Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 2018 | |
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 | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 8,717,767 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Real estate, at cost | $ 1,111,346 | $ 1,112,721 |
Real estate subject to sales contracts at cost | 45,739 | 45,739 |
Less accumulated depreciation | (179,100) | (178,590) |
Total real estate | 977,985 | 979,870 |
Notes and interest receivable: | ||
Performing (including $40,553 in 2018 and $45,155 in 2017 from related parties) | 83,342 | 70,166 |
Total notes and interest receivable | 83,342 | 70,166 |
Cash and cash equivalents | 40,894 | 42,705 |
Restricted cash | 55,400 | 45,637 |
Investments in unconsolidated joint ventures and investees | 2,483 | 2,472 |
Receivable from related party | 115,734 | 111,665 |
Other assets | 54,751 | 60,907 |
Total assets | 1,330,589 | 1,313,422 |
Liabilities: | ||
Notes and interest payable | 885,831 | 892,149 |
Notes related to real estate held for sale | 376 | 376 |
Notes related to real estate subject to sales contracts | 347 | 1,957 |
Bond and bond interest payable | 146,888 | 113,047 |
Deferred revenue (including $40,584 in 2018 and $40,574 in 2017 to related parties) | 60,960 | 60,949 |
Accounts payable and other liabilities (including $6,701 in 2018 and $7,236 in 2017 to related parties) | 28,249 | 36,683 |
Total liabilities | 1,122,651 | 1,105,161 |
Shareholders' equity: | ||
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares; issued and outstanding zero shares in 2018 and 2017. Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2018 and 2017 (liquidation preference $100 per share) | 1 | 1 |
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2018 and 2017; outstanding 8,717,767 shares in 2018 and 2017 | 87 | 87 |
Treasury stock at cost, 200 shares in 2018 and 2017 | (2) | (2) |
Paid-in capital | 268,727 | 268,949 |
Retained deficit | (80,098) | (79,865) |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 188,715 | 189,170 |
Non-controlling interest | 19,223 | 19,091 |
Total shareholders' equity | 207,938 | 208,261 |
Total liabilities and shareholders' equity | $ 1,330,589 | $ 1,313,422 |
CONSOLIDATED BALANCE SHEETS (u3
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Performing | $ 83,342 | $ 70,166 |
Deferred revenue from related parties | $ 60,960 | $ 60,949 |
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 |
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, issued | 100,000 | 100,000 |
Preferred stock, outstanding | 100,000 | 100,000 |
Preferred stock, liquidation preference per share (in dollars per share) | $ 100 | $ 100 |
Related Parties [Member] | ||
Performing | $ 48,553 | $ 45,155 |
Deferred revenue from related parties | 40,584 | 40,574 |
Accounts payable and other liabilities to related parties (in dollars) | $ 6,701 | $ 7,236 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Rental and other property revenues (including $208 and $190 for the three months ended 2018 and 2017, respectively, from related parties) | $ 31,082 | $ 31,535 |
Expenses: | ||
Property operating expenses (including $227 and $228 for the three months ended 2018 and 2017, respectively, from related parties) | 14,455 | 15,889 |
Depreciation and amortization | 6,446 | 6,303 |
General and administrative (including $1,093 and $732 for the three months ended 2018 and 2017, respectively, from related parties) | 2,192 | 1,780 |
Net income fee to related party | 53 | 60 |
Advisory fee to related party | 2,748 | 2,305 |
Total operating expenses | 25,894 | 26,337 |
Net operating income | 5,188 | 5,198 |
Other income (expenses): | ||
Interest income (including $3,236 and $3,169 for the three months ended 2018 and 2017, respectively, from related parties) | 3,876 | 3,421 |
Other income (expense) | 1,826 | 1,442 |
Mortgage and loan interest (including $318 and $151 for the three months ended 2018 and 2017, respectively, from related parties) | (14,093) | (15,190) |
Foreign currency translation gain (loss) | 1,756 | (323) |
Earnings (losses) from unconsolidated joint ventures and investees | 11 | (8) |
Total other expenses | (6,624) | (10,658) |
Loss before gain on land sales, non-controlling interest, and taxes | (1,436) | (5,460) |
Gain on land sales | 1,335 | 445 |
Net loss from continuing operations before taxes | (101) | (5,015) |
Net loss from continuing operations | (101) | (5,015) |
Net loss | (101) | (5,015) |
Net loss attributable to non-controlling interest | (132) | (119) |
Net loss attributable to Transcontinental Realty Investors, Inc. | (233) | (5,134) |
Preferred dividend requirement | (222) | (222) |
Net loss applicable to common shares | $ (455) | $ (5,356) |
Earnings per share - basic | ||
Net loss from continuing operations (in dollars per share) | $ (0.05) | $ (0.61) |
Earnings per share - diluted | ||
Net loss from continuing operations (in dollars per share) | $ (.05) | $ (0.61) |
Weighted average common shares used in computing earnings per share (in shares) | 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 |
Amounts attributable to Transcontinental Realty Investors, Inc. | ||
Net loss from continuing operations | $ (233) | $ (5,134) |
Net loss attributable to Transcontinental Realty Investors, Inc. | $ (233) | $ (5,134) |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Rental and other property revenues | $ 31,082 | $ 31,535 |
Property operating expenses | 14,455 | 15,889 |
General and administrative | 2,192 | 1,780 |
Interest income | 3,876 | 3,421 |
Mortgage and loan interest | 14,093 | 15,190 |
Related Parties [Member] | ||
Rental and other property revenues | 208 | 190 |
Property operating expenses | 227 | 228 |
General and administrative | 1,093 | 732 |
Interest income | 3,236 | 3,169 |
Mortgage and loan interest | $ 318 | $ 151 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Comprehensive Income (Loss) [Member] | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Paid-In Capital [Member] | Retained Deficit [Member] | Non-controlling Interest [Member] |
Balance, at beginning at Dec. 31, 2017 | $ 208,261 | $ (80,168) | $ 1 | $ 87 | $ (2) | $ 268,949 | $ (79,865) | $ 19,091 |
Balance, at beginning (in shares) at Dec. 31, 2017 | 8,717,967 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Series D preferred stock dividends (9.0% per year) | (222) | (222) | ||||||
Net income | (101) | (233) | (233) | 132 | ||||
Balance, at the end at Mar. 31, 2018 | $ 207,938 | $ (80,401) | $ 1 | $ 87 | $ (2) | $ 268,727 | $ (80,098) | $ 19,223 |
Balance, at the end (in shares) at Mar. 31, 2018 | 8,717,967 |
CONSOLIDATED STATEMENT OF SHAR7
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (unaudited) (Parenthetical) | 3 Months Ended |
Mar. 31, 2018 | |
Statement of Stockholders' Equity [Abstract] | |
Preferred stock dividend (in percent) | 9.00% |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (101) | $ (5,015) |
Total comprehensive loss | (101) | (5,015) |
Comprehensive (income) attributable to non-controlling interest | (132) | (119) |
Comprehensive loss attributable to Transcontinental Realty Investors, Inc. | $ (233) | $ (5,134) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flow From Operating Activities: | ||
Net loss | $ (101) | $ (5,015) |
Adjustments to reconcile net loss applicable to common shares to net cash flows from operating activities: | ||
Gain on sale of land | (1,335) | (445) |
Depreciation and amortization | 6,446 | 6,303 |
Amortization of deferred borrowing costs | 986 | 1,053 |
Amortization of bond issuance costs | 299 | 141 |
(Earnings) loss from unconsolidated joint ventures and investees | (11) | 8 |
(Increase) decrease in assets: | ||
Accrued interest receivable | (2,779) | 1,746 |
Other assets | (1,468) | (1,634) |
Prepaid expense | 7,365 | (1,734) |
Rent receivables | 259 | (1,524) |
Related party receivables | (1,599) | 1,980 |
Increase (decrease) in liabilities: | ||
Accrued interest payable | (2,556) | 846 |
Other liabilities | (3,821) | (10,888) |
Net cash provided by (used in) operating activities | 1,685 | (9,163) |
Cash Flow From Investing Activities: | ||
Proceeds from notes receivable | 706 | |
Originations or advances on notes receivable | (8,080) | |
Proceeds from insurance claim | 413 | |
Acquisition of land held for development | (6,400) | |
Proceeds from sale of income-producing properties | 2,128 | |
Proceeds from sale of land | 2,636 | 1,089 |
Improvement of land held for development | (1,154) | |
Improvement of income-producing properties | (633) | (1,031) |
Construction and development of new properties | (20,117) | (8,406) |
Net cash used in investing activities | (24,066) | (14,783) |
Cash Flow From Financing Activities: | ||
Proceeds from notes payable | 17,343 | 47,577 |
Recurring amortization of principal on notes payable | (7,415) | (3,423) |
Payments on maturing notes payable | (16,750) | (59,392) |
Proceeds from bonds | 39,399 | 75,991 |
Bond issuance costs | (2,022) | (4,829) |
Deferred financing costs | (1,162) | |
Preferred stock dividends - Series D | (222) | (222) |
Net cash provided by financing activities | 30,333 | 54,540 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 7,952 | 30,594 |
Cash, cash equivalents and restricted cash, beginning of period | 88,342 | 55,733 |
Cash, cash equivalents and restricted cash, end of period | 96,294 | 86,327 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 13,301 | $ 12,205 |
Schedule of noncash investing and financing activities: | ||
Notes receivable received from sale of income-producing properties | $ 6,384 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
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 77.68% 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 81.25% 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 American”) 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 fifty-three income-producing properties as of March 31, 2018. 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 ● Forty-five apartment communities totaling 8,115 units; excluding apartments being developed; and ● 3,401 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 March 31, 2018, we had fourteen 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 months ended March 31, 2018, 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, 2017, 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, 2017. Certain 2017 Consolidated Financial Statement amounts have been reclassified to conform to the 2018 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 does not believe the adoption of this guidance had a material impact on its financial statements. In February 2016, FASB issued ASU 2016-02 (“ASU 2016-02”), Leases. 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. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those years; however, early adoption is permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively if retrospective application would be impracticable. The Company adopted this standard effective on January 1, 2018. ASU 2016-15 will impact our presentation of operating, investing and financing activities related to certain cash receipts and payments on our consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies guidance on the classification and presentation of changes in restricted cash. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. Upon adoption, restricted cash balances will be included along with cash and cash equivalents as of the end of the period and beginning period, respectively, in the Company’s consolidated statement of cash flows for all periods presented. Upon adoption, separate line items showing changes in restricted cash balances will be eliminated from the Company’s consolidated statement of cash flows. The Company adopted this guidance effective on January 1, 2018. ASU 2016-18 will impact our presentation of operating, investing and financing activities related to restricted cash on our consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business and thus will be treated as asset acquisitions. Acquisition costs for those acquisitions that are not businesses will be capitalized rather than expensed. The Company adopted this guidance effective January 1, 2018. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20), which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in-substance real estate. The ASU requires the Company to measure at fair value any retained interest in a partial sale of real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The Company adopted ASU 2017-05 effective January 1, 2018. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements. |
REAL ESTATE ACTIVITY
REAL ESTATE ACTIVITY | 3 Months Ended |
Mar. 31, 2018 | |
Real Estate [Abstract] | |
REAL ESTATE ACTIVITY | NOTE 2. REAL ESTATE ACTIVITY Below is a summary of the real estate owned as of March 31, 2018 (dollars in thousands): Apartments $ 718,373 Apartments under construction 124,272 Commercial properties 201,436 Land held for development 67,265 Real estate subject to sales contract 45,739 Total real estate $ 1,157,085 Less accumulated depreciation (179,100 ) Total real estate, net of depreciation $ 977,985 The highlights of our significant real estate transactions for the three months ended March 31, 2018, are listed below: Sales For the three months ended March 31, 2018, TCI sold 62 acres of land to an independent third party for a total sales price of $3.0 million. We recorded an aggregate gain of $1.3 million from the land sale. In addition, the Company sold six income-producing properties to a related party for an aggregate purchase price of $8.5 million, out of which, $2.1 million was received in cash and $6.4 million in note receivables. No gain or loss was recorded from the sale of income-producing properties. As of March 31, 2018, the Company has approximately 67 acres of land, at various locations that were sold to related parties in multiple transactions. These transactions are treated as “subject to sales contract” on the Consolidated Balance Sheets. Due to the related party nature of the transactions TCI has deferred the recording of the sales in accordance with ASC 360-20. We continue to invest in the development of apartment projects. During the three months ended March 31, 2018, we have expended $20.1 million related to the construction or predevelopment of various apartment complexes and capitalized $0.9 million of interest costs. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 3. SUPPLEMENTAL CASH FLOW INFORMATION For the three months ended March 31, 2018 and 2017, the company paid interest expense of $13.3 million and $12.2 million, respectively. Cash and cash equivalents, and restricted cash for the three months ended March 31, 2018 and 2017 was $96.3 million and $86.3 million, respectively. The following is a reconciliation of the Company’s cash and cash equivalents, and restricted cash to the total presented in the consolidated statement of cash flows: March 31, 2018 2017 Cash and cash equivalents $ 40,894 $ 52,815 Restricted cash (cash held in escrow) 38,800 30,537 Restricted cash (certificate of deposits) 10,652 — Restricted cash (held with Trustee) 5,948 2,975 $ 96,294 $ 86,327 Amounts included in restricted cash represent funds required to be set aside to meet contractual obligations with certain financial institutions for the payment of reserve replacement and tax and insurance escrow. In addition, restricted cash includes funds held with the Trustee for payment of bonds interest and other bond related expenses. |
NOTES AND INTEREST RECEIVABLE
NOTES AND INTEREST RECEIVABLE | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
NOTES AND INTEREST RECEIVABLE | NOTE 4. 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 March 31, 2018 (dollars in thousands): Borrower Maturity Date Interest Rate Amount Collateral Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured H198, LLC (McKinney Ranch Land) 09/18 6.00 % 4,558 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Spyglass Apartments of Ennis LP 11/19 5.00 % 4,638 Secured D4DS, LLC 05/20 5.00 % 3,027 Secured Parc at Windmill Farms 05/20 5.00 % 4,777 Secured Unified Housing Foundation, Inc. (Echo Station) (1) 12/32 12.00 % 1,481 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 2,000 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 6,369 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 6,000 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 1,953 Secured Unified Housing Foundation, Inc. (Timbers of Terrell) (1) 12/32 12.00 % 1,323 Secured Unified Housing Foundation, Inc. (Tivoli) (1) 12/32 12.00 % 6,140 Secured 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) 06/20 12.00 % 5,760 Unsecured Unified Housing Foundation, Inc. (1) 03/21 12.00 % 5,314 Unsecured Other related party notes (1) Various Various 6,894 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 981 Various unsecured interests Accrued interest 4,849 Total Performing $ 83,342 (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 March 31, 2018, we had mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $83.3 million. We recognized interest income of $2.1 million related to these notes receivables for the three months ending March 31, 2018. 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 | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | NOTE 5. 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 March 31, 2018 March 31, 2017 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 March 31 2018 2017 Real estate, net of accumulated depreciation $ 5,193 $ 14,495 Notes receivable 45,414 44,840 Other assets 58,253 127,106 Notes payable (6,266 ) (7,742 ) Other liabilities (32,539 ) (112,388 ) Shareholders’ equity (70,055 ) (66,311 ) For the Three Months Ended March 31 2018 2017 Rents and interest and other income $ 1,629 $ 1,713 Depreciation — (45 ) Operating expenses (417 ) (980 ) Interest expense (1,631 ) (1,606 ) Net income (loss) $ (419 ) $ (918 ) Company's proportionate share of income (loss) (1) (4) (8) (1) Income (loss) represents continued and discontinued operations |
NOTES AND INTEREST PAYABLE
NOTES AND INTEREST PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTES AND INTEREST PAYABLE | NOTE 6. NOTES AND INTEREST PAYABLE Below is a summary of our notes and interest payable as of March 31, 2018 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 560,147 $ 1,585 $ 561,732 Apartments under Construction 96,026 113 96,139 Commercial 126,557 628 127,185 Land 16,000 598 16,598 Mezzanine financing 93,423 401 93,824 Other 9,572 (248 ) 9,324 Total $ 901,725 $ 3,077 $ 904,802 Unamortized deferred borrowing costs (18,248 ) — (18,248 ) $ 883,477 $ 3,077 $ 886,554 The segment labeled as “Other” consists of unsecured or stock-secured notes payable. There are various land mortgages, secured by the property, that are in the process of a modification or extension to the original note due to expiration of the loan. We are in constant contact with these lenders, working together in order to modify the terms of these loans and we anticipate a timely resolution that is similar to the existing agreement or subsequent modification. In conjunction with the development of various apartment projects and other developments, we drew down $20.1 million in construction loans during the three months ended March 31, 2018. 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. |
BONDS PAYABLE
BONDS PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
BONDS PAYABLE | NOTE 7. BONDS PAYABLE In August 2016 Southern Properties Capital LTD (“Southern”), a British Virgin Islands corporation was incorporated for the purpose of raising funds by issuing Bonds to be traded on the Tel Aviv Stock Exchange (“TASE”). The Company transferred certain residential and commercial properties located in the United States to Southern, its wholly owned subsidiary. On February 13, 2017, Southern filed a final prospectus with the TASE for an offering and sale of nonconvertible Series A Bonds to be issued by Southern. The bonds are obligations of Southern. During the year ended December 31, 2017 on three separate occasions Southern issued nonconvertible Series A Bonds with a total value of approximately NIS400 million New Israeli Shekels (“NIS”) or approximately $115 million dollars. The Series A Bonds have a stated interest rate of 7.3%. At March 31, 2018 the effective interest rate is 9.17%. The bonds require semi-annual equal installments on January 31 and July 31 of each year from 2019 to 2023 (inclusive). The interest will be repaid on January 31 and July 31 of each of the years 2018 to 2023 (inclusive), with the first payment commencing on July 31, 2017. On February 15, 2018, the Company issued Series B bonds in the amount of NIS 137.7 million par value (approximately $39.2 million as of February 15, 2018). The Series B bonds are registered on the TASE. The bonds are reported in NIS and bear annual interest rate of 6.8%. Interest shall be repaid January 31 and July 31 of each of the years 2019 to 2023 (inclusive), first payment commencing on July 31, 2018. The principal shall be repaid in ten equal installments on January 31 and July 31 of each of the years from 2021 to 2025 (inclusive). The total bond issuance cost of $1.4 million was incurred. The effective interest rate is 7.99% The outstanding balance of these Bonds at March 31, 2018 is as follows: March 31, 2018 December 31, 2017 Bonds (Series A) $ 113,793 $ 115,336 Bonds (Series B) 39,179 — Less: deferred issuance expense, net (7,639 ) (5,916 ) Accrued Interest 1,555 3,627 $ 146,888 $ 113,047 The aggregate maturity of the bonds are as follows: Year 2018 $ — 2019 23,067 2020 23,067 2021 23,067 2022 30,903 Thereafter 52,868 $ 152,972 The funds were used primarily for the acquisition and development of additional real estate operations in the United States. The funds were raised and will be repaid in NIS, however the funds raised have been converted to US dollars. The Company records unrealized gains or losses each quarter based upon the relative exchange values of the US dollar and the NIS; however, no gain or loss will be realized until a conversion from US dollars to NIS 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. For the three months ended March 31, 2018, the Company recorded a gain on foreign currency transaction of approximately $1.8 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8. 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 March 31, 2018 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2017 $ — $ 111,665 $ 111,665 Cash transfers 17,579 — 17,579 Advisory fees (2,748 ) — (2,748 ) Net income fee (53 ) — (53 ) Fees and commissions (83 ) — (83 ) Cost reimbursements (1,063 ) — (1,063 ) Interest income — 1,570 1,570 Notes receivable purchased (5,315 ) (5,315 ) Expenses paid by advisor (2,262 ) — (2,262 ) Sales/Purchases transactions (3,556 ) — (3,556 ) Related party receivable, March 31, 2018 $ 2,499 $ 113,235 $ |
OPERATING SEGMENTS
OPERATING SEGMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | NOTE 9. 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 March 31, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Three Months Ended March 31, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 7,555 $ 23,525 $ — $ 2 $ 31,082 Property operating expenses (3,749 ) (10,582 ) (30 ) (94 ) (14,455 ) Depreciation (2,293 ) (4,149 ) — (4 ) (6,446 ) Mortgage and loan interest (1,849 ) (5,456 ) (110 ) (6,678 ) (14,093 ) Interest income — — — 3,876 3,876 Gain on land sales — — 1,335 — 1,335 Segment operating income (loss) $ (336) $ 3,338 $ 1,195 $ (2,898 ) $ 1,299 Capital expenditures 633 — — — 633 Real estate assets 135,805 728,525 113,004 651 977,985 Property Sales Sales price $ — $ 2,512 $ 2,984 $ — $ 5,496 Cost of sale — (2,512) (1,649 ) — (4,161 ) Gain on sale $ — $ — $ 1,335 $ — $ 1,335 Commercial For the Three Months Ended March 31, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 8,872 $ 22,660 $ — $ 3 $ 31,535 Property operating expenses (4,683 ) (10,745 ) (159 ) (302 ) (15,889 ) Depreciation (2,257 ) (4,046 ) — — (6,303 ) Mortgage and loan interest (1,606 ) (6,758 ) (551 ) (6,275 ) (15,190 ) Gain on land sales — — 445 — 445 Segment operating income (loss) $ 326 $ 1,111 $ (265 ) $ (3,153 ) $ (1,981 ) Capital expenditures 1,343 — 399 — 1,742 Real estate assets 148,115 635,845 117,922 — 901,882 Property Sales Sales price $ — $ — $ 1,089 $ — $ 1,089 Cost of sale — — (644 ) — (644 ) Gain (loss) on sale $ — $ — $ 445 $ — $ 445 The table below reflects the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 (dollars in thousands): For the Three Months Ended March 31, 2018 2017 Segment operating income (loss) $ 1,299 $ (1,981 ) Other non-segment items of income (expense) General and administrative (2,192 ) (1,780 ) Net income fee to related party (53 ) (60 ) Advisory fee to related party (2,748 ) (2,305 ) Other income 3,582 1,119 Loss from unconsolidated joint ventures and investees 11 (8 ) Net loss from continuing operations $ (101) $ (5,015 ) The table below reflects a reconciliation of the segment information to the corresponding amounts in the Consolidated Balance Sheets (dollars in thousands): As of March 31, 2018 2017 Segment assets $ 977,985 $ 901,882 Investments in real estate partnerships 2,483 2,438 Notes and interest receivable 83,342 76,856 Other assets 266,779 246,539 Total assets $ 1,330,589 $ 1,227,715 |
COMMITMENTS AND CONTINGENCIES A
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 3 Months Ended |
Mar. 31, 2018 | |
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 68 th An original trial in 2004, which also included Dynex Capital, Inc. as a defendant, resulted in a jury awarding damages in favor of Basic for “lost opportunity,” as well as damages in favor of ART and in favor of TCI and its subsidiaries for “increased costs” and “lost opportunity.” The original Trial Court judge ignored the jury’s findings, however, and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in favor of the Dynex entities (the judge held the Plaintiffs were not entitled to any damages from the Dynex entities). After numerous appeals by all parties, Dynex Capital, Inc. was ultimately dismissed from the case and the remaining claims against Dynex Commercial were remanded to the Trial Court for a new judgment consistent with the jury’s findings. The Court entered the new Final Judgment against Dynex Commercial, Inc. on July 20, 2015. The Final Judgment entered against Dynex Commercial, Inc. on July 20, 2015 awarded Basic $0.256 million in damages, plus pre-judgment interest of $0.192 million for a total amount of $0.448 million. The Judgment awarded ART $14.2 million in damages, plus pre-judgment interest of $10.6 million for a total amount of $24.8 million. The Judgment awarded TCI $11.1 million, plus pre-judgment interest of $8.4 million for a total amount of $19.5 million. The Judgment also awarded Basic, ART, and TCI post-judgment interest at the rate of 5% per annum from April 25, 2014 until the date their respective damages are paid. Lastly, the Judgement awarded Basic, ART, and TCI $1.6 million collectively in attorneys’ fees from Dynex Commercial, Inc. The Company is working with counsel to identify assets and collect on the Final Judgement against Dynex Commercial, Inc., as well as explore possible additional claims, if any, against Dynex Capital, Inc. Litigation. Guarantees. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018, there are no preferred stock or stock options that are required to be included in the calculation of EPS. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12. SUBSEQUENT EVENTS The date to which events occurring after March 31, 2018, the date of the most recent balance sheet, have been evaluated for possible adjustment to the Consolidated Financial Statements or disclosure is May 15, 2018, which is the date on which the Consolidated Financial Statements were available to be issued. |
ORGANIZATION AND BASIS OF PRE22
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Organization | 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 77.68% 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 81.25% 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 American”) 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 | Properties We own or had interests in a total property portfolio of 53 income-producing properties as of March 31, 2018. 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 ● 45 apartment communities totaling 8,115 units; excluding apartments being developed; and ● 3,461 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 March 31, 2018, we had fourteen 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 | 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 months ended March 31, 2018, 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, 2017, 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, 2017. Certain 2017 Consolidated Financial Statement amounts have been reclassified to conform to the 2018 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 Impairment | Real Estate, Depreciation and Impairment Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements: 10-40 years; furniture, fixtures and equipment: 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360 (“ASC 360”), “Property, Plant and Equipment”. Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under ASC 360, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the 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 does not believe the adoption of this guidance had a material impact on its financial statements. In February 2016, FASB issued ASU 2016-02 (“ASU 2016-02”), Leases. 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. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those years; however, early adoption is permitted. Entities must apply the guidance retrospectively to all periods presented but may apply it prospectively if retrospective application would be impracticable. The Company adopted this standard effective on January 1, 2018. ASU 2016-15 will impact our presentation of operating, investing and financing activities related to certain cash receipts and payments on our consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies guidance on the classification and presentation of changes in restricted cash. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted, and will be applied retrospectively to all periods presented. Upon adoption, restricted cash balances will be included along with cash and cash equivalents as of the end of the period and beginning period, respectively, in the Company’s consolidated statement of cash flows for all periods presented. Upon adoption, separate line items showing changes in restricted cash balances will be eliminated from the Company’s consolidated statement of cash flows. The Company adopted this guidance effective on January 1, 2018. ASU 2016-18 will impact our presentation of operating, investing and financing activities related to restricted cash on our consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business when evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU is effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The Company expects that acquisitions of real estate or in-substance real estate will not meet the revised definition of a business and thus will be treated as asset acquisitions. Acquisition costs for those acquisitions that are not businesses will be capitalized rather than expensed. The Company adopted this guidance effective January 1, 2018. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements. In February 2017, the FASB issued ASU 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Topic 610-20), which requires that all entities account for the derecognition of a business in accordance with ASC 810, including instances in which the business is considered in-substance real estate. The ASU requires the Company to measure at fair value any retained interest in a partial sale of real estate. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2017. The Company adopted ASU 2017-05 effective January 1, 2018. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements. |
ORGANIZATION AND BASIS OF PRE23
ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization And Basis Of Presentation Tables | |
Schedule of consolidated statement of cash flows | The following is a reconciliation of the Company’s cash and cash equivalents, and restricted cash to the total presented in the consolidated statement of cash flows for the three months ended March 31, 2018 and 2017, respectively: For the Three Months Ended 2018 2017 Cash and cash equivalents $ 54,769 $ 55,282 Restricted cash (cash held in escrow and under the terms of secured notes and unsecured bonds) 41,525 31,045 Total cash and cash equivalents, and restricted cash $ 96,294 $ 86,327 |
REAL ESTATE ACTIVITY (Tables)
REAL ESTATE ACTIVITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Real Estate [Abstract] | |
Schedule of the real estate owned | Below is a summary of the real estate owned as of March 31, 2018 (dollars in thousands): Apartments $ 718,373 Apartments under construction 124,272 Commercial properties 201,436 Land held for development 67,265 Real estate subject to sales contract 45,739 Total real estate $ 1,157,085 Less accumulated depreciation (179,100 ) Total real estate, net of depreciation $ 977,985 |
SUPPLEMENTAL CASH FLOW INFORM25
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Reconciliation of cash and cash equivalents and restricted cash | Cash and cash equivalents, and restricted cash for the three months ended March 31, 2018 and 2017 was $96.3 million and $86.3 million, respectively. The following is a reconciliation of the Company’s cash and cash equivalents, and restricted cash to the total presented in the consolidated statement of cash flows: March 31, 2018 2017 Cash and cash equivalents $ 40,894 $ 52,815 Restricted cash (cash held in escrow) 38,800 30,537 Restricted cash (certificate of deposits) 10,652 — Restricted cash (held with Trustee) 5,948 2,975 $ 96,294 $ 86,327 |
NOTES AND INTEREST RECEIVABLE (
NOTES AND INTEREST RECEIVABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Receivables [Abstract] | |
Schedule of notes receivable | Below is a summary of our notes receivable as of March 31, 2018 (dollars in thousands): Borrower Maturity Date Interest Rate Amount Collateral Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured H198, LLC (McKinney Ranch Land) 09/18 6.00 % 4,558 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Spyglass Apartments of Ennis LP 11/19 5.00 % 4,638 Secured D4DS, LLC 05/20 5.00 % 3,027 Secured Parc at Windmill Farms 05/20 5.00 % 4,777 Secured Unified Housing Foundation, Inc. (Echo Station) (1) 12/32 12.00 % 1,481 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 2,000 Secured Unified Housing Foundation, Inc. (Lakeshore Villas) (1) 12/32 12.00 % 6,369 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 6,000 Secured Unified Housing Foundation, Inc. (Limestone Ranch) (1) 12/32 12.00 % 1,953 Secured Unified Housing Foundation, Inc. (Timbers of Terrell) (1) 12/32 12.00 % 1,323 Secured Unified Housing Foundation, Inc. (Tivoli) (1) 12/32 12.00 % 6,140 Secured 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) 06/20 12.00 % 5,760 Unsecured Unified Housing Foundation, Inc. (1) 03/21 12.00 % 5,314 Unsecured Other related party notes (1) Various Various 6,894 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 981 Various unsecured interests Accrued interest 4,849 Total Performing $ 83,342 (1) |
INVESTMENT IN UNCONSOLIDATED 27
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 March 31, 2017 American Realty Investors, Inc. (1) 0.90 % 0.90 % |
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 March 31 2018 2017 Real estate, net of accumulated depreciation $ 5,193 $ 14,495 Notes receivable 45,414 44,840 Other assets 58,253 127,106 Notes payable (6,266 ) (7,742 ) Other liabilities (32,539 ) (112,388 ) Shareholders’ equity (70,055 ) (66,311 ) For the Three Months Ended March 31 2018 2017 Rents and interest and other income $ 1,629 $ 1,713 Depreciation — (45 ) Operating expenses (417 ) (980 ) Interest expense (1,631 ) (1,606 ) Net income (loss) $ (419 ) $ (918 ) Company's proportionate share of income (loss) (1) (4) (8) (1) Income (loss) represents continued and discontinued operations |
NOTES AND INTEREST PAYABLE (Tab
NOTES AND INTEREST PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of notes and interest payable | Below is a summary of our notes and interest payable as of March 31, 2018 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 560,147 $ 1,585 $ 561,732 Apartments under Construction 96,026 113 96,139 Commercial 126,557 628 127,185 Land 16,000 598 16,598 Mezzanine financing 93,423 401 93,824 Other 9,572 (248 ) 9,324 Total $ 901,725 $ 3,077 $ 904,802 Unamortized deferred borrowing costs (18,248 ) — (18,248 ) $ 883,477 $ 3,077 $ 886,554 |
BONDS PAYABLE (Tables)
BONDS PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Bonds Payable Tables | |
Schedule of bonds and interest payable | The outstanding balance of these Bonds at March 31, 2018 is as follows: March 31, 2018 December 31, 2017 Bonds (Series A) $ 113,793 $ 115,336 Bonds (Series B) 39,179 — Less: deferred issuance expense, net (7,639 ) (5,916 ) Accrued Interest 1,555 3,627 $ 146,888 $ 113,047 |
Schedule of principal payments on the bonds payable | The aggregate maturity of the bonds are as follows: Year 2018 $ — 2019 23,067 2020 23,067 2021 23,067 2022 30,903 Thereafter 52,868 $ 152,972 |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND FEES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2017 $ — $ 111,665 $ 111,665 Cash transfers 17,579 — 17,579 Advisory fees (2,748 ) — (2,748 ) Net income fee (53 ) — (53 ) Fees and commissions (83 ) — (83 ) Cost reimbursements (1,063 ) — (1,063 ) Interest income — 1,570 1,570 Notes receivable purchased (5,315 ) (5,315 ) Expenses paid by advisor (2,262 ) — (2,262 ) Sales/Purchases transactions (3,556 ) — (3,556 ) Related party receivable, March 31, 2018 $ 2,499 $ 113,235 $ |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Three Months Ended March 31, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 7,555 $ 23,525 $ — $ 2 $ 31,082 Property operating expenses (3,749 ) (10,582 ) (30 ) (94 ) (14,455 ) Depreciation (2,293 ) (4,149 ) — (4 ) (6,446 ) Mortgage and loan interest (1,849 ) (5,456 ) (110 ) (6,678 ) (14,093 ) Interest income — — — 3,876 3,876 Gain on land sales — — 1,335 — 1,335 Segment operating income (loss) $ (336) $ 3,338 $ 1,195 $ (2,898 ) $ 1,299 Capital expenditures 633 — — — 633 Real estate assets 135,805 728,525 113,004 651 977,985 Property Sales Sales price $ — $ 2,512 $ 2,984 $ — $ 5,496 Cost of sale — (2,512) (1,649 ) — (4,161 ) Gain on sale $ — $ — $ 1,335 $ — $ 1,335 Commercial For the Three Months Ended March 31, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 8,872 $ 22,660 $ — $ 3 $ 31,535 Property operating expenses (4,683 ) (10,745 ) (159 ) (302 ) (15,889 ) Depreciation (2,257 ) (4,046 ) — — (6,303 ) Mortgage and loan interest (1,606 ) (6,758 ) (551 ) (6,275 ) (15,190 ) Gain on land sales — — 445 — 445 Segment operating income (loss) $ 326 $ 1,111 $ (265 ) $ (3,153 ) $ (1,981 ) Capital expenditures 1,343 — 399 — 1,742 Real estate assets 148,115 635,845 117,922 — 901,882 Property Sales Sales price $ — $ — $ 1,089 $ — $ 1,089 Cost of sale — — (644 ) — (644 ) Gain (loss) on sale $ — $ — $ 445 $ — $ 445 |
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 March 31, 2018 and 2017 (dollars in thousands): For the Three Months Ended March 31, 2018 2017 Segment operating income (loss) $ 1,299 $ (1,981 ) Other non-segment items of income (expense) General and administrative (2,192 ) (1,780 ) Net income fee to related party (53 ) (60 ) Advisory fee to related party (2,748 ) (2,305 ) Other income 3,582 1,119 Loss from unconsolidated joint ventures and investees 11 (8 ) Net loss from continuing operations $ (101) $ (5,015 ) |
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 March 31, 2018 2017 Segment assets $ 977,985 $ 901,882 Investments in real estate partnerships 2,483 2,438 Notes and interest receivable 83,342 76,856 Other assets 266,779 246,539 Total assets $ 1,330,589 $ 1,227,715 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Organization And Summary Of Significant Accounting Policies Details | |||
Cash and cash equivalents | $ 40,894 | $ 42,705 | $ 55,282 |
Restricted cash (cash held in escrow and under the terms of secured notes and unsecured bonds) | 55,400 | $ 45,637 | 31,045 |
Total cash and cash equivalents, and restricted cash | $ 96,294 | $ 86,327 |
ORGANIZATION AND SUMMARY OF S33
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2018ft²Number | |
Number of apartment communities | 53 |
Number of properties | 50 |
Rentable square feet | ft² | 1,700 |
Acres of land | ft² | 3,401 |
Commercial Properties [Member] | |
Number of properties | 7 |
Minimum [Member] | |
Percentage of ownership | 20.00% |
Minimum [Member] | Buildings and Improvements [Member] | |
Useful life of property, plant and equipment | 10 years |
Minimum [Member] | Fixtures and Equipment [Member] | |
Useful life of property, plant and equipment | 5 years |
Maximum [Member] | |
Percentage of ownership | 50.00% |
Maximum [Member] | Buildings and Improvements [Member] | |
Useful life of property, plant and equipment | 40 years |
Maximum [Member] | Fixtures and Equipment [Member] | |
Useful life of property, plant and equipment | 10 years |
Southern Properties Capital LTD [Member] | |
Percentage of ownership in the company | 77.68% |
Income Opportunities Realty Investors, Inc. [Member] | |
Percentage of ownership | 81.25% |
REAL ESTATE ACTIVITY (Details)
REAL ESTATE ACTIVITY (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Real Estate [Abstract] | |||
Apartments | $ 718,373 | ||
Apartments under construction | 124,272 | ||
Commercial properties | 201,436 | ||
Land held for development | 67,265 | ||
Real estate subject to sales contract | 45,739 | ||
Total real estate | 1,157,085 | ||
Less accumulated depreciation | (179,100) | ||
Total real estate | $ 977,985 | $ 979,870 | $ 901,882 |
REAL ESTATE ACTIVITY (Details N
REAL ESTATE ACTIVITY (Details Narrative) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($)ft²Number | Mar. 31, 2017USD ($) | Dec. 31, 2018Number | |
Number of properties | Number | 50 | ||
Acres of land | ft² | 3,401 | ||
Payment for construction or predevelopment of various apartment complexes | $ | $ 20,100 | ||
Capitalized interest costs | $ | 900 | ||
Gain on land sales | $ | $ 1,335 | $ 445 | |
Related Parties [Member] | |||
Number of properties | Number | 2 | ||
Acres of land | ft² | 11.12 | ||
Apartment Community Acquired [Member] | |||
Number of properties | Number | 1 | ||
Number of units | Number | 201 | ||
Commercial Properties [Member] | |||
Number of properties | Number | 7 | ||
Buildings and Improvements [Member] | Minimum [Member] | |||
Useful life | 10 years | ||
Buildings and Improvements [Member] | Maximum [Member] | |||
Useful life | 40 years | ||
Fixtures and Equipment [Member] | Minimum [Member] | |||
Useful life | 5 years | ||
Fixtures and Equipment [Member] | Maximum [Member] | |||
Useful life | 10 years | ||
Land Improvements [Member] | Minimum [Member] | |||
Useful life | 25 years | ||
Land Improvements [Member] | Maximum [Member] | |||
Useful life | 40 years | ||
TEXAS | Land [Member] | |||
Area of land sold | ft² | 62 | ||
Land sales - total consideration | $ | $ 3,000 | ||
Gain on land sales | $ | $ 1,300 |
SUPPLEMENTAL CASH FLOW INFORM36
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 40,894 | $ 52,815 | ||
Restricted cash (cash held in escrow) | 38,800 | 30,537 | ||
Restricted cash (certificate of deposits) | 10,652 | |||
Restricted cash (held with Trustee) | 5,948 | 2,975 | ||
Total cash and cash equivalents, and restricted cash | $ 96,294 | $ 88,342 | $ 86,327 | $ 55,733 |
SUPPLEMENTAL CASH FLOW INFORM37
SUPPLEMENTAL CASH FLOW INFORMATION (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest expense paid | $ 13,300 | $ 12,200 |
NOTES AND INTEREST RECEIVABLE38
NOTES AND INTEREST RECEIVABLE (Details) - Performing Loans [Member] - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | ||
Accrued interest | $ 4,849 | ||
Performing loans, total | $ 83,342 | ||
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 | ||
H198, LLC (McKinney Ranch Land) [Member] | |||
Maturity Date | Sep. 30, 2018 | ||
Description of property | McKinney Ranch Land | ||
Interest Rate | 6.00% | ||
Performing loans, total | $ 4,558 | ||
Description of Security | Secured | ||
Spyglass Apartments of Ennis LP [Member] | |||
Maturity Date | Nov. 30, 2019 | ||
Interest Rate | 5.00% | ||
Performing loans, total | $ 4,638 | ||
Description of Security | Secured | ||
D4DS, LLC [Member] | |||
Maturity Date | May 31, 2020 | ||
Interest Rate | 5.00% | ||
Performing loans, total | $ 3,027 | ||
Description of Security | Secured | ||
Parc at Windmill Farms [Member] | |||
Maturity Date | May 31, 2020 | ||
Interest Rate | 5.00% | ||
Performing loans, total | $ 4,777 | ||
Description of Security | Secured | ||
Unified Housing Foundation, Inc. (Echo Station) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Echo Station | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 1,481 | |
Description of Security | [1] | !-SYNTAX- | |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Lakeshore Villas | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 2,000 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Lakeshore Villas | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 6,368 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Limestone Ranch | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 6,000 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Limestone Ranch | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 1,953 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. (Timbers of Terrell) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Timbers of Terrell | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 1,323 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. (Tivoli) [Member] | |||
Maturity Date | [1] | Dec. 31, 2032 | |
Description of property | [1] | Tivoli | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 6,140 | |
Description of Security | [1] | Secured | |
Unified Housing Foundation, Inc. [Member] | |||
Maturity Date | [1] | Dec. 31, 2018 | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 3,994 | |
Description of Security | [1] | Unsecured | |
Unified Housing Foundation, Inc. #2 [Member] | |||
Maturity Date | [1] | Dec. 31, 2018 | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 6,407 | |
Description of Security | [1] | Unsecured | |
Unified Housing Foundation, Inc. #3 [Member] | |||
Maturity Date | [1] | Jun. 30, 2020 | |
Interest Rate | [1] | 12.00% | |
Performing loans, total | [1] | $ 5,760 | |
Description of Security | [1] | Unsecured | |
Other Related Party Notes [Member] | |||
Description of maturity date | [1] | Various | |
Description of Interest Rate | [1] | Various | |
Performing loans, total | [1] | $ 6,894 | |
Description of Security | [1] | Various unsecured interests | |
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 | $ 981 | ||
Description of Security | Various unsecured interests | ||
Unified Housing Foundation, Inc. #4 [Member] | |||
Maturity Date | Mar. 31, 2021 | ||
Interest Rate | 12.00% | ||
Performing loans, total | $ 5,314 | ||
Description of Security | Unsecured | ||
Oulan-Chikh Family Trust [Member] | |||
Maturity Date | Mar. 31, 2021 | ||
Interest Rate | 8.00% | ||
Performing loans, total | $ 174 | ||
Description of Security | Secured | ||
[1] | Related party notes |
NOTES AND INTEREST RECEIVABLE39
NOTES AND INTEREST RECEIVABLE (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Interest income | $ 1,570 |
Mortgage Loans [Member] | Related Parties [Member] | |
Total notes and interest receivable | 83,300 |
Interest income | $ 2,100 |
INVESTMENT IN UNCONSOLIDATED 40
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details) | Mar. 31, 2018 | Mar. 31, 2017 | |
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 41
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Real estate, net of accumulated depreciation | $ 977,985 | $ 901,882 | $ 979,870 |
Other assets | 54,751 | 246,539 | 60,907 |
Notes payable | (885,831) | (892,149) | |
Shareholders' equity | (188,715) | $ (189,170) | |
Rents and interest and other income | 31,082 | 31,535 | |
Depreciation | (6,446) | (6,303) | |
Operating expenses | 25,894 | 26,337 | |
Net income (loss) | (101) | (5,015) | |
Company's proportionate share of loss | 11 | (8) | |
American Realty Investors, Inc. [Member] | |||
Real estate, net of accumulated depreciation | 5,193 | 14,495 | |
Notes receivable | 45,414 | 44,840 | |
Other assets | 58,253 | 127,106 | |
Notes payable | (6,266) | (7,742) | |
Other liabilities | (32,539) | (112,388) | |
Shareholders' equity | (70,055) | (66,311) | |
Rents and interest and other income | 1,629 | 1,713 | |
Depreciation | (45) | ||
Operating expenses | (417) | (980) | |
Interest expense | (1,631) | (1,606) | |
Net income (loss) | (419) | (918) | |
Company's proportionate share of loss | $ (4) | $ (8) |
INVESTMENT IN UNCONSOLIDATED 42
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details Narrative) | Mar. 31, 2018 |
American Realty Investors, Inc [Member] | |
Percentage of ownership | 0.90% |
Minimum [Member] | |
Percentage of ownership | 20.00% |
Maximum [Member] | |
Percentage of ownership | 50.00% |
NOTES AND INTEREST PAYABLE (Det
NOTES AND INTEREST PAYABLE (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Notes Payable | $ 883,477 |
Accrued Interest | 3,077 |
Unamortized deferred borrowing costs | (18,248) |
Total Debt | 886,554 |
Apartments [Member] | |
Notes Payable | 560,147 |
Accrued Interest | 1,585 |
Total Debt | 561,733 |
Apartments Under Construction [Member] | |
Notes Payable | 96,026 |
Accrued Interest | 113 |
Total Debt | 96,139 |
Commercial [Member] | |
Notes Payable | 126,557 |
Accrued Interest | 628 |
Total Debt | 127,185 |
Land [Member] | |
Notes Payable | 16,000 |
Accrued Interest | 598 |
Total Debt | 16,598 |
Mezzanine Financing [Member] | |
Notes Payable | 93,423 |
Accrued Interest | 401 |
Total Debt | 93,824 |
Other [Member] | |
Notes Payable | 9,572 |
Accrued Interest | (248) |
Total Debt | 9,324 |
Total Notes Payable [Member] | |
Notes Payable | 901,725 |
Accrued Interest | 3,077 |
Unamortized deferred borrowing costs | (18,248) |
Total Debt | $ 904,802 |
NOTES AND INTEREST PAYABLE (D44
NOTES AND INTEREST PAYABLE (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Construction Loans [Member] | |
Proceeds from draw on loan facility | $ 20,100 |
BONDS PAYABLE (Details)
BONDS PAYABLE (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Less: deferred issuance expense, net | $ (18,248) | |
Accrued Interest | 3,077 | |
Total | 146,888 | $ 113,047 |
Series A Bonds [Member] | ||
Notes Payable | 113,793 | 115,336 |
Series B Bonds [Member] | ||
Notes Payable | 39,179 | |
Bonds [Member] | ||
Notes Payable | 115,336 | |
Less: deferred issuance expense, net | (7,639) | (5,916) |
Accrued Interest | 1,555 | 3,627 |
Total | $ 146,888 | $ 113,047 |
BONDS PAYABLE (Details 1)
BONDS PAYABLE (Details 1) $ in Thousands | Mar. 31, 2018USD ($) |
Year ended December 31, | |
Total | $ 883,477 |
Bonds [Member] | |
Year ended December 31, | |
2,019 | 23,067 |
2,020 | 23,067 |
2,021 | 23,067 |
2,022 | 30,903 |
Thereafter | 52,868 |
Total | $ 152,972 |
BONDS PAYABLE (Details Narrativ
BONDS PAYABLE (Details Narrative) ₪ in Thousands, $ in Thousands | Mar. 31, 2018 | Feb. 15, 2018USD ($) | Feb. 15, 2018ILS (₪) | Feb. 14, 2017USD ($) | Feb. 14, 2017ILS (₪) |
Series A Bonds [Member] | |||||
Effective interest rate | 9.17% | ||||
Nonconvertible Series A Bonds [Member] | |||||
Debentures offering amount | $ 39,200 | ||||
Interest rate | 6.80% | 6.80% | |||
Series B Bonds [Member] | |||||
Debentures offering amount | $ 39,200 | ||||
Interest rate | 6.80% | 6.80% | |||
Effective interest rate | 7.99% | 7.99% | |||
Bond issuance cost | $ 1,400 | ||||
Series B Bonds [Member] | Israel Shekel [Member] | |||||
Debentures offering amount | ₪ | ₪ 137,700 | ||||
Southern Properties Capital LTD [Member] | Series A Bonds [Member] | |||||
Debentures offering amount | $ 115,000 | ||||
Interest rate | 7.30% | 7.30% | |||
Southern Properties Capital LTD [Member] | Series A Bonds [Member] | Israel Shekel [Member] | |||||
Debentures offering amount | ₪ | ₪ 400,000 |
RELATED PARTY TRANSACTIONS AN48
RELATED PARTY TRANSACTIONS AND FEES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Due from Related Parties [RollForward] | ||
Related party receivable, beginning | $ 111,665 | |
Cash transfers | 17,579 | |
Advisory fees | (2,748) | $ (2,305) |
Net income fee | (53) | $ (60) |
Fees and commissions | (83) | |
Cost reimbursements | (1,063) | |
Interest income | 1,570 | |
Notes receivable purchased | (5,315) | |
Expenses paid by Advisor | (2,262) | |
Sales/purchases transactions | (3,556) | |
Related party receivable, ending | 115,734 | |
Pillar Income Asset Management, Inc [Member] | ||
Due from Related Parties [RollForward] | ||
Related party receivable, beginning | ||
Cash transfers | 17,579 | |
Advisory fees | (2,748) | |
Net income fee | (53) | |
Fees and commissions | (83) | |
Cost reimbursements | (1,063) | |
Notes receivable purchased | (5,315) | |
Expenses paid by Advisor | (2,262) | |
Sales/purchases transactions | (3,556) | |
Related party receivable, ending | 2,499 | |
American Realty Investors, Inc [Member] | ||
Due from Related Parties [RollForward] | ||
Related party receivable, beginning | 111,665 | |
Interest income | 1,570 | |
Related party receivable, ending | $ 113,235 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | $ 31,082 | $ 31,535 |
Property operating expenses | (14,455) | (15,889) |
Depreciation | (6,446) | (6,303) |
Gain on land sales | 1,335 | 445 |
Segment operating income (loss) | 5,188 | 5,198 |
Real estate assets | 977,985 | 901,882 |
Commercial Properties [Member] | ||
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | 7,555 | 8,872 |
Property operating expenses | (3,749) | (4,683) |
Depreciation | (2,293) | (2,257) |
Mortgage and loan interest | (1,849) | (1,606) |
Interest income | ||
Gain on land sales | ||
Segment operating income (loss) | (336) | 326 |
Capital expenditures | 633 | 1,343 |
Real estate assets | 135,805 | 148,115 |
Property Sales | ||
Sales price | ||
Cost of sale | ||
Gain (loss) on sale | ||
Apartments [Member] | ||
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | 23,525 | 22,660 |
Property operating expenses | (10,582) | (10,745) |
Depreciation | (4,149) | (4,046) |
Mortgage and loan interest | (5,456) | (6,758) |
Interest income | ||
Gain on land sales | ||
Segment operating income (loss) | 3,338 | 1,111 |
Capital expenditures | ||
Real estate assets | 728,525 | 635,845 |
Property Sales | ||
Sales price | 2,512 | |
Cost of sale | (2,512) | |
Gain (loss) on sale | ||
Land [Member] | ||
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | ||
Property operating expenses | (30) | (159) |
Depreciation | ||
Mortgage and loan interest | (110) | (551) |
Interest income | ||
Gain on land sales | 1,335 | 445 |
Segment operating income (loss) | 1,195 | (265) |
Capital expenditures | 399 | |
Real estate assets | 113,004 | 117,922 |
Property Sales | ||
Sales price | 2,984 | 1,089 |
Cost of sale | (1,649) | (644) |
Gain (loss) on sale | 1,335 | 445 |
Other [Member] | ||
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | 2 | 3 |
Property operating expenses | (94) | (302) |
Depreciation | (4) | |
Mortgage and loan interest | (6,678) | (6,275) |
Interest income | 3,876 | |
Gain on land sales | ||
Segment operating income (loss) | (2,898) | (3,153) |
Capital expenditures | ||
Real estate assets | 651 | |
Property Sales | ||
Sales price | ||
Cost of sale | ||
Gain (loss) on sale | ||
Total Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Rental and other property revenues | 31,082 | 31,535 |
Property operating expenses | (14,455) | (15,889) |
Depreciation | (6,446) | (6,303) |
Mortgage and loan interest | (14,093) | (15,190) |
Interest income | 3,876 | |
Gain on land sales | 1,335 | 445 |
Segment operating income (loss) | 1,299 | (1,981) |
Capital expenditures | 633 | 1,742 |
Real estate assets | 977,985 | 901,882 |
Property Sales | ||
Sales price | 5,496 | 1,089 |
Cost of sale | (4,161) | (644) |
Gain (loss) on sale | $ 1,335 | $ 445 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Segment operating income (loss) | $ 5,188 | $ 5,198 |
Other non-segment items of income (expense) | ||
General and administrative | (2,192) | (1,780) |
Net income fee to related party | (53) | (60) |
Advisory fee to related party | (2,748) | (2,305) |
Other income | 1,826 | 1,442 |
Loss from unconsolidated joint ventures and investees | 11 | (8) |
Net loss from continuing operations | (101) | (5,015) |
Total Segments [Member] | ||
Segment operating income (loss) | 1,299 | (1,981) |
Other non-segment items of income (expense) | ||
General and administrative | (2,192) | (1,780) |
Net income fee to related party | (53) | (60) |
Advisory fee to related party | (2,748) | (2,305) |
Other income | 3,582 | 1,119 |
Loss from unconsolidated joint ventures and investees | 11 | (8) |
Net loss from continuing operations | $ (101) | $ (5,015) |
OPERATING SEGMENTS (Details 2)
OPERATING SEGMENTS (Details 2) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Segment assets | $ 977,985 | $ 979,870 | $ 901,882 |
Investments in real estate partnerships | 2,483 | 2,472 | 2,438 |
Notes and interest receivable | 76,856 | ||
Other assets | 54,751 | 60,907 | 246,539 |
Total assets | 1,330,589 | $ 1,313,422 | 1,227,715 |
Total Segments [Member] | |||
Segment assets | 977,985 | $ 901,882 | |
Investments in real estate partnerships | 2,483 | ||
Notes and interest receivable | 83,342 | ||
Other assets | 266,779 | ||
Total assets | $ 1,330,589 |
COMMITMENTS AND CONTINGENCIES52
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY (Details Narrative) - USD ($) $ in Thousands | Jul. 20, 2015 | Dec. 31, 2017 |
Related Party [Member] | Mezzanine Financing [Member] | ||
Guarantor - notes payable | $ 39,100 | |
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% | |
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) - USD ($) $ / shares in Units, $ in Thousands | Jul. 09, 2014 | Mar. 31, 2018 |
Dividend rate | 9.00% | |
RAI [Member] | ||
Shares issued upon conversion | (304,298) | |
Series C Cumulative Convertible Preferred Stock [Member] | RAI [Member] | ||
Preferred stock, shares issued | 30,000 | |
Preferred stock, shares outstanding | 30,000 | |
Dividend rate | 90.00% | |
Shares issued upon conversion | (30,000) | |
Accrued Dividends | $ 900 | |
Preferred stock, liquidation preference per share | $ 100 |