Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 05, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | TRANSCONTINENTAL REALTY INVESTORS INC | |
Entity Central Index Key | 733,590 | |
Document Type | 10-Q | |
Trading Symbol | TCI | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,717,767 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Real estate, at cost | $ 993,060 | $ 935,635 |
Real estate subject to sales contracts at cost, net of depreciation | 47,192 | 47,192 |
Less accumulated depreciation | (148,718) | (138,808) |
Total real estate | 891,534 | 844,019 |
Notes and interest receivable | ||
Performing (including $67,829 in 2016 and $64,181 in 2015 from related parties) | 76,002 | 71,376 |
Less allowance for estimated losses (including $1,825 in 2016 and 2015 from related parties) | (1,825) | (1,825) |
Total notes and interest receivable | 74,177 | 69,551 |
Cash and cash equivalents | 19,953 | 15,171 |
Restricted cash | 29,880 | 44,060 |
Investments in unconsolidated joint ventures and investees | 2,460 | 5,243 |
Receivable from related party | 75,615 | 90,515 |
Other assets | 39,741 | 41,645 |
Total assets | 1,133,360 | 1,110,204 |
Liabilities: | ||
Notes and interest payable | 800,398 | 772,636 |
Notes related to assets held for sale | 376 | 376 |
Notes related to real estate subject to sales contracts | 6,072 | 6,422 |
Deferred revenue (including $50,669 in 2016 and $50,645 in 2015 from related parties) | 71,045 | 71,021 |
Accounts payable and other liabilities (including $6,060 in 2016 and $5,845 in 2015 to related parties) | 29,667 | 34,694 |
Total liabilities | 907,558 | 885,149 |
Shareholders' equity: | ||
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares, issued and outstanding zero shares in 2016 and 2015 (liquidation preference $100 per share). Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2016 and 2015 (liquidation preference $100 per share) | 1 | 1 |
Common Stock, $0.01 par value, authorized 10,000,000 shares, issued 8,717,967 shares in 2016 and 2015; outstanding 8,717,767 in 2016 and 2015 | 87 | 87 |
Treasury stock at cost, 200 shares in 2016 and 2015 | (2) | (2) |
Paid-in capital | 270,303 | 270,749 |
Retained earnings | (62,968) | (64,087) |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 207,421 | 206,748 |
Non-controlling interest | 18,381 | 18,307 |
Total shareholders' equity | 225,802 | 225,055 |
Total liabilities and shareholders' equity | $ 1,133,360 | $ 1,110,204 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Performing | $ 76,002 | $ 71,376 |
Deferred revenue from related parties | 71,045 | 71,021 |
Allowance for doubtful accounts (in dollars) | $ 1,825 | $ 1,825 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 10,000,000 | 10,000,000 |
Common stock, issued | 8,717,967 | 8,717,967 |
Common stock, outstanding | 8,717,767 | 8,717,767 |
Treasury stock, shares | 200 | 200 |
Related Parties [Member] | ||
Performing | $ 67,829 | $ 64,181 |
Deferred revenue from related parties | 50,669 | 50,645 |
Allowance for doubtful accounts (in dollars) | 1,825 | 1,825 |
Accounts payable and other liabilities to related parties (in dollars) | $ 6,060 | $ 5,845 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Series D Preferred Stock [Member] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 100,000 | 100,000 |
Preferred stock, issued | 100,000 | 100,000 |
Preferred stock, outstanding | 100,000 | 100,000 |
Preferred stock, liquidation preference per share (in dollars per share) | $ 100 | $ 100 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues: | ||||
Rental and other property revenues (including $174 and $170 for the three months and $347 and $343 for the six months ended 2016 and 2015, respectively, from related parties) | $ 30,521 | $ 23,756 | $ 59,424 | $ 46,060 |
Expenses: | ||||
Property operating expenses (including $223 and $178 for the three months and $423 and $331 for the six months ended 2016 and 2015, respectively, from related parties) | 14,919 | 10,929 | 29,882 | 21,793 |
Depreciation and amortization | 5,843 | 5,107 | 11,651 | 9,751 |
General and administrative (including $753 and $727 for the three months and $1,502 and $1,547 for the six months ended 2016 and 2015, respectively, from related parties) | 1,604 | 1,278 | 3,213 | 3,045 |
Net income fee to related party | 54 | 45 | 126 | 90 |
Advisory fee to related party | 2,331 | 1,951 | 4,702 | 3,894 |
Total operating expenses | 24,751 | 19,310 | 49,574 | 38,573 |
Net operating income | 5,770 | 4,446 | 9,850 | 7,487 |
Other income (expense): | ||||
Interest income (including $3,274 and $2,748 for the three months and $6,008 and $6,167 for the six months ended 2016 and 2015, respectively, from related parties) | 3,289 | 2,994 | 7,136 | 6,755 |
Other income | 902 | 14 | 1,169 | 81 |
Mortgage and loan interest (including $165 and $190 for the three months and $627 and $408 for the six months ended 2016 and 2015, respectively, from related parties) | (12,092) | (8,216) | (25,258) | (18,401) |
Earnings (losses) from unconsolidated joint ventures and investees | 10 | (2) | 43 | |
Litigation expense | (45) | (118) | ||
Total other expenses | (7,901) | (5,243) | (16,955) | (11,640) |
Loss before gain on sale of income-producing properties, gain on land sales, non-controlling interest, and taxes | (2,131) | (797) | (7,105) | (4,153) |
Gain on sale of income producing properties | 5,168 | 4,925 | ||
Gain on land sales | 1,719 | 1,250 | 3,370 | 4,126 |
Net income (loss) from continuing operations before taxes | 4,756 | 453 | 1,190 | (27) |
Income tax benefit (expense) | (12) | 1 | 90 | |
Net income from continuing operations | 4,756 | 441 | 1,191 | 63 |
Discontinued operations: | ||||
Net income (loss) from discontinued operations | (34) | 3 | 258 | |
Income tax expense (benefit) from discontinued operations | 12 | (1) | (90) | |
Net income (loss) from discontinued operations | (22) | 2 | 168 | |
Net income | 4,756 | 419 | 1,193 | 231 |
Net (income) loss attributable to non-controlling interest | (97) | (281) | (74) | 12 |
Net income attributable to Transcontinental Realty Investors, Inc. | 4,659 | 138 | 1,119 | 243 |
Preferred dividend requirement | (224) | (224) | (446) | (446) |
Net income (loss) applicable to common shares | $ 4,435 | $ (86) | $ 673 | $ (203) |
Earnings per share - basic | ||||
Net income (loss) from continuing operations (in dollars per share) | $ 0.51 | $ (0.01) | $ 0.08 | $ (0.04) |
Net income (loss) from discontinued operations (in dollars per share) | 0.02 | |||
Net income (loss) applicable to common shares (in dollars per share) | 0.51 | (0.01) | 0.08 | (0.02) |
Earnings per share - diluted | ||||
Net income (loss) from continuing operations (in dollars per share) | 0.51 | (0.01) | 0.08 | (0.04) |
Net income from discontinued operations (in dollars per share) | 0.02 | |||
Net income (loss) applicable to common shares (in dollars per share) | $ 0.51 | $ (0.01) | $ 0.08 | $ (0.02) |
Weighted average common shares used in computing earnings per share (in shares) | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 |
Weighted average common shares used in computing diluted earnings per share (in shares) | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 |
Amounts attributable to Transcontinental Realty Investors, Inc. | ||||
Net income from continuing operations | $ 4,659 | $ 160 | $ 1,117 | $ 75 |
Net income (loss) from discontinued operations | (22) | 2 | 168 | |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | $ 4,659 | $ 138 | $ 1,119 | $ 243 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Rental and other property revenues | $ 30,521 | $ 23,756 | $ 59,424 | $ 46,060 |
Property operating expenses | 14,919 | 10,929 | 29,882 | 21,793 |
General and administrative | 1,604 | 1,278 | 3,213 | 3,045 |
Interest income | 3,289 | 2,994 | 7,136 | 6,755 |
Mortgage and loan interest | (12,092) | (8,216) | (25,258) | (18,401) |
Related Parties [Member] | ||||
Rental and other property revenues | 174 | 173 | 347 | 343 |
Property operating expenses | 223 | 178 | 423 | 331 |
General and administrative | 753 | 727 | 1,502 | 1,547 |
Interest income | 3,274 | 2,748 | 6,008 | 6,167 |
Mortgage and loan interest | $ 165 | $ 190 | $ 627 | $ 408 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands | Total | Comprehensive Income (Loss) [Member] | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Paid-In Capital [Member] | Retained Earnings [Member] | Non-Controlling Interest [Member] |
Balance, at beginning at Dec. 31, 2015 | $ 225,055 | $ (65,174) | $ 1 | $ 87 | $ (2) | $ 270,749 | $ (64,087) | $ 18,307 |
Balance, at beginning (in shares) at Dec. 31, 2015 | 8,717,967 | |||||||
Series D preferred stock dividends (9.0% per year) | (446) | (446) | ||||||
Net income | 1,193 | 1,193 | 1,119 | 74 | ||||
Balance, at the end at Jun. 30, 2016 | $ 225,802 | $ (63,981) | $ 1 | $ 87 | $ (2) | $ (270,303) | $ (62,968) | $ 18,381 |
Balance, at the end (in shares) at Jun. 30, 2016 | 8,717,967 |
CONSOLIDATED STATEMENT OF SHAR7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) | 1 Months Ended | 6 Months Ended |
Nov. 30, 2006 | Jun. 30, 2016 | |
Series D Preferred Stock [Member] | ||
Preferred stock dividend (in percent) | 7.00% | 9.00% |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements Of Comprehensive Income | ||
Net income | $ 1,193 | $ 231 |
Total comprehensive income | 1,193 | 231 |
Comprehensive income (loss) attributable to non-controlling interest | (74) | 12 |
Comprehensive income attributable to Transcontinental Realty Investors, Inc. | $ 1,119 | $ 243 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flow From Operating Activities: | ||
Net income | $ 1,193 | $ 231 |
Adjustments to reconcile net income applicable to common shares to net cash from operating activities: | ||
Gain on sale of income producing properties | (4,925) | |
Gain on sale of land | (3,370) | (4,126) |
Depreciation and amortization | 10,588 | 9,751 |
Amortization of deferred borrowing costs | 2,269 | 949 |
Losses (earnings) from unconsolidated joint ventures and investees | 2 | (43) |
Decrease (increase) in assets: | ||
Accrued interest receivable | (413) | 185 |
Other assets | 962 | 2,385 |
Prepaid expense | (724) | (8,687) |
Escrow | 16,105 | (4,746) |
Earnest money | (259) | (1,395) |
Rent receivables | (883) | |
Related party receivables | 14,900 | (35,676) |
Increase (decrease) in liabilities: | ||
Accrued interest payable | (404) | 327 |
Other liabilities | (5,003) | (3,358) |
Net cash provided by (used in) operating activities | 30,921 | (45,086) |
Cash Flow From Investing Activities: | ||
Proceeds from notes receivables | 2,637 | 16,060 |
Originations or advances of notes receivables | (6,850) | (7,655) |
Acquisition of income-producing properties | (33,857) | (105,729) |
Proceeds from sales of income-producing properties | 9,377 | |
Proceeds from sale of land | 6,347 | 8,618 |
Investment in unconsolidated real estate entities | 2,781 | 3,176 |
Improvement of land held for development | (1,722) | (1,469) |
Improvement of income-producing properties | (1,987) | (6,539) |
Construction and development of new properties | (27,966) | (3,176) |
Net cash provided by (used in) investing activities | (51,240) | (96,714) |
Cash Flow From Financing Activities: | ||
Proceeds from notes payable | 78,487 | 198,770 |
Recurring amortization of principal on notes payable | (6,624) | (7,802) |
Payments on maturing notes payable | (45,033) | (33,865) |
Deferred financing costs | (1,283) | (7,941) |
Contributions from non-controlling interests | 11 | |
Preferred stock dividends - Series D | (446) | (446) |
Net cash provided by (used in) financing activities | 25,101 | 148,727 |
Net increase (decrease) in cash and cash equivalents | 4,782 | 6,927 |
Cash and cash equivalents, beginning of period | 15,171 | 12,201 |
Cash and cash equivalents, end of period | 19,953 | 19,128 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $ 20,531 | $ 16,748 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Organization As used herein, the terms TCI, the Company, we, our or us refer to Transcontinental Realty Investors, Inc., a Nevada corporation which was formed in 1984. The Company is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (NYSE) under the symbol (TCI). Subsidiaries of American Realty Investors, Inc. (ARL) own approximately 80.9% of the Companys common stock. Accordingly, TCIs financial results are consolidated with those of ARLs on Form 10-K and related Consolidated Financial Statements. ARLs common stock trades on the New York Stock Exchange under the symbol (ARL). We have no employees. TCI is a C corporation for U.S. federal income tax purposes and files an annual consolidated tax return with ARL and its ultimate parent, May Realty Holdings, Inc. (MRHI). TCI owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (IOT). Accordingly IOTs financial results are consolidated with those of TCI and its subsidiaries. Shares of IOT are traded on the New York Stock Exchange Euronext (NYSE MKT) under the symbol (IOT). TCI invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (Pillar) is the Companys external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of TCI, and for setting the policies which guide it, the day-to-day operations of TCI are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillars duties include, but are not limited to: locating, evaluating and recommending real estate and real estate-related investment opportunities, and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with TCIs business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to ARL and IOT. Regis Realty Prime, LLC (Regis) manages our commercial properties and provides brokerage services for our real estate portfolio. TCI engages third-party companies to lease and manage its apartment properties. Properties We own or had interests in a total property portfolio of 56 income-producing properties as of June 30, 2016. The properties consisted of: · Seven commercial properties consisting of five office buildings and two retail centers comprising in aggregate approximately 1.7 million rentable square feet; · A golf course comprising approximately 96 acres · 48 apartment communities totaling 8,083 units; excluding apartments being developed; and · 3,612 acres of developed and undeveloped land. We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities that have not yet begun construction. At June 30, 2016, we had eight apartment projects in development. The third-party developer typically holds a general partner, as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property, while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all necessary equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our Consolidated Financial Statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developers partnership interests in exchange for any remaining unpaid developer fees. Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. The year-end Consolidated Balance Sheet at December 31, 2015, was derived from the audited Consolidated Financial Statements at that date, but does not include all of the information and disclosures required by U.S. GAAP for complete financial statements. For further information, refer to the Consolidated Financial Statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015. Certain 2015 Consolidated Financial Statement amounts have been reclassified to conform to the 2016 presentation. Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (VIE), in accordance with the provisions and guidance of ASC Topic 810 Consolidation, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (EITF) Issue 04-5, Investors 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 is generally 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 entitys financial results. All significant intercompany balances and transactions have been eliminated in consolidation. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. Real Estate, Depreciation and Impairment Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements: 10-40 years; furniture, fixtures and equipment: 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360 (ASC 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 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 assets net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. Real Estate Held for Sale We periodically classify real estate assets as held for sale. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. Prior to January 1, 2015, the operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. Effective January 1, 2015, Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08) substantially changed the criteria for determining whether a disposition qualifies for discontinued operations presentation. Since the Company adopted ASU 2014-08, effective January 1, 2015, we have had no dispositions that met the discontinued operations criteria. Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. Fair Value Measurement We apply the guidance in ASC Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entitys 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 instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Deferred Costs Costs relating to the financing of properties are deferred and amortized over the life of the related financing agreement. Amortization is reflected as interest expense in the Consolidated Statements of Operations, with remaining terms ranging from 6 months to 40 years. Unamortized financing costs are written off when the financing agreement is extinguished before the maturity date. Related Parties We apply ASC Topic 805, Business Combinations, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity. Newly Issued Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changed the criteria for determining whether a disposal qualifies as discontinued operations. Under the new guidance, d isposals representing a strategic shift, or change in the entitys strategy, that has, or will have, a major effect on an entitys operations and financial results will be presented as discontinued operations. See Note 8 below. In May 2014, Accounting Standards Update (ASU) No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, was issued. This new guidance established a new single comprehensive revenue recognition model and provides for enhanced disclosures. Under the new policy, the nature, timing and amount of revenue recognized for certain transactions could differ from those recognized under existing accounting guidance. This new standard does not affect revenue recognized under lease contracts. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its financial position and results of operations, if any. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. The Company adopted ASU 2015-03 effective June 30, 2015. In February 2016, Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases was issued. This guidance establishes a new model for accounting for leases and provides for enhanced disclosures. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial position and results of operations, if any. |
REAL ESTATE ACTIVITY
REAL ESTATE ACTIVITY | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
REAL ESTATE ACTIVITY | NOTE 2. REAL ESTATE ACTIVITY Below is a summary of the real estate we owned as of June 30, 2016 (dollars in thousands): Apartments $ 656,832 Apartments under construction 46,196 Commercial properties 201,464 Land held for development 88,568 Land subject to sales contract 47,192 Total real estate $ 1,040,252 Less accumulated depreciation (148,718 ) Total real estate, net of depreciation $ 891,534 The highlights of our significant real estate transactions for the six months ended June 30, 2016, are discussed below. Purchases For the six months ended June 30, 2016, we acquired one income-producing apartment community for a purchase price of $32.1 million. In addition, we acquired three land parcels for future development for a total purchase price of $8.9 million, adding 31.04 acres to the development portfolio. Sales For the six months ended June 30, 2016, TCI sold a combined 53.1 acres of land located in Forney, Texas and McKinney, Texas to independent third parties for a total sales price of $7.3 million. We recorded an aggregate $3.4 million gain from the land sales. In addition, the Company sold one apartment community located in Irving, Texas to an independent third party for a total sales price of $8.1 million. We recorded a gain of $5.2 million from this sale. The Company also sold an industrial warehouse consisting of approximately 177,805 square feet. The sale resulted in a loss of approximately $0.2 million. In November 2015, the Company entered into a sales contract with an unrelated party. The contract was for most of the developable land owned by the Company in the Mercer Crossing Development located in Farmers Branch, Texas. In addition, IOT, ARL and Realty Advisors, Inc. (“RAI”) also sold land in this transaction. Total consideration for the sale was $75 million. The ultimate allocation of sales proceeds to the parties involved is yet to be determined and will be completed when the final use of the land, certain development commitments are completed and the note is collected. The agreement between TCI and the other parties related to this transaction provides for TCI to hold the subordinated note from the buyer in the amount of $50 million. At the closing, the note payable to related parties of $16.1 million was paid off. Due to an inadequate down payment from the buyer and the level of seller financing involved, the transaction is being accounted for under the deposit method. Under the deposit method, no revenue is recognized and the asset sold remains on the books until the criteria for full revenue recognition is met. As of June 30, 2016, the Company has approximately 91 acres of land, at various locations that were sold to related parties in multiple transactions. These transactions are treated as “subject to sales contract” on the Consolidated Balance Sheets. Due to the related party nature of the transactions, TCI has deferred the recording of the sales in accordance with ASC 360-20. We continue to invest in the development of apartment projects. During the six months ended June 30, 2016, we have expended $12.7 million related to the construction or predevelopment of various apartment complexes and capitalized $0.7 million of interest costs. |
NOTES AND INTEREST RECEIVABLE
NOTES AND INTEREST RECEIVABLE | 6 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
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 guarantees, 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. Below is a summary of our notes receivable as of June 30, 2016 (dollars in thousands): Borrower Maturity Date Interest Rate Amount Security Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Unified Housing Foundation, Inc. (Echo Station) (1) 12/32 12.00 % 1,481 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 2,000 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 6,368 Secured Unified Housing Foundation, Inc. (Limestone Canyon) (1) 12/32 12.00 % 4,640 Secured Unified Housing Foundation, Inc. (Limestone Canyon) (1) 12/32 12.00 % 2,653 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 6,000 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 1,953 Secured Unified Housing Foundation, Inc. (Parkside Crossing) (1) 12/32 12.00 % 1,936 Secured Unified Housing Foundation, Inc. (Sendero Ridge) (1) 12/32 12.00 % 4,812 Secured Unified Housing Foundation, Inc. (Sendero Ridge) (1) 12/32 12.00 % 4,491 Secured Unified Housing Foundation, Inc. (Timbers of Terrell) (1) 12/32 12.00 % 1,323 Secured Unified Housing Foundation, Inc. (Tivoli) (1) 12/32 12.00 % 7,966 Secured Unified Housing Foundation, Inc. (1) 12/17 12.00 % 1,207 Unsecured Unified Housing Foundation, Inc. (1) 12/18 12.00 % 3,994 Unsecured Unified Housing Foundation, Inc. (1) 12/18 12.00 % 6,407 Unsecured Unified Housing Foundation, Inc. (1) 06/19 12.00 % 5,400 Unsecured Other related party notes (1) Various Various 1,420 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 103 Various unsecured interests Accrued interest 4,971 Total Performing $ 76,002 Allowance for estimated losses (1,825 ) Total $ 74,177 (1) Related party notes We invest in 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 guarantees. At June 30, 2016, we had mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $74.2 million. During the six months ended June 30, 2016, we recognized interest income of $4.0 million related to these notes receivables. The Company has various notes receivable from Unified Housing Foundation, Inc. (UHF) and Foundation for Better Housing, Inc. (FBH). UHF and FBH are determined to be related parties due to our reliance upon the performance of the collateral secured under the notes receivable. Payments are due from surplus cash flow of operations of the properties. A sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes for the specific borrower. These notes are cross-collateralized for the specific borrower, but to the extent cash is received from a specific UHF or FBH property, it is applied first against any outstanding interest for the related-property note. The allowance on the UHF notes was a purchase allowance that was netted against the notes when acquired. |
INVESTMENT IN UNCONSOLIDATED JO
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | 6 Months Ended |
Jun. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | NOTE 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES Investments in unconsolidated joint ventures and other investees in which we have a 20% to 50% interest or otherwise exercise significant influence, are carried at cost and adjusted for the Companys proportionate share of their undistributed earnings or losses under the equity method of accounting. ARL is our parent company and is considered as an unconsolidated joint venture. Investments in unconsolidated joint ventures and investees consist of the following: Percentage ownership as of June 30, 2016 June 30, 2015 American Realty Investors, Inc. (1) 0.90 % 1.00 % (1) Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock Our 0.90% interest in the common stock of ARL is accounted for under the equity method because we exercise significant influence over the operations and financial activities. Accordingly, the investments are carried at cost, adjusted for the Companys proportionate share of earnings or losses. The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): As of June 30, 2016 2015 Real estate, net of accumulated depreciation $ 14,578 $ 14,285 Notes receivable 49,677 50,519 Other assets 126,134 127,217 Notes payable (19,821 ) (28,193 ) Other liabilities (103,520 ) (94,201 ) Shareholders equity (67,048 ) (69,627 ) For the Six Months Ended June 30, 2016 2015 Rents and interest and other income $ 3,589 $ 6,359 Depreciation (84 ) (78 ) Operating expenses (2,243 ) (1,810 ) Interest expense (2,323 ) (1,448 ) Net income (loss) $ (1,061 ) $ 3,023 Companys proportionate share of income (loss) $ (10 ) $ 30.23 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5. NOTES PAYABLE Below is a summary of our notes and interest payable as of June 30, 2016 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 546,718 $ 1,503 $ 548,221 Commercial 109,423 501 109,924 Land 31,062 117 31,179 Real estate held for sale 376 376 Real estate subject to sales contract 5,602 470 6,072 Mezzanine and Medley financing 121,900 (401 ) 121,499 Other 8,594 8,594 Total $ 823,675 $ 2,190 $ 825,865 Unamortized deferred borrowing costs (19,019 ) (19,019 ) Total $ 804,656 $ 2,190 $ 806,846 The segment labeled as Other consists of unsecured or stock-secured notes payable. There are various land mortgages, secured by the property, that are in the process of a modification or extension to the original note due to expiration of the loan. We are in constant contact with these lenders, working together in order to modify the terms of these loans and we anticipate a timely resolution that is similar to the existing agreement or subsequent modification. In conjunction with the development of various apartment projects and other developments, we drew down $11.4 million in construction loans during the six months ended June 30, 2016. The properties that we have sold to a related party and have deferred the recognition of the sale are treated as subject to sales contract on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6. RELATED PARTY TRANSACTIONS The following table reflects the activity in our net receivable from related party for the six months ended June 30, 2016 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2015 $ $ 90,515 $ 90,515 Cash transfers (1,995 ) (1,995 ) Advisory fees (4,702 ) (4,702 ) Net income fee (127 ) (127 ) Fees and commissions (1,564 ) (1,564 ) Cost reimbursements (1,411 ) (1,411 ) Interest income 2,218 2,218 Notes receivable purchased (5,356 ) (5,356 ) Expenses paid by advisor (3,481 ) (3,481 ) Financing (mortgage payments) 8,690 8,690 Sales/Purchases transactions (7,172 ) (7,172 ) Purchase of obligations (4,032 ) 4,032 Related party receivable, June 30, 2016 $ (21,150 ) $ 96,765 $ 75,615 During the ordinary course of business, we have related party transactions that include, but are not limited to, rental income, interest income, interest expense, general and administrative costs, commissions, management fees, and property expenses. In addition, we have assets and liabilities that include related party amounts. The related party amounts included in assets and liabilities, and the related party revenues and expenses received/paid are shown on the face of the Consolidated Financial Statements. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | NOTE 7. OPERATING SEGMENTS Our segments are based on our method of internal reporting, which classifies our operations by property type. Our property types are grouped into commercial, apartments, land and other operating segments. Significant differences among the accounting policies of the operating segments as compared to the Consolidated Financial Statements principally involve the calculation and allocation of administrative and other expenses. Management evaluates the performance of each of the operating segments and allocates resources to them based on their net operating income and cash flow. Items of income that are not reflected in the segments are interest, other income, gain on debt extinguishment, gain on condemnation award, equity in partnerships, and gains on sale of real estate. Expenses that are not reflected in the segments are provision for losses, advisory fees, net income and incentive fees, general and administrative, non-controlling interests and net loss from discontinued operations before gains on sale of real estate. The segment labeled as “Other” consists of revenue and operating expenses related to the notes receivable and corporate debt. Presented below is our reportable segments’ operating income for the three months ended June 30, 2016 and 2015, including capital expenditures and segment assets (dollars in thousands): For the Three Months Ended June 30, 2016 Properties Apartments Land Other Total Rental and other property revenues $ 8,664 $ 21,856 $ — $ 1 $ 30,521 Property operating expenses (4,595 ) (10,168 ) (138 ) (18 ) (14,919 ) Depreciation (2,227 ) (3,616 ) — — (5,843 ) Mortgage and loan interest (1,696 ) (6,109 ) (419 ) (3,868 ) (12,092 ) Interest income — — — 3,289 3,289 Gain on sale of income producing properties 6 5,162 — — 5,168 Gain on land sales — — 1,719 — 1,719 Segment operating income (loss) $ 152 $ 7,125 $ 1,162 $ (596 ) $ 7,843 Balance Sheet Data as of June 30, 2016 Capital expenditures $ 1,562 $ (146 ) $ 1,570 $ — $ 2,986 Real estate assets $ 149,536 $ 606,238 $ 135,760 $ — $ 891,534 Property Sales Sales price $ — $ 8,100 $ 3,154 $ — $ 11,254 Cost of sale (2,932 ) (1,435 ) (4,367 ) Gain on sale $ — $ 5,168 $ 1,719 $ — $ 6,887 Commercial For the Three Months Ended June 30, 2015 Properties Apartments Land Other Total Rental and other property revenues $ 6,678 $ 17,070 $ — $ 8 $ 23,756 Property operating expenses (3,134 ) (7,693 ) (129 ) 27 (10,929 ) Depreciation (2,197 ) (2,910 ) — — (5,107 ) Mortgage and loan interest (1,639 ) (3,293 ) (1,193 ) (2,091 ) (8,216 ) Interest income — — — 2,994 2,994 Gain on land sales — — 1,250 — 1,250 Segment operating income (loss) $ (292 ) $ 3,174 $ (72 ) $ 938 $ 3,748 Balance Sheet Data as of June 30, 2016 Capital expenditures $ 2,940 $ 1,498 $ 485 $ — $ 4,923 Real estate assets $ 160,403 $ 476,391 $ 155,617 $ — $ 792,411 Property Sales Sales price 1,878 1,878 Cost of sale $ — $ — $ (628 ) $ — $ (628 ) Gain on sale $ — $ — $ 1,250 $ — $ 1,250 The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the three months ended June 30, 2016 and 2015 (dollars in thousands): Three Months Ended June 30, 2016 2015 Segment operating income $ 7,843 $ 3,748 Other non-segment items of income (expense) General and administrative (729 ) (1,278 ) Net income fee to related party (54 ) (45 ) Advisory fee to related party (2,331 ) (1,951 ) Other income 27 14 Earnings from unconsolidated joint ventures and investees — 10 Litigation settlement — (45 ) Income tax expense — (12 ) Net income from continuing operations $ 4,756 $ 441 Presented below is our reportable segments’ operating income for the six months ended June 30, 2016 and 2015, including capital expenditures and segment assets (dollars in thousands): Commercial For the Six Months Ended June 30, 2016 Properties Apartments Land Other Total Rental and other property revenues $ 16,252 $ 43,170 $ — $ 2 $ 59,424 Property operating expenses (9,452 ) (19,562 ) (870 ) 2 (29,882 ) Depreciation (4,500 ) (7,151 ) — — (11,651 ) Mortgage and loan interest (3,647 ) (12,265 ) (915 ) (8,431 ) (25,258 ) Interest income — — — 7,136 7,136 Gain on sale of income-producing properties 6 4,919 — — 4,925 Gain on land sales — — 3,370 — 3,370 Segment operating income (loss) $ (1,341 ) $ 9,111 $ 1,585 $ (1,291 ) $ 8,064 Balance Sheet as of June 30, 2016 Capital expenditures $ 1,656 $ (146 ) $ 1,497 $ — $ 3,007 Real estate assets $ 149,536 $ 606,238 $ 135,760 $ — $ 891,534 Property Sales Sales price $ 1,500 $ 8,100 $ 7,334 $ — $ 16,934 Cost of sale (1,743 ) (2,932 ) (3,964 ) — (8,639 ) Gain (loss) on sale $ (243 ) $ 5,168 $ 3,370 $ — $ 8,295 Commercial For the Six Months Ended June 30, 2015 Properties Apartments Land Other Total Rental and other property revenues $ 13,464 $ 32,543 $ — $ 53 $ 46,060 Property operating expenses (7,147 ) (14,353 ) (310 ) 17 (21,793 ) Depreciation (4,092 ) (5,659 ) — — (9,751 ) Mortgage and loan interest (3,245 ) (9,364 ) (2,197 ) (3,595 ) (18,401 ) Interest income — — — 6,755 6,755 Gain on land sales — — 4,126 — 4,126 Segment operating income (loss) $ (1,020 ) $ 3,167 $ 1,619 $ 3,230 $ 6,996 Balance Sheet as of June 30, 2015 Capital expenditures $ 6,132 $ 1,755 $ 1,311 $ — $ 9,198 Real estate assets $ 160,403 $ 476,391 $ 155,617 $ — $ 792,411 Property Sales Sales price $ — $ — $ 9,135 $ — $ 9,135 Cost of sale — — (5,009 ) — (5,009 ) Gain on sale $ — $ — $ 4,126 $ — $ 4,126 The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the six months ended June 30, 2016 and 2015 (dollars in thousands): Six Months Ended June 30, 2016 2015 Segment operating income $ 8,064 $ 6,996 Other non-segment items of income (expense) General and administrative (2,338 ) (3,045 ) Net income fee to related party (126 ) (90 ) Advisory fee to related party (4,702 ) (3,894 ) Other income 294 81 Earnings (loss) from unconsolidated joint ventures and investees (2 ) 43 Litigation settlement — (118 ) Income tax benefit 1 90 Net income from continuing operations $ 1,191 $ 63 The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): As of June 30, 2016 2015 Segment assets $ 891,534 $ 792,411 Investments in real estate partnerships 2,460 2,155 Notes and interest receivable 74,177 74,867 Other assets 165,189 198,561 Total assets $ 1,133,360 $ 1,067,994 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 8. DISCONTINUED OPERATIONS Prior to January 1, 2015, we applied the provisions of ASC 360, “Property, Plant and Equipment”, which required 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. Effective January 1, 2015, the Company adopted the provisions of ASU 2014-08, which changed the criteria of ASC 360 related to determining which disposals qualify to be accounted for as discontinued operations and modified related reporting and disclosure requirements. Disposals representing a strategic shift in operations that have a major effect on a company’s operations and financial results will be presented as discontinued operations. There were no sales of income-producing properties in the first six months of 2016 that met the criteria for discontinued operations. Amounts included in discontinued operations represent the residual amounts from sales classified as discontinued operations prior to January 1, 2015. The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Revenues: Rental and other property revenues $ — $ — $ — $ 15 — — — 15 Expenses: Property operating expenses — 26 (3 ) (348 ) General and administrative — 7 — 104 Total operating expenses — 33 (3 ) (244 ) Other expense: Mortgage and loan interest — (1 ) — (1 ) Total other expense — (1 ) — (1 ) Gain (loss) from discontinued operations before income tax — (34 ) 3 258 Income tax benefit (expense) — 12 (1 ) (90 ) Income (loss) from discontinued operations $ — $ (22 ) $ 2 $ 168 Our application of ASC 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2015 as income from discontinued operations. This does not have an impact on net income available to common shareholders and only impacts the presentation of these properties within the Consolidated Statements of Operations. |
COMMITMENTS AND CONTINGENCIES A
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | NOTE 9. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY Dynex Capital, Inc. On July 20, 2015, the 68 th An original trial in 2004, which also included Dynex Capital, Inc. as a defendant, resulted in a jury awarding damages in favor of Basic for “lost opportunity,” as well as damages in favor of ART and in favor of TCI and its subsidiaries for “increased costs” and “lost opportunity.” The original Trial Court judge ignored the jury’s findings, however, and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in favor of the Dynex entities (the judge held the Plaintiffs were not entitled to any damages from the Dynex entities). After numerous appeals by all parties, Dynex Capital, Inc. was ultimately dismissed from the case and the remaining claims against Dynex Commercial were remanded to the Trial Court for a new judgment consistent with the jury’s findings. The Court entered the new Final Judgment against Dynex Commercial, Inc. on July 20, 2015. The Final Judgment entered against Dynex Commercial, Inc. on July 20, 2015 awarded Basic $0.256 million in damages, plus pre-judgment interest of $0.192 million for a total amount of $0.448 million. The Judgment awarded ART $14.2 million in damages, plus pre-judgment interest of $10.6 million for a total amount of $24.8 million. The Judgment awarded TCI $11.1 million, plus pre-judgment interest of $8.4 million for a total amount of $19.5 million. The Judgment also awarded Basic, ART, and TCI post-judgment interest at the rate of 5% per annum from April 25, 2014 until the date their respective damages are paid. Lastly, the Judgement awarded Basic, ART, and TCI $1.6 million collectively in attorneys’ fees from Dynex Commercial, Inc. The Company is working with counsel to identify assets and collect on the Final Judgment against Dynex Commercial, Inc., as well as explore possible additional claims, if any, against Dynex Capital, Inc. 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. Liquidity. Partnership Buyouts Litigation. The Company is involved in and vigorously defending against, a number of deficiency claims with respect to assets that have been foreclosed by various lenders. Such claims are generally against a consolidated subsidiary as the borrower or the Company as a guarantor of indebtedness or performance. Some of these proceedings may ultimately result in an unfavorable determination for the Company and/or one of its consolidated subsidiaries. While we cannot predict the final result of such proceedings, management believes that the maximum exposure to the Company and its consolidated subsidiaries, if any, will not exceed approximately $20.0 million in the aggregate and will occur, if at all, in future years. Guarantees. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 10. EARNINGS PER SHARE Earnings per Share (EPS) have been computed pursuant to the provisions of ASC Topic 260 Earnings per Share. The computation of basic EPS is calculated by dividing income available to common shareholders from continuing operations, adjusted for preferred dividends, by the weighted-average number of common shares outstanding during the period. Shares issued during the period shall be weighted for the portion of the period that they were outstanding. 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 10,500 shares are owned by Pillar, a related party. RAIs 89,500 shares have accrued dividends unpaid of approximately $4.4 million. Pillars 10,500 shares have accrued dividends unpaid of approximately $0.5 million. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11. SUBSEQUENT EVENTS The date to which events occurring after June 30, 2016, the date of the most recent balance sheet, have been evaluated for possible adjustment to the Consolidated Financial Statements or disclosure is August 12, 2016, which is the date on which the Consolidated Financial Statements were available to be issued. The Company has determined that there are no subsequent events to be reported. |
ORGANIZATION AND BASIS OF PRE21
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Properties | Properties We own or had interests in a total property portfolio of 56 income-producing properties as of June 30, 2016. The properties consisted of: · Seven commercial properties consisting of five office buildings and two retail centers comprising in aggregate approximately 1.7 million rentable square feet; · A golf course comprising approximately 96 acres · 48 apartment communities totaling 8,083 units; excluding apartments being developed; and · 3,612 acres of developed and undeveloped land. We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities that have not yet begun construction. At June 30, 2016, we had eight apartment projects in development. The third-party developer typically holds a general partner, as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property, while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all necessary equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our Consolidated Financial Statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developers partnership interests in exchange for any remaining unpaid developer fees. |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year. The year-end Consolidated Balance Sheet at December 31, 2015, was derived from the audited Consolidated Financial Statements at that date, but does not include all of the information and disclosures required by U.S. GAAP for complete financial statements. For further information, refer to the Consolidated Financial Statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2015. Certain 2015 Consolidated Financial Statement amounts have been reclassified to conform to the 2016 presentation. |
Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (VIE), in accordance with the provisions and guidance of ASC Topic 810 Consolidation, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (EITF) Issue 04-5, Investors 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 is generally 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 entitys financial results. All significant intercompany balances and transactions have been eliminated in consolidation. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. |
Real estate, depreciation, and impairment | Real Estate, Depreciation and Impairment Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements: 10-40 years; furniture, fixtures and equipment: 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360 (ASC 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 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 assets net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. |
Real estate held for sale | Real Estate Held for Sale We periodically classify real estate assets as held for sale. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. Prior to January 1, 2015, the operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. Effective January 1, 2015, Accounting Standards Update 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08) substantially changed the criteria for determining whether a disposition qualifies for discontinued operations presentation. Since the Company adopted ASU 2014-08, effective January 1, 2015, we have had no dispositions that met the discontinued operations criteria. |
Cost capitalization | Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. |
Fair value measurement | Fair Value Measurement We apply the guidance in ASC Topic 820, Fair Value Measurements and Disclosures, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entitys 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 instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
Deferred Costs | Deferred Costs Costs relating to the financing of properties are deferred and amortized over the life of the related financing agreement. Amortization is reflected as interest expense in the Consolidated Statements of Operations, with remaining terms ranging from 6 months to 40 years. Unamortized financing costs are written off when the financing agreement is extinguished before the maturity date. |
Related parties | Related Parties We apply ASC Topic 805, Business Combinations, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity. |
Newly Issued Accounting Pronouncements | Newly Issued Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (FASB) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changed the criteria for determining whether a disposal qualifies as discontinued operations. Under the new guidance, d isposals representing a strategic shift, or change in the entitys strategy, that has, or will have, a major effect on an entitys operations and financial results will be presented as discontinued operations. See Note 8 below. In May 2014, Accounting Standards Update (ASU) No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers, was issued. This new guidance established a new single comprehensive revenue recognition model and provides for enhanced disclosures. Under the new policy, the nature, timing and amount of revenue recognized for certain transactions could differ from those recognized under existing accounting guidance. This new standard does not affect revenue recognized under lease contracts. ASU 2014-09 is effective for reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact of the adoption of ASU 2014-09 on its financial position and results of operations, if any. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (ASU 2015-03). ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. Prior to the issuance of the standard, debt issuance costs were required to be presented in the balance sheet as an asset. The Company adopted ASU 2015-03 effective June 30, 2015. In February 2016, Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases was issued. This guidance establishes a new model for accounting for leases and provides for enhanced disclosures. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial position and results of operations, if any. |
REAL ESTATE ACTIVITY (Tables)
REAL ESTATE ACTIVITY (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
Schedule of the real estate owned | Below is a summary of the real estate we owned as of June 30, 2016 (dollars in thousands): Apartments $ 656,832 Apartments under construction 46,196 Commercial properties 201,464 Land held for development 88,568 Land subject to sales contract 47,192 Total real estate $ 1,040,252 Less accumulated depreciation (148,718 ) Total real estate, net of depreciation $ 891,534 |
NOTES AND INTEREST RECEIVABLE (
NOTES AND INTEREST RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Receivables [Abstract] | |
Schedule of notes receivable | Below is a summary of our notes receivable as of June 30, 2016 (dollars in thousands): Borrower Maturity Date Interest Rate Amount Security Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Unified Housing Foundation, Inc. (Echo Station) (1) 12/32 12.00 % 1,481 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 2,000 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 6,368 Secured Unified Housing Foundation, Inc. (Limestone Canyon) (1) 12/32 12.00 % 4,640 Secured Unified Housing Foundation, Inc. (Limestone Canyon) (1) 12/32 12.00 % 2,653 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 6,000 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 1,953 Secured Unified Housing Foundation, Inc. (Parkside Crossing) (1) 12/32 12.00 % 1,936 Secured Unified Housing Foundation, Inc. (Sendero Ridge) (1) 12/32 12.00 % 4,812 Secured Unified Housing Foundation, Inc. (Sendero Ridge) (1) 12/32 12.00 % 4,491 Secured Unified Housing Foundation, Inc. (Timbers of Terrell) (1) 12/32 12.00 % 1,323 Secured Unified Housing Foundation, Inc. (Tivoli) (1) 12/32 12.00 % 7,966 Secured Unified Housing Foundation, Inc. (1) 12/17 12.00 % 1,207 Unsecured Unified Housing Foundation, Inc. (1) 12/18 12.00 % 3,994 Unsecured Unified Housing Foundation, Inc. (1) 12/18 12.00 % 6,407 Unsecured Unified Housing Foundation, Inc. (1) 06/19 12.00 % 5,400 Unsecured Other related party notes (1) Various Various 1,420 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 103 Various unsecured interests Accrued interest 4,971 Total Performing $ 76,002 Allowance for estimated losses (1,825 ) Total $ 74,177 (1) Related party notes |
INVESTMENT IN UNCONSOLIDATED 24
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of investments in unconsolidated joint ventures | Investments in unconsolidated joint ventures and investees consist of the following: Percentage ownership as of June 30, 2016 June 30, 2015 American Realty Investors, Inc. (1) 0.90 % 1.00 % (1) Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock |
Schedule of the financial position and results of operations - unconsolidated parent | The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): As of June 30, 2016 2015 Real estate, net of accumulated depreciation $ 14,578 $ 14,285 Notes receivable 49,677 50,519 Other assets 126,134 127,217 Notes payable (19,821 ) (28,193 ) Other liabilities (103,520 ) (94,201 ) Shareholders equity (67,048 ) (69,627 ) For the Six Months Ended June 30, 2016 2015 Rents and interest and other income $ 3,589 $ 6,359 Depreciation (84 ) (78 ) Operating expenses (2,243 ) (1,810 ) Interest expense (2,323 ) (1,448 ) Net income (loss) $ (1,061 ) $ 3,023 Companys proportionate share of income (loss) $ (10 ) $ 30.23 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes and interest payable | Below is a summary of our notes and interest payable as of June 30, 2016 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 546,718 $ 1,503 $ 548,221 Commercial 109,423 501 109,924 Land 31,062 117 31,179 Real estate held for sale 376 376 Real estate subject to sales contract 5,602 470 6,072 Mezzanine and Medley financing 121,900 (401 ) 121,499 Other 8,594 8,594 Total $ 823,675 $ 2,190 $ 825,865 Unamortized deferred borrowing costs (19,019 ) (19,019 ) Total $ 804,656 $ 2,190 $ 806,846 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of accounts receivable from and (accounts payable) to related parties | The following table reflects the activity in our net receivable from related party for the six months ended June 30, 2016 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2015 $ $ 90,515 $ 90,515 Cash transfers (1,995 ) (1,995 ) Advisory fees (4,702 ) (4,702 ) Net income fee (127 ) (127 ) Fees and commissions (1,564 ) (1,564 ) Cost reimbursements (1,411 ) (1,411 ) Interest income 2,218 2,218 Notes receivable purchased (5,356 ) (5,356 ) Expenses paid by advisor (3,481 ) (3,481 ) Financing (mortgage payments) 8,690 8,690 Sales/Purchases transactions (7,172 ) (7,172 ) Purchase of obligations (4,032 ) 4,032 Related party receivable, June 30, 2016 $ (21,150 ) $ 96,765 $ 75,615 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of operating segment, including segment assets and expenditures | Presented below is our reportable segments’ operating income for the three months ended June 30, 2016 and 2015, including capital expenditures and segment assets (dollars in thousands): For the Three Months Ended June 30, 2016 Properties Apartments Land Other Total Rental and other property revenues $ 8,664 $ 21,856 $ — $ 1 $ 30,521 Property operating expenses (4,595 ) (10,168 ) (138 ) (18 ) (14,919 ) Depreciation (2,227 ) (3,616 ) — — (5,843 ) Mortgage and loan interest (1,696 ) (6,109 ) (419 ) (3,868 ) (12,092 ) Interest income — — — 3,289 3,289 Gain on sale of income producing properties 6 5,162 — — 5,168 Gain on land sales — — 1,719 — 1,719 Segment operating income (loss) $ 152 $ 7,125 $ 1,162 $ (596 ) $ 7,843 Balance Sheet Data as of June 30, 2016 Capital expenditures $ 1,562 $ (146 ) $ 1,570 $ — $ 2,986 Real estate assets $ 149,536 $ 606,238 $ 135,760 $ — $ 891,534 Property Sales Sales price $ — $ 8,100 $ 3,154 $ — $ 11,254 Cost of sale (2,932 ) (1,435 ) (4,367 ) Gain on sale $ — $ 5,168 $ 1,719 $ — $ 6,887 Commercial For the Three Months Ended June 30, 2015 Properties Apartments Land Other Total Rental and other property revenues $ 6,678 $ 17,070 $ — $ 8 $ 23,756 Property operating expenses (3,134 ) (7,693 ) (129 ) 27 (10,929 ) Depreciation (2,197 ) (2,910 ) — — (5,107 ) Mortgage and loan interest (1,639 ) (3,293 ) (1,193 ) (2,091 ) (8,216 ) Interest income — — — 2,994 2,994 Gain on land sales — — 1,250 — 1,250 Segment operating income (loss) $ (292 ) $ 3,174 $ (72 ) $ 938 $ 3,748 Balance Sheet Data as of June 30, 2016 Capital expenditures $ 2,940 $ 1,498 $ 485 $ — $ 4,923 Real estate assets $ 160,403 $ 476,391 $ 155,617 $ — $ 792,411 Property Sales Sales price 1,878 1,878 Cost of sale $ — $ — $ (628 ) $ — $ (628 ) Gain on sale $ — $ — $ 1,250 $ — $ 1,250 Presented below is our reportable segments’ operating income for the six months ended June 30, 2016 and 2015, including capital expenditures and segment assets (dollars in thousands): Commercial For the Six Months Ended June 30, 2016 Properties Apartments Land Other Total Rental and other property revenues $ 16,252 $ 43,170 $ — $ 2 $ 59,424 Property operating expenses (9,452 ) (19,562 ) (870 ) 2 (29,882 ) Depreciation (4,500 ) (7,151 ) — — (11,651 ) Mortgage and loan interest (3,647 ) (12,265 ) (915 ) (8,431 ) (25,258 ) Interest income — — — 7,136 7,136 Gain on sale of income-producing properties 6 4,919 — — 4,925 Gain on land sales — — 3,370 — 3,370 Segment operating income (loss) $ (1,341 ) $ 9,111 $ 1,585 $ (1,291 ) $ 8,064 Balance Sheet as of June 30, 2016 Capital expenditures $ 1,656 $ (146 ) $ 1,497 $ — $ 3,007 Real estate assets $ 149,536 $ 606,238 $ 135,760 $ — $ 891,534 Property Sales Sales price $ 1,500 $ 8,100 $ 7,334 $ — $ 16,934 Cost of sale (1,743 ) (2,932 ) (3,964 ) — (8,639 ) Gain (loss) on sale $ (243 ) $ 5,168 $ 3,370 $ — $ 8,295 Commercial For the Six Months Ended June 30, 2015 Properties Apartments Land Other Total Rental and other property revenues $ 13,464 $ 32,543 $ — $ 53 $ 46,060 Property operating expenses (7,147 ) (14,353 ) (310 ) 17 (21,793 ) Depreciation (4,092 ) (5,659 ) — — (9,751 ) Mortgage and loan interest (3,245 ) (9,364 ) (2,197 ) (3,595 ) (18,401 ) Interest income — — — 6,755 6,755 Gain on land sales — — 4,126 — 4,126 Segment operating income (loss) $ (1,020 ) $ 3,167 $ 1,619 $ 3,230 $ 6,996 Balance Sheet as of June 30, 2015 Capital expenditures $ 6,132 $ 1,755 $ 1,311 $ — $ 9,198 Real estate assets $ 160,403 $ 476,391 $ 155,617 $ — $ 792,411 Property Sales Sales price $ — $ — $ 9,135 $ — $ 9,135 Cost of sale — — (5,009 ) — (5,009 ) Gain on sale $ — $ — $ 4,126 $ — $ 4,126 |
Schedule of reconciliaton of segment information to consolidated statements of operations | The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the three months ended June 30, 2016 and 2015 (dollars in thousands): Three Months Ended June 30, 2016 2015 Segment operating income $ 7,843 $ 3,748 Other non-segment items of income (expense) General and administrative (729 ) (1,278 ) Net income fee to related party (54 ) (45 ) Advisory fee to related party (2,331 ) (1,951 ) Other income 27 14 Earnings from unconsolidated joint ventures and investees 10 Litigation settlement (45 ) Income tax expense (12 ) Net income from continuing operations $ 4,756 $ 441 The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the six months ended June 30, 2016 and 2015 (dollars in thousands): Six Months Ended June 30, 2016 2015 Segment operating income $ 8,064 $ 6,996 Other non-segment items of income (expense) General and administrative (2,338 ) (3,045 ) Net income fee to related party (126 ) (90 ) Advisory fee to related party (4,702 ) (3,894 ) Other income 294 81 Earnings (loss) from unconsolidated joint ventures and investees (2 ) 43 Litigation settlement (118 ) Income tax benefit 1 90 Net income from continuing operations $ 1,191 $ 63 |
Schedule of reconciliaton segment information to consolidated balance sheets | The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): As of June 30, 2016 2015 Segment assets $ 891,534 $ 792,411 Investments in real estate partnerships 2,460 2,155 Notes and interest receivable 74,177 74,867 Other assets 165,189 198,561 Total assets $ 1,133,360 $ 1,067,994 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of summarizes revenue and expense information for the properties sold and held for sale | The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands): For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Revenues: Rental and other property revenues $ — $ — $ — $ 15 — — — 15 Expenses: Property operating expenses — 26 (3 ) (348 ) General and administrative — 7 — 104 Total operating expenses — 33 (3 ) (244 ) Other expense: Mortgage and loan interest — (1 ) — (1 ) Total other expense — (1 ) — (1 ) Gain (loss) from discontinued operations before income tax — (34 ) 3 258 Income tax benefit (expense) — 12 (1 ) (90 ) Income (loss) from discontinued operations $ — $ (22 ) $ 2 $ 168 |
ORGANIZATION AND BASIS OF PRE29
ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) | 6 Months Ended | |
Jun. 30, 2016ft²aNumber | Dec. 31, 2015 | |
Number of apartment units | 8,083 | |
Number of apartment communities | 48 | |
Number of properties | 56 | |
Rentable square feet | ft² | 1,700,000 | |
Acres of land | a | 3,612 | |
Area of land comprising golf course | a | 96 | |
Minimum [Member] | ||
Percentage of ownership | 20.00% | |
Period of amortization financing costs | 6 months | |
Maximum [Member] | ||
Percentage of ownership | 50.00% | |
Period of amortization financing costs | 40 years | |
Commercial Properties [Member] | ||
Number of properties | 7 | |
Office Buildings [Member] | ||
Number of properties | 5 | |
Retail Centers [Member] | ||
Number of properties | 2 | |
Apartment Projects in Development [Member] | ||
Number of properties | 8 | |
Buildings and Improvements [Member] | Minimum [Member] | ||
Useful life of property, plant and equipment | 10 years | |
Buildings and Improvements [Member] | Maximum [Member] | ||
Useful life of property, plant and equipment | 40 years | |
Fixtures and Equipment [Member] | Minimum [Member] | ||
Useful life of property, plant and equipment | 5 years | |
Fixtures and Equipment [Member] | Maximum [Member] | ||
Useful life of property, plant and equipment | 10 years | |
Income Opportunities Realty Investors, Inc. [Member] | ||
Percentage of ownership | 81.10% | |
ARI Subsidiaries [Member] | ||
Percentage of ownership | 80.90% |
REAL ESTATE ACTIVITY (Details N
REAL ESTATE ACTIVITY (Details Narrative) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Nov. 30, 2015USD ($) | Jun. 30, 2016USD ($)ft²aNumber | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)ft²aNumber | Jun. 30, 2015USD ($) | |
Number of properties | Number | 56 | 56 | |||
Acquisition of income-producing properties | $ 33,857 | $ 105,729 | |||
Acres of land | a | 3,612 | 3,612 | |||
Gain on land sales | $ 1,719 | $ 1,250 | $ 3,370 | 4,126 | |
Proceeds from sales of income-producing properties | 9,377 | ||||
Payment for construction or predevelopment of various apartment complexes | 12,700 | ||||
Capitalized interest costs | $ 700 | $ 700 | |||
Related Parties [Member] | |||||
Area of land sold | a | 91 | 91 | |||
Apartment Community Acquired [Member] | |||||
Number of properties | Number | 1 | 1 | |||
Acquisition of income-producing properties | $ 32,100 | ||||
Land Parcel Acquired [Member] | |||||
Number of properties | Number | 3 | 3 | |||
Acquisition of income-producing properties | $ 8,900 | ||||
Acres of land | a | 31.04 | 31.04 | |||
Land [Member] | TEXAS | |||||
Area of land sold | a | 53.1 | 53.1 | |||
Land sales - total consideration | $ 75,000 | $ 7,300 | |||
Gain on land sales | $ 3,400 | ||||
Notes receivable - land sales | 50,000 | ||||
Payment for note payable related party | $ 16,100 | ||||
Apartment Community Sold [Member] | |||||
Number of properties | Number | 1 | 1 | |||
Gain (loss) on sale of real estate | $ 5,200 | ||||
Proceeds from sales of income-producing properties | $ 8,100 | ||||
Industrial Warehouse [Member] | |||||
Area of real estate property sold | ft² | 177,805 | 177,805 | |||
Gain (loss) on sale of real estate | $ (200) |
REAL ESTATE ACTIVITY (Details)
REAL ESTATE ACTIVITY (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Real Estate [Abstract] | ||
Apartments | $ 656,832 | |
Apartments under construction | 46,196 | |
Commercial properties | 201,464 | |
Land held for development | 88,568 | |
Land subject to sales contract | 47,192 | |
Total real estate | 1,040,252 | |
Less accumulated depreciation | (148,718) | |
Total real estate | $ 891,534 | $ 844,019 |
NOTES AND INTEREST RECEIVABLE32
NOTES AND INTEREST RECEIVABLE (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Interest income | $ 2,218 |
Mortgage Loans [Member] | Related Parties [Member] | |
Total notes and interest receivable | 74,200 |
Interest income | $ 4,000 |
NOTES AND INTEREST RECEIVABLE33
NOTES AND INTEREST RECEIVABLE (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($) | ||
Allowance for estimated losses | $ (1,825) | |
Performing Loans [Member] | ||
Performing loans, total | 76,002 | |
Accrued interest | 4,971 | |
Total notes and interest receivable | $ 74,177 | |
Performing Loans [Member] | H198, LLC (Las Vegas Land) [Member] | ||
Maturity Date | Jan. 31, 2020 | |
Description of property | Las Vegas Land | |
Interest Rate | 12.00% | |
Performing loans, total | $ 5,907 | |
Description of Security | Secured | |
Performing Loans [Member] | Oulan-Chikh Family Trust [Member] | ||
Maturity Date | Mar. 31, 2021 | |
Interest Rate | 8.00% | |
Performing loans, total | $ 174 | |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Echo Station) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Echo Station | |
Interest Rate | 12.00% | |
Performing loans, total | $ 1,481 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Lakeshore Villas | |
Interest Rate | 12.00% | |
Performing loans, total | $ 2,000 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Lakeshore Villas | |
Interest Rate | 12.00% | |
Performing loans, total | $ 6,368 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Limestone Canyon) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Limestone Canyon | |
Interest Rate | 12.00% | |
Performing loans, total | $ 4,640 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Limestone Canyon) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Limestone Canyon | |
Interest Rate | 12.00% | |
Performing loans, total | $ 2,653 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Limestone Ranch | |
Interest Rate | 12.00% | |
Performing loans, total | $ 6,000 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Limestone Ranch | |
Interest Rate | 12.00% | |
Performing loans, total | $ 1,953 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Parkside Crossing) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Parkside Crossing | |
Interest Rate | 12.00% | |
Performing loans, total | $ 1,936 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Sendero Ridge) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Sendero Ridge | |
Interest Rate | 12.00% | |
Performing loans, total | $ 4,812 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Sendero Ridge) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Sendero Ridge | |
Interest Rate | 12.00% | |
Performing loans, total | $ 4,491 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Timbers of Terrell) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Timbers of Terrell | |
Interest Rate | 12.00% | |
Performing loans, total | $ 1,323 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. (Tivoli) [Member] | ||
Maturity Date | Dec. 31, 2032 | |
Description of property | Tivoli | |
Interest Rate | 12.00% | |
Performing loans, total | $ 7,966 | [1] |
Description of Security | Secured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. [Member] | ||
Maturity Date | Dec. 31, 2017 | |
Interest Rate | 12.00% | |
Performing loans, total | $ 1,207 | [1] |
Description of Security | Unsecured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. #2 [Member] | ||
Maturity Date | Dec. 31, 2018 | |
Interest Rate | 12.00% | |
Performing loans, total | $ 3,994 | [1] |
Description of Security | Unsecured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. #3 [Member] | ||
Maturity Date | Dec. 31, 2018 | |
Interest Rate | 12.00% | |
Performing loans, total | $ 6,407 | [1] |
Description of Security | Unsecured | |
Performing Loans [Member] | Unified Housing Foundation, Inc. #4 [Member] | ||
Maturity Date | Jun. 30, 2019 | |
Interest Rate | 12.00% | |
Performing loans, total | $ 5,400 | [1] |
Description of Security | Unsecured | |
Performing Loans [Member] | Other Related Party Notes [Member] | ||
Description of Interest Rate | Various | |
Performing loans, total | $ 1,420 | [1] |
Description of Security | Various unsecured interests | |
Performing Loans [Member] | Other Non-Related Party Notes [Member] | ||
Description of Interest Rate | Various | |
Performing loans, total | $ 796 | |
Description of Security | Various secured interests | |
Performing Loans [Member] | Other Non-Related Party Notes [Member] | ||
Description of Interest Rate | Various | |
Performing loans, total | $ 103 | |
Description of Security | Various unsecured interests | |
[1] | Related party notes |
INVESTMENT IN UNCONSOLIDATED 34
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details Narrative) - shares | Jun. 30, 2016 | Dec. 31, 2015 |
American Realty Investors, Inc [Member] | ||
Ownership of parent company shares | 140,000 | |
Minimum [Member] | ||
Percentage of ownership | 20.00% | |
Maximum [Member] | ||
Percentage of ownership | 50.00% |
INVESTMENT IN UNCONSOLIDATED 35
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details) | Jun. 30, 2016 | Jun. 30, 2015 | |
American Realty Investors, Inc. [Member] | |||
Percentage of ownership | [1] | 0.90% | 1.00% |
[1] | Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock |
INVESTMENT IN UNCONSOLIDATED 36
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Financial Position | |||||
Real estate, net of accumulated depreciation | $ 891,534,000 | $ 891,534,000 | $ 844,019,000 | ||
Other assets | 39,741,000 | 39,741,000 | 41,645,000 | ||
Notes payable | 800,398,000 | 800,398,000 | 772,636,000 | ||
Shareholders' equity | 207,421,000 | 207,421,000 | $ 206,748,000 | ||
Results of Operations | |||||
Rents and interest and other income | 30,521,000 | $ 23,756,000 | 59,424,000 | $ 46,060,000 | |
Depreciation | (5,843,000) | (5,107,000) | (11,651,000) | (9,751,000) | |
Operating expenses | 24,751,000 | 19,310,000 | 49,574,000 | 38,573,000 | |
Income (loss) from discontinued operations | (22,000) | 2,000 | 168,000 | ||
Net income (loss) | 4,756,000 | 419,000 | 1,193,000 | 231,000 | |
Company's proportionate share of income (loss) | 10,000 | (2,000) | 43,000 | ||
American Realty Investors, Inc. [Member] | |||||
Financial Position | |||||
Real estate, net of accumulated depreciation | 14,578,000 | 14,285,000 | 14,578,000 | 14,285,000 | |
Notes receivable | 49,677,000 | 50,519,000 | 49,677,000 | 50,519,000 | |
Other assets | 126,134,000 | 127,217,000 | 126,134,000 | 127,217,000 | |
Notes payable | (19,821,000) | (28,193,000) | (19,821,000) | (28,193,000) | |
Other liabilities | (103,520,000) | (94,201,000) | (103,520,000) | (94,201,000) | |
Shareholders' equity | $ (67,048,000) | $ (69,627,000) | (67,048,000) | (69,627,000) | |
Results of Operations | |||||
Rents and interest and other income | 3,589,000 | 6,359,000 | |||
Depreciation | 84,000 | 78,000 | |||
Operating expenses | (2,243,000) | (1,810,000) | |||
Interest expense | 2,323,000 | 1,448,000 | |||
Net income (loss) | (1,061,000) | 3,023,000 | |||
Company's proportionate share of income (loss) | $ (10,000) | $ 30,230 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Construction Loans [Member] | |
Proceeds from draw on loan facility | $ 11,400 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) $ in Thousands | Jun. 30, 2016USD ($) |
Notes Payable | $ 804,656 |
Accrued Interest | 2,190 |
Total Debt | 806,846 |
Apartments [Member] | |
Notes Payable | 546,718 |
Accrued Interest | 1,503 |
Total Debt | 548,221 |
Commercial [Member] | |
Notes Payable | 109,423 |
Accrued Interest | 501 |
Total Debt | 109,924 |
Land [Member] | |
Notes Payable | 31,062 |
Accrued Interest | 117 |
Total Debt | 31,179 |
Real Estate Held for Sale [Member] | |
Notes Payable | 376 |
Total Debt | 376 |
Real Estate Subject To Sales Contract [Member] | |
Notes Payable | 5,602 |
Accrued Interest | 470 |
Total Debt | 6,072 |
Mezzanine and Medley Financing [Member] | |
Notes Payable | 121,900 |
Accrued Interest | (401) |
Total Debt | 121,499 |
Other [Member] | |
Notes Payable | 8,594 |
Total Debt | 8,594 |
Total Notes Payable [Member] | |
Notes Payable | 823,675 |
Accrued Interest | 2,190 |
Total Debt | 825,865 |
Unamortized deferred borrowing costs | $ (19,019) |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND FEES (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($)a | |
Interest income | $ 2,218 |
Notes payable | $ 804,656 |
Area of land | a | 3,612 |
Mezzanine and Medley Financing [Member] | |
Notes payable | $ 121,900 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Related party receivable | $ 90,515 | |||
Cash transfers | (1,995) | |||
Advisory fees | $ (2,331) | $ (1,951) | (4,702) | $ (3,894) |
Net income fee | (54) | $ (45) | (126) | $ (90) |
Fees and commissions | (1,564) | |||
Cost reimbursements | (1,411) | |||
Interest income | 2,218 | |||
Notes receivable purchased | (5,356) | |||
Expenses paid by Advisor | (3,841) | |||
Financing (mortgage payments) | 8,690 | |||
Sales/purchases transactions | (7,172) | |||
Related party receivable | 75,615 | 75,615 | ||
Pillar Income Asset Management, Inc [Member] | ||||
Cash transfers | (1,995) | |||
Advisory fees | (4,702) | |||
Net income fee | (127) | |||
Fees and commissions | (1,564) | |||
Cost reimbursements | (1,411) | |||
Notes receivable purchased | (5,356) | |||
Expenses paid by Advisor | (3,481) | |||
Financing (mortgage payments) | 8,690 | |||
Sales/purchases transactions | (7,172) | |||
Purchase of obligations | (4,032) | |||
Related party receivable | (21,150) | (21,150) | ||
American Realty Investors, Inc [Member] | ||||
Related party receivable | 90,515 | |||
Interest income | 2,218 | |||
Purchase of obligations | 4,032 | |||
Related party receivable | $ 96,765 | $ 96,765 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | $ 30,521 | $ 23,756 | $ 59,424 | $ 46,060 |
Property operating expenses | (14,919) | (10,929) | (29,882) | (21,793) |
Depreciation | (5,843) | (5,107) | (11,651) | (9,751) |
Gain on the sale of income producing properties | 5,168 | 4,925 | ||
Gain on land sales | 1,719 | 1,250 | 3,370 | 4,126 |
Segment operating income (loss) | 5,770 | 4,446 | 9,850 | 7,487 |
Total real estate | 891,534 | 891,534 | ||
Commercial Properties [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 8,664 | 6,678 | 16,252 | 13,464 |
Property operating expenses | (4,595) | (3,134) | (9,452) | (7,147) |
Depreciation | (2,227) | (2,197) | (4,500) | (4,092) |
Mortgage and loan interest | (1,696) | (1,639) | (3,647) | (3,245) |
Gain on the sale of income producing properties | 6 | 6 | ||
Segment operating income (loss) | 152 | (292) | (1,341) | (1,020) |
Capital expenditures | 1,562 | 2,940 | 1,656 | 6,132 |
Total real estate | 149,536 | 160,403 | 149,536 | 160,403 |
Property Sales | ||||
Sales price | 1,500 | |||
Cost of sale | (1,743) | |||
Gain (loss) on sale | (243) | |||
Apartments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 21,856 | 17,070 | 43,170 | 32,543 |
Property operating expenses | (10,168) | (7,693) | (19,562) | (14,353) |
Depreciation | (3,616) | (2,910) | (7,151) | (5,659) |
Mortgage and loan interest | (6,109) | (3,293) | (12,265) | (9,364) |
Gain on the sale of income producing properties | 5,162 | 4,919 | ||
Segment operating income (loss) | 7,125 | 3,174 | 9,111 | 3,167 |
Capital expenditures | (146) | 1,498 | (146) | 1,755 |
Total real estate | 606,238 | 476,391 | 606,238 | 476,391 |
Property Sales | ||||
Sales price | 8,100 | 8,100 | ||
Cost of sale | (2,932) | (2,932) | ||
Gain (loss) on sale | 5,168 | 5,168 | ||
Land [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Property operating expenses | (138) | (129) | (870) | (310) |
Mortgage and loan interest | (419) | (1,193) | (915) | (2,197) |
Gain on land sales | 1,719 | 1,250 | 3,370 | 4,126 |
Segment operating income (loss) | 1,162 | (72) | 1,585 | 1,619 |
Capital expenditures | 1,570 | 485 | 1,497 | 1,311 |
Total real estate | 135,760 | 155,617 | 135,760 | 155,617 |
Property Sales | ||||
Sales price | 3,154 | 1,878 | 7,334 | 9,135 |
Cost of sale | (1,435) | (628) | (3,964) | (5,009) |
Gain (loss) on sale | 1,719 | 1,250 | 3,370 | 4,126 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 1 | 8 | 2 | 53 |
Property operating expenses | (18) | 27 | 2 | 17 |
Mortgage and loan interest | (3,868) | (2,091) | (8,431) | (3,595) |
Interest income | 3,289 | 2,994 | 7,136 | 6,755 |
Segment operating income (loss) | (596) | 938 | (1,291) | 3,230 |
Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 30,521 | 23,756 | 59,424 | 46,060 |
Property operating expenses | (14,919) | (10,929) | (29,882) | (21,793) |
Depreciation | (5,843) | (5,107) | (11,651) | (9,751) |
Mortgage and loan interest | (12,092) | (8,216) | (25,258) | (18,401) |
Interest income | 3,289 | 2,994 | 7,136 | 6,755 |
Gain on the sale of income producing properties | 5,168 | 4,925 | ||
Gain on land sales | 1,719 | 1,250 | 3,370 | 4,126 |
Segment operating income (loss) | 7,843 | 3,748 | 8,064 | 6,996 |
Capital expenditures | 2,986 | 4,923 | 3,007 | 9,198 |
Total real estate | 891,534 | 792,411 | 891,534 | 792,411 |
Property Sales | ||||
Sales price | 11,254 | 1,878 | 16,934 | 9,135 |
Cost of sale | (4,367) | (628) | (8,639) | (5,009) |
Gain (loss) on sale | $ 6,887 | $ 1,250 | $ 8,295 | $ 4,126 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Segment operating income | $ 5,770 | $ 4,446 | $ 9,850 | $ 7,487 |
Other non-segment items of income (expense) | ||||
General and administrative | (1,604) | (1,278) | (3,213) | (3,045) |
Net income fee to related party | (54) | (45) | (126) | (90) |
Advisory fee to related party | (2,331) | (1,951) | (4,702) | (3,894) |
Other income | 902 | 14 | 1,169 | 81 |
Earnings (loss) from unconsolidated joint ventures and investees | 10 | (2) | 43 | |
Income tax (expense) benefit | (12) | 1 | 90 | |
Net income from continuing operations | 4,756 | 441 | 1,191 | 63 |
Total Segments [Member] | ||||
Segment operating income | 7,843 | 3,748 | 8,064 | 6,996 |
Other non-segment items of income (expense) | ||||
General and administrative | (729) | (1,278) | (2,338) | (3,045) |
Net income fee to related party | (54) | (45) | (126) | (90) |
Advisory fee to related party | (2,331) | (1,951) | (4,702) | (3,894) |
Other income | 27 | 14 | 294 | 81 |
Earnings (loss) from unconsolidated joint ventures and investees | 10 | (2) | 43 | |
Litigation settlement | (45) | (118) | ||
Income tax (expense) benefit | (12) | 1 | 90 | |
Net income from continuing operations | $ 4,756 | $ 441 | $ 1,191 | $ 63 |
OPERATING SEGMENTS (Details 2)
OPERATING SEGMENTS (Details 2) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 | Jun. 30, 2015 |
Total real estate | $ 891,534 | $ 844,019 | |
Investments in real estate partnerships | 2,460 | 5,243 | |
Other assets | 39,741 | 41,645 | |
Total assets | 1,133,360 | $ 1,110,204 | |
Total Segments [Member] | |||
Total real estate | 891,534 | $ 792,411 | |
Investments in real estate partnerships | 2,460 | 2,155 | |
Notes and interest receivable | 74,177 | 74,867 | |
Other assets | 165,189 | 198,561 | |
Total assets | $ 1,133,360 | $ 1,067,994 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues: | |||
Rental and other property revenues | $ 15 | ||
Revenues | 15 | ||
Expenses: | |||
Property operating expenses | $ 26 | $ (3) | (348) |
General and administrative | 7 | 104 | |
Total operating expenses | 33 | (3) | (244) |
Other income (expense): | |||
Mortgage and loan interest | (1) | (1) | |
Total other income (expenses) | (1) | (1) | |
Gain (loss) from discontinued operations before income tax | (34) | 3 | 258 |
Income tax benefit (expense) | 12 | (1) | (90) |
Income (loss) from discontinued operations | $ (22) | $ 2 | $ 168 |
COMMITMENTS, CONTINGENCIES, AND
COMMITMENTS, CONTINGENCIES, AND LIQUIDITY (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended |
Jul. 20, 2015 | Jun. 30, 2016 | |
Related Parties [Member] | Mezzanine and Medley Financing [Member] | ||
Guarantor - notes payable | $ 60,350 | |
Dynex Capital, Inc. [Member] | ||
Description of plaintiff | ART and TCI | |
Description of defendant | Dynex Capital Inc. | |
Description of action taken by court | On July 20, 2015, the 68 th | |
Damages - awarded amount | $ 256 | |
Damages - pre-judgement interest | 192 | |
Damages - total | 448 | |
Awarded attorney fees | $ 1,600 | |
Post-judgment interest rate | 5.00% | |
Dynex Capital, Inc. [Member] | Transcontinential Realty Investors [Member] | ||
Damages - awarded amount | $ 11,100 | |
Damages - pre-judgement interest | 8,400 | |
Damages - total | 19,500 | |
Dynex Capital, Inc. [Member] | American Reality Trust, Inc. [Member] | ||
Damages - awarded amount | 14,200 | |
Damages - pre-judgement interest | 10,600 | |
Damages - total | $ 24,800 | |
Pending Litigation [Member] | ||
Description of allegation | The Company is involved in and vigorously defending against, a number of deficiency claims with respect to assets that have been foreclosed by various lenders. | |
Maximum loss exposure | $ 20,000 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - Series D Preferred Stock [Member] - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 6 Months Ended | |
Nov. 30, 2006 | Jun. 30, 2016 | Dec. 31, 2015 | |
Stock issued | 100,000 | ||
Dividend rate | 7.00% | 9.00% | |
Preferred stock, liquidation preference per share | $ 100 | $ 100 | $ 100 |
RAI [Member] | |||
Accrued dividends unpaid | $ 4,400 | ||
Stock held by related parties (shares) | 89,500 | ||
Pillar Income Asset Management, Inc [Member] | |||
Accrued dividends unpaid | $ 500 | ||
Stock held by related parties (shares) | 10,500 |