rental Payments for Operating Leases (Tables): | ' | ||||||||
Schedule of Fair Value Measurements 2013 | ' | ||||||||
The following is a schedule of minimum future rents on non-cancelable operating leases at December 31, 2013 (dollars in thousands): | |||||||||
Year | Amount | ||||||||
2014 | $ | 15,158 | |||||||
2015 | 14,678 | ||||||||
2016 | 12,264 | ||||||||
2017 | 9,790 | ||||||||
2018 | 8,652 | ||||||||
Thereafter | 16,647 | ||||||||
Total | $ | 77,189 | |||||||
Schedule of Fair Value Measurements 2012 | ' | ||||||||
Fair Value Measurements Using (dollars in thousands): | |||||||||
31-Dec-11 | Fair Value | Level 1 | Level 2 | Level 3 | |||||
Land | $ | 55,806 | $ | --- | $ | 55,806 | $ | --- | |
Residential | $ | 30,539 | $ | --- | $ | --- | $ | 30,539 | |
Commercial | $ | 11,934 | $ | --- | $ | 11,934 | $ | --- | |
Schedule of Fair Value Measurements 2011 | ' | ||||||||
Fair Value Measurements Using (dollars in thousands): | |||||||||
31-Dec-12 | Fair Value | Level 1 | Level 2 | Level 3 | |||||
Land | $ | 2,699 | $ | --- | $ | 1,800 | $ | 899 | |
Commercial | $ | 9,660 | $ | --- | $ | 9,660 | $ | --- | |
Schedule_of_Income_Taxes_Table
Schedule of Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Schedule of Income Taxes (Tables): | ' | ||||||||||||
Summary of Operating Loss Carryforwards | ' | ||||||||||||
Current expense (benefit) is attributable to (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Income from continuing operations | $ | (24,598 | ) | $ | (10,401 | ) | $ | (14,460 | ) | ||||
Income from discontinued operations | 16,835 | 10,401 | 14,460 | ||||||||||
Tax benefit | $ | (7,763 | ) | $ | - | $ | - | ||||||
Schedule of Deferred Tax Assets and Liabilities | ' | ||||||||||||
2013 | 2012 | 2011 | |||||||||||
Net operating losses | $ | 71,071 | $ | 53,857 | $ | 42,337 | |||||||
AMT credits | 1,374 | 1,374 | 1,374 | ||||||||||
Basis difference of: | |||||||||||||
Real estate holdings | (3,045 | ) | (15,159 | ) | (13,514 | ) | |||||||
Notes receivable | 860 | 860 | 1,726 | ||||||||||
Investments | (4,703 | ) | (4,757 | ) | (5,346 | ) | |||||||
Notes payable | 12,496 | 16,598 | 22,966 | ||||||||||
Deferred gains | 10,806 | 11,370 | 14,985 | ||||||||||
Total | $ | 88,859 | $ | 64,143 | $ | 64,528 | |||||||
Deferred tax valuation allowance | (88,859 | ) | (64,143 | ) | (64,528 | ) | |||||||
Net deferred tax asset | $ | - | $ | - | $ | - | |||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||||||
The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follows (dollars in thousands): | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Computed "expected" income tax (benefit) expense | $ | 26,998 | $ | (4,211 | ) | $ | (16,008 | ) | |||||
Book to tax differences for partnerships not consolidated for tax purposes | (33,565 | ) | (3,831 | ) | (6,442 | ) | |||||||
Book to tax differences of depreciation and amortization | 1,222 | 1,434 | 1,140 | ||||||||||
Book to tax differences in gains on sale of property | (20,308 | ) | (4,835 | ) | (7,020 | ) | |||||||
Book provision for loss | 3,962 | 1,656 | 10,132 | ||||||||||
Partial valuation allowance against current net operating loss benefit | 16,835 | 10,401 | 14,460 | ||||||||||
Other | 4,856 | (614 | ) | 3,738 | |||||||||
Total | $ | - | $ | - | $ | - | |||||||
Alternative minimum tax | $ | - | $ | - | $ | - | |||||||
OPERATING_SEGMENTS_Tables
OPERATING SEGMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
OPERATING SEGMENTS (Tables) | ' | ||||||||||||||||||||
Segments operating income including segment assets and expenditures | ' | ||||||||||||||||||||
Presented below is the Company’s reportable segments’ operating income including segment assets and expenditures for the years 2013, 2012 and 2011 (dollars in thousands): | |||||||||||||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 26,931 | $ | 59,155 | $ | 39 | $ | 112 | $ | 86,237 | |||||||||||
Property operating expenses | 13,916 | 26,018 | 976 | 38 | 40,948 | ||||||||||||||||
Depreciation | 6,550 | 10,624 | - | - | 17,174 | ||||||||||||||||
Mortgage and loan interest | 6,057 | 17,147 | 5,685 | 2,748 | 31,637 | ||||||||||||||||
Deferred borrowing costs amortization | 61 | 2,265 | 195 | 67 | 2,588 | ||||||||||||||||
Loan charges and prepayment penalties | 150 | 3,937 | 1,080 | 52 | 5,219 | ||||||||||||||||
Interest income | - | - | - | 13,790 | 13,790 | ||||||||||||||||
Loss on land sales | - | - | (1,073 | ) | - | (1,073 | ) | ||||||||||||||
Segment operating income (loss) | $ | 197 | $ | (836 | ) | $ | (8,970 | ) | $ | 10,997 | $ | 1,388 | |||||||||
Capital expenditures | 7,188 | 315 | 387 | - | 7,890 | ||||||||||||||||
Assets | 141,752 | 379,264 | 158,359 | - | 679,375 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 26,974 | $ | 239,676 | $ | 5,999 | $ | - | $ | 272,649 | |||||||||||
Less: Cost of sale | 14,914 | 154,331 | 7,072 | - | 176,317 | ||||||||||||||||
Deferred current gain | - | - | |||||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain (loss) on sale | $ | 12,060 | $ | 85,345 | $ | (1,073 | ) | $ | - | $ | 96,332 | ||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2012 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 30,846 | $ | 55,693 | $ | 25 | $ | 51 | $ | 86,615 | |||||||||||
Property operating expenses | 16,721 | 24,582 | 589 | 437 | 42,329 | ||||||||||||||||
Depreciation | 5,657 | 10,484 | - | - | 16,141 | ||||||||||||||||
Mortgage and loan interest | 5,920 | 19,844 | 6,250 | 4,229 | 36,243 | ||||||||||||||||
Deferred borrowing costs amortization | 86 | 397 | 154 | - | 637 | ||||||||||||||||
Loan charges and prepayment penalties | - | 3,495 | 79 | - | 3,574 | ||||||||||||||||
Interest income | - | - | - | 11,725 | 11,725 | ||||||||||||||||
Gain on land sales | - | - | 6,935 | - | 6,935 | ||||||||||||||||
Segment operating income (loss) | $ | 2,462 | $ | (3,109 | ) | $ | (112 | ) | $ | 7,110 | $ | 6,351 | |||||||||
Capital expenditures | 2,454 | 839 | - | - | 3,293 | ||||||||||||||||
Assets | 165,697 | 540,045 | 173,132 | - | 878,874 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 9,825 | $ | 47,131 | $ | 37,799 | $ | - | $ | 94,755 | |||||||||||
Less: Cost of sale | (10,152 | ) | (41,587 | ) | (31,479 | ) | - | (83,218 | ) | ||||||||||||
Deferred current gain | - | - | 615 | - | 615 | ||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain (loss) on sale | $ | (327 | ) | $ | 5,544 | $ | 6,935 | $ | - | $ | 12,152 | ||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2011 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 28,008 | $ | 49,536 | $ | 132 | $ | 259 | $ | 77,935 | |||||||||||
Property operating expenses | 16,568 | 23,645 | 1,573 | 198 | 41,984 | ||||||||||||||||
Depreciation | 4,416 | 9,551 | - | - | 13,967 | ||||||||||||||||
Mortgage and loan interest | 6,403 | 19,278 | 6,957 | 3,583 | 36,221 | ||||||||||||||||
Deferred borrowing costs amortization | 136 | 236 | 1,184 | 4 | 1,560 | ||||||||||||||||
Loan charges and prepayment penalties | - | 292 | 147 | - | 439 | ||||||||||||||||
Interest income | - | - | - | 5,720 | 5,720 | ||||||||||||||||
Gain on land sales | - | - | 17,011 | 17,011 | |||||||||||||||||
Segment operating income (loss) | $ | 485 | $ | (3,466 | ) | $ | 7,282 | $ | 2,194 | $ | 6,495 | ||||||||||
Capital expenditures | 3,286 | 1,248 | 4,103 | - | 8,637 | ||||||||||||||||
Assets | 172,446 | 550,892 | 197,301 | - | 920,639 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 103,811 | $ | 21,590 | $ | 163,050 | $ | - | $ | 288,451 | |||||||||||
Less: Cost of sale | (108,243 | ) | (14,933 | ) | (154,122 | ) | - | (277,298 | ) | ||||||||||||
Deferred current gain | - | - | - | - | - | ||||||||||||||||
Recognized prior deferred gain | 7,287 | 8,788 | 8,083 | - | 24,158 | ||||||||||||||||
Gain on sale | $ | 2,855 | $ | 15,445 | $ | 17,011 | $ | - | $ | 35,311 | |||||||||||
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 (dollars in thousands): | |||||||||||||||||||||
For Twelve Months Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Segment operating income | $ | 1,388 | $ | 6,351 | $ | 6,495 | |||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (6,323 | ) | (5,090 | ) | (8,971 | ) | |||||||||||||||
Provision on impairment of notes receivable and real estate assets | (11,320 | ) | (2,330 | ) | (35,039 | ) | |||||||||||||||
Net income fee to related party | (4,089 | ) | (180 | ) | (54 | ) | |||||||||||||||
Advisory fee to related party | (8,494 | ) | (8,915 | ) | (9,958 | ) | |||||||||||||||
Other income | 7,862 | 6,303 | 2,441 | ||||||||||||||||||
Gain (loss) on the sale of investments | (283 | ) | 125 | (514 | ) | ||||||||||||||||
Earnings from unconsolidated joint ventures and investees | (172 | ) | (66 | ) | 242 | ||||||||||||||||
Litigation settlement | (20,313 | ) | (173 | ) | (225 | ) | |||||||||||||||
Income tax benefit (expense) | 40,485 | (1,445 | ) | (357 | ) | ||||||||||||||||
Loss from continuing operations | $ | (1,259 | ) | $ | (5,420 | ) | $ | (45,940 | ) | ||||||||||||
Segment information to amounts in the Balance Sheets | ' | ||||||||||||||||||||
The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): | |||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||
Segment assets | $ | 679,375 | $ | 878,874 | $ | 920,639 | |||||||||||||||
Investments in real estate partnerships | 1,697 | 5,439 | 6,362 | ||||||||||||||||||
Notes and interest receivable | 67,907 | 59,098 | 77,371 | ||||||||||||||||||
Other assets | 132,265 | 83,856 | 88,251 | ||||||||||||||||||
Assets held for sale | 16,427 | 18,077 | 67,701 | ||||||||||||||||||
Total assets | $ | 897,671 | $ | 1,045,344 | $ | 1,160,324 | |||||||||||||||
Schedule_of_Quarterly_Financia
Schedule of Quarterly Financial Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Schedule of Quarterly Financial Information (Tables) | ' | ||||||||||||||||
Schedule of Quarterly Financial Information | ' | ||||||||||||||||
The following is a tabulation of TCI’s quarterly results of operations for the years 2013, 2012 and 2011 (unaudited, dollars in thousands): | |||||||||||||||||
For the Three Months Ended 2013 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2013 | |||||||||||||||||
Revenue and other property revenues | $ | 20,383 | $ | 20,636 | $ | 20,831 | $ | 24,387 | |||||||||
Total operating expenses | 17,824 | 17,730 | 18,921 | 33,873 | |||||||||||||
Operating (loss) income | 2,559 | 2,906 | 1,910 | (9,486 | ) | ||||||||||||
Other expenses | (12,275 | ) | (5,657 | ) | (8,675 | ) | (11,953 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (9,716 | ) | (2,751 | ) | (6,765 | ) | (21,439 | ) | |||||||||
Loss on land sales | (48 | ) | - | - | (1,025 | ) | |||||||||||
Income tax benefit | 2,368 | 5,213 | 319 | 32,585 | |||||||||||||
Net income (loss) from continuing operations | (7,396 | ) | 2,462 | (6,447 | ) | 10,121 | |||||||||||
Net income from discontinuing operations | 4,398 | 9,680 | 593 | 46,098 | |||||||||||||
Net income (loss) | (2,998 | ) | 12,142 | (5,854 | ) | 56,219 | |||||||||||
Net loss attributable to non-controlling interest | (111 | ) | (115 | ) | (97 | ) | (656 | ) | |||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (279 | ) | (280 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (3,383 | ) | $ | 11,750 | $ | (6,230 | ) | $ | 55,283 | |||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.92 | ) | $ | 0.25 | $ | (0.81 | ) | $ | 1.09 | |||||||
Income from discontinued operations | 0.52 | 1.15 | 0.07 | 5.48 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.4 | $ | (0.74 | ) | $ | 6.57 | |||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.92 | ) | $ | 0.24 | $ | (0.81 | ) | $ | 1.04 | |||||||
Income from discontinued operations | 0.52 | 1.1 | 0.07 | 5.24 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.34 | $ | (0.74 | ) | $ | 6.28 | |||||||
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 8,796,699 | 8,413,469 | 8,791,655 | |||||||||||||
For the Three Months Ended 2012 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2012 | |||||||||||||||||
Revenue and other property revenues | $ | 20,446 | $ | 20,956 | $ | 21,422 | $ | 23,791 | |||||||||
Total operating expenses | 18,597 | 17,349 | 17,972 | 21,067 | |||||||||||||
Operating income | 1,849 | 3,607 | 3,450 | 2,724 | |||||||||||||
Other expenses | (5,541 | ) | (7,736 | ) | (5,905 | ) | (3,358 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (3,692 | ) | (4,129 | ) | (2,455 | ) | (634 | ) | |||||||||
Gain (loss) on land sales | 423 | 4,738 | 2,913 | (1,139 | ) | ||||||||||||
Income tax benefit (expense) | (301 | ) | 647 | (237 | ) | (1,554 | ) | ||||||||||
Net income (loss) from continuing operations | (3,570 | ) | 1,256 | 221 | (3,327 | ) | |||||||||||
Net income (loss) from discontinuing operations | (558 | ) | 1,201 | (440 | ) | (2,887 | ) | ||||||||||
Net income (loss) | (4,128 | ) | 2,457 | (219 | ) | (6,214 | ) | ||||||||||
Net income (loss) attributable to non-controlling interest | (79 | ) | (175 | ) | (43 | ) | 77 | ||||||||||
Preferred dividend requirement | (277 | ) | (277 | ) | (277 | ) | (281 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (4,484 | ) | $ | 2,005 | $ | (539 | ) | $ | (6,418 | ) | ||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.47 | ) | $ | 0.1 | $ | (0.01 | ) | $ | (0.42 | ) | ||||||
Income (loss) from discontinued operations | (0.07 | ) | 0.14 | (0.05 | ) | (0.34 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.54 | ) | $ | 0.24 | $ | (0.06 | ) | $ | (0.76 | ) | ||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (0.47 | ) | $ | 0.08 | $ | (0.01 | ) | $ | (0.42 | ) | ||||||
Income (loss) from discontinued operations | (0.07 | ) | 0.12 | (0.05 | ) | (0.34 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.54 | ) | $ | 0.2 | $ | (0.06 | ) | $ | (0.76 | ) | ||||||
Weighted average common shares used in computing diluted earnings per share | 8,413,469 | 9,622,951 | 8,413,469 | 8,413,469 | |||||||||||||
For the Three Months Ended 2011 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2011 | |||||||||||||||||
Revenue and other property revenues | $ | 18,428 | $ | 20,701 | $ | 21,067 | $ | 17,739 | |||||||||
Total operating expenses | 23,534 | 15,854 | 20,253 | 50,332 | |||||||||||||
Operating (loss) income | (5,106 | ) | 4,847 | 814 | (32,593 | ) | |||||||||||
Other expenses | (8,058 | ) | (8,383 | ) | (8,056 | ) | (6,059 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (13,164 | ) | (3,536 | ) | (7,242 | ) | (38,652 | ) | |||||||||
Gain on land sales | 796 | 1,285 | 1,435 | 13,495 | |||||||||||||
Income tax benefit (expense) | 112 | (4,193 | ) | 2,211 | 1,513 | ||||||||||||
Net loss from continuing operations | (12,256 | ) | (6,444 | ) | (3,596 | ) | (23,644 | ) | |||||||||
Net income (loss) from discontinuing operations | 208 | (7,788 | ) | 4,107 | 2,810 | ||||||||||||
Net income (loss) | (12,048 | ) | (14,232 | ) | 511 | (20,834 | ) | ||||||||||
Net income (loss) attributable to non-controlling interest | 85 | 46 | 384 | (233 | ) | ||||||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (279 | ) | (280 | ) | |||||||||
Net income (loss) applicable to common shares | $ | (12,237 | ) | $ | (14,463 | ) | $ | 616 | $ | (21,347 | ) | ||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | (1.51 | ) | $ | (0.79 | ) | $ | (0.41 | ) | $ | (2.87 | ) | |||||
Income (loss) from discontinued operations | 0.03 | (0.93 | ) | 0.49 | 0.33 | ||||||||||||
Net income (loss) applicable to common shares | $ | (1.48 | ) | $ | (1.72 | ) | $ | 0.08 | $ | (2.54 | ) | ||||||
Weighted average common shares used in computing earnings per share | 8,240,136 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | (1.51 | ) | $ | (0.79 | ) | $ | (0.41 | ) | $ | (2.87 | ) | |||||
Income (loss) from discontinued operations | 0.03 | (0.93 | ) | 0.49 | 0.33 | ||||||||||||
Net income (loss) applicable to common shares | $ | (1.48 | ) | $ | (1.72 | ) | $ | 0.08 | $ | (2.54 | ) | ||||||
Weighted average common shares used in computing diluted earnings per share | 8,240,136 | 8,413,469 | 8,413,469 | 8,413,469 | |||||||||||||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
DISCONTINUED OPERATIONS (Tables) | ' | ||||||||||||
Summary of revenue and expense information for the properties sold and held for sale | ' | ||||||||||||
For the Years Ended December 31, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||
Revenues: | |||||||||||||
Rental and other property revenues | $ | 26,036 | $ | 34,774 | $ | 46,620 | |||||||
26,036 | 34,774 | 46,620 | |||||||||||
Expenses: | |||||||||||||
Property operating expenses | 12,201 | 18,161 | 25,187 | ||||||||||
Depreciation | 4,231 | 6,349 | 9,067 | ||||||||||
General and administrative | 935 | 961 | 1,269 | ||||||||||
Provision on impairment of notes receivable and real estate assets | - | 2,400 | 9,968 | ||||||||||
Total operating expenses | 17,367 | 27,871 | 45,491 | ||||||||||
Other income (expense): | |||||||||||||
Other income (expense) | 29 | 14 | (24 | ) | |||||||||
Mortgage and loan interest | (6,139 | ) | (10,806 | ) | (18,808 | ) | |||||||
Deferred borrowing costs amortization | (3,009 | ) | (1,790 | ) | (805 | ) | |||||||
Loan charges and prepayment penalties | (3,245 | ) | (3,472 | ) | (1,265 | ) | |||||||
Earnings from unconsolidated subsidiaries and investees | 30 | 55 | 453 | ||||||||||
Litigation settlement | (250 | ) | (250 | ) | - | ||||||||
Total other expenses | (12,584 | ) | (16,249 | ) | (20,449 | ) | |||||||
Loss from discontinued operations before gain on sale of real estate and taxes | (3,915 | ) | (9,346 | ) | (19,320 | ) | |||||||
Gain on sale of real estate from discontinued operations | 97,405 | 5,217 | 18,300 | ||||||||||
Income tax benefit (expense) | (32,722 | ) | 1,445 | 357 | |||||||||
Income (loss) from discontinued operations | $ | 60,768 | $ | (2,684 | ) | $ | (663 | ) | |||||
Organization_and_significant_p
Organization and significant policies (Details) | Dec. 31, 2013 |
Organization and significant policies | ' |
Percentage of common stock by subsidiaries of ARL | 83.80% |
Company acquired additional shares of common stock of Income Opportunity Realty Investors, Inc. | 2,518,934 |
Stock of Income Opportunity Realty Investors, Inc increased its ownership from approximately 25% to over shares of common stock IOT | 80.00% |
Percentage of common stock of Income Opportunity Realty Investors, Inc. by TCI | 81.10% |
At the time of the acquisition, the historical accounting value of IOT's assets in millions | 112 |
At the time of the acquisition, the historical accounting value of IOT's liabilities in millions | 43 |
Company owned residential apartment communities | 36 |
Number of units for residential apartments | 6,078 |
Company owned commercial properties | 9 |
Commercial properties comprising an aggregate of approximate square feet in millions | 2.3 |
Investment in acres of undeveloped and partially developed land. | 4,100 |
Summary_of_real_estate_owned_a
Summary of real estate owned as of the end of the year (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of real estate owned as of the end of the year is listed: | ' | ' |
Apartments,. | $433,141 | $609,093 |
Apartments under construction | 0 | 0 |
Commercial properties | 203,823 | 216,343 |
Land held for development | 141,010 | 153,345 |
Real estate held for sale | 18,817 | 22,735 |
Real estate subject to sales contract | 31,302 | 62,118 |
Total real estate, at cost, less impairment | 828,093 | 1,063,634 |
Less accumulated depreciation,. | -132,291 | -166,684 |
Total real estate, net of depreciation | $695,802 | $896,950 |
Depreciation_of_estimated_usef
Depreciation of estimated useful lives (Details) | Dec. 31, 2013 |
Depreciation of estimated useful lives | ' |
Land improvements useful lives | '25 to 40 years |
Building and improvements useful lives | '10 to 40 years |
Tenant improvements useful lives | 'shorter of useful life or terms of related lease |
Furniture, fixtures and equipment useful lives | '3 to 7 years |
Provision_for_Impairment_Dolla
Provision for Impairment (Dollars in millions) (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Provision for Impairment | ' |
Real estate assets Provision for Impairment in millions | 11.3 |
Increase in real estate asset expense compare to previous year in millions | 9 |
Previous year expenses in Impairment real estate assets in millions | 2.3 |
Third party appraisal determined the fair value of a building located in Dallas, Texas that resulted in an impairment | 9.6 |
Impairement Relating to land development | 1.5 |
Notes receivable - impairement | 0.2 |
Texas land holding that resulted in an impairment reserve | 1.2 |
Florida land holding that resulted in an impairment reserve | 0.5 |
Remaining impairement from an appraisal | 0.6 |
Fair_Value_Measurements_inputs
Fair Value Measurements inputs (dollars in thousands) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair Value | ' | ' | ' |
Land | ' | ' | $55,806 |
Land | ' | ' | 55,806 |
Residential | ' | ' | 30,539 |
Commercial | ' | ' | 11,934 |
Land | ' | 2,699 | ' |
Commercial | ' | 9,660 | ' |
Land | 849 | ' | ' |
Commercial | 26,194 | ' | ' |
Level 1 | ' | ' | ' |
Land | ' | ' | 0 |
Land | ' | ' | 0 |
Level 2 | ' | ' | ' |
Land | ' | ' | 55,806 |
Land | ' | ' | 55,806 |
Commercial | ' | ' | 11,934 |
Land | ' | 1,800 | ' |
Commercial | ' | 9,660 | ' |
Land | 849 | ' | ' |
Commercial | 26,194 | ' | ' |
Level 3 | ' | ' | ' |
Residential | ' | ' | 30,539 |
Land | ' | $899 | ' |
Fair_value_of_property_Details
Fair value of property (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Fair value of property Details | ' | ' | ' |
Land with a carrying amount | $2,355,768 | $5,029,254 | $86,696,927 |
Land written down fair value | 849,468 | 2,699,175 | 55,806,297 |
Impairment charge of land | 1,506,300 | 2,330,079 | 30,890,630 |
Residential properties with a carrying amount | ' | ' | 35,717,146 |
Residential properties written down fair value | ' | ' | 30,539,462 |
Residential property Impairment charge | ' | ' | 5,177,684 |
Commercial properties with a carrying amount | 35,794,331 | 12,060,247 | 20,427,936 |
Commercial properties written down fair value | 26,194,331 | 9,660,247 | 11,933,620 |
Commercial properties impairment charge | $9,600,000 | $2,400,000 | $8,494,316 |
Real_estate_transactions_Detai
Real estate transactions (Details) | Verandas at City View | Sheffield | Laguna Vista | Baronne |
Balance of real estate at Dec. 31, 2012 | 0 | ' | ' | ' |
No of units; | 314 | ' | 206 | ' |
No of Square feet | ' | ' | ' | 422,037 |
Sale price of land in millions | 25.3 | 2.3 | 24.8 | 1.5 |
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 Dec. 31, 2013 | 0 | ' | ' | ' |
Guarantor_Settlement_and_Conse
Guarantor Settlement and Consent Agreement with the lender (Details) | Feb. 12, 2014 | 7-May-13 |
Guarantor Settlement and Consent Agreement with the lender | ' | ' |
TCI recorded the sale to the independent third party and recognized a gain in millions | ' | 11.9 |
TCI issued a promissory note payable to the lender which is secured by an unrecorded confession of judgment in millions | ' | 5 |
Shares of Series K convertible preferred stock of ARL issued on the same date to TCI | ' | 135,000 |
The issuance of the promissory note and collateral to the lender resolved all claims of the lender against TCI in millions | ' | 5 |
The note has prepayment provisions whereby if it is paid off by March 1, 2014 amount forgiven in millions | ' | 3.5 |
The note has prepayment provisions whereby if it is paid off by March 1, 2015 amount forgiven in millions | ' | 2.5 |
TCI exercised the first prepayment option date on the settlement with Petra CRE CDO relating to the Amoco Building and paid in millions | 1.2 | ' |
To settle all obligations and the remaining balance of the note and accrued interest was forgiven in millions | 3.5 | ' |
Sale_of_residential_apartment_
Sale of residential apartment complexes (Details) | Dec. 20, 2013 |
Sale of residential apartment complexes | ' |
Company sold nine residential apartment complexes to an independent third party for the sales price in millions | 189.6 |
Number of units of Dorado Ranch apartment complex located in Odessa sold | 224 |
Number of units of Huntington Ridge apartment complex located in Desoto sold | 198 |
Number of units of Legends of El Paso apartment complex located in El Paso sold | 240 |
Number of units of Mariposa Villas apartment complex located in Dallas sold | 216 |
Number of units of Paramount Terrace apartment complex located in Amarillo sold | 181 |
Number of units of River Oaks apartment complex located in Wylie sold | 180 |
Number of units of Savoy of Garland apartment complex located in Garland sold | 144 |
Number of units of , Stonebridge apartment complex located in Houston sold | 240 |
Number of units of Vistas of Pinnacle Park apartment complex located in Dallas sold | 332 |
The buyer assumed the combined debt secured by the properties in millions | 115.1 |
TCI recorded a combined gain in millions | 73.5 |
NOTES_AND_INTEREST_RECEIVABLE_1
NOTES AND INTEREST RECEIVABLE CONSISTS OF THE FOLLOWING (Details) (USD $) | Dec. 31, 2013 |
Performing loans: | ' |
Miscellaneous related party notes (1) | $664 |
S Breeze I-V, LLC | 3,180 |
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. (1) | 6,000 |
Accrued interest performing | 12,757 |
Total performing loans | 69,626 |
Miscellaneous non-related party notes | 507 |
Accrued interest non performing | 36 |
Total Non-Performing loans | 543 |
Allowances for Doubtful accounts | -2,262 |
Total Financing Notes Receivable | $67,907 |
Junior_Mortgage_Loans_Details
Junior Mortgage Loans (Details) | Dec. 31, 2013 |
Junior Mortgage Loans | ' |
Assets were invested in junior and wrapround mortgage loans | 6.40% |
Percentage of mortgage notes receivable portfolio were due from related entities | 93.60% |
Mortgage notes receivable portfolio due from related entities in millions | 53.7 |
Company recognized interest income from these related party notes receivables in millions | 12.2 |
Non-performing mortgage notes receivable portfolio in millions | 0.5 |
Percentage of Non-performing mortgage notes receivable portfolio | 0.90% |
The original notes gave a five-year period of preferred interest rate | 5.25% |
The Company agreed to extend the maturity on the surplus cash flow notes receivable from UHF for an additional term of five years before returning to the original note rate | 12.00% |
ALLOWANCE_FOR_ESTIMATED_LOSSES1
ALLOWANCE FOR ESTIMATED LOSSES (dollars in thousands) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for Estimated losses, | ' | ' | ' |
Allowance Balance on January 1, | $2,262 | $3,942 | $4,741 |
Decrease in provision | ' | -1,680 | -799 |
Allowance Balance on December 31, | $2,262 | $2,262 | $3,942 |
Summary_of_the_financial_posit
Summary of the financial position and results of operations from our unconsolidated subsidiaries and investees (dollars in thousands) (Details) (USD $) | Unconsolidated Subsidiaries | Other Investees | Total Investees |
Balance of Investments at Dec. 31, 2010 | ' | ' | $0 |
Real estate, net of accumulated depreciation | 60,703 | 71,987 | 132,690 |
Notes receivable from unconsolidated subsidiaries and investees | 27,447 | 0 | 27,447 |
Other assets from unconsolidated subsidiaries and investees | 138,927 | 4,441 | 143,368 |
Notes payable from unconsolidated subsidiaries and investees | -59,744 | -47,091 | -106,835 |
Other liabilities from unconsolidated subsidiaries and investees | -88,647 | -2,849 | -91,496 |
Shareholders equity from unconsolidated subsidiaries and investees | -78,686 | -26,488 | -105,174 |
Rents and interest and other income from unconsolidated subsidiaries and investees | 8,021 | 7,096 | 15,117 |
Depreciation from unconsolidated subsidiaries and investees | 56 | -3,133 | -3,077 |
Operating expenses from unconsolidated subsidiaries and investees | -8,196 | -3,999 | -12,195 |
Gain (loss) on land sales from unconsolidated subsidiaries and investees | 23,646 | 0 | 23,646 |
Interest expense from unconsolidated subsidiaries and investees | -7,562 | -2,307 | -9,869 |
Loss from continuing operations from unconsolidated subsidiaries and investees | 15,965 | -2,343 | 13,622 |
Income (loss) from discontinued operations from unconsolidated subsidiaries and investees | 9,864 | 0 | 9,864 |
Net loss from unconsolidated subsidiaries and investees | 25,829 | -2,343 | 23,486 |
Companys proportionate share of earnings from unconsolidated subsidiaries and investees | 530 | -117 | 413 |
Balance of Investments at Dec. 31, 2011 | ' | ' | 0 |
Balance of Investments at Dec. 31, 2011 | ' | ' | ' |
Real estate, net of accumulated depreciation | 45,860 | 0 | 45,860 |
Notes receivable from unconsolidated subsidiaries and investees | 44,371 | 0 | 44,371 |
Other assets from unconsolidated subsidiaries and investees | 130,420 | 0 | 130,420 |
Notes payable from unconsolidated subsidiaries and investees | -61,720 | 0 | -61,720 |
Other liabilities from unconsolidated subsidiaries and investees | -85,069 | 0 | -85,069 |
Shareholders equity from unconsolidated subsidiaries and investees | -73,862 | 0 | -73,862 |
Rents and interest and other income from unconsolidated subsidiaries and investees | 8,198 | 0 | 8,198 |
Depreciation from unconsolidated subsidiaries and investees | -263 | 0 | -263 |
Operating expenses from unconsolidated subsidiaries and investees | -4,062 | 0 | -4,062 |
Gain (loss) on land sales from unconsolidated subsidiaries and investees | -2,785 | 0 | -2,785 |
Interest expense from unconsolidated subsidiaries and investees | -4,234 | 0 | -4,234 |
Loss from continuing operations from unconsolidated subsidiaries and investees | -3,146 | 0 | -3,146 |
Income (loss) from discontinued operations from unconsolidated subsidiaries and investees | 2,691 | 0 | 2,691 |
Net loss from unconsolidated subsidiaries and investees | -455 | 0 | -455 |
Companys proportionate share of loss | -9 | 0 | -9 |
Balance of Investments at Dec. 31, 2012 | ' | ' | 0 |
Balance of Investments at Dec. 31, 2012 | ' | ' | ' |
Real estate, net of accumulated depreciation | 11,944 | 0 | 11,944 |
Notes receivable from unconsolidated subsidiaries and investees | 45,179 | 0 | 45,179 |
Other assets from unconsolidated subsidiaries and investees | 130,535 | 0 | 130,535 |
Notes payable from unconsolidated subsidiaries and investees | -56,103 | 0 | -56,103 |
Other liabilities from unconsolidated subsidiaries and investees | -62,998 | 0 | -62,998 |
Shareholders equity from unconsolidated subsidiaries and investees | -68,557 | 0 | -68,557 |
Rents and interest and other income from unconsolidated subsidiaries and investees | 21,658 | 0 | 21,658 |
Depreciation from unconsolidated subsidiaries and investees | -285 | 0 | -285 |
Operating expenses from unconsolidated subsidiaries and investees | -23,487 | 0 | -23,487 |
Gain (loss) on land sales from unconsolidated subsidiaries and investees | 618 | 0 | 618 |
Interest expense from unconsolidated subsidiaries and investees | -7,173 | 0 | -7,173 |
Loss from continuing operations from unconsolidated subsidiaries and investees | -8,669 | 0 | -8,669 |
Income (loss) from discontinued operations from unconsolidated subsidiaries and investees | -15 | 0 | -15 |
Net loss from unconsolidated subsidiaries and investees | -8,684 | 0 | -8,684 |
Companys proportionate share of loss | -172 | 0 | -172 |
Balance of Investments at Dec. 31, 2013 | ' | ' | $0 |
A_summary_of_our_notes_and_int
A summary of our notes and interest payable(Dollars in thousands) (Details) (USD $) | Dec. 31, 2013 |
Notes payable | ' |
Apartments | $359,566 |
Apartments | 359,566 |
Commercial | 108,344 |
Land | 76,468 |
Real estate held for sale, | 17,058 |
Real estate subject to sales contract, | 21,494 |
Other, | 14,471 |
Total, | 597,401 |
Stock Secured Loans | ' |
Other, | 2,243 |
Total, | 2,243 |
Accured Interest | ' |
Apartments | 1,207 |
Apartments | 1,207 |
Commercial | 285 |
Land | 117 |
Real estate held for sale, | 42 |
Real estate subject to sales contract, | 1,518 |
Other, | 32 |
Total, | 3,201 |
Total Debt | ' |
Apartments | 360,773 |
Apartments | 360,773 |
Commercial | 108,629 |
Land | 76,585 |
Real estate held for sale, | 17,100 |
Real estate subject to sales contract, | 23,012 |
Other, | 16,746 |
Total, | $602,845 |
The_scheduled_principal_paymen
The scheduled principal payments of our notes payable (Details) (USD $) | Dec. 31, 2013 |
Principal payments of notes payable | ' |
Principal payments of notes payable in the year 2014 | $134,524 |
Principal payments of notes payable in the year 2015 | 22,007 |
Principal payments of notes payable in the year 2016 | 61,099 |
Principal payments of notes payable in the year 2017 | 6,013 |
Principal payments of notes payable in the year 2018 | 5,862 |
Principal payments of notes payable thereafter | 370,139 |
Total Principal payments of notes payable | $599,644 |
Notes_issued_on_real_estate_De
Notes issued on real estate (Details) (USD $) | Dec. 31, 2013 | Dec. 30, 2013 | Oct. 11, 2013 | 7-May-13 |
Notes issued on real estate | ' | ' | ' | ' |
Company signed a million promissory note to Petra CRE CDO relating to the Amoco building settlement agreement in millions | ' | ' | ' | 5 |
Company refinanced the existing mortgage on 600 Las colinas square foot commercial building located in Irving | ' | ' | 510,841 | ' |
New mortgage in millions. | ' | ' | 41 | ' |
Paid off existing mortgage in millions. | ' | ' | 31 | ' |
Closing costs and escrows | ' | ' | 5.3 | ' |
Note accrues interest and payments of principal and interest | ' | ' | 5.31% | ' |
Paid off according to the Settlement and Release Agreement and a Loan Purchase Agreement | ' | $29,635,211 | ' | ' |
The agreement also included the purchase of an obligation, known as the Lamar land loan, by a subsidiary of TCI, from BDF | ' | 1,864,789 | ' | ' |
The total settlement price of the agreement for the two loans was | ' | 31,500,000 | ' | ' |
Recognized gain of million for the discount received | ' | 7.5 | ' | ' |
IOT incurred extension fees in million | ' | 1.08 | ' | ' |
RAI, a related party, obtained a mortgage to First NBC Bank in millions | ' | 20 | ' | ' |
IOT owned acres of land given as security for the mortagage | ' | 178.1 | ' | ' |
TCI owned acres of land given as security for the mortagage | ' | 100.05 | ' | ' |
variable interest rate of Prime plus for First NBC loan | ' | 1.50% | ' | ' |
An interest rate floor for First NBC loan | ' | 6.00% | ' | ' |
Based off the land valuation loan in millions allocated to IOT | ' | 12.4 | ' | ' |
Loan is allocated to TCI in million | ' | 7.6 | ' | ' |
Drew down construction loan in million | ' | 0.3 | ' | ' |
Interest payable in million | 3.2 | ' | ' | ' |
Interest accrues at rates ranging minimum | 1.00% | ' | ' | ' |
Interest accrues at rates ranging maximum | 12.50% | ' | ' | ' |
The mortgages were collateralized by deeds of trust on real estate having a net carrying value | $682.50 | ' | ' | ' |
Senior debt in million in total notes payable | 574.6 | ' | ' | ' |
Junior debt in millions in total notes payable | 17.2 | ' | ' | ' |
Other debt in millions in total notes payable | 7.8 | ' | ' | ' |
Property tax loans included in other debt in millions | 0.3 | ' | ' | ' |
Mortagage_on_real_estate_Detai
Mortagage on real estate (Details) | Dec. 31, 2013 |
Breakwater Bay | ' |
New mortagage (Millions) | 9.8 |
Number of units in apartments | 176 |
New mortagage (Millions) | 9.8 |
Paid off amount on existing mortagage in Millions | 9.1 |
Closing costs in Millions | 0.3 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Northside on Travis | ' |
New mortagage (Millions) | 13.9 |
Number of units in apartments | 200 |
New mortagage (Millions) | 13.9 |
Paid off amount on existing mortagage in Millions | 13.5 |
Closing costs in Millions | 1.3 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Mansions of Mansfield | ' |
New mortagage (Millions) | 16.3 |
Number of units in apartments | 208 |
New mortagage (Millions) | 16.3 |
Paid off amount on existing mortagage in Millions | 15.8 |
Closing costs in Millions | 1.2 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Preserve at Pecan Creek | ' |
New mortagage (Millions) | 15.1 |
Number of units in apartments | 192 |
New mortagage (Millions) | 15.1 |
Paid off amount on existing mortagage in Millions | 14.6 |
Closing costs in Millions | 1.1 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Parc at Clarksville | ' |
New mortagage (Millions) | 13.4 |
Number of units in apartments | 168 |
New mortagage (Millions) | 13.4 |
Paid off amount on existing mortagage in Millions | 13 |
Closing costs in Millions | 0.7 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Dorado Ranch | ' |
New mortagage (Millions) | 16.6 |
Number of units in apartments | 224 |
New mortagage (Millions) | 16.6 |
Paid off amount on existing mortagage in Millions | 16.2 |
Closing costs in Millions | 1.4 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Legends of El Paso apartments | ' |
New mortagage (Millions) | 16 |
Number of units in apartments | 240 |
New mortagage (Millions) | 16 |
Paid off amount on existing mortagage in Millions | 15.2 |
Closing costs in Millions | 1.2 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Vistas of Pinnacle Park | ' |
New mortagage (Millions) | 19 |
Number of units in apartments | 332 |
New mortagage (Millions) | 19 |
Paid off amount on existing mortagage in Millions | 18.6 |
Closing costs in Millions | 2 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Toulon apartments | ' |
New mortagage (Millions) | 17 |
Number of units in apartments | 240 |
New mortagage (Millions) | 17 |
Accrued interest rate | 5.37% |
Amortization schedule in years | 40 |
Capitol Hill | ' |
New mortagage (Millions) | 9.4 |
Number of units in apartments | 156 |
New mortagage (Millions) | 9.4 |
Paid off amount on existing mortagage in Millions | 8.8 |
Closing costs in Millions | 0.3 |
Accrued interest rate | 2.50% |
Amortization schedule in years | 40 |
Denham Springs | ' |
New mortagage (Millions) | 1.9 |
Number of units in apartments | 0 |
New mortagage (Millions) | 1.9 |
Paid off amount on existing mortagage in Millions | 0.1 |
Related_party_transactions_Det
Related party transactions (Details) (USD $) | Total | Pillar | ARI |
Related party payable, balance at Dec. 31, 2012 | ($10,057) | ' | ($10,057) |
Cash transfers | 3,028 | 3,028 | ' |
Advisory fees | -8,424 | -8,494 | ' |
Net income fee | -4,089 | -4,089 | ' |
Fees and commissions | -2,977 | -2,977 | ' |
Cost reimbursements | -2,585 | -2,585 | ' |
Interest (to) from advisor | -157 | ' | -157 |
Expenses paid by advisor | -1,456 | -1,456 | ' |
Financing (mortgage payments) | -967 | -967 | ' |
Sales/Purchases transactions | 70,261 | 70,261 | ' |
Series K preferred stock acquisition | -270 | ' | -270 |
Tax sharing expense | 7,763 | 7,763 | ' |
Purchase of obligations | 2,380 | -60,484 | 62,864 |
Related party receivable, balance at Dec. 31, 2013 | $52,380 | ' | $52,380 |
Fees_expenses_and_revenue_paid
Fees, expenses and revenue paid to advisor (dollars in thousands) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Fees, expenses and revenue paid to advisor | ' | ' | ' |
Advisory fees to advisor | $8,494 | $8,915 | $9,958 |
Construction advisory fees to advisor | ' | 181 | 2,429 |
Mortgage brokerage and equity refinancing fees to advisor | 1,878 | 1,873 | 812 |
Net income fees to advisor | 4,089 | 180 | 54 |
Property acquisition fees to advisor | ' | 20 | ' |
Total Fees to advisor | 14,461 | 11,169 | 13,253 |
Cost reimbursements to advisor | 2,585 | 2,247 | 2,908 |
Interest paid to advisor | 157 | 1,194 | 1,048 |
Total other expenses to advisor | 2,742 | 3,441 | 3,956 |
Rental Revenue from advisor | $670 | $587 | $434 |
Fees_paid_to_Regis_and_related
Fees paid to Regis and related parties (dollars in thousands) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Fees paid to Regis and related parties: | ' | ' | ' |
Property acquisition Fees paid to Regis | $0 | $71 | $0 |
Property management, construction management and leasing commissions Fees paid to Regis | 436 | 2,087 | 1,759 |
Real estate brokerage Fees paid to Regis | 4,055 | 2,263 | 0 |
Total fee paid to Ragis | $4,491 | $4,421 | $1,759 |
Preferred_Stock_shares_Details
Preferred Stock shares (Details) (USD $) | Dec. 31, 2013 | Nov. 30, 2006 |
Preferred stock details | ' | ' |
TCI issued shares of Series C Preferred Stock | 30,000 | ' |
TCI's Series C Cumulative Convertible Preferred Stock | 30,000 | ' |
Cumulative Convertible Preferred Stock liquidation preference per share | $100 | ' |
Dividends are payable at the annual rate of per share annually | $7 | ' |
Dividends are payable at the annual rate of per share quarterly | $1.75 | ' |
Series C Preferred Stock may be converted into Common stock at a price of the daily avarage closing price | 90.00% | ' |
Shares of Series C Preferred Stock were issued and outstanding | 30,000 | ' |
TCI issued shares of Series D Preferred Stock | ' | 100,000 |
Series D Preferred Stock with a liquidation preference per share | ' | $100 |
Dividends payable at the initial rate annually | ' | 7.00% |
The dividend rate increases in future periods to a rate | ' | 9.00% |
Directors_Stock_Option_Plan_De
Director's Stock Option Plan (Details) (USD $) | Dec. 31, 2013 | Oct. 31, 2000 |
Director's Stock Option Plan | ' | ' |
Director's Stock Option Plan which provides for options to purchase up to | ' | 140,000 |
Director ceases to be a Director years from the date of grant. | ' | 10 |
Stock options outstanding | 5,000 | ' |
Stock options exercisable per share | $14.25 | ' |
FUTURE_MINIMUM_RENTAL_INCOME_U1
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES (Details) (USD $) | Dec. 31, 2013 |
Minimum future rents on non-cancelable operating leases | ' |
Minimum future rents on non-cancelable operating leases in 2014 | $15,158 |
Minimum future rents on non-cancelable operating leases in 2015 | 14,678 |
Minimum future rents on non-cancelable operating leases in 2016 | 12,264 |
Minimum future rents on non-cancelable operating leases in 2017 | 9,790 |
Minimum future rents on non-cancelable operating leases in 2018 | 8,652 |
Minimum future rents on non-cancelable operating leases thereafter | 16,647 |
Total Minimum future rents on non-cancelable operating leases | $77,189 |
Components_of_income_tax_expen
Components of income tax expense benefit (dollars in thousands)(Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Components of income tax expense benefit | ' | ' | ' |
Income from continuing operations, | ($24,598) | ($10,401) | ($14,460) |
Income from discontinued operations, | 16,835 | 10,401 | 14,460 |
Tax benefit | -7,763 | ' | ' |
Total tax benefit from RAMI | 6,802 | ' | ' |
Total tax benefit from ARL | $961 | ' | ' |
The expense (benefit) in each year was calculated witha maximum statutory rate | 35.00% | ' | ' |
Reconciliation_of_income_tax_e
Reconciliation of income tax expense (Dollars in Thousands) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Reconciliation of income tax expense | ' | ' | ' |
Corporate tax rate applied to to the income before income taxes | 35.00% | ' | ' |
Computed expected income tax (benefit) expense | $26,998 | ($4,211) | ($16,008) |
Book to tax differences for partnerships not consolidated for tax purposes | -33,565 | -3,831 | -6,442 |
Book to tax differences of depreciation and amortization | 1,222 | 1,434 | 1,140 |
Book to tax differences in gains on sale of property | -20,308 | -4,835 | -7,020 |
Book provision for loss | 3,962 | 1,656 | 10,132 |
Partial valuation allowance against current net operating loss benefit | 16,835 | 10,401 | 14,460 |
Other differences | 4,856 | -614 | 3,738 |
Total differences | 0 | 0 | 0 |
Alternative minimum tax | $0 | $0 | $0 |
Components_of_Deferred_income_
Components of Deferred income tax assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Components of Deferred income tax assets | ' | ' | ' |
Net operating losses | $71,071 | $53,857 | $42,337 |
AMT credits | 1,374 | 1,374 | 1,374 |
Basis difference of Real estate holdings | -3,045 | -15,159 | -13,514 |
Basis difference of Notes receivable | 860 | 860 | 1,726 |
Basis difference of Investments | -4,703 | -4,757 | -5,346 |
Basis difference of Notes payable | 12,496 | 16,598 | 22,966 |
Basis difference of Deferred gains | 10,806 | 11,370 | 14,985 |
Total deferred tax asset | 88,859 | 64,143 | 64,528 |
Deferred tax valuation allowance | -88,859 | -64,143 | -64,528 |
Net deferred tax asset | 0 | 0 | 0 |
TCI has established a valuation allowance for deferred tax assets | 88,859,000 | 64,143,000 | 64,528,000 |
TCI has tax net operating loss carryforwards of approximately in million | 184.2 | ' | ' |
The alternative minimum tax credit balance | $1,374,000 | ' | ' |
Operating_Segments_information
Operating Segments information to the corresponding amounts in Consolidated Statements of Operations (dollars in thousands) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Operating Segments information to the corresponding amounts in Consolidated Statements of Operations | ' | ' | ' |
Segment operating income | $1,388 | $6,351 | $6,495 |
General and administrative | -6,323 | -5,090 | -8,971 |
Provision on impairment of notes receivable and real estate assets | -11,320 | -2,330 | -35,039 |
Net income fee to related party | -4,089 | -180 | -54 |
Advisory fee to related party | -8,494 | -8,915 | -9,958 |
Other income | 7,862 | 6,303 | 2,441 |
Gain (loss) on the sale of investments | -283 | 125 | -514 |
Earnings from unconsolidated joint ventures and investees | -172 | -66 | 242 |
Litigation settlement | -20,313 | -173 | -225 |
Income tax benefit (expense) | 40,485 | -1,445 | -357 |
Loss from continuing operations | ($1,259) | ($5,420) | ($45,940) |
Operating_Segments_Reconciles_
Operating Segments Reconciles information to the Consolidated Balance Sheets (dollars in thousands) (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Operating Segments Reconciles information to the Consolidated Balance Sheets (Details) | ' | ' | ' |
Segment assets | $679,375 | $878,874 | $920,639 |
Investments in real estate partnerships | 1,697 | 5,439 | 6,362 |
Notes and interest receivable | 67,907 | 59,098 | 77,371 |
Other assets | 132,265 | 83,856 | 88,251 |
Assets held for sale | 16,427 | 18,077 | 67,701 |
Total assets | $897,671 | $1,045,344 | $1,160,324 |
Summary_of_discontinued_operat
Summary of discontinued operations (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Revenue from discontinued operations | ' | ' | ' |
Rental and other property revenues discontinued operations | $26,036 | $34,774 | $46,620 |
Total revenue discontinued operations | 26,036 | 34,774 | 46,620 |
Property operating expenses discontinued operations | 12,201 | 18,161 | 25,187 |
Depreciation discontinued operations | 4,231 | 6,349 | 9,067 |
General and administrative discontinued operations | 935 | 961 | 1,269 |
Provision on impairment of notes receivable and real estate assets discontinued operations | 0 | 2,400 | 9,968 |
Total operating expenses discontinued operations | 17,367 | 27,871 | 45,491 |
Other income (expense) discontinued operations | 29 | 14 | -24 |
Mortgage and loan interest discontinued operations | -6,139 | -10,806 | -18,808 |
Deferred borrowing costs amortization discontinued operations | -3,009 | -1,790 | -805 |
Loan charges and prepayment penalties discontinued operations | -3,245 | -3,472 | -1,265 |
Earnings from unconsolidated subsidiaries and investees discontinued operations | 30 | 55 | 453 |
Litigation settlement discontinued operations | -250 | -250 | 0 |
Total other expenses discontinued operations | -12,584 | -16,249 | -20,449 |
Loss from discontinued operations before gains on sale of real estate, taxes discontinued operations | -3,915 | -9,346 | -19,320 |
Gain on sale of real estate from discontinued operations discontinued operations | 97,405 | 5,217 | 18,300 |
Income tax benefit (expense) discontinued operations | -32,722 | 1,445 | 357 |
Net income (loss) from discontinued operations discontinued operations | $60,768 | ($2,684) | ($663) |
Computation_of_Earnings_per_sh
Computation of Earnings per share (Details) (USD $) | Dec. 31, 2013 | Sep. 30, 2006 |
Computation of Earnings per share | ' | ' |
Series C Cumulative Convertible Preferred Stock issued and outstanding shares | ' | 30,000 |
The stock has a liquidation preference per share | ' | $100 |
The stock may be converted into common stock at a percentage of daily average closing price of the common stock for the prior five trading days | ' | 90.00% |
Shares of stock options outstanding as on balance sheet date | 5,000 | ' |
Subsequent_transactions_Detail
Subsequent transactions (Details) (USD $) | Mar. 28, 2014 | Feb. 13, 2014 | Feb. 12, 2014 | Feb. 06, 2014 | Jan. 29, 2014 |
Subsequent transactions | ' | ' | ' | ' | ' |
Company entered into a sales contract to sell commercial building for a price in millions | ' | ' | ' | ' | 16.6 |
Area of commercial building in square feet | ' | ' | ' | ' | 512,593 |
Company sold apartment complex known as Pecan Pointe in units | ' | ' | ' | 232 | ' |
Company sold apartment complex known as Pecan Pointe for a price in millions | ' | ' | ' | 23.1 | ' |
The buyer assumed the existing debt in millions secured by the property | ' | ' | ' | 16.5 | ' |
Gain recorded in this transaction in millions | ' | ' | ' | 5.8 | ' |
Company exercised the first prepayment option date on the settlement with Petra CRE CDO as per agreement and paid in millions | ' | ' | 1.2 | ' | ' |
Amount forgiven as per the agreement in millions | ' | ' | 3.5 | ' | ' |
Company acquired land adjacent to the Mandahl Bay Land in acres | ' | 0.75 | ' | ' | ' |
Company acquired land adjacent to the Mandahl Bay Land for a price | ' | $89,454 | ' | ' | ' |
TCI Secured financing of an amount in millions | 40 | ' | ' | ' | ' |
The note has interest only for the first year with the quarterly principal payments due | $500,000 | ' | ' | ' | ' |
Denham_Springs_apartments_Deta
Denham Springs apartments (Details) | Feb. 28, 2014 |
Denham Springs apartments | ' |
Company refinanced the existing mortgage on Parc for a number of units | 224 |
Company refinanced for the new mortgage in millions | 19.2 |
Company paid off the existing mortgage in millions | 19.2 |
Company paid off the closing costs in millions | 1.6 |
The note accrues interest at a rate | 3.75% |
Loan amortization schedule in years | 40 |