Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 15, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | TRANSCONTINENTAL REALTY INVESTORS INC | ||
Entity Trading Symbol | TRAN | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Entity Central Index Key | 733590 | ||
Current Fiscal Year End Date | -19 | ||
Entity Common Stock, Shares Outstanding | 8,717,767 | ||
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 | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $19,381,338 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Assets {1} | ||
Real estate, at cost | $781,794 | $777,974 |
Real estate held for sale at cost, net of depreciation ($0 in 2014 and $2,390 in 2013) | 0 | 16,427 |
Real estate subject to sales contracts at cost, net of depreciation ($2,300 in 2014 and $1,949 in 2013) | 20,395 | 29,353 |
Less accumulated depreciation | -113,068 | -127,952 |
Total real estate | 689,121 | 695,802 |
Notes and interest receivable | ||
Performing (including $77,853 in 2014 and $66,431 in 2013 from related parties) | 84,863 | 69,626 |
Non-Performing | 584 | 543 |
Less allowance for estimated losses (including $1,825 in 2014 and $2,097 in 2013 from related parties) | -1,990 | -2,262 |
Total notes and interest receivable | 83,457 | 67,907 |
Cash and cash equivalents | 12,201 | 16,086 |
Restricted cash | 48,238 | 31,799 |
Investments in unconsolidated subsidiaries and investees | 1,543 | 1,697 |
Receivable from related party | 58,404 | 52,380 |
Other assets | 37,441 | 32,000 |
Total assets | 930,405 | 897,671 |
Liabilities: | ||
Notes and interest payable | 588,749 | 562,734 |
Notes related to assets held for sale | 1,552 | 17,100 |
Notes related to subject to sales contracts | 18,616 | 23,011 |
Deferred revenue (from sales to related parties) | 51,356 | 53,096 |
Accounts payable and other liabilities (including $4,909 in 2014 and $4,697 in 2013 from related parties) | 36,684 | 50,160 |
Total liabilities | 696,957 | 706,101 |
Shareholders' equity: | ||
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares, issued and outstanding zero shares in 2014 and 30,000 shares in 2013 (liquidation preference $100 per share). Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2014 and 2013 (liquidation preference $100 per share) | 1 | 1 |
Common Stock, $0.01 par value, authorized 10,000,000 shares, issued 8,717,967 and 8,413,669 shares in 2014 and 2013, respectively and outstanding 8,717,767 and 8,413,469 shares in 2014 and 2013, respectively | 87 | 84 |
Treasury stock at cost, 200 shares in 2014 and 2013 | -2 | -2 |
Paid-in capital | 271,649 | 271,720 |
Retained earnings | -56,451 | -98,029 |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 215,284 | 173,774 |
Non-controlling interest | 18,164 | 17,796 |
Total shareholders' equity | 233,448 | 191,570 |
Total liabilities and shareholders' equity | $930,405 | $897,671 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
BALANCE SHEETS PARENTHETICALS | ||
Depreciation of Real Estate held for sale at cost | $0 | $2,390 |
Depreciation of Real Estate subject to sales contracts at cost | 2,300 | 1,949 |
Performing Notes and Interest Receivable from related parties | 77,853 | 66,431 |
Allowance for doubtful accounts from related parties | 1,825 | 2,097 |
Accounts payable and other liabilities from related parties | $4,909 | $4,697 |
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 | 0 | 30,000 |
Preferred stock Series C, shares outstanding | 0 | 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 | 8,717,967 | 8,413,669 |
Common stock, shares outstanding | 8,717,967 | 8,413,669 |
Treasury stock, shares | 200 | 200 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Rental and other property revenues (including $701, $670 and $587 for the year ended 2014, 2013 and 2012, respectively, from related parties) | $75,858 | $77,351 | $78,378 |
Expenses: | |||
Property operating expenses (including $606, $661 and $851 for the year ended 2014, 2013 and 2012, respectively, from related parties) | 39,484 | 36,669 | 37,845 |
Depreciation and amortization | 17,398 | 15,842 | 14,813 |
General and administrative (including $2,802, $2,765 and $2,427 for the year ended 2014, 2013 and 2012, respectively, from related parties) | 7,163 | 6,308 | 5,074 |
Provision on impairment of notes receivable and real estate assets | 0 | 11,320 | 2,330 |
Net income fee to related party | 3,669 | 4,089 | 180 |
Advisory fee to related party | 7,373 | 8,494 | 8,915 |
Total operating expenses | 75,087 | 82,722 | 69,157 |
Net operating income (loss) | 771 | -5,371 | 9,221 |
Other income (expense): | |||
Interest income (including $11,469, $13,823 and $11,677 for the year ended 2014, 2013 and 2012, respectively, from related parties) | 12,194 | 13,790 | 11,725 |
Other income (including $0, $0 and $6,000 for the year ended 2014, 2013 and 2012, respectively, from related parties) | 403 | 7,847 | 6,310 |
Mortgage and loan interest (including $31, $1,761 and $3,153 for the year ended 2014, 2013 and 2012, respectively, from related parties) | -28,368 | -29,694 | -34,372 |
Deferred borrowing costs amortization | -2,509 | -2,582 | -634 |
Loan charges and prepayment penalties | -2,804 | -5,219 | -3,574 |
Gain (loss) on the sale of investments | -92 | -283 | 125 |
Losses from unconsolidated joint ventures and investees | -28 | -172 | -66 |
Litigation settlement | 3,591 | -20,313 | -175 |
Total other expenses | -17,613 | -36,626 | -20,661 |
Loss before gain (loss) on land sales, non-controlling interest, and taxes | -16,842 | -41,997 | -11,440 |
Gain (loss) on land sales | 561 | -1,073 | 6,935 |
Net loss from continuing operations before taxes | -16,281 | -43,070 | -4,505 |
Income tax benefit (expense) | 20,390 | 40,949 | -1,260 |
Net income (loss) from continuing operations | 4,109 | -2,121 | -5,765 |
Discontinued operations: | |||
Net loss from discontinued operations | -3,621 | -2,589 | -8,816 |
Gain on sale of real estate from discontinued operations | 61,879 | 97,405 | 5,217 |
Income tax benefit (expense) from discontinued operations | -20,390 | -33,186 | 1,260 |
Net income (loss) from discontinued operations (1) | 37,868 | 61,630 | -2,339 |
Net income (loss) | 41,977 | 59,509 | -8,104 |
Net loss attributable to non-controlling interest | -399 | -979 | -220 |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | 41,578 | 58,530 | -8,324 |
Preferred dividend requirement | -1,005 | -1,110 | -1,112 |
Net income (loss) applicable to common shares | 40,573 | 57,420 | -9,436 |
Earnings per share - basic | |||
Net income (loss) from continuing operations basic | $0.32 | ($0.50) | ($0.84) |
Net income (loss) from discontinued operations basic | $4.42 | $7.33 | ($0.28) |
Net income (loss) applicable to common shares basic (1) | $4.74 | $6.83 | ($1.12) |
Earnings per share - diluted | |||
Net income (loss) from continuing operations diluted | $0.32 | ($0.50) | ($0.84) |
Net income (loss) from discontinued operations diluted | $4.42 | $7.33 | ($0.28) |
Net income (loss) applicable to common shares diluted | $4.74 | $6.83 | ($1.12) |
Weighted average common shares used in computing earnings per share | 8,559,370 | 8,413,469 | 8,413,469 |
Weighted average common shares used in computing diluted earnings per share | 8,559,370 | 8,413,469 | 8,413,469 |
Amounts attributable to Transcontinental Realty Investors, Inc. | |||
Net income (loss) from continuing operations | 3,710 | -3,100 | -5,985 |
Net income (loss) from discontinued operations | 37,868 | 61,630 | -2,339 |
Net income (loss). | $41,578 | $58,530 | ($8,324) |
CONSOLIDATED_STATEMENTS_OF_OPE1
CONSOLIDATED STATEMENTS OF OPERATIONS PARENTHETICALS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statements Of Operations Parentheticals | |||
Rental and other property revenues, related parties | $701 | $670 | $587 |
Property operating expenses, related parties | 606 | 661 | 851 |
General and administrative expenses, related parties | 2,802 | 2,765 | 2,427 |
Interest income from related parties | 11,469 | 13,823 | 11,677 |
Other income from related parties | 0 | 0 | 6,000 |
Mortgage and loan interest, related parties | $31 | $1,761 | $3,153 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) | 36 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Comprehensive Income (loss) | |||
Net income (loss) | $41,977 | $59,509 | ($8,104) |
Unrealized gain on investment securities | 0 | 0 | 0 |
Total other comprehensive loss | 0 | 0 | 0 |
Comprehensive income (loss) | 41,977 | 59,509 | -8,104 |
Comprehensive income attributable to non-controlling interest | -399 | -979 | -220 |
Comprehensive income (loss) attributable to Transcontinental Realty Investors, Inc. | $41,578 | $58,530 | ($8,324) |
CONSOLIDATED_STATEMENTS_OF_SHA
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) | Total Equity | Comprehensive Income (Loss) | Preferred Stock | Common Stock Shares | Common Stock Amount | Treasury Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-Controlling Interest |
In Thousands | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||
Balance, at Dec. 31, 2011 | 141,284 | -151,052 | 1 | 8,413,669 | 84 | -2 | 273,886 | -148,235 | 15,550 | |
Series C preferred stock dividends (7.0% per year) | ($210) | ($210) | ||||||||
Series D preferred stock dividends (9.0% per year) | -902 | -902 | ||||||||
Net income (loss) | -8,104 | -8,104 | -8,324 | 220 | ||||||
Sale of controlling interest | 1,138 | 1,138 | ||||||||
Acquisition of controlling interest | -69 | -69 | ||||||||
Distributions to non-controlling interests | -8 | -8 | ||||||||
Balance, at Dec. 31, 2012 | 133,129 | -159,156 | 1 | 8,413,669 | 84 | -2 | 272,774 | -156,559 | 0 | 16,831 |
Series C preferred stock dividends (7.0% per year) | -210 | -210 | ||||||||
Series D preferred stock dividends (9.0% per year) | -900 | -900 | ||||||||
Net income | 59,509 | 59,509 | 58,530 | 979 | ||||||
Sale of controlling interest | 56 | 56 | ||||||||
Distributions to non-controlling interests | -14 | -14 | ||||||||
Balance, at Dec. 31, 2013 | 191,570 | -99,647 | 1 | 8,413,669 | 84 | -2 | 271,720 | -98,029 | 0 | 17,796 |
Series C preferred stock dividends (7.0% per year) | -106 | -106 | ||||||||
Series D preferred stock dividends (9.0% per year) | -899 | -899 | ||||||||
Net income | 41,977 | 41,977 | 41,578 | 399 | ||||||
Issuance of common stock | 937 | 304,298 | 3 | 934 | ||||||
Distributions to non-controlling interests | ($31) | ($31) | ||||||||
Balance, at Dec. 31, 2014 | 233,448 | -57,670 | 1 | 8,717,967 | 87 | -2 | 271,649 | -56,451 | 0 | 18,164 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash Flow From Operating Activities: | |||
Net income (loss) (2) | $41,977 | $59,509 | ($8,104) |
Adjustments to reconcile net income (loss) applicable to common shares to net cash used in operating activities: | |||
(Gain) loss on sale of land | -561 | 1,073 | -6,935 |
Gain on sale of income producing properties | -61,879 | -97,405 | -5,217 |
Depreciation and amortization | 18,150 | 21,404 | 22,488 |
Provision on impairment of notes receivable and real estate assets (1) | 0 | 11,320 | 4,730 |
Amortization of deferred borrowing costs | 3,970 | 1,349 | 2,428 |
Earnings from unconsolidated subsidiaries and investees | 298 | 142 | 11 |
(Increase) decrease in assets: | |||
Accrued interest receivable | 7,648 | -8,432 | -5,517 |
Other assets | 2,784 | -1,443 | -3,462 |
Prepaid expense | -1,995 | -1,722 | -236 |
Escrow | -16,733 | 3,625 | 1,157 |
Earnest money | -420 | -310 | 235 |
Rent receivables | -1,486 | 2,445 | -1,094 |
Increase (decrease) in liabilities: | |||
Accrued interest payable | 104 | -5,262 | -7,498 |
Related party payables | -6,024 | -62,437 | -7,408 |
Other liabilities | -15,215 | 9,449 | -10,316 |
Net cash used in operating activities | -29,382 | -66,695 | -24,738 |
Cash Flow From Investing Activities: | |||
Proceeds from notes receivables | 12,504 | 0 | 11,993 |
Originations of notes receivables | -35,430 | -458 | 13,477 |
Acquisition of land held for development | -2,604 | -83 | -18,948 |
Acquisition of income producing properties | -78,557 | 0 | 0 |
Proceeds from sales of income producing properties | 135,074 | 261,495 | 31,751 |
Proceeds from sale of land | 8,777 | 13,671 | 36,648 |
Proceeds from sale of investments | 0 | 0 | 132 |
Investment in unconsolidated real estate entities | -144 | 3,600 | 780 |
Improvement of land held for development | -3,137 | -399 | -184 |
Improvement of income producing properties | -4,563 | -7,681 | -2,201 |
Acquisition of non-controlling interest | 0 | 0 | -69 |
Sale of controlling interest | 0 | 56 | 113 |
Construction and development of new properties | -3,016 | -1,152 | -5,683 |
Net cash provided by investing activities | 28,904 | 269,049 | 67,809 |
Cash Flow From Financing Activities: | |||
Proceeds from notes payable | 178,514 | 202,535 | 139,459 |
Recurring amortization of principal on notes payable | -21,352 | -15,761 | -21,541 |
Payments on maturing notes payable | -153,595 | -386,710 | -163,553 |
Deferred financing costs | -6,875 | 1,791 | -3,305 |
Distributions to non-controlling interests | -31 | -14 | -8 |
Common stock issuance | 937 | 0 | 0 |
Preferred stock dividends - Series C | -106 | -210 | -212 |
Preferred stock dividends - Series D | -899 | -900 | -901 |
Net cash used in financing activities | -3,407 | -199,269 | -50,061 |
Net increase (decrease) in cash and cash equivalents | -3,885 | 3,085 | -6,990 |
Cash and cash equivalents, beginning of period | 16,086 | 13,001 | 19,991 |
Cash and cash equivalents, end of period | 12,201 | 16,086 | 13,001 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 30,110 | 37,776 | 44,737 |
Schedule of noncash investing and financing activities: | |||
Affiliate payable/receivable for ARL cost basis sales adjustment | 0 | 0 | 10,445 |
Acquisition of land for ARL cost basis sales adjustment | 0 | 0 | -10,445 |
Notes receivable received from affiliate | 0 | 0 | 6,000 |
Sale of notes receivable to affiliate | $0 | $0 | ($20,387) |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended | ||
Dec. 31, 2014 | |||
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. TCI, 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 NYSE under the symbol (“ARL”). Subsidiaries of ARL own approximately 80.90% 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, 2014, 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 is $25.9 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 May Realty Holdings, Inc. (“MRHI”, formerly known as Realty Advisors Management, Inc. “RAMI”, effective August 7, 2014), 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 ARL 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. | |||
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, 2014, we owned 37 residential apartment communities comprising of 6,024 units, eight commercial properties comprising an aggregate of approximately 1.8 million rentable square feet, and an investment in 4,087 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. | |||
The Company in accordance with the VIE guidance in ASC 810 “Consolidations” consolidates 35 and 33 multifamily residential properties located throughout the United States at December 31, 2014 and December 31, 2013, respectively, ranging from 32 units to 290 units. Assets totaling $362.3 million and $343.9 million at December 31, 2014 and 2013, 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 $0.0 and $16.4 million at December 31, 2014 and 2013, 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. | |||
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, 2014 and 2013, 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 GAAP, 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 MRHI, consolidated group for tax purposes. The income tax expense (benefit) for the first part of the 2012 period 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 MRHI for the remainder of 2012 and subsequent years. 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, 2014 | |||||||||||||||||
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): | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Apartments | $ | 452,631 | $ | 433,141 | |||||||||||||
Apartments under construction | 1,512 | - | |||||||||||||||
Commercial properties | 179,171 | 203,823 | |||||||||||||||
Land held for development | 148,480 | 141,010 | |||||||||||||||
Real estate held for sale | - | 18,817 | |||||||||||||||
Real estate subject to sales contract | 22,695 | 31,302 | |||||||||||||||
Total real estate, at cost, less impairment | 804,489 | 828,093 | |||||||||||||||
Less accumulated deprecation | (115,368 | ) | (132,291 | ) | |||||||||||||
Total real estate, net of depreciation | $ | 689,121 | $ | 695,802 | |||||||||||||
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 | |||||||||||||||||
There was no provision for impairment of notes receivable, investment in real estate partnerships, and real estate assets for the year ended December 31, 2014. | |||||||||||||||||
In the prior year, impairment was recorded as an additional loss in the commercial and land portfolios. In our commercial portfolio, an impairment reserve of $9.6 million was taken to adjust for the appraised value of the building. In our land portfolio, an impairment reserve of $1.5 million was taken based on a potential sale of land at a value lower than book basis. The remaining $0.2 million in impairment reserves were related to provisions for losses taken to our notes receivable. | |||||||||||||||||
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. There was no provision for impairment for the year ended December 31, 2014. | |||||||||||||||||
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. | |||||||||||||||||
The following is a brief description of the most significant property acquisitions and sales in 2014: | |||||||||||||||||
On February 6, 2014, the Company sold a 232-unit apartment complex known as Pecan Pointe, located in Temple, Texas, to an independent third party, for a sales price of $23.1 million. The buyer assumed the existing debt of $16.5 million secured by the property. A gain of $6.1 million was recorded on the sale. | |||||||||||||||||
On March 13, 2014, 6.6 acres of land known as Three Hickory located in Farmers Branch, Texas was transferred back to the Company as a result of the settlement agreement with the lender. On the same day TCI sold the land to IOT for $1.2 million which resulted in a gain of $1.2 million. | |||||||||||||||||
On March 26, 2014, the Company sold 6.314 acres of land known as McKinney Ranch land, located in McKinney, Texas, to an independent third party, for a sales price of $1.7 million. We paid $1.5 million on the existing mortgage to satisfy a portion of the multi-tract collateral debt of $6.6 million, secured by various land parcels located in McKinney, Texas. A gain of $0.8 million was recorded on the sale. | |||||||||||||||||
On April 3, 2014, the Company sold a 512,593 square foot commercial building known as 1010 Common, located in New Orleans, Louisiana, to an independent third party, for a sales price of $16.6 million. A gain of $7.0 million was recorded on the sale. | |||||||||||||||||
On July 25, 2014, the Company sold 24.498 acres of land known as Stanley Tools and Kelly Lots, located in Farmers Branch, Texas, to an independent third party, for a sales price of $4.3 million. We paid off the existing mortgage of $1.7 million in addition to making a $0.2 million payment on an existing mortgage related to another parcel of land located in Gulfport, Mississippi. A nominal gain was recorded on the sale. | |||||||||||||||||
On August 12, 2014, the Company sold a 20,715 square foot commercial building known as Sesame Square, located in Anchorage, Alaska, to an independent third party, for a sales price of $2.6 million. We paid off the existing mortgage of $0.8 million. A gain of $1.8 million was recorded on the sale. | |||||||||||||||||
On September 19, 2014, the Company acquired 100% ownership of Summer Breeze I-V, LLC, from an independent third party, which resulted in the acquisition of Sunset Lodge, a 216-unit complex located in Odessa, Texas. We exchanged the existing note receivable and all accrued interest in the amount of $3.5 million for the ownership interest. | |||||||||||||||||
On September 23, 2014, the Company sold a 106-unit complex known as Bridgewood Ranch, located in Kaufman, Texas, to an independent third party, for a sales price of $8.0 million. We paid off the existing mortgage of $4.5 million and the buyer obtained a new mortgage of $6.6 million. We did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement as a result of having the option to repurchase the sold property at a later date. The exercise of the option is subject to the approval of the U.S. Department of Housing and Urban Development. We determined a sale had not occurred for financial reporting purposes and therefore the asset remains on our books. | |||||||||||||||||
On November 3, 2014, the Company sold a 290-unit apartment complex known as Blue Ridge, located in Midland, Texas, to an independent third party, for a sales price of $52.8 million. We paid off the existing mortgage of $23.7 million. A gain of $26.7 million was recorded on the sale. | |||||||||||||||||
On November 6, 2014, the Company acquired 100% ownership of Dun-Run Golf, Dun-Run Development, and Dun-Run Restaurants, all limited liability companies, which resulted in the acquisition of Mahogany Run Golf Course for a purchase price of $13.1 million. The Company took out a note as seller financing to aid in the purchase in the amount of $6.6 million. The note accrues at 8% with interest only payments due through the maturity date of November 6, 2015. An option to renew for one more year can be exercised if a $1.0 million principal payment is made before maturity. | |||||||||||||||||
On November 13, 2014, the Company sold a 216-unit complex known as Sunset Lodge, as well as 5.98 acres of land, both located in Odessa, Texas, to an independent third party, for a combined sales price of $40.6 million. The buyer assumed the existing debt of $19.0 million secured by the property. A gain of $20.7 million was recorded on the sale. | |||||||||||||||||
On December 1, 2014, the Company acquired a 208-unit complex known as Legacy at Pleasant Grove, located in Texarkana, Texas, from a third party. We exchanged the existing note receivable and all accrued interest in the amount of $5.0 million for the complex. | |||||||||||||||||
On December 1, 2014, the Company acquired a 148-unit complex known as Villas at Park West I, located in Pueblo, Colorado, from a third party. We exchanged the existing note receivable and all accrued interest in the amount of $1.3 million for the complex. | |||||||||||||||||
On December 1, 2014, the Company acquired a 112-unit complex known as Villas at Park West II, located in Pueblo, Colorado, from a third party. We exchanged the existing note receivable and all accrued interest in the amount of $5.1 million for the complex. | |||||||||||||||||
On December 30, 2014, the Company acquired 8.387 acres of land known as Bonneau Land, located in Farmers Branch, Texas, from a third party, for a purchase price of $1.2 million. | |||||||||||||||||
On December 30, 2014, the Company sold 2.606 acres of land known as Carr (Luna) Land, located in Farmers Branch, Texas, to a third party, for a sales price of $0.3 million. A loss of $0.4 million was recorded on the sale. | |||||||||||||||||
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, 2014, 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, 2014, there remains one apartment complex, one commercial building and 110 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, 2014 | |||||||||
ALLOWANCE FOR ESTIMATED LOSSES | |||||||||
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: | |||||||||
Foundation for Better Housing, Inc. (Holland Lake) (1) | 19-Dec | 12.00% | $ 4,698 | Secured | |||||
Foundation for Better Housing, Inc. (Holland Lake) (1) | 17-Dec | 12.00% | 1,674 | Secured | |||||
Foundation for Better Housing, Inc. (Overlook at Allensville) (1) | 19-Nov | 12.00% | 2,472 | Secured | |||||
Foundation for Better Housing, Inc. (Overlook at Allensville) (1) | 17-Dec | 12.00% | 1,408 | Secured | |||||
Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1) | 19-Mar | 12.00% | 1,810 | Secured | |||||
Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1) | 17-Mar | 12.00% | 1,156 | Secured | |||||
Foundation for Better Housing, Inc. (Vista Ridge) (1) | 19-Apr | 12.00% | 3,923 | Secured | |||||
Foundation for Better Housing, Inc. (Vista Ridge) (1) | 17-Jun | 12.00% | 1,492 | Secured | |||||
HGH Residential, LLC (Tradewinds Development) | 19-Jul | 12.00% | 6,131 | Secured | |||||
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) | 17-Jun | 12.00% | 1,261 | Unsecured | |||||
Unified Housing Foundation, Inc. (1) | 17-Dec | 12.00% | 1,207 | Unsecured | |||||
Other related party notes (1) | Various | Various | 768 | Various secured interests | |||||
Other related party notes (1) | Various | Various | 4,276 | Various unsecured interests | |||||
Other non-related party notes | Various | Various | 496 | Various secured interests | |||||
Accrued interest | 5,066 | ||||||||
Total Performing | $ 84,863 | ||||||||
Non-Performing loans: | |||||||||
Other non-related party notes | Various | Various | 507 | Various secured interests | |||||
Accrued interest | 77 | ||||||||
Total Non-Performing | $ 584 | ||||||||
Allowance for estimated losses | (1,990) | ||||||||
Total | $ 83,457 | ||||||||
(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, 2014, 8.6% of our assets were invested in junior and wraparound mortgage loans. | |||||||||
As of December 31, 2014, the obligors on $73.2 million or 91.1% of the mortgage notes receivable portfolio were due from related entities. The Company recognized $9.0 million of interest income from these related party notes receivables. | |||||||||
As of December 31, 2014, $0.5 million or 0.6% of the mortgage notes receivable portfolio were 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 from operations, sale or refinancing of the underlying properties. These notes are cross collateralized to the extent that any surplus cash available from any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes. Furthermore, any surplus cash available from any of the properties UHF owns, besides the properties underlying these notes, can be used to repay outstanding interest and principal for these notes. The allowance on the notes was a purchase allowance that was netted against the notes when acquired. | |||||||||
In 2010, the Company agreed to reduce the interest rate from 12% to 5.25% for a five year period on the surplus cash flow notes receivable from UHF. As of January 1, 2013, the Company agreed to extend the maturity on these surplus cash flow notes receivable for an additional term of five years in exchange for the early termination of the reduced interest rate. |
ALLOWANCE_FOR_ESTIMATED_LOSSES
ALLOWANCE FOR ESTIMATED LOSSES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
ALLOWANCE FOR ESTIMATED LOSSES | |||||||||||||
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 2014. The decrease in 2014 was due to a fully reserved note that was written off. The decrease in 2012 was due to two notes that were written off, both of which were fully reserved. The table below shows our allowance for estimated losses (dollars in thousands): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Balance January 1, | $ | 2,262 | $ | 2,262 | $ | 3,942 | |||||||
Decrease in provision | (272 | ) | - | (1,680 | ) | ||||||||
Balance December 31, | $ | 1,990 | $ | 2,262 | $ | 2,262 | |||||||
INVESTMENT_IN_UNCONSOLIDATED_J
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Investments, Equity Method and Joint Ventures: | |||||||||||||
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, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
American Realty Investors, Inc. (1) | 1.00% | 1.99% | 1.99% | ||||||||||
_________________________________ | |||||||||||||
-1 | Unconsolidated investment in parent company | ||||||||||||
Our interest in the common stock of ARL in the amount of 1.00% is accounted for under the equity method. Accordingly, the investment is carried at cost, adjusted for the company’s proportionate share of earnings or losses. | |||||||||||||
The market values, other than unconsolidated subsidiaries, as of the year ended December 31, 2014, 2013 and 2012 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): | |||||||||||||
For the Twelve Months Ended December 31, | |||||||||||||
Unconsolidated Subsidiaries | 2014 | 2013 | 2012 | ||||||||||
Real estate, net of accumulated depreciation | $ | 15,460 | $ | 11,944 | $ | 45,032 | |||||||
Notes Receivable | 50,909 | 68,909 | 44,371 | ||||||||||
Other assets | 128,635 | 128,945 | 130,419 | ||||||||||
Notes payable | (50,048 | ) | (56,103 | ) | (61,720 | ) | |||||||
Other liabilities | (80,904 | ) | (91,099 | ) | (84,123 | ) | |||||||
Shareholders' equity/partners' capital | (64,052 | ) | (62,596 | ) | (73,979 | ) | |||||||
Rents and interest and other income | $ | 12,427 | $ | 11,372 | $ | 8,198 | |||||||
Depreciation | (285 | ) | (285 | ) | (263 | ) | |||||||
Operating expenses | (6,983 | ) | (14,162 | ) | (4,013 | ) | |||||||
Gain on land sales | - | 618 | (2,785 | ) | |||||||||
Interest expense | (7,144 | ) | (7,173 | ) | (4,283 | ) | |||||||
Loss from continuing operations | (1,985 | ) | (9,630 | ) | (3,146 | ) | |||||||
Income from discontinued operations | 64 | (15 | ) | 2,691 | |||||||||
Net loss | $ | (1,921 | ) | $ | (9,645 | ) | $ | (455 | ) | ||||
Company's proportionate share of loss (1) | $ | (19 | ) | $ | (192 | ) | $ | (9 | ) | ||||
(1) Loss represents continued and discontinued operations |
NOTES_AND_INTEREST_PAYABLE
NOTES AND INTEREST PAYABLE | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
NOTES AND INTEREST PAYABLE | |||||||||||||
NOTES AND INTEREST PAYABLE | NOTE 6. NOTES AND INTEREST PAYABLE | ||||||||||||
Below is a summary of our notes and interest payable as of December 31, 2014 (dollars in thousands): | |||||||||||||
Notes | Accrued | Total | |||||||||||
Payable | Interest | Debt | |||||||||||
Apartments | $ | 411,180 | $ | 1,124 | $ | 412,304 | |||||||
Commercial | 105,908 | 409 | 106,317 | ||||||||||
Land | 65,445 | 117 | 65,562 | ||||||||||
Real estate held for sale | 452 | - | 452 | ||||||||||
Real estate subject to sales contract | 16,961 | 1,655 | 18,616 | ||||||||||
Other | 5,666 | - | 5,666 | ||||||||||
Total | $ | 605,612 | $ | 3,305 | $ | 608,917 | |||||||
The following table schedules the principal payments on the notes payable for the next five years and thereafter (dollars in thousands): | |||||||||||||
Year | Amount | ||||||||||||
2015 | $ | 103,805 | |||||||||||
2016 | 45,769 | ||||||||||||
2017 | 42,507 | ||||||||||||
2018 | 8,448 | ||||||||||||
2019 | 43,357 | ||||||||||||
Thereafter | 361,726 | ||||||||||||
Total | $ | 605,612 | |||||||||||
Interest payable at December 31, 2014 was $3.3 million. Interest accrues at rates ranging from 1.0% to 12.5% per annum and mature between 2015 and 2053. The mortgages were collateralized by deeds of trust on real estate having a net carrying value of $675.2 million. Of the total notes payable, the senior debt is $552.0 million, junior debt is $52.3 million, and other debt is $1.3 million. Included in other debt are property tax loans of $0.2 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 February 12, 2014, the Company exercised the first prepayment option on the settlement with the lender relating to the Amoco Building and paid $1.2 million to settle all obligations. The remaining balance of the note in the amount of $3.5 million, along with accrued interest, was forgiven. The 135,000 shares of Series K Convertible Preferred Stock of ARL that was pledged to the lender has been released to TCI. The Series K preferred stock was cancelled May 7, 2014. | |||||||||||||
On February 28, 2014, the Company refinanced the existing mortgage on Parc at Denham Springs apartments, a 224-unit complex located in Denham Springs, Louisiana, 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, maturing April 1, 2051. | |||||||||||||
On March 25, 2014, the Company exercised its lender granted option under the settlement agreement relating to the Galleria East Center Retail / Showcase Chevrolet land which was transferred to the existing lender on February 4, 2011. We paid the balance of the notes along with all accrued and unpaid interest and received a reduction in price of $0.4 million. | |||||||||||||
On March 28, 2014, the Company secured financing of $40.0 million from an independent third party. 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 starting April 1, 2015. The loan is secured by various equity interests in residential apartments and can be prepaid at a penalty rate of 4% for year 1 with the penalty declining by 1% each year thereafter. | |||||||||||||
On March 31, 2014, the Company entered into a settlement agreement relating to the Fenton Centre building which was transferred to the existing lender on June 7, 2011. The total amount of the settlement was $7.0 million, $5.0 million was paid at the time of the settlement and the remaining $2.0 million will be paid out in equal monthly installments through November 5, 2015. | |||||||||||||
On May 28, 2014, a $1.5 million principal payment was made to the existing Realty Advisors, Inc. mortgage and two additional land parcels, including 8.0 acres of Ladue land owned by TCI and 16.87 acres of Valwood land owned by ARL, were substituted as collateral under the note in exchange for a release of a $4 million deposit account. The principal balance is allocated based on the land valuation. | |||||||||||||
On July 31, 2014, the Company refinanced the existing mortgage on Desoto Ranch apartments, a 248-unit complex located in Desoto, Texas, for a new mortgage of $15.7 million. We paid off the existing mortgage of $15.7 million and $0.5 million in closing costs. The note accrues interest at 3.50% and payments of interest and principal are due monthly, maturing June 1, 2050. | |||||||||||||
On August 28, 2014, the Company refinanced the existing mortgage on Treehouse apartments, a 160-unit complex located in Irving, Texas, for a new mortgage of $5.8 million. We paid off the existing mortgage of $4.7 million and $1.1 million in closing costs and escrows. The note accrues interest at 3.55% and payments of interest and principal are due monthly, maturing September 1, 2044. | |||||||||||||
On September 23, 2014, the Company sold a 106-unit complex known as Bridgewood Ranch, located in Kaufman, Texas, to an independent third party, for a sales price of $8.0 million. We paid off the existing mortgage of $4.5 million and the buyer obtained a new mortgage of $6.6 million. We did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement as a result of having the option to repurchase the sold property at a later date. The exercise of the option is subject to the approval of the U.S. Department of Housing and Urban Development. We determined a sale had not occurred for financial reporting purposes and therefore the asset remains on our books. | |||||||||||||
On October 17, 2014, the construction loan in the amount of $19.7 million that was taken out on July 1, 2012, to fund the development of Sunset Lodge apartments, a 216-unit complex located in Odessa, Texas, closed into permanent financing. The note accrues interest at 3.00% and payments of interest only are payable commencing August 1, 2012, through February 1, 2014, at which time principal and interest payments are due through the maturity date of February 1, 2054. | |||||||||||||
On December 12, 2014, the Company refinanced the existing mortgage on Stanford Center, a 333,381 square foot commercial building located in Dallas, Texas, for a new mortgage of $28.0 million. We paid off the existing mortgage of $21.3 million and $7.8 million in closing costs and escrows. The note accrues interest at a floating rate of 5.50% above the 30-day LIBOR index, with a floor of 5.75% and payments of interest only, maturing on January 5, 2017. | |||||||||||||
In conjunction with the development of various apartment projects and other developments, we drew down $3.0 million in construction loans during the twelve months ended December 31, 2014. |
RELATED_PARTY_TRANSACTIONS_AND
RELATED PARTY TRANSACTIONS AND FEES | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
RELATED PARTY TRANSACTIONS AND FEES | ||||||||||||||
RELATED PARTY TRANSACTIONS AND FEES | 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 MRHI, 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 | ||||||||||||||
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 and Regis: | ||||||||||||||
Fees, expenses and revenue paid to and/or received from our advisor: | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Advisory | $ | 7,373 | $ | 8,494 | $ | 8,915 | ||||||||
Construction advisory | - | - | 181 | |||||||||||
Mortgage brokerage and equity refinancing | 1,152 | 1,878 | 1,873 | |||||||||||
Net income | 3,669 | 4,089 | 180 | |||||||||||
Property acquisition | 145 | - | 20 | |||||||||||
$ | 12,339 | $ | 14,461 | $ | 11,169 | |||||||||
Other Expense: | ||||||||||||||
Cost reimbursements | $ | 2,622 | $ | 2,585 | $ | 2,247 | ||||||||
Interest paid (received) | (2,795 | ) | 157 | 1,194 | ||||||||||
$ | (173 | ) | $ | 2,742 | $ | 3,441 | ||||||||
Revenue: | ||||||||||||||
Rental | $ | 701 | $ | 670 | $ | 587 | ||||||||
Fees paid to Regis and related parties: | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Property acquisition | $ | 348 | $ | - | $ | 71 | ||||||||
Property management, construction management and leasing commissions | 544 | 436 | 2,087 | |||||||||||
Real estate brokerage | 2,752 | 4,055 | 2,263 | |||||||||||
$ | 3,644 | $ | 4,491 | $ | 4,421 | |||||||||
The Company received rental revenue of $0.7 million in 2014, $0.7 million in 2013, and $0.6 million in 2012 from Pillar and its related parties for properties owned by the Company. | ||||||||||||||
As of December 31, 2014, the Company had notes and interest receivables, net of allowances, of $50.0 million and $3.7 million, respectively, due from UHF, a related party. See Part 2, Item 8. Note 3. “Notes and Interest Receivable”. During the current period, the Company recognized interest income of $7.7 million, originated $5.4 million, received principal payments of $6.6 million and received interest payments of $16.8 million from these related party notes receivables. | ||||||||||||||
As of December 31, 2014, the Company had notes and interest receivables of $21.0 million and $1.0 million, respectively, due from FBH, a related party. See Part 2, Item 8. Note 3. “Notes and Interest Receivable”. During the current period, the Company recognized interest income of $1.0 million and originated $21.0 million from these related party notes receivables. | ||||||||||||||
On January 1, 2012, the Company entered into a development agreement with 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 MRHI for the remainder of 2012 and subsequent years. 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, 2014 (dollars in thousands): | ||||||||||||||
Pillar | ARL | Total | ||||||||||||
Related party receivable, December 31, 2013 | $ | - | $ | 52,380 | $ | 52,380 | ||||||||
Cash transfers | 47,701 | - | 47,701 | |||||||||||
Advisory fees | (7,373 | ) | - | (7,373 | ) | |||||||||
Net income fee | (3,669 | ) | - | (3,669 | ) | |||||||||
Fees and commissions | (4,398 | ) | - | (4,398 | ) | |||||||||
Cost reimbursements | (2,622 | ) | - | (2,622 | ) | |||||||||
Interest income | - | 2,795 | 2,795 | |||||||||||
Notes receivable purchased | (26,290 | ) | (26,290 | ) | ||||||||||
Expenses paid by advisor | (7,341 | ) | - | (7,341 | ) | |||||||||
Financing (mortgage payments) | (3,321 | ) | - | (3,321 | ) | |||||||||
Sales/Purchases transactions | 7,729 | - | 7,729 | |||||||||||
Series K preferred stock acquisition | - | 270 | 270 | |||||||||||
Tax sharing expense | - | - | - | |||||||||||
Purchase of obligations | (416 | ) | 2,959 | 2,543 | ||||||||||
Related party receivable, December 31, 2014 | $ | - | $ | 58,404 | $ | 58,404 | ||||||||
Below are transactions that involve a related party: | ||||||||||||||
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, 2014, 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, 2014, there remains one apartment complex, one commercial building and 110 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, 2014 | |
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 2014, 2013, or 2012. 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, 2014 | |
PREFERRED STOCK | |
PREFERRED STOCK | NOTE 9. PREFERRED STOCK |
Prior to July 9, 2014, TCI had 30,000 shares of Series C cumulative convertible preferred stock issued and outstanding. These 30,000 shares were owned by RAI, a related party, and had accrued dividends unpaid of $0.9 million. The stock had a liquidation preference of $100.00 per share and could be converted into common stock at 90% of the daily average closing price of the common stock for the prior five trading days. On July 9, 2014, RAI converted all 30,000 shares into the requisite number of shares of common stock. The conversion resulted in the issuance of 304,298 new shares of common stock. The effects of the Series C Cumulative Convertible Preferred Stock are no longer included in the dilutive earnings per share calculation for the current period, but are considered in the calculation for the prior periods if applying the if-converted method is dilutive. | |
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 and requires dividends payable from the initial rate of 7% annually to the current rate of 9%. The shares can be redeemed at any point after September 30, 2011. Of the 100,000 shares, 89,500 shares are owned by RAI, a related party, and have accrued dividends unpaid of $3.2 million. |
STOCK_OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2014 | |
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. At December 31, 2014, there were 5,000 stock options outstanding which were exercisable at $14.25 per share. These options expired unexercised January 1, 2015. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
INCOME TAXES | |||||||||||||
INCOME TAXES | NOTE 11. INCOME TAXES | ||||||||||||
For 2014, 2013 and 2012, TCI had net losses for federal tax purposes. | |||||||||||||
For tax periods ending before August 31, 2012, TCI was part of the ARL consolidated federal return. After that date, TCI and the rest of the ARL group joined the MRHI consolidated group for tax purposes. The income tax expense (benefit) for the first part of the 2012 period 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 MRHI for the remainder of 2012 and subsequent periods. For 2012 and 2014 MRHI, 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): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Loss from continuing operations | $ | (22,902 | ) | $ | (24,598 | ) | $ | (10,401 | ) | ||||
Income from discontinued operations | 22,902 | 16,835 | 10,401 | ||||||||||
Tax benefit | $ | - | $ | (7,763 | ) | $ | - | ||||||
Of the total 2013 tax (benefit), ($7,763) comes from MRHI. | |||||||||||||
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): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Computed "expected" income tax (benefit) expense | $ | 14,762 | $ | 26,998 | $ | (4,211 | ) | ||||||
Book to tax differences for partnerships not consolidated for tax purposes | (23,900 | ) | (33,565 | ) | (3,831 | ) | |||||||
Book to tax differences of depreciation and amortization | 1,461 | 1,222 | 1,434 | ||||||||||
Book to tax differences in gains on sale of property | (2,350 | ) | (20,308 | ) | (4,835 | ) | |||||||
Book provision for loss | - | 3,962 | 1,656 | ||||||||||
Partial valuation allowance against current net operating loss benefit | 7,069 | 16,835 | 10,401 | ||||||||||
Other | 2,958 | 2,139 | (614 | ) | |||||||||
Total | $ | - | $ | (2,717 | ) | $ | - | ||||||
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): | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net operating losses | $ | 56,897 | $ | 71,071 | $ | 53,857 | |||||||
AMT credits | 1,374 | 1,374 | 1,374 | ||||||||||
Basis difference of: | |||||||||||||
Real estate holdings | 876 | (3,045 | ) | (15,159 | ) | ||||||||
Notes receivable | 757 | 860 | 860 | ||||||||||
Investments | (4,693 | ) | (4,703 | ) | (4,757 | ) | |||||||
Notes payable | 6,932 | 12,496 | 16,598 | ||||||||||
Deferred gains | 10,146 | 10,806 | 11,370 | ||||||||||
Total | $ | 72,289 | $ | 88,859 | $ | 64,143 | |||||||
Deferred tax valuation allowance | (72,289 | ) | (88,859 | ) | (64,143 | ) | |||||||
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 $72.3 million, $88.9 million and $64.1 million as of December 31, 2014, 2013 and 2012, respectively. | |||||||||||||
TCI has tax net operating loss carryforwards of approximately $146.9 million expiring through the year 2033. The alternative minimum tax credit balance did not change in 2014 and remains at approximately $1.4 million. The credit has no expiration date. | |||||||||||||
TCI is subject to routine audits by taxing jurisdictions; however, there are currently no audits in progress for any tax periods. Management believes TCI is no longer subject to income tax examinations for years prior to 2011. |
FUTURE_MINIMUM_RENTAL_INCOME_U
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
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, 2014 (dollars in thousands): | ||||||
Year | Amount | |||||
2015 | $ | 16,741 | ||||
2016 | 15,189 | |||||
2017 | 12,880 | |||||
2018 | 12,012 | |||||
2019 | 7,851 | |||||
Thereafter | 17,868 | |||||
Total | $ | 82,541 | ||||
OPERATING_SEGMENTS
OPERATING SEGMENTS | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
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 2014, 2013 and 2012 (dollars in thousands): | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2014 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 19,129 | $ | 56,685 | $ | 1 | $ | 43 | $ | 75,858 | |||||||||||
Property operating expenses | 12,238 | 26,065 | 1,169 | 12 | 39,484 | ||||||||||||||||
Depreciation | 7,310 | 10,088 | - | - | 17,398 | ||||||||||||||||
Mortgage and loan interest | 5,625 | 14,794 | 4,092 | 3,857 | 28,368 | ||||||||||||||||
Deferred borrowing costs amortization | 74 | 1,527 | 226 | 682 | 2,509 | ||||||||||||||||
Loan charges and prepayment penalties | 113 | 2,625 | 16 | 50 | 2,804 | ||||||||||||||||
Interest income | - | - | - | 12,194 | 12,194 | ||||||||||||||||
Gain on land sales | - | - | 561 | - | 561 | ||||||||||||||||
Segment operating income (loss) | $ | (6,231 | ) | $ | 1,586 | $ | (4,941 | ) | $ | 7,636 | $ | (1,950 | ) | ||||||||
Capital expenditures | 4,418 | 320 | 2,435 | - | 7,173 | ||||||||||||||||
Assets | 140,131 | 391,767 | 157,223 | - | 689,121 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 19,182 | $ | 115,273 | $ | 8,091 | $ | - | $ | 142,546 | |||||||||||
Less: Cost of sale | 9,168 | 63,408 | 7,530 | - | 80,106 | ||||||||||||||||
Deferred current gain | - | - | - | - | - | ||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain on sale | $ | 10,014 | $ | 51,865 | $ | 561 | $ | - | $ | 62,440 | |||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 22,928 | $ | 54,272 | $ | 39 | $ | 112 | $ | 77,351 | |||||||||||
Property operating expenses | 10,857 | 24,798 | 976 | 38 | 36,669 | ||||||||||||||||
Depreciation | 5,846 | 9,996 | - | - | 15,842 | ||||||||||||||||
Mortgage and loan interest | 5,507 | 15,754 | 5,685 | 2,748 | 29,694 | ||||||||||||||||
Deferred borrowing costs amortization | 61 | 2,259 | 195 | 67 | 2,582 | ||||||||||||||||
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) | $ | 507 | $ | (2,472 | ) | $ | (8,970 | ) | $ | 10,997 | $ | 62 | |||||||||
Capital expenditures | 6,964 | 315 | 387 | - | 7,666 | ||||||||||||||||
Assets | 129,063 | 354,035 | 158,359 | - | 641,457 | ||||||||||||||||
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 | $ | 26,887 | $ | 51,415 | $ | 25 | $ | 51 | $ | 78,378 | |||||||||||
Property operating expenses | 13,500 | 23,319 | 589 | 437 | 37,845 | ||||||||||||||||
Depreciation | 4,934 | 9,879 | - | - | 14,813 | ||||||||||||||||
Mortgage and loan interest | 5,394 | 18,499 | 6,250 | 4,229 | 34,372 | ||||||||||||||||
Deferred borrowing costs amortization | 86 | 394 | 154 | - | 634 | ||||||||||||||||
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) | $ | 2,973 | $ | (4,171 | ) | $ | (112 | ) | $ | 7,110 | $ | 5,800 | |||||||||
Capital expenditures | 1,831 | (726 | ) | (920 | ) | - | 185 | ||||||||||||||
Assets | 136,774 | 363,677 | 173,132 | - | 673,583 | ||||||||||||||||
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 | ||||||||||
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, | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Segment operating income (loss) | $ | (1,950 | ) | $ | 62 | $ | 5,800 | ||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (7,163 | ) | (6,308 | ) | (5,074 | ) | |||||||||||||||
Provision on impairment of notes receivable and real estate assets | - | (11,320 | ) | (2,330 | ) | ||||||||||||||||
Net income fee to related party | (3,669 | ) | (4,089 | ) | (180 | ) | |||||||||||||||
Advisory fee to related party | (7,373 | ) | (8,494 | ) | (8,915 | ) | |||||||||||||||
Other income | 403 | 7,847 | 6,310 | ||||||||||||||||||
Gain (loss) on the sale of investments | (92 | ) | (283 | ) | 125 | ||||||||||||||||
Loss from unconsolidated joint ventures and investees | (28 | ) | (172 | ) | (66 | ) | |||||||||||||||
Litigation settlement | 3,591 | (20,313 | ) | (175 | ) | ||||||||||||||||
Income tax benefit (expense) | 20,390 | 40,949 | (1,260 | ) | |||||||||||||||||
Gain (loss) from continuing operations | $ | 4,109 | $ | (2,121 | ) | $ | (5,765 | ) | |||||||||||||
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, | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Segment assets | $ | 689,121 | $ | 641,457 | $ | 673,583 | |||||||||||||||
Investments in real estate partnerships | 1,543 | 1,697 | 5,439 | ||||||||||||||||||
Notes and interest receivable | 83,457 | 67,907 | 59,098 | ||||||||||||||||||
Other assets | 156,284 | 132,265 | 83,857 | ||||||||||||||||||
Assets held for sale | - | 54,345 | 223,367 | ||||||||||||||||||
Total assets | $ | 930,405 | $ | 897,671 | $ | 1,045,344 | |||||||||||||||
DISCONTINUED_OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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 2014, 2013 and 2012. Income from discontinued operations relates to 5, 19 and 24 properties that were sold or held for sale in 2014, 2013 and 2012, 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, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Revenues: | |||||||||||||
Rental and other property revenues | $ | 5,612 | $ | 34,922 | $ | 43,010 | |||||||
5,612 | 34,922 | 43,010 | |||||||||||
Expenses: | |||||||||||||
Property operating expenses | 2,350 | 16,480 | 22,645 | ||||||||||
Depreciation | 751 | 5,563 | 7,676 | ||||||||||
General and administrative | 515 | 950 | 975 | ||||||||||
Provision on impairment of notes receivable and real estate assets | - | - | 2,400 | ||||||||||
Total operating expenses | 3,616 | 22,993 | 33,696 | ||||||||||
Other income (expense): | |||||||||||||
Other income (expense) | (508 | ) | 44 | 7 | |||||||||
Mortgage and loan interest | (1,743 | ) | (8,082 | ) | (12,677 | ) | |||||||
Deferred borrowing costs amortization | (1,461 | ) | (3,015 | ) | (1,794 | ) | |||||||
Loan charges and prepayment penalties | (1,656 | ) | (3,245 | ) | (3,471 | ) | |||||||
Earnings from unconsolidated subsidiaries and investees | 1 | 30 | 55 | ||||||||||
Litigation settlement | (250 | ) | (250 | ) | (250 | ) | |||||||
Total other expenses | (5,617 | ) | (14,518 | ) | (18,130 | ) | |||||||
Loss from discontinued operations before gain on sale of real estate and taxes | (3,621 | ) | (2,589 | ) | (8,816 | ) | |||||||
Gain on sale of real estate from discontinued operations | 61,879 | 97,405 | 5,217 | ||||||||||
Income tax benefit (expense) | (20,390 | ) | (33,186 | ) | 1,260 | ||||||||
Income (loss) from discontinued operations | $ | 37,868 | $ | 61,630 | $ | (2,339 | ) | ||||||
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 2014, 2013 and 2012 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, 2014 | |||||||||||||||||
QUARTERLY RESULTS OF OPERATIONS | |||||||||||||||||
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 2014, 2013 and 2012. 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: | |||||||||||||||||
For the Three Months Ended 2014 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2014 | |||||||||||||||||
Revenue and other property revenues | $ | 18,303 | $ | 18,511 | $ | 18,466 | $ | 20,578 | |||||||||
Total operating expenses | 17,376 | 18,388 | 17,264 | 22,059 | |||||||||||||
Operating income (loss) | 927 | 123 | 1,202 | (1,481 | ) | ||||||||||||
Other expenses | (2,899 | ) | (3,718 | ) | (5,754 | ) | (5,242 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (1,972 | ) | (3,595 | ) | (4,552 | ) | (6,723 | ) | |||||||||
Gain (loss) on land sales | 753 | (159 | ) | 40 | (73 | ) | |||||||||||
Income tax benefit | 2,049 | 2,195 | 786 | 15,360 | |||||||||||||
Net income (loss) from continuing operations | 830 | (1,559 | ) | (3,726 | ) | 8,564 | |||||||||||
Net income from discontinuing operations | 3,805 | 4,076 | 1,461 | 28,526 | |||||||||||||
Net income (loss) | 4,635 | 2,517 | (2,265 | ) | 37,090 | ||||||||||||
Net (loss) attributable to non-controlling interest | (84 | ) | (127 | ) | (81 | ) | (107 | ) | |||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (227 | ) | (227 | ) | |||||||||
Net income (loss) applicable to common shares | $ | 4,277 | $ | 2,113 | $ | (2,573 | ) | $ | 36,756 | ||||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | 0.06 | $ | (0.23 | ) | $ | (0.46 | ) | $ | 0.94 | |||||||
Income from discontinued operations | 0.45 | 0.48 | 0.17 | 3.27 | |||||||||||||
Net income (loss) applicable to common shares | $ | 0.51 | $ | 0.25 | $ | (0.29 | ) | $ | 4.21 | ||||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,688,018 | 8,717,767 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | 0.05 | $ | (0.23 | ) | $ | (0.46 | ) | $ | 0.94 | |||||||
Income from discontinued operations | 0.44 | 0.48 | 0.17 | 3.27 | |||||||||||||
Net income (loss) applicable to common shares | $ | 0.49 | $ | 0.25 | $ | (0.29 | ) | $ | 4.21 | ||||||||
Weighted average common shares used in computing diluted earnings per share | 8,639,679 | 8,413,469 | 8,688,018 | 8,717,767 | |||||||||||||
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 | $ | 18,242 | $ | 18,351 | $ | 18,663 | $ | 22,095 | |||||||||
Total operating expenses | 16,416 | 16,336 | 17,472 | 32,498 | |||||||||||||
Operating income (loss) | 1,826 | 2,015 | 1,191 | (10,403 | ) | ||||||||||||
Other expenses | (11,779 | ) | (5,179 | ) | (8,193 | ) | (11,475 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (9,953 | ) | (3,164 | ) | (7,002 | ) | (21,878 | ) | |||||||||
Loss on land sales | (48 | ) | - | - | (1,025 | ) | |||||||||||
Income tax benefit | 2,451 | 5,357 | 401 | 32,740 | |||||||||||||
Net income (loss) from continuing operations | (7,550 | ) | 2,193 | (6,601 | ) | 9,837 | |||||||||||
Net income from discontinuing operations | 4,552 | 9,949 | 747 | 46,382 | |||||||||||||
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 | $ | (0.94 | ) | $ | 0.21 | $ | (0.83 | ) | $ | 1.06 | |||||||
Income from discontinued operations | 0.54 | 1.18 | 0.09 | 5.51 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.39 | $ | (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 | $ | (0.94 | ) | $ | 0.2 | $ | (0.83 | ) | $ | 1.01 | |||||||
Income from discontinued operations | 0.54 | 1.13 | 0.09 | 5.28 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.33 | $ | (0.74 | ) | $ | 6.29 | |||||||
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 | $ | 18,411 | $ | 18,881 | $ | 19,332 | $ | 21,754 | |||||||||
Total operating expenses | 17,213 | 15,985 | 16,518 | 19,441 | |||||||||||||
Operating income | 1,198 | 2,896 | 2,814 | 2,313 | |||||||||||||
Other expenses | (5,124 | ) | (7,311 | ) | (5,360 | ) | (2,866 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (3,926 | ) | (4,415 | ) | (2,546 | ) | (553 | ) | |||||||||
Gain (loss) on land sales | 423 | 4,738 | 2,913 | (1,139 | ) | ||||||||||||
Income tax benefit (expense) | (219 | ) | 747 | (205 | ) | (1,583 | ) | ||||||||||
Net income (loss) from continuing operations | (3,722 | ) | 1,070 | 162 | (3,275 | ) | |||||||||||
Net income (loss) from discontinuing operations | (406 | ) | 1,387 | (381 | ) | (2,939 | ) | ||||||||||
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 | $ | (0.48 | ) | $ | 0.07 | $ | (0.02 | ) | $ | (0.41 | ) | ||||||
Income (loss) from discontinued operations | (0.05 | ) | 0.16 | (0.05 | ) | (0.35 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.53 | ) | $ | 0.23 | $ | (0.07 | ) | $ | (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 | $ | (0.48 | ) | $ | 0.06 | $ | (0.02 | ) | $ | (0.41 | ) | ||||||
Income (loss) from discontinued operations | (0.05 | ) | 0.14 | (0.05 | ) | (0.35 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.53 | ) | $ | 0.2 | $ | (0.07 | ) | $ | (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 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 12 Months Ended |
Dec. 31, 2014 | |
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 2015; 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. | |
Dynex Capital, Inc. | |
On February 13, 2013, the Court of Appeals, Fifth District of Texas at Dallas (the “Fifth Court of Appeals”) rendered an opinion involving TCI in Case No. 05-04-01358-CV styled Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. v. Dynex Commercial, Inc. and Dynex Capital, Inc. The case was on appeal from the 68th Judicial District Court of Dallas County, Texas, had previously been appealed to the Fifth Court of Appeals and further appealed to the Supreme Court of the State of Texas which had remanded the instant case back to the Fifth Court of Appeals to address certain issues. The case had its origin with Dynex Commercial making loans to Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. (subsidiaries of Continental Mortgage & Equity Trust (“CMET”), an entity which merged into TCI in 1999 after the original suit was filed). Under the original loan commitment, $160,000,000 in loans were to be made to the entities. The loans were conditioned on the execution of a commitment between Dynex Commercial and Basic Capital Management, Inc. (“Basic”). | |
An original trial to a jury resulted in the jury awarding significant damages to Basic for “lost opportunity,” awarding damages in “increased costs” and “lost opportunity” damages to American Realty Trust, Inc. (“ART”) and damages of $960,646 in “increased costs” and $11,161,520 for “lost opportunity’ damages in favor of TCI and its subsidiaries (a total of $12,122,166). The original Trial Court ignored the jury’s findings and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in Dynex’s favor; the Fifth Court of Appeals has now ruled that the JNOV was improper because there was sufficient evidence to support the jury’s findings. As a result, the Fifth Court of Appeals ordered the Trial Court to enter a new judgment consistent with the jury’s original findings. | |
The Fifth Court of Appeals also determined that TCI was entitled to damages for “lost opportunities” relating to tenant improvements and awarded TCI an additional $252,577. Issues relating to attorneys fees were also addressed with the Fifth Court of Appeals ordering the Trial Court to “re-try” the issue of attorney’s fees to determine the amount of fees to which TCI would be entitled on a “breach of commitment” claim. In addition, as a result of the changes in amounts awarded and passage of time, the Fifth Court of Appeals also ordered the Trial Court to recalculate the correct amounts of pre and post-judgment interest owed to Appellants. | |
While the fifteen year old controversy is not yet fully resolved, the Fifth Court of Appeals opinion is favorable to TCI, but TCI expects continued challenges by Dynex to the Fifth Court of Appeals opinion and any ultimate award of damages by the Trial Court. | |
ART and ART Midwest, Inc. | |
In August 2014, David M. Clapper and two entities related to Mr. Clapper (all, collectively, the “Clapper Parties”) filed a complaint in the U. S. District Court against the Company, its directors and certain of its officers alleging purported transactions to the detriment of the Clapper Parties and others by transferring assets, cash and diverting property. Management of the Company believes that there is no basis for this action against the Company and its officers and directors and intends to vigorously defend itself. The August 2014 complaint does not allege any facts relating to the Company, except that the named directors and officers are directors and officers of the Company and that the Company is a Nevada corporation, with its headquarters/principal place of business in Dallas, Texas. | |
The case arises over other litigation, commenced in 1999, among the Clapper Parties and American Realty Trust, Inc. (“ART”) and its former subsidiary, Art Midwest, Inc., originally arising out of a transaction in 1998, in which ART and the Clapper Parties were to form a partnership to own eight residential apartment complexes. Over the ensuing years, a number of rulings, both for and against ART and ART Midwest, Inc., were issued, resulting in a ruling in October 2011, under which the Clapper Parties were awarded an initial judgment for approximately $74 million, including $26 million in actual damages and $48 million in interest. The 2011 ruling was only against ART and Art Midwest, Inc., but no other entity. During February 2014, the Court of Appeals affirmed a portion of the judgment in favor of the Clapper Parties but also ruled that a double counting of a significant portion of the damages had occurred and remanded the case back to the trial court to recalculate the damage award, as well as pre- and post-judgment interest thereon. ART was also a significant owner of a partnership interest in the partnership that was awarded the initial damages in the matter. ART and ART Midwest, Inc. are not and have never been subsidiaries of the Company. | |
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. | |
Other Litigation. The ownership of property and provision of services to the public as tenants entails an inherent risk of liability. Although the Company and its subsidiaries are involved in various items of litigation incidental to and in the ordinary course of its business, in the opinion of Management, the outcome of such litigation will not have a material adverse impact upon the Company’s financial condition, results of operation or liquidity, unless noted otherwise above. | |
The Company is involved in and vigorously defending against other 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 $20.0 million in the aggregate and will occur, if at all, in future years. | |
EARNINGS_PER_SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2014 | |
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. | |
Prior to July 9, 2014, TCI had 30,000 shares of Series C cumulative convertible preferred stock issued and outstanding. These 30,000 shares were owned by RAI, a related party, and had accrued dividends unpaid of $0.9 million. The stock had a liquidation preference of $100.00 per share and could be converted into common stock at 90% of the daily average closing price of the common stock for the prior five trading days. On July 9, 2014, RAI converted all 30,000 shares into the requisite number of shares of common stock. The conversion resulted in the issuance of 304,298 new shares of common stock. The effects of the Series C Cumulative Convertible Preferred Stock are no longer included in the dilutive earnings per share calculation for the current period, but are considered in the calculation for the prior periods if applying the if-converted method is dilutive. | |
As of December 31, 2014, there were 5,000 shares of stock options outstanding. These options are considered in the computation of diluted earnings per share if the effect of applying the treasury stock method is dilutive. These options expired unexercised January 1, 2015. | |
As of December 31, 2014, 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, 2014 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18. SUBSEQUENT EVENTS |
The date to which events occurring after December 31, 2014, the date of the most recent balance sheet, have been evaluated for possible adjustment to the financial statements or disclosure is March 30, 2015, which is the date on which the financial statements were available to be issued. | |
On January 30, 2015, the Company refinanced the existing mortgage on Heather Creek apartments, a 200-unit complex located in Mesquite, Texas, for a new mortgage of $11.5 million. We paid off the existing mortgage of $11.5 million and $0.3 million in closing costs. The note accrues interest at 3.24% and payments of interest and principal are due monthly, maturing August 1, 2050. | |
On February 9, 2015, the Company purchased 100% of the membership interest in Holland Lake Partners, Ltd, which owns Residences at Holland Lake apartments, a 208-unit complex located in Weatherford, Texas, from FBH, a related party under common control, for $4.7 million. We assumed the current mortgage of $12.0 million. | |
On February 9, 2015, the Company purchased 100% of the membership interest in Mount Drive, LLC, which owns Overlook at Allensville apartments, a 144-unit complex located in Seiverville, Tennessee, from FBH, a related party under common control, for $2.5 million. We assumed the current mortgage of $11.6 million. | |
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 12 Months Ended | ||
Dec. 31, 2014 | |||
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | |||
Organization and Business | Organization and business. TCI, 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 NYSE under the symbol (“ARL”). Subsidiaries of ARL own approximately 80.90% 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, 2014, 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 is $25.9 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 May Realty Holdings, Inc. (“MRHI”, formerly known as Realty Advisors Management, Inc. “RAMI”, effective August 7, 2014), 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 ARL 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. | |||
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, 2014, we owned 37 residential apartment communities comprising of 6,024 units, eight commercial properties comprising an aggregate of approximately 1.8 million rentable square feet, and an investment in 4,087 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. | |||
The Company in accordance with the VIE guidance in ASC 810 “Consolidations” consolidates 35 and 33 multifamily residential properties located throughout the United States at December 31, 2014 and December 31, 2013, respectively, ranging from 32 units to 290 units. Assets totaling $362.3 million and $343.9 million at December 31, 2014 and 2013, 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 $0.0 and $16.4 million at December 31, 2014 and 2013, 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. | |||
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. Restricted cash consists of cash reserved primarily for specific uses such as insurance, property taxes and replacement reserves. | ||
Concentration of Credit Risk. | 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, 2014 and 2013, the Company maintained balances in excess of the insured amount. | ||
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 GAAP, 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 MRHI, consolidated group for tax purposes. The income tax expense (benefit) for the first part of the 2012 period 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 MRHI for the remainder of 2012 and subsequent years. 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, 2014 | |||||||||||||||||
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): | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Apartments | $ | 452,631 | $ | 433,141 | |||||||||||||
Apartments under construction | 1,512 | - | |||||||||||||||
Commercial properties | 179,171 | 203,823 | |||||||||||||||
Land held for development | 148,480 | 141,010 | |||||||||||||||
Real estate held for sale | - | 18,817 | |||||||||||||||
Real estate subject to sales contract | 22,695 | 31,302 | |||||||||||||||
Total real estate, at cost, less impairment | 804,489 | 828,093 | |||||||||||||||
Less accumulated deprecation | (115,368 | ) | (132,291 | ) | |||||||||||||
Total real estate, net of depreciation | $ | 689,121 | $ | 695,802 | |||||||||||||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | |||||||||||||||||
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 | $ | --- | |||||||||
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 | $ | --- |
Depreciation_and_Useful_Life_T
Depreciation and Useful Life (Tables) | 12 Months Ended | ||
Dec. 31, 2014 | |||
Depreciation and Useful Life | |||
Depreciation and Useful Life | 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, 2014 | |||||||||
NOTES AND INTEREST RECEIVABLE (Tables) | |||||||||
Mortgage notes receivable consist of first, wraparound and junior mortgage loans | Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands): | ||||||||
Maturity | Interest | ||||||||
Borrower | Date | Rate | Amount | Security | |||||
Performing loans: | |||||||||
Foundation for Better Housing, Inc. (Holland Lake) (1) | 19-Dec | 12.00% | $ 4,698 | Secured | |||||
Foundation for Better Housing, Inc. (Holland Lake) (1) | 17-Dec | 12.00% | 1,674 | Secured | |||||
Foundation for Better Housing, Inc. (Overlook at Allensville) (1) | 19-Nov | 12.00% | 2,472 | Secured | |||||
Foundation for Better Housing, Inc. (Overlook at Allensville) (1) | 17-Dec | 12.00% | 1,408 | Secured | |||||
Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1) | 19-Mar | 12.00% | 1,810 | Secured | |||||
Foundation for Better Housing, Inc. (Preserve @ Prairie Pointe) (1) | 17-Mar | 12.00% | 1,156 | Secured | |||||
Foundation for Better Housing, Inc. (Vista Ridge) (1) | 19-Apr | 12.00% | 3,923 | Secured | |||||
Foundation for Better Housing, Inc. (Vista Ridge) (1) | 17-Jun | 12.00% | 1,492 | Secured | |||||
HGH Residential, LLC (Tradewinds Development) | 19-Jul | 12.00% | 6,131 | Secured | |||||
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) | 17-Jun | 12.00% | 1,261 | Unsecured | |||||
Unified Housing Foundation, Inc. (1) | 17-Dec | 12.00% | 1,207 | Unsecured | |||||
Other related party notes (1) | Various | Various | 768 | Various secured interests | |||||
Other related party notes (1) | Various | Various | 4,276 | Various unsecured interests | |||||
Other non-related party notes | Various | Various | 496 | Various secured interests | |||||
Accrued interest | 5,066 | ||||||||
Total Performing | $ 84,863 | ||||||||
Non-Performing loans: | |||||||||
Other non-related party notes | Various | Various | 507 | Various secured interests | |||||
Accrued interest | 77 | ||||||||
Total Non-Performing | $ 584 | ||||||||
Allowance for estimated losses | (1,990) | ||||||||
Total | $ 83,457 | ||||||||
(1) Related party notes | |||||||||
INVESTMENT_IN_UNCONSOLIDATED_J1
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
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, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
American Realty Investors, Inc. (1) | 1.00% | 1.99% | 1.99% | ||||||||||
_________________________________ | |||||||||||||
-1 | Unconsolidated investment in parent company | ||||||||||||
Summary of the financial position and results of operations from unconsolidated joint ventures and other investees | The following is a summary of the financial position and results of operations from our unconsolidated subsidiaries and investees (dollars in thousands): | ||||||||||||
For the Twelve Months Ended December 31, | |||||||||||||
Unconsolidated Subsidiaries | 2014 | 2013 | 2012 | ||||||||||
Real estate, net of accumulated depreciation | $ | 15,460 | $ | 11,944 | $ | 45,032 | |||||||
Notes Receivable | 50,909 | 68,909 | 44,371 | ||||||||||
Other assets | 128,635 | 128,945 | 130,419 | ||||||||||
Notes payable | (50,048 | ) | (56,103 | ) | (61,720 | ) | |||||||
Other liabilities | (80,904 | ) | (91,099 | ) | (84,123 | ) | |||||||
Shareholders' equity/partners' capital | (64,052 | ) | (62,596 | ) | (73,979 | ) | |||||||
Rents and interest and other income | $ | 12,427 | $ | 11,372 | $ | 8,198 | |||||||
Depreciation | (285 | ) | (285 | ) | (263 | ) | |||||||
Operating expenses | (6,983 | ) | (14,162 | ) | (4,013 | ) | |||||||
Gain on land sales | - | 618 | (2,785 | ) | |||||||||
Interest expense | (7,144 | ) | (7,173 | ) | (4,283 | ) | |||||||
Loss from continuing operations | (1,985 | ) | (9,630 | ) | (3,146 | ) | |||||||
Income from discontinued operations | 64 | (15 | ) | 2,691 | |||||||||
Net loss | $ | (1,921 | ) | $ | (9,645 | ) | $ | (455 | ) | ||||
Company's proportionate share of loss (1) | $ | (19 | ) | $ | (192 | ) | $ | (9 | ) | ||||
(1) Loss represents continued and discontinued operations | |||||||||||||
Scheduled_principal_payments_o
Scheduled principal payments of notes payable (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Scheduled principal payments of notes payable | |||||||||||||
Scheduled principal payments of notes payables | Below is a summary of our notes and interest payable as of December 31, 2014 (dollars in thousands): | ||||||||||||
Notes | Accrued | Total | |||||||||||
Payable | Interest | Debt | |||||||||||
Apartments | $ | 411,180 | $ | 1,124 | $ | 412,304 | |||||||
Commercial | 105,908 | 409 | 106,317 | ||||||||||
Land | 65,445 | 117 | 65,562 | ||||||||||
Real estate held for sale | 452 | - | 452 | ||||||||||
Real estate subject to sales contract | 16,961 | 1,655 | 18,616 | ||||||||||
Other | 5,666 | - | 5,666 | ||||||||||
Total | $ | 605,612 | $ | 3,305 | $ | 608,917 | |||||||
The following table schedules the principal payments on the notes payable for the next five years and thereafter (dollars in thousands): | |||||||||||||
Year | Amount | ||||||||||||
2015 | $ | 103,805 | |||||||||||
2016 | 45,769 | ||||||||||||
2017 | 42,507 | ||||||||||||
2018 | 8,448 | ||||||||||||
2019 | 43,357 | ||||||||||||
Thereafter | 361,726 | ||||||||||||
Total | $ | 605,612 |
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
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 and Regis: | |||||||||||||
Fees, expenses and revenue paid to and/or received from our advisor: | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Advisory | $ | 7,373 | $ | 8,494 | $ | 8,915 | ||||||||
Construction advisory | - | - | 181 | |||||||||||
Mortgage brokerage and equity refinancing | 1,152 | 1,878 | 1,873 | |||||||||||
Net income | 3,669 | 4,089 | 180 | |||||||||||
Property acquisition | 145 | - | 20 | |||||||||||
$ | 12,339 | $ | 14,461 | $ | 11,169 | |||||||||
Other Expense: | ||||||||||||||
Cost reimbursements | $ | 2,622 | $ | 2,585 | $ | 2,247 | ||||||||
Interest paid (received) | (2,795 | ) | 157 | 1,194 | ||||||||||
$ | (173 | ) | $ | 2,742 | $ | 3,441 | ||||||||
Revenue: | ||||||||||||||
Rental | $ | 701 | $ | 670 | $ | 587 | ||||||||
Fees paid to Regis and related parties: | ||||||||||||||
2014 | 2013 | 2012 | ||||||||||||
(dollars in thousands) | ||||||||||||||
Fees: | ||||||||||||||
Property acquisition | $ | 348 | $ | - | $ | 71 | ||||||||
Property management, construction management and leasing commissions | 544 | 436 | 2,087 | |||||||||||
Real estate brokerage | 2,752 | 4,055 | 2,263 | |||||||||||
$ | 3,644 | $ | 4,491 | $ | 4,421 | |||||||||
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, 2014 (dollars in thousands): | |||||||||||||
Pillar | ARL | Total | ||||||||||||
Related party receivable, December 31, 2013 | $ | - | $ | 52,380 | $ | 52,380 | ||||||||
Cash transfers | 47,701 | - | 47,701 | |||||||||||
Advisory fees | (7,373 | ) | - | (7,373 | ) | |||||||||
Net income fee | (3,669 | ) | - | (3,669 | ) | |||||||||
Fees and commissions | (4,398 | ) | - | (4,398 | ) | |||||||||
Cost reimbursements | (2,622 | ) | - | (2,622 | ) | |||||||||
Interest income | - | 2,795 | 2,795 | |||||||||||
Notes receivable purchased | (26,290 | ) | (26,290 | ) | ||||||||||
Expenses paid by advisor | (7,341 | ) | - | (7,341 | ) | |||||||||
Financing (mortgage payments) | (3,321 | ) | - | (3,321 | ) | |||||||||
Sales/Purchases transactions | 7,729 | - | 7,729 | |||||||||||
Series K preferred stock acquisition | - | 270 | 270 | |||||||||||
Tax sharing expense | - | - | - | |||||||||||
Purchase of obligations | (416 | ) | 2,959 | 2,543 | ||||||||||
Related party receivable, December 31, 2014 | $ | - | $ | 58,404 | $ | 58,404 | ||||||||
OPERATING_SEGMENTS_Tables
OPERATING SEGMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
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 2014, 2013 and 2012 (dollars in thousands): | ||||||||||||||||||||
For the Twelve Months Ended December 31, 2014 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 19,129 | $ | 56,685 | $ | 1 | $ | 43 | $ | 75,858 | |||||||||||
Property operating expenses | 12,238 | 26,065 | 1,169 | 12 | 39,484 | ||||||||||||||||
Depreciation | 7,310 | 10,088 | - | - | 17,398 | ||||||||||||||||
Mortgage and loan interest | 5,625 | 14,794 | 4,092 | 3,857 | 28,368 | ||||||||||||||||
Deferred borrowing costs amortization | 74 | 1,527 | 226 | 682 | 2,509 | ||||||||||||||||
Loan charges and prepayment penalties | 113 | 2,625 | 16 | 50 | 2,804 | ||||||||||||||||
Interest income | - | - | - | 12,194 | 12,194 | ||||||||||||||||
Gain on land sales | - | - | 561 | - | 561 | ||||||||||||||||
Segment operating income (loss) | $ | (6,231 | ) | $ | 1,586 | $ | (4,941 | ) | $ | 7,636 | $ | (1,950 | ) | ||||||||
Capital expenditures | 4,418 | 320 | 2,435 | - | 7,173 | ||||||||||||||||
Assets | 140,131 | 391,767 | 157,223 | - | 689,121 | ||||||||||||||||
Property Sales | |||||||||||||||||||||
Sales price | $ | 19,182 | $ | 115,273 | $ | 8,091 | $ | - | $ | 142,546 | |||||||||||
Less: Cost of sale | 9,168 | 63,408 | 7,530 | - | 80,106 | ||||||||||||||||
Deferred current gain | - | - | - | - | - | ||||||||||||||||
Recognized prior deferred gain | - | - | - | - | - | ||||||||||||||||
Gain on sale | $ | 10,014 | $ | 51,865 | $ | 561 | $ | - | $ | 62,440 | |||||||||||
Commercial | |||||||||||||||||||||
For the Twelve Months Ended December 31, 2013 | Properties | Apartments | Land | Other | Total | ||||||||||||||||
Rental and other property revenues | $ | 22,928 | $ | 54,272 | $ | 39 | $ | 112 | $ | 77,351 | |||||||||||
Property operating expenses | 10,857 | 24,798 | 976 | 38 | 36,669 | ||||||||||||||||
Depreciation | 5,846 | 9,996 | - | - | 15,842 | ||||||||||||||||
Mortgage and loan interest | 5,507 | 15,754 | 5,685 | 2,748 | 29,694 | ||||||||||||||||
Deferred borrowing costs amortization | 61 | 2,259 | 195 | 67 | 2,582 | ||||||||||||||||
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) | $ | 507 | $ | (2,472 | ) | $ | (8,970 | ) | $ | 10,997 | $ | 62 | |||||||||
Capital expenditures | 6,964 | 315 | 387 | - | 7,666 | ||||||||||||||||
Assets | 129,063 | 354,035 | 158,359 | - | 641,457 | ||||||||||||||||
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 | $ | 26,887 | $ | 51,415 | $ | 25 | $ | 51 | $ | 78,378 | |||||||||||
Property operating expenses | 13,500 | 23,319 | 589 | 437 | 37,845 | ||||||||||||||||
Depreciation | 4,934 | 9,879 | - | - | 14,813 | ||||||||||||||||
Mortgage and loan interest | 5,394 | 18,499 | 6,250 | 4,229 | 34,372 | ||||||||||||||||
Deferred borrowing costs amortization | 86 | 394 | 154 | - | 634 | ||||||||||||||||
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) | $ | 2,973 | $ | (4,171 | ) | $ | (112 | ) | $ | 7,110 | $ | 5,800 | |||||||||
Capital expenditures | 1,831 | (726 | ) | (920 | ) | - | 185 | ||||||||||||||
Assets | 136,774 | 363,677 | 173,132 | - | 673,583 | ||||||||||||||||
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 | ||||||||||
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, | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Segment operating income (loss) | $ | (1,950 | ) | $ | 62 | $ | 5,800 | ||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||||||
General and administrative | (7,163 | ) | (6,308 | ) | (5,074 | ) | |||||||||||||||
Provision on impairment of notes receivable and real estate assets | - | (11,320 | ) | (2,330 | ) | ||||||||||||||||
Net income fee to related party | (3,669 | ) | (4,089 | ) | (180 | ) | |||||||||||||||
Advisory fee to related party | (7,373 | ) | (8,494 | ) | (8,915 | ) | |||||||||||||||
Other income | 403 | 7,847 | 6,310 | ||||||||||||||||||
Gain (loss) on the sale of investments | (92 | ) | (283 | ) | 125 | ||||||||||||||||
Loss from unconsolidated joint ventures and investees | (28 | ) | (172 | ) | (66 | ) | |||||||||||||||
Litigation settlement | 3,591 | (20,313 | ) | (175 | ) | ||||||||||||||||
Income tax benefit (expense) | 20,390 | 40,949 | (1,260 | ) | |||||||||||||||||
Gain (loss) from continuing operations | $ | 4,109 | $ | (2,121 | ) | $ | (5,765 | ) | |||||||||||||
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, | |||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||
Segment assets | $ | 689,121 | $ | 641,457 | $ | 673,583 | |||||||||||||||
Investments in real estate partnerships | 1,543 | 1,697 | 5,439 | ||||||||||||||||||
Notes and interest receivable | 83,457 | 67,907 | 59,098 | ||||||||||||||||||
Other assets | 156,284 | 132,265 | 83,857 | ||||||||||||||||||
Assets held for sale | - | 54,345 | 223,367 | ||||||||||||||||||
Total assets | $ | 930,405 | $ | 897,671 | $ | 1,045,344 | |||||||||||||||
DISCONTINUED_OPERATIONS_Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
DISCONTINUED OPERATIONS (Tables) | |||||||||||||
Summary of revenue and expense information for the properties sold and held for sale | The following table summarizes revenue and expense information for these properties sold and held-for-sale (dollars in thousands): | ||||||||||||
For the Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Revenues: | |||||||||||||
Rental and other property revenues | $ | 5,612 | $ | 34,922 | $ | 43,010 | |||||||
5,612 | 34,922 | 43,010 | |||||||||||
Expenses: | |||||||||||||
Property operating expenses | 2,350 | 16,480 | 22,645 | ||||||||||
Depreciation | 751 | 5,563 | 7,676 | ||||||||||
General and administrative | 515 | 950 | 975 | ||||||||||
Provision on impairment of notes receivable and real estate assets | - | - | 2,400 | ||||||||||
Total operating expenses | 3,616 | 22,993 | 33,696 | ||||||||||
Other income (expense): | |||||||||||||
Other income (expense) | (508 | ) | 44 | 7 | |||||||||
Mortgage and loan interest | (1,743 | ) | (8,082 | ) | (12,677 | ) | |||||||
Deferred borrowing costs amortization | (1,461 | ) | (3,015 | ) | (1,794 | ) | |||||||
Loan charges and prepayment penalties | (1,656 | ) | (3,245 | ) | (3,471 | ) | |||||||
Earnings from unconsolidated subsidiaries and investees | 1 | 30 | 55 | ||||||||||
Litigation settlement | (250 | ) | (250 | ) | (250 | ) | |||||||
Total other expenses | (5,617 | ) | (14,518 | ) | (18,130 | ) | |||||||
Loss from discontinued operations before gain on sale of real estate and taxes | (3,621 | ) | (2,589 | ) | (8,816 | ) | |||||||
Gain on sale of real estate from discontinued operations | 61,879 | 97,405 | 5,217 | ||||||||||
Income tax benefit (expense) | (20,390 | ) | (33,186 | ) | 1,260 | ||||||||
Income (loss) from discontinued operations | $ | 37,868 | $ | 61,630 | $ | (2,339 | ) | ||||||
Schedule_of_Quarterly_financia
Schedule of Quarterly financial information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Schedule of Quarterly financial information: | |||||||||||||||||
Schedule of Quarterly Financial Information | NOTE 15. QUARTERLY RESULTS OF OPERATIONS | ||||||||||||||||
The following is a tabulation of TCI’s quarterly results of operations for the years 2014, 2013 and 2012. 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: | |||||||||||||||||
For the Three Months Ended 2014 | |||||||||||||||||
March 31, | June 30, | September 30, | December 31, | ||||||||||||||
(dollars in thousands, except share and per share amounts) | |||||||||||||||||
2014 | |||||||||||||||||
Revenue and other property revenues | $ | 18,303 | $ | 18,511 | $ | 18,466 | $ | 20,578 | |||||||||
Total operating expenses | 17,376 | 18,388 | 17,264 | 22,059 | |||||||||||||
Operating income (loss) | 927 | 123 | 1,202 | (1,481 | ) | ||||||||||||
Other expenses | (2,899 | ) | (3,718 | ) | (5,754 | ) | (5,242 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (1,972 | ) | (3,595 | ) | (4,552 | ) | (6,723 | ) | |||||||||
Gain (loss) on land sales | 753 | (159 | ) | 40 | (73 | ) | |||||||||||
Income tax benefit | 2,049 | 2,195 | 786 | 15,360 | |||||||||||||
Net income (loss) from continuing operations | 830 | (1,559 | ) | (3,726 | ) | 8,564 | |||||||||||
Net income from discontinuing operations | 3,805 | 4,076 | 1,461 | 28,526 | |||||||||||||
Net income (loss) | 4,635 | 2,517 | (2,265 | ) | 37,090 | ||||||||||||
Net (loss) attributable to non-controlling interest | (84 | ) | (127 | ) | (81 | ) | (107 | ) | |||||||||
Preferred dividend requirement | (274 | ) | (277 | ) | (227 | ) | (227 | ) | |||||||||
Net income (loss) applicable to common shares | $ | 4,277 | $ | 2,113 | $ | (2,573 | ) | $ | 36,756 | ||||||||
PER SHARE DATA | |||||||||||||||||
Earnings per share - basic | |||||||||||||||||
Income (loss) from continuing operations | $ | 0.06 | $ | (0.23 | ) | $ | (0.46 | ) | $ | 0.94 | |||||||
Income from discontinued operations | 0.45 | 0.48 | 0.17 | 3.27 | |||||||||||||
Net income (loss) applicable to common shares | $ | 0.51 | $ | 0.25 | $ | (0.29 | ) | $ | 4.21 | ||||||||
Weighted average common shares used in computing earnings per share | 8,413,469 | 8,413,469 | 8,688,018 | 8,717,767 | |||||||||||||
Earnings per share - diluted | |||||||||||||||||
Income (loss) from continuing operations | $ | 0.05 | $ | (0.23 | ) | $ | (0.46 | ) | $ | 0.94 | |||||||
Income from discontinued operations | 0.44 | 0.48 | 0.17 | 3.27 | |||||||||||||
Net income (loss) applicable to common shares | $ | 0.49 | $ | 0.25 | $ | (0.29 | ) | $ | 4.21 | ||||||||
Weighted average common shares used in computing diluted earnings per share | 8,639,679 | 8,413,469 | 8,688,018 | 8,717,767 | |||||||||||||
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 | $ | 18,242 | $ | 18,351 | $ | 18,663 | $ | 22,095 | |||||||||
Total operating expenses | 16,416 | 16,336 | 17,472 | 32,498 | |||||||||||||
Operating income (loss) | 1,826 | 2,015 | 1,191 | (10,403 | ) | ||||||||||||
Other expenses | (11,779 | ) | (5,179 | ) | (8,193 | ) | (11,475 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (9,953 | ) | (3,164 | ) | (7,002 | ) | (21,878 | ) | |||||||||
Loss on land sales | (48 | ) | - | - | (1,025 | ) | |||||||||||
Income tax benefit | 2,451 | 5,357 | 401 | 32,740 | |||||||||||||
Net income (loss) from continuing operations | (7,550 | ) | 2,193 | (6,601 | ) | 9,837 | |||||||||||
Net income from discontinuing operations | 4,552 | 9,949 | 747 | 46,382 | |||||||||||||
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 | $ | (0.94 | ) | $ | 0.21 | $ | (0.83 | ) | $ | 1.06 | |||||||
Income from discontinued operations | 0.54 | 1.18 | 0.09 | 5.51 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.39 | $ | (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 | $ | (0.94 | ) | $ | 0.2 | $ | (0.83 | ) | $ | 1.01 | |||||||
Income from discontinued operations | 0.54 | 1.13 | 0.09 | 5.28 | |||||||||||||
Net income (loss) applicable to common shares | $ | (0.40 | ) | $ | 1.33 | $ | (0.74 | ) | $ | 6.29 | |||||||
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 | $ | 18,411 | $ | 18,881 | $ | 19,332 | $ | 21,754 | |||||||||
Total operating expenses | 17,213 | 15,985 | 16,518 | 19,441 | |||||||||||||
Operating income | 1,198 | 2,896 | 2,814 | 2,313 | |||||||||||||
Other expenses | (5,124 | ) | (7,311 | ) | (5,360 | ) | (2,866 | ) | |||||||||
Loss before gain on land sales, non-controlling interest, and taxes | (3,926 | ) | (4,415 | ) | (2,546 | ) | (553 | ) | |||||||||
Gain (loss) on land sales | 423 | 4,738 | 2,913 | (1,139 | ) | ||||||||||||
Income tax benefit (expense) | (219 | ) | 747 | (205 | ) | (1,583 | ) | ||||||||||
Net income (loss) from continuing operations | (3,722 | ) | 1,070 | 162 | (3,275 | ) | |||||||||||
Net income (loss) from discontinuing operations | (406 | ) | 1,387 | (381 | ) | (2,939 | ) | ||||||||||
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 | $ | (0.48 | ) | $ | 0.07 | $ | (0.02 | ) | $ | (0.41 | ) | ||||||
Income (loss) from discontinued operations | (0.05 | ) | 0.16 | (0.05 | ) | (0.35 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.53 | ) | $ | 0.23 | $ | (0.07 | ) | $ | (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 | $ | (0.48 | ) | $ | 0.06 | $ | (0.02 | ) | $ | (0.41 | ) | ||||||
Income (loss) from discontinued operations | (0.05 | ) | 0.14 | (0.05 | ) | (0.35 | ) | ||||||||||
Net income (loss) applicable to common shares | $ | (0.53 | ) | $ | 0.2 | $ | (0.07 | ) | $ | (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 |
Schedule_of_Income_Taxes_Table
Schedule of Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Schedule of Income Taxes | |||||||||||||
Summary of Operating Loss Carryforwards | Current expense (benefit) is attributable to (dollars in thousands): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Loss from continuing operations | $ | (22,902 | ) | $ | (24,598 | ) | $ | (10,401 | ) | ||||
Income from discontinued operations | 22,902 | 16,835 | 10,401 | ||||||||||
Tax benefit | $ | - | $ | (7,763 | ) | $ | - | ||||||
Of the total 2013 tax (benefit), ($7,763) comes from MRHI. | |||||||||||||
Schedule of Deferred Tax Assets and Liabilities | 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): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Net operating losses | $ | 56,897 | $ | 71,071 | $ | 53,857 | |||||||
AMT credits | 1,374 | 1,374 | 1,374 | ||||||||||
Basis difference of: | |||||||||||||
Real estate holdings | 876 | (3,045 | ) | (15,159 | ) | ||||||||
Notes receivable | 757 | 860 | 860 | ||||||||||
Investments | (4,693 | ) | (4,703 | ) | (4,757 | ) | |||||||
Notes payable | 6,932 | 12,496 | 16,598 | ||||||||||
Deferred gains | 10,146 | 10,806 | 11,370 | ||||||||||
Total | $ | 72,289 | $ | 88,859 | $ | 64,143 | |||||||
Deferred tax valuation allowance | (72,289 | ) | (88,859 | ) | (64,143 | ) | |||||||
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): | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Computed "expected" income tax (benefit) expense | $ | 14,762 | $ | 26,998 | $ | (4,211 | ) | ||||||
Book to tax differences for partnerships not consolidated for tax purposes | (23,900 | ) | (33,565 | ) | (3,831 | ) | |||||||
Book to tax differences of depreciation and amortization | 1,461 | 1,222 | 1,434 | ||||||||||
Book to tax differences in gains on sale of property | (2,350 | ) | (20,308 | ) | (4,835 | ) | |||||||
Book provision for loss | - | 3,962 | 1,656 | ||||||||||
Partial valuation allowance against current net operating loss benefit | 7,069 | 16,835 | 10,401 | ||||||||||
Other | 2,958 | 2,139 | (614 | ) | |||||||||
Total | $ | - | $ | (2,717 | ) | $ | - | ||||||
Alternative minimum tax | $ | - | $ | - | $ | - | |||||||
Schedule_of_Future_Minimum_Ren
Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
FUTURE MINIMUM RENTAL INCOME UNDER OPERATING LEASES | ||||||
Schedule of Future Minimum Rental Payments for Operating Leases | The following is a schedule of minimum future rents on non-cancelable operating leases at December 31, 2014 (dollars in thousands): | |||||
Year | Amount | |||||
2015 | $ | 16,741 | ||||
2016 | 15,189 | |||||
2017 | 12,880 | |||||
2018 | 12,012 | |||||
2019 | 7,851 | |||||
Thereafter | 17,868 | |||||
Total | $ | 82,541 | ||||
Organization_and_significant_p
Organization and significant policies (Details) | Dec. 31, 2014 | Jul. 17, 2009 |
Organization and significant policies | ||
Percentage of common stock by subsidiaries of ARL | 80.90% | |
Company aquired an additional shares of common stock of Income Opportunity Realty Investors | 2,518,934 | |
Stock of Income Opportunity Realty Investors, owns approximately over shares of common stock IOT | 80.00% | |
TCI owned the outstanding IOT common shares | 81.10% | |
Company owned residential apartment communities | 37 | |
Number of units for residential apartments | 6,024 | |
Company owned commercial properties | 8 | |
Commercial properties comprising an aggregate of approximate square feet in millions | 1.8 | |
Investment in acres of undeveloped and partially developed land. | 4,087 |
IOT_Assets_and_Liabilities_Det
IOT Assets and Liabilities (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
IOT Assets and Liabilities | |
IOT assets acquired | $112 |
IOT Liabilities assumed | $43 |
Summary_of_real_estate_owned_a
Summary of real estate owned as of the end of the year (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Summary of real estate owned as of the end of the year | ||
Apartments | $452,631 | $433,141 |
Apartments under construction | 1,512 | |
Commercial properties | 179,171 | 203,823 |
Land held for development | 148,480 | 141,010 |
Real estate held for sale | 18,817 | |
Real estate subject to sales contract | 22,695 | 31,302 |
Total real estate, at cost, less impairment | 804,489 | 828,093 |
Less accumulated deprecation | -115,368 | -132,291 |
Total real estate, net of depreciation | $689,121 | $695,802 |
Estimated_useful_lives_of_the_
Estimated useful lives of the assets as follows (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Estimated useful lives of the assets as follows: | |
Land improvements useful life | 25 to 40 years |
Buildings and improvements useful life | 10 to 40 years |
Tenant improvements useful life | shorter of useful life or terms of related lease |
Furniture, fixtures and equipment useful life | 3 to 7 years |
Provision_for_Impairment_Detai
Provision for Impairment (Details) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Provision for Impairment | ||
Impairment reserve was taken to adjust for the appraised value of the building | $0 | $9.60 |
Impairment reserve was taken based on a potential sale of land | 0 | 1.5 |
Impairment reserves were related to provisions for losses taken to our notes receivable. | $0 | $0.20 |
Fair_Value_Measurement_of_asse
Fair Value Measurement of assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Fair Value | ||
Land | $849 | $2,699 |
Commercial | 26,194 | 9,660 |
Level 1 | ||
Land | 0 | 0 |
Commercial | 0 | 0 |
Level 2 | ||
Land | 849 | 1,800 |
Commercial | 26,194 | 9,660 |
Level 3 | ||
Land | 0 | 899 |
Commercial | $0 | $0 |
Assets_fair_value_computation_
Assets fair value computation (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Assets fair value computation | ||
Land with a carrying amount | $2,355,768 | $5,029,254 |
Land Fair value | 849,468 | 2,699,175 |
Land Impairment charge | 1,506,300 | 2,330,079 |
Commercial building carrying amount | 35,794,331 | 12,060,247 |
Commercial building Fair value | 26,194,331 | 9,660,247 |
Commercial building Impairment charge | $9,600,000 | $2,400,000 |
Significant_property_acquisiti
Significant property acquisitions and sales in first quarter of 2014 (Details) (USD $) | Mar. 26, 2014 | Mar. 13, 2014 | Feb. 06, 2014 |
Significant property acquisitions and sales in first quarter of 2014 | |||
Company sold apartment complex known as Pecan Pointe, to an independent third party in units | 232 | ||
Sale price of apartment complex known as Pecan Pointe | $23,100,000 | ||
The buyer assumed the existing debt secured by the property | 16,500,000 | ||
Gain recorded on the sale of apartment complex known as Pecan Pointe | 6,100,000 | ||
Company acquired acres of land known as Three Hickory as a result of the settlement agreement with the lender | 6.6 | ||
Company sold the land to IOT for an amount | 1,200,000 | ||
Gain on the sale of land to IOT | 1,200,000 | ||
Company sold acres of land known as McKinney Ranch land, to an independent third party | 6.314 | ||
Sale price of land known as McKinney Ranch land | 1,700,000 | ||
Company paid existing mortgage to satisfy a portion of the multi-tract collateral debt of $6.6 million | 1,500,000 | ||
Gain on the sale of land to an independent third party | $800,000 |
Significant_property_acquisiti1
Significant property acquisitions and sales in second quarter of 2014 (Details) (USD $) | Apr. 03, 2014 |
Significant property acquisitions and sales in second quarter of 2014 | |
Company sold a commercial building to an independent third party in square foot | 512,593 |
Sale price of commercial building to an independent third party | $16,600,000 |
Gain recorded on the sale of commercial building to an independent third party | $7,000,000 |
Significant_property_acquisiti2
Significant property acquisitions and sales in third quarter of 2014 (Details) (USD $) | Sep. 23, 2014 | Sep. 19, 2014 | Aug. 12, 2014 | Jul. 25, 2014 |
Significant property acquisitions and sales in third quarter of 2014 | ||||
Company sold acres of land known as Stanley Tools and Kelly Lots, to an independent third party | 24.498 | |||
Sale price of land known as Stanley Tools and Kelly Lots | $4,300,000 | |||
Company paid existing mortgage of land | 1,700,000 | |||
Company paid existing mortgagerelated to another parcel of land | 200,000 | |||
Company sold a commercial building known as Sesame Square to an independent third party in square foot | 20,715 | |||
Sale price of commercial building known as Sesame Square sold to an independent third party | 2,600,000 | |||
Gain recorded on the sale of commercial building known as Sesame Square sold to an independent third party | 1,800,000 | |||
Company paid existing mortagage of commercial building known as Sesame Square | 800,000 | |||
Company acquired 100% ownership of Summer Breeze I-V, LLC, from an independent third party in units | 216 | |||
Company exchanged the existing note receivable and all accrued interest in the amount for the ownership interest | 3,500,000 | |||
Company sold complex known as Bridgewood Ranch, to an independent third party | 106 | |||
Sale price of complex known as Bridgewood Ranch, sold to an independent third party | 8,000,000 | |||
Paid off the existing mortagage on complex known as Bridgewood Ranch | 4,500,000 | |||
New mortagage obtained by buyer on complex known as Bridgewood Ranch | $6,600,000 |
Significant_property_acquisiti3
Significant property acquisitions and sales in fourth quarter of 2014 (Details) (USD $) | Dec. 30, 2014 | Dec. 01, 2014 | Nov. 13, 2014 | Nov. 06, 2014 | Nov. 03, 2014 |
Significant property acquisitions and sales in fourth quarter of 2014 | |||||
Company sold an apartment complex known as Blue Ridge, to an independent third party in units | 290 | ||||
Sale price of apartment complex known as Blue Ridge, to an independent third party | $52,800,000 | ||||
Paid off the existing mortagage on complex known as Blue Ridge | 23,700,000 | ||||
Gain on sale of complex known as Blue Ridge | 26,700,000 | ||||
Company acquired 100% ownership of Dun-Run Golf resulted in the acquisition of Mahogany Run Golf Course for a purchase price | 13,300,000 | ||||
The Company took out a note as seller financing to aid in the purchase in the amount | 6,600,000 | ||||
Option to renew for one more year can be exercised with a principal payment made before maturity | 1,000,000 | ||||
Company sold a complex known as Sunset Lodge in units | 216 | ||||
Company sold a land known as Sunset Lodge in acres | 5.98 | ||||
Sale price of Sunset Lodge | 40,600,000 | ||||
Gain recorded on the sale of Sunset Lodge | 18,900,000 | ||||
Company acquired a complex known as Legacy at Pleasant Grove in units from a third party | 208 | ||||
Company exchanged the existing note receivable and all accrued interest in the amount for Legacy at Pleasant Grove | 5,000,000 | ||||
Company acquired a complex known as Villas at Park West I in units from a third party | 148 | ||||
Company exchanged the existing note receivable and all accrued interest in the amount for Villas at Park West I | 1,300,000 | ||||
Company acquired a complex known as Villas at Park West II in units from a third party | 112 | ||||
Company exchanged the existing note receivable and all accrued interest in the amount for Villas at Park West II | 5,100,000 | ||||
Company acquired acres of land known as Bonneau Land, from a third party | 8.387 | ||||
Purchase price of land known as Bonneau Land, purchased from a third party | 1,200,000 | ||||
Company sold acres of land known as Carr (Luna) Land, to a third party | 2.606 | ||||
Sale price of land known as Carr (Luna) Land, sold to a third party | 300,000 | ||||
Loss recorded on the sale of Carr (Luna) Land sold to a third party | $400,000 |
Recovered_Sheet1
Notes and interest receivable consists of the following (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Notes and interest receivable consist of the following | |
Foundation for Better Housing, Inc.. (Holland Lake) (1) | $4,698 |
Foundation for Better Housing, Inc. (Holland Lake) (1) | 1,674 |
Foundation for Better Housing, Inc .. (Overlook at Allensville) (1) | 2,472 |
Foundation for Better Housing, Inc. (Overlook at Allensville) (1) | 1,408 |
Foundation for Better Housing, Inc.. (Preserve at Prairie Pointe) (1) | 1,810 |
Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) | 1,156 |
Foundation for Better Housing, Inc.. (Vista Ridge) (1) | 3,923 |
Foundation for Better Housing, Inc. (Vista Ridge) (1) | 1,492 |
HGH Residential, Inc. (Tradewinds Development) | 6,131 |
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) | 4,812 |
Unified Housing Foundation, Inc. (Sendero Ridge) (1) | 5,174 |
Unified Housing Foundation, Inc. (Timbers of Terrell) | 1,323 |
Unified Housing Foundation, Inc. (Tivoli) (1) | 7,966 |
Unified Housing Foundation, Inc.. (1) | 1,261 |
Unified Housing Foundation, Inc.(1) | 1,207 |
Other related party notes (1) | 768 |
Other related party notes. (1) | 4,276 |
Other non-related party notes | 496 |
Accrued interest performing | 5,066 |
Total Performing | 84,863 |
Other non-related party notes. | 507 |
Accrued interest non performing | 77 |
Total Non-Performing | 584 |
Allowance for estimated losses | -1,990 |
Total Notes and interest Receivable | $83,457 |
Junior_Mortgage_Loans_percenta
Junior Mortgage Loans percentages (Details) | Dec. 31, 2014 |
Junior Mortgage Loans percentages | |
Company assets were invested in junior wraparound mortgage loans ( percentage) | 8.60% |
The mortgage notes receivable portfolio were due from related entities. ( percentage) | 91.10% |
The mortgage notes receivable portfolio were non-performing. ( percentage) | 0.60% |
Company agreed to reduce the interest rate from 12% to ,for a five year period on the surplus cash flow notes ( percentage) | 5.25% |
Junior_Mortgage_Loans_outstand
Junior Mortgage Loans outstanding (Details) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Junior Mortgage Loans outstanding | |
Amount of mortgage notes receivable portfolio due from related entities | $73.20 |
Company recognized interest income from these related party notes receivables | 9 |
Amount of mortgage notes receivable portfolio non-performing. | $0.50 |
Allowances_for_estimated_losse
Allowances for estimated losses (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Estimated losses details | |||
Balance of estimated losses on January 1, | $2,262 | $2,262 | $3,942 |
Decrease in provision | -272 | 0 | -1,680 |
Balance of estimated losses on December 31, | $1,990 | $2,262 | $2,262 |
Investments_in_unconsolidated_
Investments in unconsolidated joint ventures (Details) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Investments in unconsolidated joint ventures Details | |||
American Realty Investors, Inc.(1) | 1.00% | 1.99% | 1.99% |
Summary_of_the_financial_posit
Summary of the financial position Unconsolidated Subsidiaries (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Summary of the financial position Unconsolidated Subsidiaries | |||
Real estate, net of accumulated depreciation; | $15,460 | $11,944 | $45,032 |
Notes receivable; | 50,909 | 68,909 | 44,371 |
Other assets; | 128,635 | 128,945 | 130,419 |
Notes payable; | -50,048 | -56,103 | -61,720 |
Other liabilities; | -80,904 | -91,099 | -84,123 |
Shareholders' equity/partners' capital; | ($64,052) | ($62,596) | ($73,979) |
Summary_of_Results_of_operatio
Summary of Results of operations Unconsolidated Subsidiaries (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of Results of operations Unconsolidated Subsidiaries | |||
Rents and interest and other income | $12,427 | $11,372 | $8,198 |
Depreciation | -285 | -285 | -263 |
Operating expenses | -6,983 | -14,162 | -4,013 |
Gain on land sales | 618 | -2,785 | |
Interest expense | -7,144 | -7,173 | -4,283 |
Loss from continuing operations | -1,985 | -9,630 | -3,146 |
Income from discontinued operations | 64 | -15 | 2,691 |
Net loss | -1,921 | -9,645 | -455 |
Company's proportionate share of loss (1) | ($19) | ($192) | ($9) |
Summary_of_notes_and_interest_
Summary of notes and interest payable (DETAILS) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Apartments | |
Notes Payable | $411,180 |
Accrued Interest | 1,124 |
Total Debt | 412,304 |
Commercial | |
Notes Payable | 105,908 |
Accrued Interest | 409 |
Total Debt | 106,317 |
Land | |
Notes Payable | 65,445 |
Accrued Interest | 117 |
Total Debt | 65,562 |
Real estate held for sale | |
Notes Payable | 452 |
Accrued Interest | 0 |
Total Debt | 452 |
Real estate subject to sales contract | |
Notes Payable | 16,961 |
Accrued Interest | 1,655 |
Total Debt | 18,616 |
Other | |
Notes Payable | 5,666 |
Accrued Interest | 0 |
Total Debt | 5,666 |
Total | |
Notes Payable | 605,612 |
Accrued Interest | 3,305 |
Total Debt | $608,917 |
Principal_Payments_on_the_note
Principal Payments on the notes Payable (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Principal payment on notes payable for next five years | |
Principal payment on notes payable for 2015 | $103,805 |
Principal payment on notes payable for 2016 | 45,769 |
Principal payment on notes payable for 2017 | 42,507 |
Principal payment on notes payable for 2018 | 8,448 |
Principal payment on notes payable for 2019 | 43,357 |
Thereafter Principal payment on notes payable | 361,726 |
Total Principal payment on notes payable | $605,612 |
Related_party_transactions_Det
Related party transactions (Details) (USD $) | Pillar | ARL | Total. |
In Thousands | |||
Related party receivable, at Dec. 31, 2013 | $52,380 | $52,380 | |
Cash transfers | 47,701 | 47,701 | |
Advisory fees | -7,373 | -7,373 | |
Net income fee | -3,669 | -3,669 | |
Fees and commissions | -4,398 | -4,398 | |
Cost reimbursements | -2,622 | -2,622 | |
Interest income. | 2,795 | 2,795 | |
Notes receivable purchased | -26,290 | -26,290 | |
Expenses paid by advisor | -7,341 | -7,341 | |
Financing (mortgage payments) | -3,321 | -3,321 | |
Sales/Purchases transactions | 7,729 | 7,729 | |
Series K preferred stock acquisition | 270 | 270 | |
Tax sharing expense | 0 | ||
Purchase of obligations | -416 | 2,959 | 2,543 |
Related party receivable, at Dec. 31, 2014 | $58,404 | $58,404 |
Recovered_Sheet2
Related party transactions and fees between Pillar and Regis (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Fees: | |||
Advisory | $7,373 | $8,494 | $8,915 |
Construction advisory | 181 | ||
Mortgage brokerage and equity refinancing | 1,152 | 1,878 | 1,873 |
Net income. | 3,669 | 4,089 | 180 |
Property acquisition | 145 | 20 | |
Total fee paid to and/or received from our advisor: | 12,339 | 14,461 | 11,169 |
Other Expense: | |||
Cost reimbursements | 2,622 | 2,585 | 2,247 |
Interest paid (received) | -2,795 | 157 | 1,194 |
Total expense paid to and/or received from our advisor: | -173 | 2,742 | 3,441 |
Revenue: | |||
Rental | $701 | $670 | $587 |
Fees_paid_to_Regis_and_related
Fees paid to Regis and related parties (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Fees paid to Regis and related parties | |||
Property acquisition | $348 | $71 | |
Property management, construction management and leasing commissions | 544 | 436 | 2,087 |
Real estate brokerage | 2,752 | 4,055 | 2,263 |
Total Fees paid to Regis and related parties | $3,644 | $4,491 | $4,421 |
Preferred_Stock_shares_Details
Preferred Stock shares (Details) (USD $) | Dec. 31, 2014 | Nov. 30, 2006 |
Preferred stock details | ||
TCI issued shares of Series C Preferred Stock | 30,000 | |
TCI's Series C Cumulative Convertible Preferred Stock owned by RAI | 30,000 | |
Cumulative Convertible Preferred Stock liquidation preference per share | $100 | $100 |
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 | |
Dividends payable at the initial rate annually | 7.00% | |
The dividend rate increases in future periods to a rate | 9.00% | |
Accrued dividends unpaid on preferred stock in amount owned by RAI | $900,000 | $3,200,000 |
RAI converted all shares into the requisite number of shares of common stock | 304,298 | |
Series D Preferred Stock shares are owned by RAI | 89,500 |
Directors_Stock_Option_Plan_De
Director's Stock Option Plan (Details) (USD $) | Dec. 31, 2014 | Oct. 08, 2000 |
Director's Stock Option Plan | ||
Director's Stock Option Plan which provides for options to purchase up to a number of shares | 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 |
Components_of_income_tax_expen
Components of income tax expense benefit (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Components of income tax expense benefit | |||
Loss from continuing operations. | ($22,902) | ($24,598) | ($10,401) |
Income from discontinued operations. | 22,902 | 16,835 | 10,401 |
Tax benefit. | -7,763 | ||
Total tax benefit from MRHI | ($7,763) | ||
The expense (benefit) in each year was calculated with a maximum statutory rate | 35.00% |
Reconciliation_of_income_tax_e
Reconciliation of income tax expense (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconciliation of income tax expense | |||
Corporate tax rate applied to to the income before income taxes | 35.00% | ||
Computed expected income tax (benefit) expense | $14,762 | $26,998 | ($4,211) |
Book to tax differences for partnerships not consolidated for tax purposes | -23,900 | -33,565 | -3,831 |
Book to tax differences of depreciation and amortization | 1,461 | 1,222 | 1,434 |
Book to tax differences in gains on sale of property | -2,350 | -20,308 | -4,835 |
Book provision for loss | 3,962 | 1,656 | |
Partial valuation allowance against current net operating loss benefit | 7,069 | 16,835 | 10,401 |
Other differences | 2,958 | 2,139 | -614 |
Total differences | -2,717 | ||
Alternative minimum tax | $0 |
Components_of_Deferred_income_
Components of Deferred income tax assets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Components of Deferred income tax assets | |||
Net operating losses | $56,897 | $71,071 | $53,857 |
AMT credits | 1,374 | 1,374 | 1,374 |
Basis difference of Real estate holdings | 876 | -3,045 | -15,159 |
Basis difference of Notes receivable | 757 | 860 | 860 |
Basis difference of Investments | -4,693 | -4,703 | -4,757 |
Basis difference of Notes payable | 6,932 | 12,496 | 16,598 |
Basis difference of Deferred gains | 10,146 | 10,806 | 11,370 |
Total deferred tax asset | 72,289 | 88,859 | 64,143 |
Deferred tax valuation allowance | -72,289 | -88,859 | -64,143 |
Net deferred tax asset | 0 | 0 | 0 |
TCI has established a valuation allowance for deferred tax assets | 72,300 | 88,900 | 64,100 |
TCI has tax net operating loss carryforwards of approximately | 146,900 | ||
The alternative minimum tax credit balance | $1,400 |
Schedule_of_minimum_future_ren
Schedule of minimum future rents on non-cancelable operating leases (Details) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Schedule of minimum future rents on non-cancelable operating leases | |
Minimum future rents on non-cancelable operating leases for 2015 | $16,741 |
Minimum future rents on non-cancelable operating leases for 2016 | 15,189 |
Minimum future rents on non-cancelable operating leases for 2017 | 12,880 |
Minimum future rents on non-cancelable operating leases for 2018 | 12,012 |
Minimum future rents on non-cancelable operating leases for 2019 | 7,851 |
Minimum future rents on non-cancelable operating leases Thereafter | 17,868 |
Total Minimum future rents on non-cancelable operating leases | $82,541 |
Operating_Segments_information
Operating Segments information reconciliation with Consolidated Balance Sheets (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||
Operating Segments information reconciliation with Consolidated Balance Sheets | |||
Segment assets | $689,121 | $641,457 | $673,583 |
Investments in real estate partnerships | 1,543 | 1,697 | 5,439 |
Notes and interest receivables | 83,457 | 67,907 | 59,098 |
Other assets. | 156,284 | 132,265 | 83,857 |
Assets held for sale. | 54,345 | 223,367 | |
Total assets | $930,405 | $897,671 | $1,045,344 |
Reconcilation_of_the_segment_i
Reconcilation of the segment information to the corresponding amounts in the Consolidated Statements of Operations (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Reconcilation of the segment information to the corresponding amounts in the Consolidated Statements of Operations | |||
Segment operating income (loss) | ($1,950) | $62 | $5,800 |
Segment General and administrative | -7,163 | -6,308 | -5,074 |
Segment Provision on impairment of notes receivable and real estate assets | -11,320 | -2,330 | |
Segment Net income fee to related party | -3,669 | -4,089 | -180 |
Segment Advisory fee to related party | -7,373 | -8,494 | -8,915 |
Segment Other income | 403 | 7,847 | 6,310 |
Segment Gain (loss) on the sale of investments | -92 | -283 | 125 |
Segment loss from unconsolidated joint ventures and investees | -28 | -172 | -66 |
Segment Litigation settlement | 3,591 | -20,313 | -175 |
Segment Income tax benefit (expense) | 20,390 | 40,949 | -1,260 |
Segment Gain (loss) from continuing operations | $4,109 | ($2,121) | ($5,765) |
Summary_of_discontinued_operat
Summary of discontinued operations (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Summary of discontinued operations | |||
Rental and other property revenues discontinued operations | $5,612 | $34,922 | $43,010 |
Total revenue discontinued operations | 5,612 | 34,922 | 43,010 |
Property operating expenses discontinued operations | 2,350 | 16,480 | 22,645 |
Depreciation discontinued operations | 751 | 5,563 | 7,676 |
General and administrative discontinued operations | 515 | 950 | 975 |
Provision on impairment of notes receivable and real estate assets discontinued operations | 2,400 | ||
Total operating expenses discontinued operations | 3,616 | 22,993 | 33,696 |
Other income (expense) discontinued operations | -508 | 44 | 7 |
Mortgage and loan interest discontinued operations | -1,743 | -8,082 | -12,677 |
Deferred borrowing costs amortization discontinued operations | -1,461 | -3,015 | -1,794 |
Loan charges and prepayment penalties discontinued operations | -1,656 | -3,245 | -3,471 |
Earnings from unconsolidated subsidiaries and investees discontinued operations | 1 | 30 | 55 |
Litigation settlement discontinued operations | -250 | -250 | -250 |
Total other expenses discontinued operations | -5,617 | -14,518 | -18,130 |
Loss from discontinued operations before gain on sale of real estate and taxes. | -3,621 | -2,589 | -8,816 |
Gain on sale of real estate from discontinued operations. | 61,879 | 97,405 | 5,217 |
Income tax benefit (expense) discontinued operations | -20,390 | -33,186 | 1,260 |
Income (loss) from discontinued operations. | $37,868 | $61,630 | ($2,339) |
Recovered_Sheet3
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 | Feb. 13, 2013 |
Dynex Commercial, Inc. and Dynex Capital, Inc | ||
Loans were to be made to the entities Under the original loan commitment | $160,000,000 | |
Jury awarded "increased costs" damages to American Realty Trust, Inc | 960,646 | |
Jury awarded "lost opportunity" damages to American Realty Trust, Inc | 11,161,520 | |
Total damages in favor of TCI and its subsidiaries | 12,122,166 | |
TCI was entitled to damages for "lost opportunities" relating to tenant improvements and awarded TCI an additional amount | 252,577 | |
Clapper Parties were awarded an initial judgment for approximately | 74,000,000 | |
Actual damages included in initial judgement | 26,000,000 | |
Interest amount included in initial judgement | 48,000,000 | |
Other deficiency claims with respect to assets that have been foreclosed by various lenders may result to a maximum amount | $20,000,000 |
Computation_of_Earnings_per_sh
Computation of Earnings per share (Details) (USD $) | Dec. 31, 2014 | Jul. 09, 2014 |
Computation of Earnings per share | ||
Series C Cumulative Convertible Preferred Stock issued and outstanding shares | 30,000 | |
Shares were owned by RAI, a related party | 30,000 | |
Accrued dividends unpaid in millions | $0.90 | |
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 be converted into the requisite number of common stocks | 30,000 | |
Conversion resulted in new shares of common stock | 304,298 | |
Shares of stock options outstanding as on balance sheet date | 5,000 |
Subsequent_Transactions_Detail
Subsequent Transactions (Details) (USD $) | Feb. 09, 2015 | Jan. 30, 2015 |
Subsequent Transactions | ||
Company refinanced the existing mortgage on Heather Creek apartments in units | 200 | |
Company sanctioned new mortgage of Heather Creek apartments | $11,500,000 | |
Company paid off the existing mortgage of Heather Creek apartments | 11,500,000 | |
Company paid off the existing mortgage closing costs of Heather Creek apartments | 300,000 | |
The note accrues interest at a rate and payments of interest and principal are due monthly | 3.24% | |
Company purchased the membership interest in Holland Lake Partners, Ltd | 100.00% | |
Number of residential owned units at Holland Lake apartments | 208 | |
Company purchased the membership interest in Holland Lake Partners, Ltd for an amount | 4,700,000 | |
Company assumed the current mortgage of Holland Lake apartments | 12,000,000 | |
Company purchased the membership interest in Mount Drive, LLC | 100.00% | |
Number of residential owned units at Mount Drive, LLC | 144 | |
Company purchased the membership interest in Mount Drive, LLC for an amount | 2,500,000 | |
Company assumed the current mortgage of Mount Drive, LLC | $11,600,000 |