Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 14, 2017 | |
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, 2017 | |
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 | 2,017 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Real estate, at cost | $ 1,040,761 | $ 998,498 |
Real estate subject to sales contracts at cost | 46,403 | 46,956 |
Less accumulated depreciation | (166,335) | (154,281) |
Total real estate | 920,829 | 891,173 |
Notes and interest receivable: | ||
Performing (including $60,821 in 2017 and $67,829 in 2016 from related parties) | 80,693 | 81,133 |
Less allowance for doubtful accounts (including $1,825 in 2017 and 2016 from related parties) | (1,825) | (1,825) |
Total notes and interest receivable | 78,868 | 79,308 |
Cash and cash equivalents | 59,034 | 17,506 |
Restricted cash | 37,436 | 38,227 |
Investments in unconsolidated joint ventures and investees | 2,428 | 2,446 |
Receivable from related party | 86,849 | 101,649 |
Other assets | 64,647 | 55,605 |
Total assets | 1,250,091 | 1,185,914 |
Liabilities: | ||
Notes and interest payable | 819,395 | 835,528 |
Notes related to real estate held for sale | 376 | 376 |
Notes related to real estate subject to sales contracts | 4,012 | 5,612 |
Bond and bond interest payable | 104,505 | |
Deferred revenue (including $50,669 in 2017 and $50,669 in 2016 to related parties) | 70,771 | 71,065 |
Accounts payable and other liabilities (including $6,667 in 2017 and $6,060 in 2016 to related parties) | 42,263 | 48,856 |
Total liabilities | 1,041,322 | 961,437 |
Shareholders' equity: | ||
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares; issued and outstanding zero shares in 2017 and 2016. Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2017 and 2016 (liquidation preference $100 per share) | 1 | 1 |
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2017 and 2016; outstanding 8,717,767 shares in 2017 and 2016 | 87 | 87 |
Treasury stock at cost, 200 shares in 2017 and 2016 | (2) | (2) |
Paid-in capital | 269,403 | 269,849 |
Retained earnings | (79,594) | (64,050) |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 189,895 | 205,885 |
Non-controlling interest | 18,874 | 18,592 |
Total shareholders' equity | 208,769 | 224,477 |
Total liabilities and shareholders' equity | $ 1,250,091 | $ 1,185,914 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Performing | $ 80,693 | $ 81,133 |
Allowance for doubtful accounts (in dollars) | 1,825 | 1,825 |
Deferred revenue from related parties | $ 70,771 | $ 71,065 |
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 | $ 60,821 | $ 67,829 |
Allowance for doubtful accounts (in dollars) | 1,825 | 1,825 |
Deferred revenue from related parties | 50,669 | 50,669 |
Accounts payable and other liabilities to related parties (in dollars) | $ 6,667 | $ 6,060 |
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, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenues: | ||||
Rental and other property revenues (including $199 and $174 for the three months and $389 and $347 for the six months ended 2017 and 2016, respectively, from related parties) | $ 31,302 | $ 30,521 | $ 62,837 | $ 59,424 |
Expenses: | ||||
Property operating expenses (including $232 and $223 for the three months and $460 and $423 for the six months ended 2017 and 2016, respectively, from related parties) | 15,210 | 14,919 | 31,099 | 29,882 |
Depreciation and amortization | 6,378 | 5,843 | 12,681 | 11,651 |
General and administrative (including $558 and $753 for the three months and $1,072 and $1,502 for the six months ended 2017 and 2016, respectively, from related parties) | 1,295 | 1,604 | 3,075 | 3,213 |
Net income fee to related party | 76 | 54 | 136 | 126 |
Advisory fee to related party | 2,501 | 2,331 | 4,806 | 4,702 |
Total operating expenses | 25,460 | 24,751 | 51,797 | 49,574 |
Net operating income | 5,842 | 5,770 | 11,040 | 9,850 |
Other income (expenses): | ||||
Interest income (including $3,070 and $3,274 for the three months and $6,502 and $6,008 for the six months ended 2017 and 2016, respectively, from related parties) | 3,709 | 3,289 | 7,130 | 7,136 |
Other income (expense) | (104) | 902 | 1,338 | 1,169 |
Mortgage and loan interest (including $283 and $165 for the three months and $836 and $627 for the six months ended 2017 and 2016, respectively, from related parties) | (15,783) | (12,092) | (30,973) | (25,258) |
Losses from unconsolidated joint ventures and investees | (10) | (18) | (2) | |
Foreign currency translation loss | (3,425) | (3,748) | ||
Total other expenses | (15,613) | (7,901) | (26,271) | (16,955) |
Loss before gain on income-producing properties, gain (loss) on land sales, non-controlling interest, and taxes | (9,771) | (2,131) | (15,231) | (7,105) |
Gain on sale of income producing properties | 5,168 | 4,925 | ||
Gain (loss) on land sales | (476) | 1,719 | (31) | 3,370 |
Net income (loss) from continuing operations before taxes | (10,247) | 4,756 | (15,262) | 1,190 |
Income tax benefit | 1 | |||
Net loss from continuing operations | (10,247) | 4,756 | (15,262) | 1,191 |
Discontinued operations: | ||||
Net income from discontinued operations | 3 | |||
Income tax expense from discontinued operations | (1) | |||
Net income from discontinued operations | 2 | |||
Net income (loss) | (10,247) | 4,756 | (15,262) | 1,193 |
Net income attributable to non-controlling interest | (163) | (97) | (282) | (74) |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | (10,410) | 4,659 | (15,544) | 1,119 |
Preferred dividend requirement | (224) | (224) | (446) | (446) |
Net income (loss) applicable to common shares | $ (10,634) | $ 4,435 | $ (15,990) | $ 673 |
Earnings per share - basic | ||||
Net income (loss) from continuing operations (in dollars per share) | $ (1.22) | $ 0.51 | $ (1.83) | $ 0.08 |
Net income (loss) applicable to common shares (in dollars per share) | (1.22) | 0.51 | (1.83) | 0.08 |
Earnings per share - diluted | ||||
Net income (loss) from continuing operations (in dollars per share) | (1.22) | 0.51 | (1.83) | 0.08 |
Net income (loss) applicable to common shares (in dollars per share) | $ (1.22) | $ 0.51 | $ (1.83) | $ 0.08 |
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 (loss) from continuing operations | $ (10,410) | $ 4,659 | $ (15,544) | $ 1,117 |
Net income from discontinued operations | 2 | |||
Net income (loss) | $ (10,410) | $ 4,659 | $ (15,544) | $ 1,119 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Rental and other property revenues | $ 31,302 | $ 30,521 | $ 62,837 | $ 59,424 |
Property operating expenses | 15,210 | 14,919 | 31,099 | 29,882 |
General and administrative | 1,295 | 1,604 | 3,075 | 3,213 |
Interest income | 3,709 | 3,289 | 7,130 | 7,136 |
Mortgage and loan interest | 15,783 | 12,092 | 30,973 | 25,258 |
Related Parties [Member] | ||||
Rental and other property revenues | 199 | 174 | 389 | 347 |
Property operating expenses | 232 | 223 | 460 | 423 |
General and administrative | 558 | 753 | 1,072 | 1,502 |
Interest income | 3,070 | 3,274 | 6,502 | 6,008 |
Mortgage and loan interest | $ 283 | $ 165 | $ 836 | $ 627 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2017 - 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, 2016 | $ 224,477 | $ (64,852) | $ 1 | $ 87 | $ (2) | $ 269,849 | $ (64,050) | $ 18,592 |
Balance, at beginning (in shares) at Dec. 31, 2016 | 8,717,967 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Series D preferred stock dividends (9.0% per year) | (446) | (446) | ||||||
Net loss | (15,262) | (15,262) | (15,544) | 282 | ||||
Balance, at the end at Jun. 30, 2017 | $ 208,769 | $ (80,114) | $ 1 | $ 87 | $ (2) | $ 269,403 | $ (79,594) | $ 18,874 |
Balance, at the end (in shares) at Jun. 30, 2017 | 8,717,967 |
CONSOLIDATED STATEMENT OF SHAR7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) | 6 Months Ended |
Jun. 30, 2017 | |
Series D Preferred Stock [Member] | |
Preferred stock dividend (in percent) | 9.00% |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ (15,262) | $ 1,193 |
Total comprehensive income (loss) | (15,262) | 1,193 |
Comprehensive income attributable to non-controlling interest | (282) | (74) |
Comprehensive income (loss) attributable to Transcontinental Realty Investors, Inc. | $ (15,544) | $ 1,119 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flow From Operating Activities: | ||
Net income (loss) | $ (15,262) | $ 1,193 |
Adjustments to reconcile net income (loss) applicable to common shares to net cash flows from operating activities: | ||
Gain on sale of income-producing properties | (4,925) | |
(Loss) gain on sale of land | 31 | (3,370) |
Depreciation and amortization | 12,681 | 10,588 |
Amortization of deferred borrowing costs | 2,122 | 2,269 |
Amortization of bond issuance costs | 462 | |
Earnings from unconsolidated joint ventures and investees | 18 | 2 |
Decrease (increase) in assets: | ||
Accrued interest receivable | 2,729 | (413) |
Other assets | (3,181) | 962 |
Prepaid expense | (4,190) | (724) |
Escrow | 1,826 | 16,105 |
Earnest money | (1,164) | (259) |
Rent receivables | (1,669) | |
Related party receivables | 14,800 | 14,900 |
Increase (decrease) in liabilities: | ||
Accrued interest payable | 141 | (404) |
Other liabilities | (4,076) | (5,003) |
Net cash provided by operating activities | 5,268 | 30,921 |
Cash Flow From Investing Activities: | ||
Proceeds from notes receivable | 10,928 | 2,637 |
Originations or advances on notes receivable | (4,116) | (6,850) |
Acquisition of land held for development | (11,440) | |
Acquisition of income-producing properties | (33,857) | |
Proceeds from sale of income-producing properties | 9,377 | |
Proceeds from sale of land | 1,596 | 6,347 |
Investment in unconsolidated real estate entities | 18 | 2,781 |
Improvement of land held for development | (585) | (1,722) |
Improvement of income-producing properties | (1,898) | (1,987) |
Construction and development of new properties | (26,708) | (27,966) |
Net cash used in investing activities | (32,205) | (51,240) |
Cash Flow From Financing Activities: | ||
Proceeds from Series A bonds | 102,364 | |
Proceeds from notes payable | 82,865 | 78,487 |
Recurring amortization of principal on notes payable | (10,329) | (6,624) |
Payments on maturing notes payable | (112,918) | (45,033) |
Deferred financing costs | 676 | (1,283) |
Bond issuance costs | 6,253 | |
Preferred stock dividends - Series D | (446) | (446) |
Net cash provided by financing activities | 68,465 | 25,101 |
Net increase (decrease) in cash and cash equivalents | 41,528 | 4,782 |
Cash and cash equivalents, beginning of period | 17,506 | 15,171 |
Cash and cash equivalents, end of period | 59,034 | 19,953 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | $ 26,548 | $ 20,531 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
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 Company’s common stock. Accordingly, TCI’s financial results are consolidated with those of ARL’s on Form 10-K and related Consolidated Financial Statements. ARL’s common stock trades on the New York Stock Exchange under the symbol (“ARL”). We have no employees. TCI is a “C” corporation for U.S. federal income tax purposes and files an annual consolidated tax return with ARL and its ultimate parent, May Realty Holdings, Inc. (“MRHI”). TCI owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (“IOR”). Accordingly IOR’s financial results are consolidated with those of TCI and its subsidiaries. Shares of IOR are traded on the New York Stock Exchange Euronext (“NYSE MKT”) under the symbol (“IOR”). TCI invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (“Pillar”) is the Company’s external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of TCI, and for setting the policies which guide it, the day-to-day operations of TCI are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillar’s duties include, but are not limited to: locating, evaluating and recommending real estate and real estate-related investment opportunities, and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with TCI’s business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to ARL and IOR. 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 58 income-producing properties as of June 30, 2017. 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 96.09 acres ● 50 apartment communities totaling 8,226 units; excluding apartments being developed; and ● 3,527 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, 2017, we had seven 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 developer’s partnership interests in exchange for any remaining unpaid developer fees. Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“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 three and six months ended June 30, 2017, 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, 2016, 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Certain 2016 Consolidated Financial Statement amounts have been reclassified to conform to the 2017 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, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary 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 entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. Real Estate, Depreciation and Impairment Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements: 10-40 years; furniture, fixtures and equipment: 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360 (“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 asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. Real Estate Held for Sale We periodically classify real estate assets as “held for sale.” An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. Fair Value Measurement We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows: Level 1 – Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. Level 2 – Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Unobservable inputs that are significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. 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 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 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, 2017 | |
Real Estate [Abstract] | |
REAL ESTATE ACTIVITY | NOTE 2. REAL ESTATE ACTIVITY Below is a summary of the real estate owned as of June 30, 2017 (dollars in thousands): Apartments $ 698,571 Apartments under construction 64,546 Commercial properties 206,293 Land held for development 71,351 Real estate subject to sales contract 46,403 Total real estate $ 1,087,164 Less accumulated depreciation (166,335 ) Total real estate, net of depreciation $ 920,829 The highlights of our significant real estate transactions for the six months ended June 30, 2017, are listed below: Purchases For the six months ended June 30, 2017, we acquired four land parcels for development for a total purchase price of $12.9 million, adding 34.56 acres to the development portfolio. Sales For the six months ended June 30, 2017, TCI recorded three land sales; selling a total of 10.82 acres of land located in Texas to independent third parties for a total sales price of $1.6 million. We recorded an aggregate loss of less than $0.1 million from the land sales. As of June 30, 2017, 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 multifamily properties. During the six months ended June 30, 2017, we have disbursed $24.4 million related to the construction or predevelopment of various apartment complexes and capitalized $0.9 million of interest costs. |
NOTES AND INTEREST RECEIVABLE
NOTES AND INTEREST RECEIVABLE | 6 Months Ended |
Jun. 30, 2017 | |
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, 2017 (dollars in thousands): Maturity Interest Borrower Date Rate Amount Collateral 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% 1,480 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% — 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% 1,952 Secured Unified Housing Foundation, Inc. (Parkside Crossing) (1) 12/32 12.00% 1,935 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% — 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 Unified Housing Foundation, Inc. (1) 06/20 12.00% 5,760 Unsecured Other related party notes (1) Various Various 782 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 9,039 Various unsecured interests Accrued interest 2,751 Total Performing $ 80,693 Allowance for estimated losses (1,825 ) Total $ 78,868 (1) 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, 2017, we had mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $78.9 million. We recognized interest income of $7.1 million related to these notes receivables for the six months ended June 30, 2017. 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, 2017 | |
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 Company’s proportionate share of their undistributed earnings or losses under the equity method of accounting. ARL is our parent company and is considered as an unconsolidated joint venture. Investments in unconsolidated joint ventures and investees consist of the following: Percentage ownership as of June 30, 2017 June 30, 2016 American Realty Investors, Inc. (1) 0.90% 0.90% (1) Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock. Our interest in the common stock of ARL in the amount of 0.90% is accounted for under the equity method because we exercise significant influence over the operations and financial activities. Accordingly, the investments are carried at cost, adjusted for the Company’s proportionate share of earnings or losses. The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): As of June 30, 2017 2016 Real estate, net of accumulated depreciation $ 14,452 $ 14,578 Notes receivable 28,005 49,677 Other assets 67,847 126,134 Notes payable (6,821 ) (19,821 ) Other liabilities (38,623 ) (103,520 ) Shareholders’ equity (64,860 ) (67,048 ) For the Six Months Ended June 30, 2017 2016 Rents and interest and other income $ 3,282 $ 3,589 Depreciation (95 ) (84 ) Operating expenses (2,460 ) (2,243 ) Interest expense (3,170 ) (2,323 ) Loss from continuing operations (2,443 ) (1,061 ) Income (loss) from discontinued operations — — Net loss $ (2,443 ) $ (1,061 ) Company’s proportionate share of income (loss) $ (22 ) $ (10 ) |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5. NOTES PAYABLE Below is a summary of our notes and interest payable as of June 30, 2017 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 539,556 $ 1,459 $ 541,015 Apartments under Construction 32,564 — 32,564 Commercial 127,542 599 128,141 Land 26,100 229 26,329 Real estate subject to sales contract 3,542 470 4,012 Mezzanine financing 101,173 — 101,173 Other 9,083 (2 ) 9,081 Total $ 839,560 $ 2,755 $ 842,315 Unamortized deferred borrowing costs (18,532 ) — (18,532 ) Total $ 821,028 $ 2,755 $ 823,783 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. During the six months ended June 30, 2017, we refinanced three loans with a total principal balance of $80.1 million. The transactions provided for lower monthly payments over the term of the loans due to lower interest rates and the extension of maturity dates of the loans. In conjunction with the development of various apartment projects and other developments, we drew down $13.7 million in construction loans during the six months ended June 30, 2017. 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. |
SERIES A BONDS PAYABLE
SERIES A BONDS PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Notes to Financial Statements | |
SERIES A BONDS PAYABLE | NOTE 6. SERIES A BONDS PAYABLE On February 13, 2017, Southern Properties Capital LTD, a British Virgin Islands corporation (“Southern”), filed a final prospectus with the Tel Aviv Stock Exchange LTD (the “TASE”) for an offering and sale of nonconvertible Series A Bonds (the “Debentures”), to be issued by Southern, which is an indirect subsidiary of TCI. Southern, in turn, wholly owns interest in other entities, which, in turn, are the principal owners of various residential and commercial properties located in the south and southwestern portions of the United States. The Debentures are unsecured obligations of Southern. On February 14, 2017, Southern commenced the institutional tender of the Debentures and accepted application for 276 million Israeli, new Shekels (approximately $73,651,065 USD, based on the exchange rate of 3.7474 Shekels to the U.S. Dollar effective February 14, 2017) in both institutional and public tenders, at an annual interest rate averaging approximately 7.38%. The Series A Bonds payable have a stated interest rate of 7.3% and an effective yield of 9.25%. On May 16, 2017, Southern issued nonconvertible Series A Bonds for 100.2 million Israelis, new Shekels (approximately $27,769,615 USD, based on the exchange rate of 3.607 Shekels to the U.S. Dollar) at an annual interest rate of 7.3%. On July 12, 2017, Southern sold nonconvertible Series A Bonds for 23.8 million Israeli, new Shekels (approximately $6,668,998 USD, based on the exchange rate of 3.574 Shekels to the U.S. Dollar) in both institutional and public tenders, at an annual interest rate averaging approximately 7.3%. Foreign Currency Gain or Loss Principal and interest will be paid in Israeli Shekels as the bonds mature. Interest payments are due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023. Until such actual payments are made, there will not be any significant need to convert US dollars to Israeli shekels. The Company records unrealized gains or losses each quarter based upon the relative exchange values of the US dollar and the Israeli shekel; however, no gain or loss will be realized until a conversion from US dollars to Israeli shekels actually occurs in the future. The recorded unrealized gain or loss is reflected as a separate line item to highlight the fact that it is a non-cash transaction until such time as actual payment of principal and interest on the bonds is made. During the six months ended June 30, 2017, the Company recorded a net loss on foreign currency transaction of $3.7 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7. RELATED PARTY TRANSACTIONS The following table reflects the reconciliation of the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of June 30, 2017 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2016 $ (7,103 ) $ 108,752 $ 101,649 Cash transfers 18,544 — 18,544 Advisory fees (4,806 ) — (4,806 ) Net income fee (137 ) — (137 ) Fees and commissions (1,147 ) — (1,147 ) Cost reimbursements (981 ) — (981 ) Interest income — 2,292 2,292 Notes receivable purchased (447 ) (447 ) Expenses paid by advisor (2,256 ) — (2,256 ) Financing (mortgage payments) (16,043 ) — (16,043 ) Sales/Purchases transactions (9,819 ) — (9,819 ) Series K preferred stock acquisition — — — Income tax expense — — — Purchase of obligations 17,092 (17,092 ) — Related party receivable, June 30, 2017 $ (7,103 ) $ 93,952 $ 86,849 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, 2017 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | NOTE 8. 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, 2017 and 2016, including segment assets and expenditures (dollars in thousands): For the Three Months Ended Commercial Apartments Land Other Total Rental and other property revenues $ 8,267 $ 23,030 $ — $ 5 $ 31,302 Property operating expenses (4,694 ) (10,211 ) (155 ) (150 ) (15,210 ) Depreciation and amortization (2,348 ) (4,030 ) — — (6,378 ) Mortgage and loan interest (2,121 ) (5,028 ) (310 ) (8,324 ) (15,783 ) Interest income — — — 3,709 3,709 Loss on land sales — — (476 ) — (476 ) Segment operating income (loss) $ (896 ) $ 3,761 $ (941 ) $ (4,760 ) $ (2,836 ) Balance Sheet Data as of June 30, 2017 Capital expenditures $ 555 $ — $ 186 $ — $ 741 Real estate assets $ 146,621 $ 656,455 $ 117,753 $ — $ 920,829 Property Sales Sales price $ — $ — $ 507 $ — $ 507 Cost of sale — — (983 ) — (983 ) Gain on sale $ — $ — $ (476 ) $ — $ (476 ) For the Three Months Ended Commercial 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 and amortization (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 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, 2017 and 2016 (dollars in thousands): For the Three Months Ended 2017 2016 Segment operating income (loss) $ (2,836 ) $ 7,843 Other non-segment items of income (expense) General and administrative (1,295 ) (729 ) Net income fee to related party (76 ) (54 ) Advisory fee to related party (2,501 ) (2,331 ) Other income (3,529 ) 27 Loss from unconsolidated joint ventures and investees (10 ) — Net income (loss) from continuing operations $ (10,247 ) $ 4,756 Presented below is our reportable segments’ operating income for the six months ended June 30, 2017 and 2016, including capital expenditures and segment assets (dollars in thousands): For the Six Months Ended Commercial Apartments Land Other Total Rental and other property revenues $ 17,138 $ 45,691 $ — $ 8 $ 62,837 Property operating expenses (9,377 ) (20,956 ) (314 ) (452 ) (31,099 ) Depreciation and amortization (4,604 ) (8,077 ) — — (12,681 ) Mortgage and loan interest (3,727 ) (11,787 ) (860 ) (14,599 ) (30,973 ) Interest income — — — 7,130 7,130 Gain on land sales — — (31 ) — (31 ) Segment operating income (loss) $ (570 ) $ 4,871 $ (1,205 ) $ (7,913 ) $ (4,817 ) Balance Sheet as of June 30, 2017 Capital expenditures $ 1,898 $ 585 $ — $ 2,483 Real estate assets $ 146,621 $ 656,455 $ 117,753 $ — $ 920,829 Property Sales Sales price $ — $ — $ 1,596 $ — $ 1,596 Cost of sale — — (1,627 ) — (1,627 ) Gain (loss) on sale $ — $ — $ (31 ) $ — $ (31 ) For the Six Months Ended Commercial 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 and amortization (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 on sale $ (243 ) $ 5,168 $ 3,370 $ — $ 8,295 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, 2017 and 2016 (dollars in thousands): Six Months Ended 2017 2016 Segment operating income (loss) $ (4,817 ) $ 8,064 Other non-segment items of income (expense) General and administrative (3,075 ) (2,338 ) Net income fee to related party (136 ) (126 ) Advisory fee to related party (4,806 ) (4,702 ) Other income (2,410 ) 294 Loss from unconsolidated joint ventures and investees (18 ) (2 ) Income tax benefit — 1 Net income (loss) from continuing operations $ (15,262 ) $ 1,191 The table below reflects a reconciliation of the segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): As of June 30, 2017 2016 Segment assets $ 920,829 $ 891,534 Investments in real estate partnerships 2,428 2,460 Notes and interest receivable 78,868 74,177 Other assets 247,966 165,189 Total assets $ 1,250,091 $ 1,133,360 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 6 Months Ended |
Jun. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 9. 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 2017. Amounts included in discontinued operations for the six months ended June 30, 2017, 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 Six Months Ended Revenues: Rental and other property revenues $ — — Expenses: Property operating expenses (3 ) Total operating expenses (3 ) Other income (expense): Other income — Total other income (expenses) — Income from discontinued operations before income tax expense 3 Income tax expense (1 ) Income from discontinued operations $ 2 |
COMMITMENTS AND CONTINGENCIES A
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | NOTE 10. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY Liquidity. Partnership Buyouts Dynex Capital, Inc. On July 20, 2015, the 68th Judicial District Court in Dallas County, Texas issued its Final Judgment in Cause No. DC-03-00675, styled Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. v. Dynex Commercial, Inc. The case, which was litigated for more than a decade, had its origin with Dynex Commercial making loans to Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. (subsidiaries of Continental Mortgage & Equity Trust (“CMET”), an entity which merged into TCI in 1999 after the original suit was filed). Under the original loan commitment, $160 million in loans were to be made to the entities. The loans were conditioned on the execution of a commitment between Dynex Commercial and Basic Capital Management, Inc. (“Basic”). An original trial 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. In April 2017, the plaintiffs filed a lawsuit against Dynex Capital, Inc. and Dynex Commercial, Inc. for $50 million alleging, among other things, fraudulent transfer and alter ego. Litigation. Guarantees. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 11. EARNINGS PER SHARE Earnings per share (“EPS”) have been computed pursuant to the provisions of ASC 260 “Earnings per Share.” Basic EPS is calculated by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Shares issued during the period shall be weighted for the portion of the period that they were outstanding. Prior to July 9, 2014, TCI had 30,000 shares of Series C cumulative convertible preferred stock issued and outstanding. These 30,000 shares were owned by RAI, a related party, and had accrued dividends unpaid of $0.9 million. The stock had a liquidation preference of $100.00 per share and could be converted into common stock at 90% of the daily average closing price of the common stock for the prior five trading days. On July 9, 2014, RAI converted all 30,000 shares into the requisite number of shares of common stock. The conversion resulted in the issuance of 304,298 new shares of common stock. The effects of the Series C Cumulative Convertible Preferred Stock are no longer included in the dilutive earnings per share calculation for the current period, but are considered in the calculation for the prior periods if applying the if-converted method is dilutive. As of June 30, 2017, there are no preferred stock or stock options that are required to be included in the calculation of EPS. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12. SUBSEQUENT EVENTS The date to which events occurring after June 30, 2017, the date of the most recent balance sheet, have been evaluated for possible adjustment to the Consolidated Financial Statements or disclosure is August 14, 2017, which is the date on which the Consolidated Financial Statements were available to be issued. On July 12, 2017, Southern sold nonconvertible Series A Bonds for 23.8 million Israeli, new Shekels (approximately $6,668,998 USD, based on the exchange rate of 3.574 Shekels to the U.S. Dollar) in both institutional and public tenders, at an annual interest rate averaging approximately 7.3%. |
ORGANIZATION AND BASIS OF PRE22
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 three and six months ended June 30, 2017, 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, 2016, 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Certain 2016 Consolidated Financial Statement amounts have been reclassified to conform to the 2017 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, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary 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 entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation. In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions. For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in ARL is accounted for under the equity method. |
Real Estate, Depreciation and Impairmentt | 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 asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value. |
Real Estate Held for Sale | 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. |
Cost Capitalization | Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. |
Fair Value Measurement | Fair Value Measurement We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows: Level 1 – Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets. Level 2 – Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 – Unobservable inputs that are significant to the fair value measurement. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. |
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 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 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, 2017 | |
Real Estate [Abstract] | |
Schedule of the real estate owned | Below is a summary of the real estate owned as of June 30, 2017 (dollars in thousands): Apartments $ 698,571 Apartments under construction 64,546 Commercial properties 206,293 Land held for development 71,351 Real estate subject to sales contract 46,403 Total real estate $ 1,087,164 Less accumulated depreciation (166,335 ) Total real estate, net of depreciation $ 920,829 |
NOTES AND INTEREST RECEIVABLE (
NOTES AND INTEREST RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Receivables [Abstract] | |
Schedule of notes receivable | Below is a summary of our notes receivable as of June 30, 2017 (dollars in thousands): Maturity Interest Borrower Date Rate Amount Collateral 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% 1,480 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% — 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% 1,952 Secured Unified Housing Foundation, Inc. (Parkside Crossing) (1) 12/32 12.00% 1,935 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% — 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 Unified Housing Foundation, Inc. (1) 06/20 12.00% 5,760 Unsecured Other related party notes (1) Various Various 782 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 9,039 Various unsecured interests Accrued interest 2,751 Total Performing $ 80,693 Allowance for estimated losses (1,825 ) Total $ 78,868 (1) |
INVESTMENT IN UNCONSOLIDATED 25
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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, 2017 June 30, 2016 American Realty Investors, Inc. (1) 0.90% 0.90% (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, 2017 2016 Real estate, net of accumulated depreciation $ 14,452 $ 14,578 Notes receivable 28,005 49,677 Other assets 67,847 126,134 Notes payable (6,821 ) (19,821 ) Other liabilities (38,623 ) (103,520 ) Shareholders’ equity (64,860 ) (67,048 ) For the Six Months Ended June 30, 2017 2016 Rents and interest and other income $ 3,282 $ 3,589 Depreciation (95 ) (84 ) Operating expenses (2,460 ) (2,243 ) Interest expense (3,170 ) (2,323 ) Loss from continuing operations (2,443 ) (1,061 ) Income (loss) from discontinued operations — — Net loss $ (2,443 ) $ (1,061 ) Company’s proportionate share of income (loss) $ (22 ) $ (10 ) |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of notes and interest payable | Below is a summary of our notes and interest payable as of June 30, 2017 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 539,556 $ 1,459 $ 541,015 Apartments under Construction 32,564 — 32,564 Commercial 127,542 599 128,141 Land 26,100 229 26,329 Real estate subject to sales contract 3,542 470 4,012 Mezzanine financing 101,173 — 101,173 Other 9,083 (2 ) 9,081 Total $ 839,560 $ 2,755 $ 842,315 Unamortized deferred borrowing costs (18,532 ) — (18,532 ) Total $ 821,028 $ 2,755 $ 823,783 |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND FEES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of accounts receivable from and (accounts payable) to related parties | The following table reflects the reconciliation of the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of June 30, 2017 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2016 $ (7,103 ) $ 108,752 $ 101,649 Cash transfers 18,544 — 18,544 Advisory fees (4,806 ) — (4,806 ) Net income fee (137 ) — (137 ) Fees and commissions (1,147 ) — (1,147 ) Cost reimbursements (981 ) — (981 ) Interest income — 2,292 2,292 Notes receivable purchased (447 ) (447 ) Expenses paid by advisor (2,256 ) — (2,256 ) Financing (mortgage payments) (16,043 ) — (16,043 ) Sales/Purchases transactions (9,819 ) — (9,819 ) Series K preferred stock acquisition — — — Income tax expense — — — Purchase of obligations 17,092 (17,092 ) — Related party receivable, June 30, 2017 $ (7,103 ) $ 93,952 $ 86,849 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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, 2017 and 2016, including segment assets and expenditures (dollars in thousands): For the Three Months Ended Commercial Apartments Land Other Total Rental and other property revenues $ 8,267 $ 23,030 $ — $ 5 $ 31,302 Property operating expenses (4,694 ) (10,211 ) (155 ) (150 ) (15,210 ) Depreciation and amortization (2,348 ) (4,030 ) — — (6,378 ) Mortgage and loan interest (2,121 ) (5,028 ) (310 ) (8,324 ) (15,783 ) Interest income — — — 3,709 3,709 Loss on land sales — — (476 ) — (476 ) Segment operating income (loss) $ (896 ) $ 3,761 $ (941 ) $ (4,760 ) $ (2,836 ) Balance Sheet Data as of June 30, 2017 Capital expenditures $ 555 $ — $ 186 $ — $ 741 Real estate assets $ 146,621 $ 656,455 $ 117,753 $ — $ 920,829 Property Sales Sales price $ — $ — $ 507 $ — $ 507 Cost of sale — — (983 ) — (983 ) Gain on sale $ — $ — $ (476 ) $ — $ (476 ) For the Three Months Ended Commercial 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 and amortization (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 Presented below is our reportable segments’ operating income for the six months ended June 30, 2017 and 2016, including capital expenditures and segment assets (dollars in thousands): For the Six Months Ended Commercial Apartments Land Other Total Rental and other property revenues $ 17,138 $ 45,691 $ — $ 8 $ 62,837 Property operating expenses (9,377 ) (20,956 ) (314 ) (452 ) (31,099 ) Depreciation and amortization (4,604 ) (8,077 ) — — (12,681 ) Mortgage and loan interest (3,727 ) (11,787 ) (860 ) (14,599 ) (30,973 ) Interest income — — — 7,130 7,130 Gain on land sales — — (31 ) — (31 ) Segment operating income (loss) $ (570 ) $ 4,871 $ (1,205 ) $ (7,913 ) $ (4,817 ) Balance Sheet as of June 30, 2017 Capital expenditures $ 1,898 $ 585 $ — $ 2,483 Real estate assets $ 146,621 $ 656,455 $ 117,753 $ — $ 920,829 Property Sales Sales price $ — $ — $ 1,596 $ — $ 1,596 Cost of sale — — (1,627 ) — (1,627 ) Gain (loss) on sale $ — $ — $ (31 ) $ — $ (31 ) For the Six Months Ended Commercial 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 and amortization (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 on sale $ (243 ) $ 5,168 $ 3,370 $ — $ 8,295 |
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, 2017 and 2016 (dollars in thousands): For the Three Months Ended 2017 2016 Segment operating income (loss) $ (2,836 ) $ 7,843 Other non-segment items of income (expense) General and administrative (1,295 ) (729 ) Net income fee to related party (76 ) (54 ) Advisory fee to related party (2,501 ) (2,331 ) Other income (3,529 ) 27 Loss from unconsolidated joint ventures and investees (10 ) — Net income (loss) from continuing operations $ (10,247 ) $ 4,756 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, 2017 and 2016 (dollars in thousands): Six Months Ended 2017 2016 Segment operating income (loss) $ (4,817 ) $ 8,064 Other non-segment items of income (expense) General and administrative (3,075 ) (2,338 ) Net income fee to related party (136 ) (126 ) Advisory fee to related party (4,806 ) (4,702 ) Other income (2,410 ) 294 Loss from unconsolidated joint ventures and investees (18 ) (2 ) Income tax benefit — 1 Net income (loss) from continuing operations $ (15,262 ) $ 1,191 |
Schedule of reconciliaton segment information to consolidated balance sheets | The table below reflects a reconciliation of the segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): As of June 30, 2017 2016 Segment assets $ 920,829 $ 891,534 Investments in real estate partnerships 2,428 2,460 Notes and interest receivable 78,868 74,177 Other assets 247,966 165,189 Total assets $ 1,250,091 $ 1,133,360 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
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 Six Months Ended Revenues: Rental and other property revenues $ — — Expenses: Property operating expenses (3 ) Total operating expenses (3 ) Other income (expense): Other income — Total other income (expenses) — Income from discontinued operations before income tax expense 3 Income tax expense (1 ) Income from discontinued operations $ 2 |
ORGANIZATION AND BASIS OF PRE30
ORGANIZATION AND BASIS OF PRESENTATION (Details Narrative) | 6 Months Ended |
Jun. 30, 2017ft²aNumber | |
Number of apartment units | 8,226 |
Number of apartment communities | 50 |
Number of properties | 58 |
Rentable square feet | ft² | 1,700,000 |
Acres of land | ft² | 3,527 |
Area of land comprising golf course | a | 96.09 |
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 | 7 |
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% |
Southern Properties Capital LTD [Member] | |
Percentage of ownership | 80.90% |
REAL ESTATE ACTIVITY (Details)
REAL ESTATE ACTIVITY (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Real Estate [Abstract] | ||
Apartments | $ 698,571 | |
Apartments under construction | 64,546 | |
Commercial properties | 206,293 | |
Land held for development | 71,351 | |
Real estate subject to sales contract | 46,403 | |
Total real estate | 1,087,164 | |
Less accumulated depreciation | (166,335) | |
Total real estate | $ 920,829 | $ 891,173 |
REAL ESTATE ACTIVITY (Details N
REAL ESTATE ACTIVITY (Details Narrative) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017USD ($)ft²aNumber | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)ft²aNumber | Jun. 30, 2016USD ($) | |
Number of properties | Number | 58 | 58 | ||
Acres of land | ft² | 3,527 | 3,527 | ||
Gain (loss) on land sales | $ (476) | $ 1,719 | $ (31) | $ 3,370 |
Payment for construction or predevelopment of various apartment complexes | 24,400 | |||
Capitalized interest costs | $ 900 | $ 900 | ||
Related Parties [Member] | ||||
Area of land sold | a | 91 | 91 | ||
Land Parcel Acquired [Member] | ||||
Number of properties | Number | 4 | 4 | ||
Acquisition of income-producing properties | $ 12,900 | |||
Acres of land | a | 34.56 | 34.56 | ||
Land [Member] | TEXAS | ||||
Area of land sold | a | 10.82 | 10.82 | ||
Land sales - total consideration | $ 1,600 | |||
Gain (loss) on land sales | $ (100) |
NOTES AND INTEREST RECEIVABLE33
NOTES AND INTEREST RECEIVABLE (Details) - Performing Loans [Member] $ in Thousands | 6 Months Ended | |
Jun. 30, 2017USD ($) | ||
Performing loans, total | $ 80,693 | |
Accrued interest | 2,751 | |
Allowance for estimated losses | (1,825) | |
Total notes and interest receivable | $ 78,868 | |
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 | |
Oulan-Chikh Family Trust [Member] | ||
Maturity Date | Mar. 31, 2021 | |
Interest Rate | 8.00% | |
Performing loans, total | $ 174 | |
Description of Security | Secured | |
Unified Housing Foundation, Inc. (Echo Station) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Echo Station | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,480 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Lakeshore Villas | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 2,000 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Lakeshore Villas | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,368 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Limestone Canyon) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Limestone Canyon | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 4,640 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Limestone Canyon) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Limestone Canyon | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | [1] | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Limestone Ranch | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,000 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Limestone Ranch | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,952 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Parkside Crossing) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Parkside Crossing | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,935 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Sendero Ridge) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Sendero Ridge | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 4,812 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Sendero Ridge) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Sendero Ridge | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | [1] | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Timbers of Terrell) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Timbers of Terrell | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,323 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Tivoli) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Description of property | Tivoli | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 7,966 | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. [Member] | ||
Maturity Date | Dec. 31, 2017 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,207 | [1] |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #2 [Member] | ||
Maturity Date | Dec. 31, 2018 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 3,994 | [1] |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #3 [Member] | ||
Maturity Date | Dec. 31, 2018 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,407 | [1] |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #4 [Member] | ||
Maturity Date | Jun. 30, 2019 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 5,400 | [1] |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #5 [Member] | ||
Maturity Date | Jun. 30, 2020 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 5,760 | [1] |
Description of Security | Unsecured | [1] |
Other Related Party Notes [Member] | ||
Description of maturity date | Various | [1] |
Description of Interest Rate | Various | [1] |
Performing loans, total | $ 782 | [1] |
Description of Security | Various unsecured interests | [1] |
Other Non-Related Party Notes [Member] | ||
Description of maturity date | Various | |
Description of Interest Rate | Various | |
Performing loans, total | $ 796 | |
Description of Security | Various secured interests | |
Other Non-Related Party Notes [Member] | ||
Description of maturity date | Various | |
Description of Interest Rate | Various | |
Performing loans, total | $ 9,039 | |
Description of Security | Various unsecured interests | |
[1] | Related party notes |
NOTES AND INTEREST RECEIVABLE34
NOTES AND INTEREST RECEIVABLE (Details Narrative) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Interest income | $ 2,292 |
Mortgage Loans [Member] | Related Parties [Member] | |
Total notes and interest receivable | 78,900 |
Interest income | $ 7,100 |
INVESTMENT IN UNCONSOLIDATED 35
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details) | Jun. 30, 2017 | Jun. 30, 2016 | |
American Realty Investors, Inc. [Member] | |||
Percentage of ownership | [1] | 0.90% | 0.90% |
[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 ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Real estate, net of accumulated depreciation | $ 920,829 | $ 920,829 | $ 891,173 | ||
Other assets | 64,647 | 64,647 | 55,605 | ||
Notes payable | (819,395) | (819,395) | (835,528) | ||
Shareholders' equity | (189,895) | (189,895) | $ (205,885) | ||
Rents and interest and other income | 31,302 | $ 30,521 | 62,837 | $ 59,424 | |
Depreciation | (6,378) | (5,843) | (12,681) | (11,651) | |
Operating expenses | 25,460 | 24,751 | 51,797 | 49,574 | |
Net loss from continuing operations | (10,247) | 4,756 | (15,262) | 1,191 | |
Income (loss) from discontinued operations | 2 | ||||
Net loss | (10,247) | 4,756 | (15,262) | 1,193 | |
Company's proportionate share of income (loss) | (10) | (18) | (2) | ||
American Realty Investors, Inc. [Member] | |||||
Real estate, net of accumulated depreciation | 14,452 | 14,578 | 14,452 | 14,578 | |
Notes receivable | 28,005 | 49,677 | 28,005 | 49,677 | |
Other assets | 67,847 | 126,134 | 67,847 | 126,134 | |
Notes payable | (6,821) | (19,821) | (6,821) | (19,821) | |
Other liabilities | (38,623) | (103,520) | (38,623) | (103,520) | |
Shareholders' equity | $ (64,860) | $ (67,048) | (64,860) | (67,048) | |
Rents and interest and other income | 3,282 | 3,589 | |||
Depreciation | (95) | (84) | |||
Operating expenses | (2,460) | (2,243) | |||
Interest expense | (3,170) | (2,323) | |||
Net loss from continuing operations | (2,443) | (1,061) | |||
Net loss | (2,443) | (1,061) | |||
Company's proportionate share of income (loss) | $ (10) | $ (2) |
INVESTMENT IN UNCONSOLIDATED 37
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details Narrative) | Jun. 30, 2017shares |
American Realty Investors, Inc [Member] | |
Percentage of ownership | 0.90% |
Ownership of parent company shares | 140,000 |
Minimum [Member] | |
Percentage of ownership | 20.00% |
Maximum [Member] | |
Percentage of ownership | 50.00% |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Notes Payable | $ 821,028 |
Accrued Interest | 2,755 |
Total Debt | 823,783 |
Unamortized deferred borrowing costs | (18,532) |
Apartments [Member] | |
Notes Payable | 539,556 |
Accrued Interest | 1,459 |
Total Debt | 541,015 |
Apartments Under Construction [Member] | |
Notes Payable | 32,564 |
Total Debt | 32,564 |
Commercial [Member] | |
Notes Payable | 127,542 |
Accrued Interest | 599 |
Total Debt | 128,141 |
Land [Member] | |
Notes Payable | 26,100 |
Accrued Interest | 229 |
Total Debt | 26,329 |
Real Estate Subject To Sales Contract [Member] | |
Notes Payable | 3,542 |
Accrued Interest | 470 |
Total Debt | 4,012 |
Mezzanine Financing [Member] | |
Notes Payable | 101,173 |
Total Debt | 101,173 |
Other [Member] | |
Notes Payable | 9,083 |
Accrued Interest | (2) |
Total Debt | 9,081 |
Total Notes Payable [Member] | |
Notes Payable | 839,560 |
Accrued Interest | 2,755 |
Total Debt | 842,315 |
Unamortized deferred borrowing costs | $ (18,532) |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - Construction Loans [Member] $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($)Number | |
Number of loans refinanced or modified | Number | 3 |
Notes payable | $ 80,100 |
Proceeds from draw on loan facility | $ 13,700 |
SERIES A BONDS PAYABLE (Details
SERIES A BONDS PAYABLE (Details Narrative) | Jul. 12, 2017USD ($)Number | Jul. 12, 2017ILS (₪)Number | May 16, 2017USD ($)Number | May 16, 2017ILS (₪)Number | Feb. 14, 2017USD ($)Number | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Feb. 14, 2017ILS (₪)Number |
Net loss on foreign currency transaction | $ (3,700,000) | |||||||
Issuance of bonds | $ 102,364,000 | |||||||
Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | ||||||||
Debentures offering amount | $ 73,651,065 | |||||||
Interest rate | 7.30% | 7.30% | 7.38% | 7.38% | ||||
Effective yield | 9.25% | 9.25% | ||||||
Number of semiannual principal payment | Number | 10 | 10 | 10 | 10 | ||||
Issuance of bonds | $ 27,769,615 | |||||||
Description of payment terms | due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023 | due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023 | due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023 | |||||
Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | Israel Shekel [Member] | ||||||||
Debentures offering amount | ₪ | ₪ 276,000,000 | |||||||
Exchange rate | 3.607 | 3.607 | 3.7474 | 3.7474 | ||||
Issuance of bonds | ₪ | ₪ 100,200,000 | |||||||
Subsequent Event [Member] | Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | ||||||||
Interest rate | 7.30% | 7.30% | ||||||
Number of semiannual principal payment | Number | 10 | 10 | ||||||
Issuance of bonds | $ 6,668,998 | |||||||
Description of payment terms | due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023 | due semiannually beginning in July 2017 through July 2023 with ten semiannual principal payments due beginning July 2019 through July 2023 | ||||||
Subsequent Event [Member] | Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | Israel Shekel [Member] | ||||||||
Exchange rate | 3.574 | 3.574 | ||||||
Issuance of bonds | ₪ | ₪ 23,800,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Due from Related Parties [RollForward] | ||||
Related party receivable, beginning | $ 101,649 | |||
Cash transfers | 18,544 | |||
Advisory fees | $ (2,501) | $ (2,331) | (4,806) | $ (4,702) |
Net income fee | (76) | $ (54) | (136) | $ (126) |
Fees and commissions | (1,147) | |||
Cost reimbursements | (981) | |||
Interest income | 2,292 | |||
Notes receivable purchased | (447) | |||
Expenses paid by Advisor | (2,256) | |||
Financing (mortgage payments) | (16,043) | |||
Sales/purchases transactions | (9,819) | |||
Related party receivable, ending | 86,849 | 86,849 | ||
Pillar Income Asset Management, Inc [Member] | ||||
Due from Related Parties [RollForward] | ||||
Related party receivable, beginning | (7,103) | |||
Cash transfers | 18,544 | |||
Advisory fees | (4,806) | |||
Net income fee | (137) | |||
Fees and commissions | (1,147) | |||
Cost reimbursements | (981) | |||
Notes receivable purchased | (447) | |||
Expenses paid by Advisor | (2,256) | |||
Financing (mortgage payments) | (16,043) | |||
Sales/purchases transactions | (9,819) | |||
Purchase of obligations | 17,092 | |||
Related party receivable, ending | (7,103) | (7,103) | ||
American Realty Investors, Inc [Member] | ||||
Due from Related Parties [RollForward] | ||||
Related party receivable, beginning | 108,752 | |||
Interest income | 2,292 | |||
Purchase of obligations | (17,092) | |||
Related party receivable, ending | $ 93,952 | $ 93,952 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | $ 31,302 | $ 30,521 | $ 62,837 | $ 59,424 |
Property operating expenses | (15,210) | (14,919) | (31,099) | (29,882) |
Depreciation and amortization | (6,378) | (5,843) | (12,681) | (11,651) |
Gain on sale of income producing properties | 5,168 | 4,925 | ||
Gain (loss) on land sales | (476) | 1,719 | (31) | 3,370 |
Segment operating income (loss) | 5,842 | 5,770 | 11,040 | 9,850 |
Total real estate | 920,829 | 920,829 | ||
Property Sales | ||||
Gain on sale | 4,925 | |||
Commercial Properties [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 8,267 | 8,664 | 17,138 | 16,252 |
Property operating expenses | (4,694) | (4,595) | (9,377) | (9,452) |
Depreciation and amortization | (2,348) | (2,227) | (4,604) | (4,500) |
Mortgage and loan interest | (2,121) | (1,696) | (3,727) | (3,647) |
Gain on sale of income producing properties | 6 | 6 | ||
Segment operating income (loss) | (896) | 152 | (570) | (1,341) |
Capital expenditures | 555 | 1,562 | 1,898 | 1,656 |
Total real estate | 146,621 | 149,536 | 146,621 | 149,536 |
Property Sales | ||||
Sales price | 1,500 | |||
Cost of sale | (1,743) | |||
Gain on sale | (243) | |||
Apartments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 23,030 | 21,856 | 45,691 | 43,170 |
Property operating expenses | (10,211) | (10,168) | (20,956) | (19,562) |
Depreciation and amortization | (4,030) | (3,616) | (8,077) | (7,151) |
Mortgage and loan interest | (5,028) | (6,109) | (11,787) | (12,265) |
Gain on sale of income producing properties | 5,162 | 4,919 | ||
Segment operating income (loss) | 3,761 | 7,125 | 4,871 | 9,111 |
Capital expenditures | (146) | (146) | ||
Total real estate | 656,455 | 606,238 | 656,455 | 606,238 |
Property Sales | ||||
Sales price | 8,100 | 8,100 | ||
Cost of sale | (2,932) | (2,932) | ||
Gain on sale | 5,168 | 5,168 | ||
Land [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Property operating expenses | (155) | (138) | (314) | (870) |
Mortgage and loan interest | (310) | (419) | (860) | (915) |
Gain (loss) on land sales | (476) | 1,719 | (31) | 3,370 |
Segment operating income (loss) | (941) | 1,162 | (1,205) | 1,585 |
Capital expenditures | 186 | 1,570 | 585 | 1,497 |
Total real estate | 117,753 | 135,760 | 117,753 | 135,760 |
Property Sales | ||||
Sales price | 507 | 3,154 | 1,596 | 7,334 |
Cost of sale | (983) | (1,435) | (1,627) | (3,964) |
Gain on sale | (476) | 1,719 | (31) | 3,370 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 5 | 1 | 8 | 2 |
Property operating expenses | (150) | (18) | (452) | 2 |
Mortgage and loan interest | (8,324) | (3,868) | (14,599) | (8,431) |
Interest income | 3,709 | 3,289 | 7,130 | 7,136 |
Segment operating income (loss) | (4,760) | (596) | (7,913) | (1,291) |
Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 31,302 | 30,521 | 62,837 | 59,424 |
Property operating expenses | (15,210) | (14,919) | (31,099) | (29,882) |
Depreciation and amortization | (6,378) | (5,843) | (12,681) | (11,651) |
Mortgage and loan interest | (15,783) | (12,092) | (30,973) | (25,258) |
Interest income | 3,709 | 3,289 | 7,130 | 7,136 |
Gain on sale of income producing properties | 5,168 | 4,925 | ||
Gain (loss) on land sales | (476) | 1,719 | (31) | 3,370 |
Segment operating income (loss) | (2,836) | 7,843 | (4,817) | 8,064 |
Capital expenditures | 741 | 2,986 | 2,483 | 3,007 |
Total real estate | 920,829 | 891,534 | 920,829 | 891,534 |
Property Sales | ||||
Sales price | 507 | 11,254 | 1,596 | 16,934 |
Cost of sale | (983) | (4,367) | (1,627) | (8,639) |
Gain on sale | $ (476) | $ 6,887 | $ (31) | $ 8,295 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Segment operating income (loss) | $ 5,842 | $ 5,770 | $ 11,040 | $ 9,850 |
Other non-segment items of income (expense) | ||||
General and administrative | (1,295) | (1,604) | (3,075) | (3,213) |
Net income fee to related party | (76) | (54) | (136) | (126) |
Advisory fee to related party | (2,501) | (2,331) | (4,806) | (4,702) |
Other income | (104) | 902 | 1,338 | 1,169 |
Loss from unconsolidated joint ventures and investees | (10) | (18) | (2) | |
Income tax benefit | 1 | |||
Net loss from continuing operations | (10,247) | 4,756 | (15,262) | 1,191 |
Total Segments [Member] | ||||
Segment operating income (loss) | (2,836) | 7,843 | (4,817) | 8,064 |
Other non-segment items of income (expense) | ||||
General and administrative | (1,295) | (729) | (3,075) | (2,338) |
Net income fee to related party | (76) | (54) | (136) | (126) |
Advisory fee to related party | (2,501) | (2,331) | (4,806) | (4,702) |
Other income | (3,529) | 27 | (2,410) | 294 |
Loss from unconsolidated joint ventures and investees | (10) | (18) | (2) | |
Income tax benefit | 1 | |||
Net loss from continuing operations | $ (10,247) | $ 4,756 | $ (15,262) | $ 1,191 |
OPERATING SEGMENTS (Details 2)
OPERATING SEGMENTS (Details 2) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Segment assets | $ 920,829 | $ 891,173 | |
Investments in real estate partnerships | 2,428 | 2,446 | |
Other assets | 64,647 | 55,605 | |
Total assets | 1,250,091 | $ 1,185,914 | |
Total Segments [Member] | |||
Segment assets | 920,829 | $ 891,534 | |
Investments in real estate partnerships | 2,428 | 2,460 | |
Notes and interest receivable | 78,868 | 74,177 | |
Other assets | 247,966 | 165,189 | |
Total assets | $ 1,250,091 | $ 1,133,360 |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Expenses: | |
Property operating expenses | $ (3) |
Total operating expenses | (3) |
Other income (expense): | |
Gain from discontinued operations before income tax expense | 3 |
Income tax expense | (1) |
Income from discontinued operations | $ 2 |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY (Details Narrative) - USD ($) $ in Thousands | Jul. 20, 2015 | Jun. 30, 2017 |
Related Party [Member] | Mezzanine Financing [Member] | ||
Guarantor - notes payable | $ 60,400 | |
Dynex Litigation [Member] | ||
Description of plaintiff | Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. | |
Description of defendant | Dynex Commercial, Inc. | |
Domicile of Litigation | 68th Judicial District Court in Dallas County, Texas | |
Description of action taken by court | 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. | |
Awarded attorney fees | $ 1,600 | |
Post-judgment interest rate | 5.00% | |
Actions by plantiff | In April 2017, the plaintiffs filed a lawsuit against Dynex Capital, Inc. and Dynex Commercial, Inc. for $50 million alleging, among other things, fraudulent transfer and alter ego. | |
Damages sought | $ 50,000 | |
Unfunded loan commitment | 160,000 | |
Dynex Litigation [Member] | Southern Properties Capital LTD [Member] | ||
Damages - awarded amount | 11,100 | |
Damages - pre-judgement interest | 8,400 | |
Damages - total | 19,500 | |
Dynex Litigation [Member] | American Reality Trust, Inc. [Member] | ||
Damages - awarded amount | 14,200 | |
Damages - pre-judgement interest | 10,600 | |
Damages - total | 24,800 | |
Dynex Litigation [Member] | Basic Capital Management, Inc. [Member] | ||
Damages - awarded amount | 256 | |
Damages - pre-judgement interest | 192 | |
Damages - total | $ 448 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - RAI [Member] $ / shares in Units, $ in Thousands | Jul. 09, 2014USD ($)$ / sharesshares |
Shares issued upon conversion | 304,298 |
Series C Cumulative Convertible Preferred Stock [Member] | |
Preferred stock, shares issued | 30,000 |
Preferred stock, shares outstanding | 30,000 |
Shares issued upon conversion | (30,000) |
Accrued Dividends | $ | $ 900 |
Preferred stock, liquidation preference per share | $ / shares | $ 100 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Jul. 12, 2017USD ($) | Jul. 12, 2017ILS (₪) | May 16, 2017USD ($) | May 16, 2017ILS (₪) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Feb. 14, 2017 |
Issuance of bonds | $ 102,364,000 | ||||||
Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | |||||||
Interest rate | 7.30% | 7.30% | 7.38% | ||||
Issuance of bonds | $ 27,769,615 | ||||||
Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | Israel Shekel [Member] | |||||||
Exchange rate | 3.607 | 3.607 | 3.7474 | ||||
Issuance of bonds | ₪ | ₪ 100,200,000 | ||||||
Subsequent Event [Member] | Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | |||||||
Interest rate | 7.30% | 7.30% | |||||
Issuance of bonds | $ 6,668,998 | ||||||
Subsequent Event [Member] | Southern Properties Capital LTD [Member] | Nonconvertible Series A Bonds [Member] | Israel Shekel [Member] | |||||||
Exchange rate | 3.574 | 3.574 | |||||
Issuance of bonds | ₪ | ₪ 23,800,000 |