Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 13, 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 | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,717,767 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false |
CONSOLIDATED BALANCE SHEETS (un
CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Real estate, at cost | $ 326,800 | $ 1,112,721 |
Real estate subject to sales contracts at cost | 43,767 | 45,739 |
Real estate held for sale at cost, net of depreciation ($113,606 in 2018) | 760,497 | |
Less accumulated depreciation | (77,612) | (178,590) |
Total real estate | 1,053,452 | 979,870 |
Notes and interest receivable (including $48,637 in 2018 and $45,155 in 2017 from related parties) | 82,239 | 70,166 |
Cash and cash equivalents | 23,763 | 42,705 |
Restricted cash | 72,688 | 45,637 |
Investments in unconsolidated joint ventures and investees | 2,774 | 2,472 |
Receivable from related party | 127,791 | 111,665 |
Other assets | 60,223 | 60,907 |
Total assets | 1,422,930 | 1,313,422 |
Liabilities: | ||
Notes and interest payable | 314,198 | 892,149 |
Notes related to real estate held for sale | 651,025 | 376 |
Notes related to real estate subject to sales contracts | 1,957 | |
Bonds and bond interest payable | 161,010 | 113,047 |
Deferred revenue (including $16,701 in 2018 and $40,574 in 2017 to related parties) | 23,044 | 60,949 |
Accounts payable and other liabilities (including $7,852 in 2018 and $7,236 in 2017 to related parties) | 35,675 | 36,683 |
Total liabilities | 1,184,952 | 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 | 268,276 | 268,949 |
Retained deficit | (50,648) | (79,865) |
Total Transcontinental Realty Investors, Inc. shareholders' equity | 217,714 | 189,170 |
Non-controlling interest | 20,264 | 19,091 |
Total shareholders' equity | 237,978 | 208,261 |
Total liabilities and shareholders' equity | $ 1,422,930 | $ 1,313,422 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Notes and interest receivable | $ 82,239 | $ 70,166 |
Deferred revenue from related parties | 23,044 | 60,949 |
Accumulated depreciation | $ 77,612 | $ 178,590 |
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, authorized | 100,000 | 100,000 |
Preferred stock, issued | 100,000 | 100,000 |
Preferred stock, outstanding | 100,000 | 100,000 |
Preferred stock, liquidation preference per share (in dollars per share) | $ 100 | $ 100 |
Related Parties [Member] | ||
Notes and interest receivable | $ 48,637 | $ 45,155 |
Deferred revenue from related parties | 16,701 | 40,574 |
Accounts payable and other liabilities to related parties (in dollars) | 7,852 | $ 7,236 |
Real Estate Held For Sale [Member] | ||
Accumulated depreciation | $ 113,606 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Rental and other property revenues (including $207 and $199 for the three months and $623 and $589 for the nine months ended 2018 and 2017, respectively, from related parties) | $ 33,505 | $ 31,491 | $ 96,194 | $ 94,328 |
Expenses: | ||||
Property operating expenses (including $231 and $236 for the three months and $689 and $696 for the nine months ended 2018 and 2017, respectively, from related parties) | 15,867 | 15,157 | 45,814 | 46,256 |
Depreciation and amortization | 6,891 | 6,326 | 19,859 | 19,008 |
General and administrative (including $1,119 and $1,018 for the three months and $3,309 and $2,134 for the nine months ended 2018 and 2017, respectively, from related parties) | 1,858 | 1,594 | 6,223 | 4,669 |
Net income fee to related party | 383 | 53 | 489 | 189 |
Advisory fee to related party | 2,735 | 2,595 | 8,209 | 7,402 |
Total operating expenses | 27,734 | 25,725 | 80,594 | 77,524 |
Net operating income | 5,771 | 5,766 | 15,600 | 16,804 |
Other income (expenses): | ||||
Interest income (including $3,303 and $3,041 for the three months and $9,380 and $10,670 for the nine months ended 2018 and 2017, respectively, from related parties) | 4,021 | 3,175 | 11,441 | 10,305 |
Other income (expense) | 18,722 | 190 | 28,030 | 1,529 |
Mortgage and loan interest (including $364 and $347 for the three months and $1,009 and $784 for the nine months ended 2018 and 2017, respectively, from related parties) | (15,555) | (14,245) | (43,823) | (45,218) |
Foreign currency transaction gain (loss) | (1,288) | 1,906 | 6,357 | (1,841) |
Earnings (losses) from unconsolidated joint ventures and investees | (4) | 7 | (2) | (11) |
Total other income (expenses) | 5,896 | (8,967) | 2,003 | (35,236) |
Gain (Loss) before gain on land sales, non-controlling interest, and taxes | 11,667 | (3,201) | 17,603 | (18,432) |
Gain on sale of income producing properties | 9,841 | 9,841 | ||
Gain on land sales | 12,243 | 530 | 13,577 | 500 |
Net income (loss) from continuing operations before taxes | 23,910 | 7,170 | 31,181 | (8,091) |
Income tax (expense) | (792) | (792) | ||
Net income (loss) from continuing operations | 23,118 | 7,170 | 30,389 | (8,091) |
Net income (loss) | 23,118 | 7,170 | 30,389 | (8,091) |
Net (income) attributable to non-controlling interest | (915) | (96) | (1,173) | (378) |
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | 22,203 | 7,074 | 29,216 | (8,469) |
Preferred dividend requirement | (227) | (224) | (673) | (670) |
Net income (loss) applicable to common shares | $ 21,976 | $ 6,850 | $ 28,543 | $ (9,139) |
Earnings per share - basic | ||||
Net income (loss) from continuing operations (in dollars per share) | $ 2.52 | $ 0.79 | $ 3.27 | $ (1.05) |
Earnings per share - diluted | ||||
Net income (loss) from continuing operations (in dollars per share) | $ 2.52 | $ 0.79 | $ 3.27 | $ (1.05) |
Weighted average common shares used in computing earnings per share | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 |
Weighted average common shares used in computing diluted earnings per share | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 |
Amounts attributable to Transcontinental Realty Investors, Inc. | ||||
Net income (loss) from continuing operations | $ 22,203 | $ 7,074 | $ 29,216 | $ (8,469) |
Net income (loss) applicable to Transcontinental Realty, Investors, Inc. | $ 22,203 | $ 7,074 | $ 29,216 | $ (8,469) |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Rental and other property revenues | $ 33,505 | $ 31,491 | $ 96,194 | $ 94,328 |
Property operating expenses | 15,867 | 15,157 | 45,814 | 46,256 |
General and administrative | 1,858 | 1,594 | 6,223 | 4,669 |
Interest income | 4,021 | 3,175 | 11,441 | 10,305 |
Mortgage and loan interest | 15,555 | 14,245 | 43,823 | 45,218 |
Related Parties [Member] | ||||
Rental and other property revenues | 207 | 199 | 623 | 589 |
Property operating expenses | 231 | 236 | 689 | 696 |
General and administrative | 1,119 | 1,018 | 3,309 | 2,134 |
Interest income | 3,303 | 3,041 | 9,380 | 10,670 |
Mortgage and loan interest | $ 364 | $ 347 | $ 1,009 | $ 784 |
CONSOLIDATED STATEMENT OF SHARE
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) - 9 months ended Sep. 30, 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) | (1,673) | (1,673) | ||||||
Net income (loss) | 30,389 | 29,216 | 30,572 | 1,173 | ||||
Balance, at the end at Sep. 30, 2018 | $ 237,978 | $ (50,952) | $ 1 | $ 87 | $ (2) | $ 268,276 | $ (50,469) | $ 20,264 |
Balance, at the end (in shares) at Sep. 30, 2018 | 8,717,967 |
CONSOLIDATED STATEMENT OF SHA_2
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Parenthetical) | 9 Months Ended |
Sep. 30, 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 | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 30,389 | $ (8,091) |
Total comprehensive income (loss) | 30,389 | (8,091) |
Comprehensive income attributable to non-controlling interest | (1,173) | (378) |
Comprehensive income (loss) attributable to Transcontinental Realty Investors, Inc. | $ 29,216 | $ (8,469) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flow From Operating Activities: | ||
Net income (loss) | $ 30,389 | $ (8,091) |
Adjustments to reconcile net loss applicable to common shares to net cash flows from operating activities: | ||
Gain on sale of income-producing properties | (9,841) | |
Gain on sale of land | (13,577) | (500) |
Depreciation and amortization | 19,859 | 19,008 |
Amortization of deferred borrowing costs | 1,293 | 2,872 |
Amortization of bond issuance costs | 2,346 | 462 |
(Earnings) loss from unconsolidated joint ventures and investees | (2) | 11 |
(Increase) decrease in assets: | ||
Accrued interest receivable | (15,096) | 1,044 |
Other assets | 21 | 11,798 |
Prepaid expense | 1,407 | (5,661) |
Rent receivables | (744) | 544 |
Related party receivables | (769) | (5,357) |
Increase (decrease) in liabilities: | ||
Accrued interest payable | (3,303) | 1,508 |
Other liabilities | (42,135) | (21,518) |
Net cash provided by (used in) operating activities | (20,311) | (13,721) |
Cash Flow From Investing Activities: | ||
Proceeds from notes receivable | 6,541 | 26,077 |
Originations or advances on notes receivable | (12,044) | (10,665) |
Acquisition of land held for development | (11,440) | |
Proceeds from sale of income-producing properties | 2,706 | |
Proceeds from sale of land | 10,439 | 2,446 |
Improvement of land held for development | (908) | |
Improvement of income-producing properties | (3,688) | (4,462) |
Construction and development of new properties | (66,567) | (41,489) |
Net cash used in investing activities | (62,613) | (40,441) |
Cash Flow From Financing Activities: | ||
Proceeds from bonds | 59,213 | 106,583 |
Proceeds from notes payable | 68,943 | 54,231 |
Recurring payment of principal on notes payable | (14,443) | (7,279) |
Payments on maturing notes payable | (16,750) | (59,068) |
Bond issuance costs | (5,257) | 6,182 |
Deferred financing costs | (820) | |
Preferred stock dividends - Series D | (673) | (670) |
Net cash provided by financing activities | 91,033 | 99,159 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 8,109 | 44,997 |
Cash, cash equivalents and restricted cash, beginning of period | 88,342 | 55,733 |
Cash, cash equivalents and restricted cash, end of period | 96,451 | 100,730 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 39,514 | $ 36,393 |
Schedule of noncash investing and financing activities: | ||
Notes receivable received from sale of income-producing properties | 1,735 | |
Seller finanncing note - acquisition of income-producing properties | 1,895 | |
Notes payable issued on acquisition of income-producing properties | $ 31,175 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 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 five income-producing properties as of September 30, 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; ● Forty eight apartment communities totaling 8,494 units; excluding apartments being developed; and ● 3,218 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 September 30, 2018, we had ten apartment projects in development. The third-party developer typically holds a general partner interest in a limited partnership formed for the purpose of building a single property, we generally are a majority of the limited partner interests in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all necessary equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our Consolidated Financial Statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developer’s partnership interests in exchange for any remaining unpaid developer fees. Basis of Presentation The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 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. Prior to January 1, 2015, the operating results of real estate assets held for sale and sold were reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. Effective January 1, 2015, Accounting Standards Update 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”) substantially changed the criteria for determining whether a disposition qualifies for discontinued operations presentation. Since the Company adopted ASU 2014-08, effective January 1, 2015, we have had no dispositions that met the discontinued operations criteria. Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. Fair Value Measurement We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting 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 | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
REAL ESTATE ACTIVITY | NOTE 2. REAL ESTATE ACTIVITY Below is a summary of the real estate owned as of September 30, 2018 (dollars in thousands): Apartments 87,834 Apartments under construction 19,502 Commercial properties 203,329 Real estate held for sale 841,207 Land held for development 88,681 Land subject to sales contract 4,117 Total real estate $ 1,244,670 Less accumulated depreciation (191,218 ) Total real estate, net of depreciation $ 1,053,452 The highlights of our significant real estate transactions for the nine months ended September 30, 2018, are listed below: Purchases During the nine months ended September 30, 2018, the Company purchased through one of its subsidiaries, three residential apartment communities. A multi-family 80 unit community located in Baton Rouge, LA for a total purchase price of $12 million, paid through a seller’s financing note of $1.9 million, issuance of note payable of $8.6 million, and exercising an option to purchase of $1.5 million paid in the previous year. A multi-family 99 unit residential apartment community located in Mansfield, TX for a total purchase price of $14.8 million, paid through a seller’s financing note of $2.3 million, and an issuance of a note payable of $11.0 million. A multi-family 200 unit residential apartment community located in Golf Shores, AL for a total purchase price of $18.1 million, paid through an issuance of a note payable of $11.5 million. Sales For the nine months ended September 30, 2018, TCI sold 62 acres of land to an independent third party for a total sales price of $3.0 million and recorded a gain of $1.3 million from the land sale. In the second quarter, a golf course comprising approximately 96.09 acres sold for an aggregate sales price of $2.3 million, out of which, $0.6 million was received in cash and $1.7 million in note receivables. In addition, during the first quarter, 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. Mercer Crossing In addition to the real estate sales noted above the Company recorded sales from a development project known as Mercer Crossing. At November 2015, our real estate land holdings at Mercer Crossing consisted of land developable into residential homes and commercial projects, located in Farmers Branch, Texas. In November 2015, the Company entered into a sales contract with an unrelated party. The contract was for all of the developable land owned by the Company. In addition, IOR and ARL also sold land in this transaction. Total consideration for the sale was $75 million. The agreement among the parties to this transaction provides for TCI to hold the subordinated note from the buyer in the amount of $50 million. At the closing, due to the inadequate down payment from the buyer and the level of seller financing involved, the transaction was accounted for under the deposit method. Under the deposit method, no revenue is recognized and the asset sold remains on the books until the criteria for full revenue recognition are met. During the third quarter of 2018, due to significant cumulative sales of real estate to unrelated third parties and cash received by TCI, the criteria for recording full accrual accounting had been met. Through the period ended August 21, 2018 approximately $28.1 million of the assets previously held by the Company were sold, resulting in a gain of $7.5 million. On August 22, 2018 the Company reacquired all the unsold portions of the real estate from the November 2015 transaction for the amount that remained from the original sales price. During the period August 23, 2018 through September 30, 2018 additional Mercer Crossing real estate was sold resulting in a net gain on sale of real estate of $4.8 million. As of September 30, 2018, the Company has approximately 86 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 nine months ended September 30, 2018, we have invested $81.4 million related to the construction or predevelopment of various apartment complexes and capitalized $6.6 million of interest costs. |
ASSETS HELD FOR SALE
ASSETS HELD FOR SALE | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
ASSETS HELD FOR SALE | NOTE 3. ASSETS HELD FOR SALE In March 2018, TCI and global diversified financial group Macquarie Group Limited (“Macquarie”) entered into an agreement to form a special purpose entity Victory Abode Apartment, LLC (“Joint Venture”) that will principally own and operate a portfolio of existing TCI Class A multi-family residential properties that are currently owned 100% by TCI subsidiaries, including the Company’s existing multi-family assets. The Joint Venture will also actively participate in the development and/or acquisitions of additional Class A multi-family assets. It is anticipated that the Company and Macquarie will each have a 49% ownership interest and a 50% voting interest in the Joint Venture. The remaining 2% ownership interest would be allotted to Daniel J. Moos, the current President and Chief Executive Officer of TCI and Abode Properties. The closing of the agreement is expected to occur in the fourth quarter of 2018. At September 30, 2018, $760.5 million were included in assets held for sale, consisting of $727.6 million related to the Joint Venture, $21.1 million related to Mercer Crossing properties (Note 2), and $11.8 million other. The following table presents income before tax associated with assets held for sale. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenues: Rental and other property revenues $ 22,371 $ 20,410 $ 65,056 $ 59,672 Total operating revenues 22,371 20,410 65,056 59,672 Expenses: Property operating expenses 9,953 9,190 29,250 26,964 Depreciation and amortization 3,780 3,397 11,080 9,971 General and administrative 6 12 276 389 Total operating expenses 13,739 12,599 40,606 37,324 Operating Income 8,632 7,811 24,450 22,348 Other Income (Expense): Interest income from notes receivable 2 3 3 6 Other income (loss) 3 (47 ) 267 (70 ) Mortgage and loan interest (4,973 ) (4,401 ) (14,449 ) (12,738 ) Loan fee expense — — — (707 ) Total other (expense) (4,968 ) (4,445 ) (14,179 ) (13,509 ) Net Income $ 3,664 $ 3,366 $ 10,271 $ 8,839 |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 4. SUPPLEMENTAL CASH FLOW INFORMATION For the nine months ended September 30, 2018 and 2017, the Company paid interest expense of $ 39.5 million and $36.4 million, respectively. Cash and cash equivalents, and restricted cash for the nine months ended September 30, 2018 and 2017 was $96.5 million and $100.7 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: September 30, 2018 2017 Cash and cash equivalents $ 23,763 $ 52,328 Restricted cash (cash held in escrow) 57,135 38,407 Restricted cash (certificate of deposits) 9,155 5,650 Restricted cash (held with Trustee) 6,398 4,345 $ 96,451 $ 100,730 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, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
NOTES AND INTEREST RECEIVABLE | NOTE 5. 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 September 30, 2018 (dollars in thousands): Borrower Maturity Interest Amount Collateral Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured H198, LLC (McKinney Ranch Land) 09/20 6.00 % 4,554 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Spyglass Apartments of Ennis, LP 11/19 5.00 % 4,927 Secured D4DS, LLC (Bellwether Ridge) 05/20 5.00 % 3,336 Secured Parc at Windmill Farms 05/20 5.00 % 5,919 Secured 2818 Ventures LLC (Forest Pines) 11/20 5.00 % 2,223 Secured ABC Land & Development (Mandahl Bay) 05/38 6.00 % 1,735 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 510 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 300 Various unsecured interests Accrued interest 5,117 Total Performing $ 82,239 (1) Related party notes. We invest in mortgage loans, secured by mortgages that are subordinate to one or more prior liens either on the fee or a leasehold interest in real estate. Recourse on such loans ordinarily includes the real estate on which the loan is made, other collateral and guarantees. At September 30, 2018, we had mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $48.6 million. We recognized interest income of $4.4 million related to these notes receivables for the nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES | NOTE 6. 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 September 30, 2018 September 30, 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 September 30 2018 2017 Real estate, net of accumulated depreciation $ 549 $ 14,411 Notes receivable 41,782 39,857 Other assets 64,352 54,703 Notes payable (6,043 ) (6,618 ) Other liabilities (30,746 ) (37,184 ) Shareholders’ equity (69,894 ) (65,169 ) For the Nine Months Ended September 30 2018 2017 Rents and interest and other income $ 5,222 $ 4,655 Depreciation — (142 ) Operating expenses (1,941 ) (2,607 ) Gain on land sales — 1,360 Interest expense (5,231 ) (4,641 ) Net income/(loss) $ (1,950 ) $ (1,375 ) Company’s proportionate share of net income/(loss) $ (18 ) $ (12 ) |
NOTES AND INTEREST PAYABLE
NOTES AND INTEREST PAYABLE | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES AND INTEREST PAYABLE | NOTE 7. NOTES AND INTEREST PAYABLE Below is a summary of our notes and interest payable as of September 30, 2018 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 62,103 $ 176 $ 62,279 Apartments under Construction 20,580 — 20,580 Commercial 125,429 617 126,046 Land 15,823 191 16,014 Real estate subject to sales contract 649,541 1,484 651,025 Mezzanine financing 93,423 503 93,926 Other 14,071 (777 ) 13,294 Total $ 980,970 $ 2,194 $ 983,164 Unamortized deferred borrowing costs (17,941 ) — (17,941 ) $ 963,029 $ 2,194 $ 965,223 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 $66.6 million in construction loans during the nine months ended September 30, 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 | 9 Months Ended |
Sep. 30, 2018 | |
Notes to Financial Statements | |
BONDS PAYABLE | NOTE 8. 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 January 25, 2018, interest payment of approximately NIS 14.6 million (or approximately $4.3 million) was paid to the Series A bondholders. On February 15, 2018, Southern 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%. On July 19, 2018, Southern closed a private placement of its Series B bonds in the amount of NIS 72.3 million (or approximately $19.8 million). The bonds are reported in NIS, are registered on the TASE, bear an annual interest rate of 6.8% and have an effective interest rate of 9.60%. Interest will be paid on January 31 and July 31 of each of the years 2019 and 2013 (inclusive). The principal will be repaid in ten equal installment on January 31 and July 31 of each of the years from 2021 to 2012 (inclusive). The Company incurred bonds issuance costs of approximately $1.9 million. On July 26, 2018, interest payment of approximately NIS 18.9 million (or approximately $5.2 million) was paid to the Series A and B bondholders. The outstanding balance of these Bonds at September 30, 2018 is as follows: September 30, December 31, 2018 2017 Bonds (Series A) $ 110,246 $ 115,336 Bonds (Series B) 37,965 — Bonds (Series B expansion) 19,934 — Less: deferred issuance expense, net (8,827 ) (5,916 ) Accrued Interest 1,692 3,627 $ 161,010 $ 113,047 The aggregate maturity of the bonds are as follows: Year 2018 $ — 2019 22,049 2020 22,049 2021 22,049 2022 33,629 Thereafter 68,369 $ 168,145 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 nine months ended September 30, 2018, the Company recorded a gain on foreign currency transaction of approximately $6.4 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9. RELATED PARTY TRANSACTIONS The following table provides the reconciliation of the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2018 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2017 $ — $ 111,665 $ 111,665 Cash transfers 26,637 — 26,637 Advisory fees (8,208 ) — (8,208 ) Net income fee (489 ) — (489 ) Fees and commissions (1,205 ) — (1,205 ) Cost reimbursements (3,264 ) — (3,264 ) Interest income — 5,135 5,135 Notes receivable purchased (5,314 ) — (5,314 ) Expenses (paid)/received by advisor 4,946 — 4,946 Financing (mortgage payments) 5,714 — 5,714 Sales/Purchases transactions (7,826 ) — (7,826 ) Related party receivable, September 30, 2018 $ 10,991 $ 116,800 $ 127,791 During the ordinary course of business, we have related party transactions that include, but are not limited to, rental income, interest income, interest expense, general and administrative costs, commissions, management fees, and property expenses. In addition, we have assets and liabilities that include related party amounts. The related party amounts included in assets and liabilities, and the related party revenues and expenses received/paid are shown on the face of the Consolidated Financial Statements. |
DEFERRED INCOME
DEFERRED INCOME | 9 Months Ended |
Sep. 30, 2018 | |
Deferred Income | |
DEFERRED INCOME | NOTE 10. DEFERRED INCOME On July 17, 2009, the Company acquired from Syntek West, Inc., (“SWI”), 2,518,934 shares of Common Stock, par value $0.01 per share of IOR at an aggregate price of $17,884,431 (approximately $7.10 per share), the full amount of which was paid by the Company through an assumption of an aggregate amount of indebtedness of $17,884,431 on the outstanding balance owed by SWI to IOR. The 2,518,934 shares of IOR Common Stock acquired by the Company constituted approximately 60.4% of the issued and outstanding Common Stock of IOR. The Company has owned for several years an aggregate of 1,037,184 shares of Common Stock of IOR (approximately 25% of the issued and outstanding). After giving effect to the transaction on July 17, 2009, the Company owns an aggregate of 3,556,118 shares of IOR Common Stock which constitutes approximately 85.3% of the shares of Common Stock of IOR outstanding (which is a total of 4,168,214 shares). Shares of IOR are traded on the NYSE American. With the Company’s acquisition of the additional shares on July 17, 2009, which increased the aggregate ownership to in excess of 80%, beginning in July 2009, IOR’s results of operations are now consolidated with those of the Company for tax and financial reporting purposes. At the time of the acquisition, the historical accounting value of IOR’s assets was $112 million and liabilities were $43 million. In that the shares of IOR acquired by TCI were from a related party, the values recorded by TCI are IOR’s historical accounting values at the date of transfer. The Company’s fair valuation of IOR assets and liabilities at the acquisition date approximated IOR’s book value. The net difference between the purchase price and historical accounting basis of the assets and liabilities acquired was $35 million and has been reflected by TCI as deferred income. At the time of the transaction it was determined that the deferred income would be recognized upon the sale of the land that IOR held on its books to an independent third party as of the date of sale. On August 22, 2018, IOR sold approximately 80% of the remaining land held on the date of the acquisition of the additional shares. During the quarter ending September 30, 2018 the Company recognized the proportionate share of the remaining deferred income, approximately $18 million, as a result of the sale of assets. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | NOTE 11. 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 notes receivable and corporate debt. Presented below is our reportable segments’ operating income for the three months ended September 30, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Three Months Ended September 30, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 8,228 $ 25,275 $ — $ 2 $ 33,505 Property operating expenses (4,236 ) (11,345 ) (78 ) (206 ) (15,867 ) Depreciation and amortization (2,523 ) (4,364 ) — (4 ) (6,891 ) Mortgage and loan interest (1,921 ) (5,722 ) (212 ) (7,699 ) (15,555 ) Interest income — — — 4,021 4,021 Gain on land sales — — 12,243 — 12,243 Segment operating (loss) income $ (452 ) $ 3,844 $ 11,953 $ (3,886 ) $ 11,456 Balance Sheet Data as of September 30, 2018 Capital expenditures 962 — (74 ) — 888 Property Sales Sales price $ — $ — $ 35,518 $ — $ 35,518 Cost of sale — — (23,275 ) — (23,275 ) Gain (loss) on sale $ — $ — $ 12,243 $ — $ 12,243 Commercial For the Three Months Ended September 30, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 8,170 $ 23,231 $ 86 $ 4 $ 31,491 Property operating expenses (4,252 ) (10,659 ) (115 ) (131 ) (15,157 ) Depreciation and amortization (2,298 ) (4,028 ) — — (6,326 ) Mortgage and loan interest (1,902 ) (5,168 ) (387 ) (6,788 ) (14,245 ) Interest income — — — 3,175 3,175 Recognition of deferred gain on sale of income - producing properties — 9,841 — — 9,841 Gain on land sales — — 530 — 530 Segment operating (loss) income $ (282 ) $ 13,217 $ 114 $ (3,740 ) $ 9,309 Balance Sheet Data as of September 30, 2017 Capital expenditures $ 689 $ 543 $ 55 $ — $ 1,287 Property Sales Sales price $ — $ — $ 850 $ — $ 850 Cost of sale — — (320 ) — (320 ) Recognized prior deferred gain — 9,841 — — 9,841 Gain on sale $ — $ 9,841 $ 530 $ — $ 10,371 The table below provides the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the three months ended September 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended 2018 2017 Segment operating income (loss) $ 11,456 $ 9,309 Other non-segment items of income (expense) General and administrative (1,858 ) (1,594 ) Net income fee to related party (383 ) (53 ) Advisory fee to related party (2,735 ) (2,595 ) Other income 17,434 2,096 Income tax (expense) (792 ) — Earnings from unconsolidated joint ventures and investees (4 ) 7 Net income (loss) from continuing operations $ 23,118 $ 7,170 Presented below is our reportable segments’ operating income for the nine months ended September 30, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Nine Months Ended September 30, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 23,187 $ 73,001 $ — $ 6 $ 96,194 Property operating expenses (12,222 ) (33,127 ) (162 ) (301 ) (45,814 ) Depreciation and amortization (7,138 ) (12,709 ) — (12 ) (19,859 ) Mortgage and loan interest (5,662 ) (16,520 ) (175 ) (21,465 ) (43,823 ) Interest income — — — 11,441 11,441 Gain on land sales — — 13,578 — 13,578 Segment operating (loss) income $ (1,835 ) $ 10,645 $ 13,241 $ (10,331 ) $ 11,717 Balance Sheet as of September 30, 2018 Capital expenditures $ 3,688 $ (2,398 ) $ (692 ) $ — $ 598 Real estate assets $ 134,148 $ 825,863 $ 92,798 $ 643 $ 1,053,452 Property Sales Sales price $ 2,313 $ 8,512 $ 38,503 $ — $ 49,328 Cost of sale (2,313 ) (8,512 ) (24,925 ) — (35,750 ) Gain on sale $ — $ — $ 13,578 $ — $ 13,578 Commercial For the Nine Months Ended September 30, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 25,308 $ 68,922 $ 87 $ 11 $ 94,328 Property operating expenses (13,629 ) (31,615 ) (429 ) (583 ) (46,256 ) Depreciation and amortization (6,903 ) (12,105 ) — — (19,008 ) Mortgage and loan interest (5,629 ) (16,955 ) (1,248 ) (21,386 ) (45,218 ) Interest income — — — 10,305 10,305 Recognition of deferred gain on sale of income - producing properties — 9,841 — — 9,841 Gain on land sales — — 500 — 500 Segment operating (loss) income $ (853 ) $ 18,088 $ (1,090 ) $ (11,653 ) $ 4,492 Balance Sheet as of September 30, 2017 Capital expenditures $ 2,586 $ 543 $ 641 $ — $ 3,770 Real estate assets $ 145,321 $ 665,972 $ 117,642 $ — $ 928,935 Property Sales Sales price $ — $ — $ 2,446 $ — $ 2,446 Cost of sale — — (1,946 ) — (1,946 ) Recognized prior deferred gain — 9,841 — — 9,841 Gain on sale $ — $ 9,841 $ 500 $ — $ 10,341 The tables below reconcile the segment information to the corresponding amounts in the Consolidated Statements of Operations: Nine Months Ended September 30, 2018 2017 Segment operating income (loss) $ 11,717 $ 4,492 Other non-segment items of income (expense) General and administrative (6,223 ) (4,669 ) Net income fee to related party (489 ) (189 ) Advisory fee to related party (8,209 ) (7,402 ) Other income 34,387 (312 ) Income tax (expense) (792 ) — Loss from unconsolidated joint ventures and investees (2 ) (11 ) Net income (loss) from continuing operations $ 30,389 $ (8,091 ) The tables below reconcile the segment information to the corresponding amounts in the Consolidated Balance Sheets: As of September 30, 2018 2017 Segment assets $ 1,053,452 $ 928,935 Investments in real estate partnerships 2,774 2,435 Notes and interest receivable 82,239 62,698 Other assets 284,465 256,659 Total assets $ 1,422,930 $ 1,250,727 |
TAXES
TAXES | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
TAXES | NOTE 12. TAXES TCI had a taxable loss for federal income tax purposes during the nine months ended September 30, 2018 and 2017. However, due to activities arising from our subsidiary IOR during the nine months ended September 30, 2018, a federal income expense of $792,000 was incurred. This expense consists of $1.9 million current income tax expense and ($1.1) million of deferred tax income related to the change in the valuation allowance of the deferred tax asset. |
COMMITMENTS AND CONTINGENCIES A
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY | NOTE 13. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY Liquidity. Partnership Buyouts Dynex Capital, Inc. On July 20, 2015, the 68th Judicial District Court in Dallas County, Texas issued its Final Judgment in Cause No. DC-03-00675, styled Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. v. Dynex Commercial, Inc. The case, which was litigated for more than a decade, had its origin with Dynex Commercial making loans to Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. (subsidiaries of Continental Mortgage & Equity Trust (“CMET”), an entity which merged into TCI in 1999 after the original suit was filed). Under the original loan commitment, $160 million in loans were to be made to the entities. The loans were conditioned on the execution of a commitment between Dynex Commercial and Basic Capital Management, Inc. (“Basic”). An original trial in 2004, which also included Dynex Capital, Inc. as a defendant, resulted in a jury awarding damages in favor of Basic for “lost opportunity,” as well as damages in favor of ART and in favor of TCI and its subsidiaries for “increased costs” and “lost opportunity.” The original Trial Court judge ignored the jury’s findings, however, and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in favor of the Dynex entities (the judge held the Plaintiffs were not entitled to any damages from the Dynex entities). After numerous appeals by all parties, Dynex Capital, Inc. was ultimately dismissed from the case and the remaining claims against Dynex Commercial were remanded to the Trial Court for a new judgment consistent with the jury’s findings. The Court entered the new Final Judgment against Dynex Commercial, Inc. on July 20, 2015. The Final Judgment entered against Dynex Commercial, Inc. on July 20, 2015 awarded Basic $0.256 million in damages, plus pre-judgment interest of $0.192 million for a total amount of $0.448 million. The Judgment awarded ART $14.2 million in damages, plus pre-judgment interest of $10.6 million for a total amount of $24.8 million. The Judgment awarded TCI $11.1 million, plus pre-judgment interest of $8.4 million for a total amount of $19.5 million. The Judgment also awarded Basic, ART, and TCI post-judgment interest at the rate of 5% per annum from April 25, 2014 until the date their respective damages are paid. Lastly, the Judgement awarded Basic, ART, and TCI $1.6 million collectively in attorneys’ fees from Dynex Commercial, Inc. 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 | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 14. 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 September 30, 2018, there are no preferred stock or stock options that are required to be included in the calculation of EPS. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15. SUBSEQUENT EVENTS The date to which events occurring after September 30, 2018, the date of the most recent balance sheet, have been evaluated for possible adjustment to the Consolidated Financial Statements or disclosure is November 13, 2018, which is the date on which the Consolidated Financial Statements were available to be issued. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 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 fifty five income-producing properties as of September 30, 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; ● Forty eight apartment communities totaling 8,494 units; excluding apartments being developed; and ● 3,218 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 September 30, 2018, we had ten apartment projects in development. The third-party developer typically holds a general partner interest in a limited partnership formed for the purpose of building a single property, we generally are a majority of the limited partner interests 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 and nine months ended September 30, 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. Prior to January 1, 2015, the operating results of real estate assets held for sale and sold were reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. Effective January 1, 2015, Accounting Standards Update 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”) substantially changed the criteria for determining whether a disposition qualifies for discontinued operations presentation. Since the Company adopted ASU 2014-08, effective January 1, 2015, we have had no dispositions that met the discontinued operations criteria. |
Cost Capitalization | Cost Capitalization Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity. We capitalize leasing costs, which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term. |
Fair Value Measurement | Fair Value Measurement We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting 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. |
REAL ESTATE ACTIVITY (Tables)
REAL ESTATE ACTIVITY (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Real Estate [Abstract] | |
Schedule of the real estate owned | Below is a summary of the real estate owned as of September 30, 2018 (dollars in thousands): Apartments 87,834 Apartments under construction 19,502 Commercial properties 203,329 Real estate held for sale 841,207 Land held for development 88,681 Land subject to sales contract 4,117 Total real estate $ 1,244,670 Less accumulated depreciation (191,218 ) Total real estate, net of depreciation $ 1,053,452 |
ASSETS HELD FOR SALE (Tables)
ASSETS HELD FOR SALE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of income before tax associated with assets held for sale | The following table presents income before tax associated with assets held for sale. Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Revenues: Rental and other property revenues $ 22,371 $ 20,410 $ 65,056 $ 59,672 Total operating revenues 22,371 20,410 65,056 59,672 Expenses: Property operating expenses 9,953 9,190 29,250 26,964 Depreciation and amortization 3,780 3,397 11,080 9,971 General and administrative 6 12 276 389 Total operating expenses 13,739 12,599 40,606 37,324 Operating Income 8,632 7,811 24,450 22,348 Other Income (Expense): Interest income from notes receivable 2 3 3 6 Other income (loss) 3 (47 ) 267 (70 ) Mortgage and loan interest (4,973 ) (4,401 ) (14,449 ) (12,738 ) Loan fee expense — — — (707 ) Total other (expense) (4,968 ) (4,445 ) (14,179 ) (13,509 ) Net Income $ 3,664 $ 3,366 $ 10,271 $ 8,839 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Reconciliation of cash and cash equivalents and restricted cash | 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: September 30, 2018 2017 Cash and cash equivalents $ 23,763 $ 52,328 Restricted cash (cash held in escrow) 57,135 38,407 Restricted cash (certificate of deposits) 9,155 5,650 Restricted cash (held with Trustee) 6,398 4,345 $ 96,451 $ 100,730 |
NOTES AND INTEREST RECEIVABLE (
NOTES AND INTEREST RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Receivables [Abstract] | |
Schedule of notes receivable | Below is a summary of our notes receivable as of September 30, 2018 (dollars in thousands): Borrower Maturity Interest Amount Collateral Performing loans: H198, LLC (Las Vegas Land) 01/20 12.00 % $ 5,907 Secured H198, LLC (McKinney Ranch Land) 09/20 6.00 % 4,554 Secured Oulan-Chikh Family Trust 03/21 8.00 % 174 Secured Spyglass Apartments of Ennis, LP 11/19 5.00 % 4,927 Secured D4DS, LLC (Bellwether Ridge) 05/20 5.00 % 3,336 Secured Parc at Windmill Farms 05/20 5.00 % 5,919 Secured 2818 Ventures LLC (Forest Pines) 11/20 5.00 % 2,223 Secured ABC Land & Development (Mandahl Bay) 05/38 6.00 % 1,735 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 510 Various unsecured interests Other non-related party notes Various Various 796 Various secured interests Other non-related party notes Various Various 300 Various unsecured interests Accrued interest 5,117 Total Performing $ 82,239 (1) Related party notes. |
INVESTMENT IN UNCONSOLIDATED _2
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2018 September 30, 2017 American Realty Investors, Inc. (1) 0.90 % 0.90 % (1) Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock |
Schedule of the financial position and results of operations - unconsolidated parent | The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands): As of September 30 2018 2017 Real estate, net of accumulated depreciation $ 549 $ 14,411 Notes receivable 41,782 39,857 Other assets 64,352 54,703 Notes payable (6,043 ) (6,618 ) Other liabilities (30,745 ) (37,184 ) Shareholders’ equity (69,894 ) (65,169 ) For the Nine Months Ended September 30 2018 2017 Rents and interest and other income $ 5,222 $ 4,655 Depreciation (0 ) (142 ) Operating expenses (1,941 ) (2,607 ) Gain on land sales — 1,360 Interest expense (5,231 ) (4,641 ) Net income/(loss) $ (1,950 ) $ (1,375 ) Company’s proportionate share of net income/(loss) $ (18 ) $ (12 ) |
NOTES AND INTEREST PAYABLE (Tab
NOTES AND INTEREST PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of notes and interest payable | Below is a summary of our notes and interest payable as of September 30, 2018 (dollars in thousands): Notes Payable Accrued Interest Total Debt Apartments $ 62,103 $ 176 $ 62,279 Apartments under Construction 20,580 — 20,580 Commercial 125,429 617 126,046 Land 15,823 191 16,014 Real estate subject to sales contract 649,541 1,484 651,025 Mezzanine financing 93,423 503 93,926 Other 14,071 (777 ) 13,294 Total $ 980,970 $ 2,194 $ 983,164 Unamortized deferred borrowing costs (17,941 ) — (17,941 ) $ 963,029 $ 2,194 $ 965,223 |
BONDS PAYABLE (Tables)
BONDS PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Bonds Payable | |
Schedule of bonds and interest payable | The outstanding balance of these Bonds at September 30, 2018 is as follows: September 30, December 31, 2018 2017 Bonds (Series A) $ 110,246 $ 115,336 Bonds (Series B) 37,965 — Bonds (Series B expansion) 19,934 — Less: deferred issuance expense, net (8,827 ) (5,916 ) Accrued Interest 1,692 3,627 $ 161,010 $ 113,047 |
Schedule of principal payments on the bonds payable | The aggregate maturity of the bonds are as follows: Year 2018 $ — 2019 22,049 2020 22,049 2021 22,049 2022 33,629 Thereafter 68,369 $ 168,145 |
RELATED PARTY TRANSACTIONS AND
RELATED PARTY TRANSACTIONS AND FEES (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of accounts receivable from and (accounts payable) to related parties | The following table provides the reconciliation of the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2018 (dollars in thousands): Pillar ARL Total Related party receivable, December 31, 2017 $ — $ 111,665 $ 111,665 Cash transfers 26,637 — 26,637 Advisory fees (8,208 ) — (8,208 ) Net income fee (489 ) — (489 ) Fees and commissions (1,205 ) — (1,205 ) Cost reimbursements (3,264 ) — (3,264 ) Interest income — 5,135 5,135 Notes receivable purchased (5,314 ) — (5,314 ) Expenses (paid)/received by advisor 4,946 — 4,946 Financing (mortgage payments) 5,714 — 5,714 Sales/Purchases transactions (7,826 ) — (7,826 ) Related party receivable, September 30, 2018 $ 10,991 $ 116,800 $ 127,791 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Three Months Ended September 30, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 8,228 $ 25,275 $ — $ 2 $ 33,505 Property operating expenses (4,236 ) (11,345 ) (78 ) (206 ) (15,867 ) Depreciation and amortization (2,523 ) (4,364 ) — (4 ) (6,891 ) Mortgage and loan interest (1,921 ) (5,722 ) (212 ) (7,699 ) (15,555 ) Interest income — — — 4,021 4,021 Gain on land sales — — 12,243 — 12,243 Segment operating (loss) income $ (452 ) $ 3,844 $ 11,953 $ (3,886 ) $ 11,456 Balance Sheet Data as of September 30, 2018 Capital expenditures 962 — (74 ) — 888 Property Sales Sales price $ — $ — $ 35,518 $ — $ 35,518 Cost of sale — — (23,275 ) — (23,275 ) Gain (loss) on sale $ — $ — $ 12,243 $ — $ 12,243 Commercial For the Three Months Ended September 30, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 8,170 $ 23,231 $ 86 $ 4 $ 31,491 Property operating expenses (4,252 ) (10,659 ) (115 ) (131 ) (15,157 ) Depreciation and amortization (2,298 ) (4,028 ) — — (6,326 ) Mortgage and loan interest (1,902 ) (5,168 ) (387 ) (6,788 ) (14,245 ) Interest income — — — 3,175 3,175 Recognition of deferred gain on sale of income - producing properties — 9,841 — — 9,841 Gain on land sales — — 530 — 530 Segment operating (loss) income $ (282 ) $ 13,217 $ 114 $ (3,740 ) $ 9,309 Balance Sheet Data as of September 30, 2017 Capital expenditures $ 689 $ 543 $ 55 $ — $ 1,287 Property Sales Sales price $ — $ — $ 850 $ — $ 850 Cost of sale — — (320 ) — (320 ) Recognized prior deferred gain — 9,841 — — 9,841 Gain on sale $ — $ 9,841 $ 530 $ — $ 10,371 Presented below is our reportable segments’ operating income for the nine months ended September 30, 2018 and 2017, including segment assets and expenditures (dollars in thousands): Commercial For the Nine Months Ended September 30, 2018 Properties Apartments Land Other Total Rental and other property revenues $ 23,187 $ 73,001 $ — $ 6 $ 96,194 Property operating expenses (12,222 ) (33,127 ) (162 ) (301 ) (45,814 ) Depreciation and amortization (7,138 ) (12,709 ) — (12 ) (19,859 ) Mortgage and loan interest (5,662 ) (16,520 ) (175 ) (21,465 ) (43,823 ) Interest income — — — 11,441 11,441 Gain on land sales — — 13,578 — 13,578 Segment operating (loss) income $ (1,835 ) $ 10,645 $ 13,241 $ (10,331 ) $ 11,717 Balance Sheet as of September 30, 2018 Capital expenditures $ 3,688 $ (2,398 ) $ (692 ) $ — $ 598 Real estate assets $ 134,148 $ 825,863 $ 92,798 $ 643 $ 1,053,452 Property Sales Sales price $ 2,313 $ 8,512 $ 38,503 $ — $ 49,328 Cost of sale (2,313 ) (8,512 ) (24,925 ) — (35,750 ) Gain on sale $ — $ — $ 13,578 $ — $ 13,578 Commercial For the Nine Months Ended September 30, 2017 Properties Apartments Land Other Total Rental and other property revenues $ 25,308 $ 68,922 $ 87 $ 11 $ 94,328 Property operating expenses (13,629 ) (31,615 ) (429 ) (583 ) (46,256 ) Depreciation and amortization (6,903 ) (12,105 ) — — (19,008 ) Mortgage and loan interest (5,629 ) (16,955 ) (1,248 ) (21,386 ) (45,218 ) Interest income — — — 10,305 10,305 Recognition of deferred gain on sale of income - producing properties — 9,841 — — 9,841 Gain on land sales — — 500 — 500 Segment operating (loss) income $ (853 ) $ 18,088 $ (1,090 ) $ (11,653 ) $ 4,492 Balance Sheet as of September 30, 2017 Capital expenditures $ 2,586 $ 543 $ 641 $ — $ 3,770 Real estate assets $ 145,321 $ 665,972 $ 117,642 $ — $ 928,935 Property Sales Sales price $ — $ — $ 2,446 $ — $ 2,446 Cost of sale — — (1,946 ) — (1,946 ) Recognized prior deferred gain — 9,841 — — 9,841 Gain on sale $ — $ 9,841 $ 500 $ — $ 10,341 |
Schedule of reconciliaton of segment information to consolidated statements of operations | The table below provides the reconciliation of segment information to the corresponding amounts in the Consolidated Statements of Operations for the three months ended September 30, 2018 and 2017 (dollars in thousands): For the Three Months Ended 2018 2017 Segment operating income (loss) $ 11,456 $ 9,309 Other non-segment items of income (expense) General and administrative (1,858 ) (1,594 ) Net income fee to related party (383 ) (53 ) Advisory fee to related party (2,735 ) (2,595 ) Other income 17,434 2,096 Income tax (expense) (792 ) — Earnings from unconsolidated joint ventures and investees (4 ) 7 Net income (loss) from continuing operations $ 23,118 $ 7,170 The tables below reconcile the segment information to the corresponding amounts in the Consolidated Statements of Operations: Nine Months Ended September 30, 2018 2017 Segment operating income (loss) $ 11,717 $ 4,492 Other non-segment items of income (expense) General and administrative (6,223 ) (4,669 ) Net income fee to related party (489 ) (189 ) Advisory fee to related party (8,209 ) (7,402 ) Other income 34,387 (312 ) Income tax (expense) (792 ) — Loss from unconsolidated joint ventures and investees (2 ) (11 ) Net income (loss) from continuing operations $ 30,389 $ (8,091 ) |
Schedule of reconciliaton segment information to consolidated balance sheets | The tables below reconcile the segment information to the corresponding amounts in the Consolidated Balance Sheets: As of September 30, 2018 2017 Segment assets $ 1,053,452 $ 928,935 Investments in real estate partnerships 2,774 2,435 Notes and interest receivable 82,239 62,698 Other assets 284,465 256,659 Total assets $ 1,422,930 $ 1,250,727 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2018ft²Number | |
Number of apartment communities | Number | 8,494 |
Rentable square feet | ft² | 1,700 |
Acres of land | ft² | 3,218 |
Commercial Properties [Member] | |
Number of apartment communities | Number | 55 |
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) $ in Thousands | Sep. 30, 2018USD ($) |
Real Estate [Abstract] | |
Apartments | $ 87,834 |
Apartments under construction | 19,502 |
Commercial properties | 203,329 |
Real estate held for sale | 841,207 |
Land held for development | 88,681 |
Land subject to sales contract | 4,117 |
Total real estate, at cost, less impairment | 1,244,670 |
Less accumulated depreciation | (191,218) |
Total real estate | $ 1,053,452 |
REAL ESTATE ACTIVITY (Details N
REAL ESTATE ACTIVITY (Details Narrative) $ in Thousands | Aug. 22, 2018USD ($) | Nov. 30, 2015USD ($)ft² | Sep. 30, 2018USD ($)ft²Number | Jun. 30, 2018USD ($)ft² | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)ft²Number | Sep. 30, 2017USD ($) |
Number of units | Number | 1,200 | 1,200 | |||||
Acres of land | ft² | 3,218 | 3,218 | |||||
Payment for construction or predevelopment of various apartment complexes | $ 81,400 | ||||||
Capitalized interest costs | $ 6,600 | 6,600 | |||||
Gain on land sales | $ 12,243 | $ 530 | 13,577 | $ 500 | |||
Proceeds from sale of land | $ 10,439 | $ 2,446 | |||||
Related Parties [Member] | |||||||
Acres of land | ft² | 86 | 86 | |||||
Mercer Crossing [Member] | |||||||
Acres of land | ft² | 180 | ||||||
Sale of land, total consideration | $ 28,100 | ||||||
Notes receivable - land sales | $ 50,000 | ||||||
Gain on sale of property | $ 7,500 | $ 4,800 | |||||
Mercer Crossing [Member] | Land [Member] | |||||||
Sale of land, total consideration | $ 75,000 | ||||||
Land [Member] | TEXAS | |||||||
Area of land sold | ft² | 180 | 180 | |||||
Gain on land sales | $ 12,800 | ||||||
Proceeds from sale of land | 32,200 | ||||||
Gain on sale of land | 11,500 | ||||||
Sale of land, total consideration | $ 35,200 | ||||||
Residential Apartment Community Acquired [Member] | |||||||
Number of properties | Number | 1 | 1 | |||||
Number of units | Number | 3 | 3 | |||||
Golf Course [Member] | |||||||
Area of land sold | ft² | 96 | ||||||
Land sales - cash received | $ 600 | ||||||
Land sales - notes receivables | 1,700 | ||||||
Sale of land, total consideration | $ 2,300 | ||||||
Multi-Family Community Acquired [Member] | |||||||
Total purchase price | $ 12,000 | ||||||
Multi-Family Community Acquired [Member] | Baton Rouge, LA [Member] | |||||||
Number of units | Number | 80 | 80 | |||||
Multi-Family Community Acquired [Member] | Baton Rouge, LA [Member] | Seller Financing Note Residential Apartment Acquisition [Member] | |||||||
Issuance of note payable | $ 1,900 | ||||||
Multi-Family Community Acquired [Member] | Baton Rouge, LA [Member] | Note Payable Residential Apartment Acquisition [Member] | |||||||
Issuance of note payable | $ 8,600 | ||||||
Multi-Family Community Acquired [Member] | Mansfield, TX [Member] | |||||||
Number of units | Number | 99 | 99 | |||||
Total purchase price | $ 14,800 | ||||||
Multi-Family Community Acquired [Member] | Mansfield, TX [Member] | Seller Financing Note Residential Apartment Acquisition [Member] | |||||||
Issuance of note payable | 2,300 | ||||||
Multi-Family Community Acquired [Member] | Mansfield, TX [Member] | Note Payable Residential Apartment Acquisition [Member] | |||||||
Issuance of note payable | $ 11,000 | ||||||
Multi-Family Community Acquired [Member] | Golf Shores [Member] | |||||||
Number of units | Number | 200 | 200 | |||||
Total purchase price | $ 18,100 | ||||||
Multi-Family Community Acquired [Member] | Golf Shores [Member] | Note Payable Residential Apartment Acquisition [Member] | |||||||
Issuance of note payable | $ 11,500 |
ASSETS HELD FOR SALE (Details)
ASSETS HELD FOR SALE (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Rental and other property revenues | $ 33,505 | $ 31,491 | $ 96,194 | $ 94,328 |
Expenses: | ||||
Property operating expenses | 15,867 | 15,157 | 45,814 | 46,256 |
General and administrative | 1,858 | 1,594 | 6,223 | 4,669 |
Total operating expenses | 27,734 | 25,725 | 80,594 | 77,524 |
Net operating income | 5,771 | 5,766 | 15,600 | 16,804 |
Other income (expenses): | ||||
Mortgage and loan interest | (15,555) | (14,245) | (43,823) | (45,218) |
Total other income (expenses) | 5,896 | (8,967) | 2,003 | (35,236) |
Net income (loss) | 23,118 | 7,170 | 30,389 | (8,091) |
Real Estate Held For Sale [Member] | ||||
Revenues: | ||||
Rental and other property revenues | 22,371 | 20,410 | 65,056 | 59,672 |
Total operating revenues | 22,371 | 20,410 | 65,056 | 59,672 |
Expenses: | ||||
Property operating expenses | 9,953 | 9,190 | 29,250 | 26,964 |
Depreciation and amortization | 3,780 | 3,397 | 11,080 | 9,971 |
General and administrative | 6 | 12 | 276 | 389 |
Total operating expenses | 13,739 | 12,599 | 40,606 | 37,324 |
Net operating income | 8,632 | 7,811 | 24,450 | 22,348 |
Other income (expenses): | ||||
Interest income | 2 | 3 | 3 | 6 |
Other income (loss) | 3 | (47) | 267 | (70) |
Mortgage and loan interest | (4,973) | (4,401) | (14,449) | (12,738) |
Loan fee expense | (707) | |||
Total other income (expenses) | (4,968) | (4,445) | (14,179) | (13,509) |
Net income (loss) | $ 3,664 | $ 3,366 | $ 10,271 | $ 8,839 |
ASSETS HELD FOR SALE (Details N
ASSETS HELD FOR SALE (Details Narrative) $ in Thousands | Sep. 30, 2018USD ($) |
Real estate held for sale at cost | $ 760,497 |
Mercer Crossing [Member] | |
Real estate held for sale at cost | 21,100 |
Real Estate Held For Sale [Member] | |
Real estate held for sale at cost | $ 11,800 |
Real Estate Held For Sale [Member] | Victory Abode Apartment, LLC [Member] | |
Ownership interest in joint interest | 49.00% |
Voting interest in joint interest | 50.00% |
Real estate held for sale at cost | $ 726,600 |
Real Estate Held For Sale [Member] | Victory Abode Apartment, LLC [Member] | Chief Executive Officer [Member] | |
Ownership interest in joint interest | 2.00% |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Cash and cash equivalents | $ 23,763 | $ 52,328 | ||
Cash and cash equivalents, and restricted cash | 96,451 | $ 88,342 | 100,730 | $ 55,733 |
Held in Escrow [Member] | ||||
Restricted cash | 57,135 | 38,407 | ||
Certificates of Deposit [Member] | ||||
Restricted cash | 9,155 | 5,650 | ||
Held with Trustee [Member] | ||||
Restricted cash | $ 6,398 | $ 4,345 |
SUPPLEMENTAL CASH FLOW INFORM_4
SUPPLEMENTAL CASH FLOW INFORMATION (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |||
Interest expense paid | $ 39,500 | $ 36,400 | |
Cash and cash equivalents | $ 72,688 | $ 100,700 | $ 45,637 |
NOTES AND INTEREST RECEIVABLE_2
NOTES AND INTEREST RECEIVABLE (Details) - Performing Loans [Member] $ in Thousands | 9 Months Ended | |
Sep. 30, 2018USD ($) | ||
Accrued interest | $ 5,117 | |
Performing loans, total | $ 82,239 | |
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, 2020 | |
Description of property | McKinney Ranch Land | |
Interest Rate | 6.00% | |
Performing loans, total | $ 4,554 | |
Description of Security | Secured | |
Oulan-Chikh Family Trust [Member] | ||
Maturity Date | Mar. 31, 2021 | |
Interest Rate | 8.00% | |
Performing loans, total | $ 174 | |
Description of Security | Secured | |
Spyglass Apartments of Ennis LP [Member] | ||
Maturity Date | Nov. 30, 2019 | |
Interest Rate | 5.00% | |
Performing loans, total | $ 4,927 | |
Description of Security | Secured | |
D4DS, LLC (Bellwether Ridge) [Member] | ||
Maturity Date | May 31, 2020 | |
Interest Rate | 5.00% | |
Performing loans, total | $ 3,336 | |
Description of Security | Secured | |
Parc at Windmill Farms [Member] | ||
Maturity Date | May 31, 2020 | |
Interest Rate | 5.00% | |
Performing loans, total | $ 5,919 | |
Description of Security | Secured | |
2818 Ventures LLC (Forest Pines) [Member] | ||
Maturity Date | Nov. 30, 2020 | [1] |
Interest Rate | 5.00% | |
Performing loans, total | $ 2,223 | |
Description of Security | Secured | |
ABC Land & Development (Mandahl Bay) [Member] | ||
Maturity Date | May 31, 2038 | |
Interest Rate | 6.00% | |
Performing loans, total | $ 1,735 | |
Description of Security | Secured | |
Unified Housing Foundation, Inc. (Echo Station) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 1,481 | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 2,000 | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Lakeshore Villas) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,369 | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Limestone Ranch) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,000 | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Timbers of Terrell) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. (Timbers of Terrell) [Member] | ||
Performing loans, total | $ 1,323 | |
Unified Housing Foundation, Inc. (Tivoli) [Member] | ||
Maturity Date | Dec. 31, 2032 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,140 | |
Description of Security | Secured | [1] |
Unified Housing Foundation, Inc. #2 [Member] | ||
Maturity Date | Dec. 31, 2018 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 3,994 | |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #3 [Member] | ||
Maturity Date | Dec. 31, 2018 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 6,407 | |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. #4 [Member] | ||
Maturity Date | Jun. 30, 2020 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 5,760 | |
Description of Security | Unsecured | [1] |
Unified Housing Foundation, Inc. [Member] | ||
Maturity Date | Mar. 31, 2021 | [1] |
Interest Rate | 12.00% | [1] |
Performing loans, total | $ 5,314 | |
Description of Security | Unsecured | [1] |
Other Related Party Notes [Member] | ||
Description of maturity date | Various | [1] |
Description of Interest Rate | Various | [1] |
Performing loans, total | $ 510 | |
Description of Security | Various secured interests | [1] |
Other Non-Related Party Notes [Member] | ||
Description of maturity date | Various | |
Description of Interest Rate | Various | |
Description of Security | Various secured interests | |
Other Related Party-Non Notes [Member] | ||
Performing loans, total | $ 796 | |
Other Non-Related Party Notes [Member] | ||
Description of maturity date | Various | |
Description of Interest Rate | Various | |
Performing loans, total | $ 300 | |
Description of Security | Various secured interests | |
[1] | Related party notes. |
NOTES AND INTEREST RECEIVABLE_3
NOTES AND INTEREST RECEIVABLE (Details Narrative) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Interest income | $ 5,135 |
Mortgage Loans [Member] | Related Party [Member] | |
Total notes and interest receivable | 48,600 |
Interest income | $ 4,400 |
INVESTMENT IN UNCONSOLIDATED _3
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details) | Sep. 30, 2018 | Sep. 30, 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 _4
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Real estate, net of accumulated depreciation | $ 1,053,452 | $ 1,053,452 | $ 979,870 | ||
Other assets | 60,223 | 60,223 | 60,907 | ||
Notes payable | (314,198) | (314,198) | (892,149) | ||
Shareholders' equity | (217,714) | (217,714) | $ (189,170) | ||
Rents and interest and other income | 33,505 | $ 31,491 | 96,194 | $ 94,328 | |
Depreciation | (6,891) | (6,326) | (19,859) | (19,008) | |
Operating expenses | (27,734) | (25,725) | (80,594) | (77,524) | |
Net income (loss) | 23,118 | 7,170 | 30,389 | (8,091) | |
Company's proportionate share of net income/(loss) | (4) | 7 | (2) | (11) | |
American Realty Investors, Inc. [Member] | |||||
Real estate, net of accumulated depreciation | 549 | 14,411 | 549 | 14,411 | |
Notes receivable | 41,782 | 39,857 | 41,782 | 39,857 | |
Other assets | 64,352 | 54,703 | 64,352 | 54,703 | |
Notes payable | (6,043) | (6,618) | (6,043) | (6,618) | |
Other liabilities | (30,745) | (37,184) | (30,745) | (37,184) | |
Shareholders' equity | $ (69,894) | $ (65,169) | (69,894) | (65,169) | |
Rents and interest and other income | 5,222 | 4,655 | |||
Depreciation | 0 | (142) | |||
Operating expenses | (1,941) | (2,607) | |||
Gain on land sales | 1,360 | ||||
Interest expense | (5,231) | (4,641) | |||
Net income (loss) | (1,950) | (1,375) | |||
Company's proportionate share of net income/(loss) | $ (18) | $ (12) |
INVESTMENT IN UNCONSOLIDATED _5
INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES (Details Narrative) | Sep. 30, 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 | Sep. 30, 2018USD ($) |
Apartments [Member] | |
Notes Payable | $ 62,103 |
Accrued Interest | 176 |
Total Debt | 62,279 |
Apartments Under Construction [Member] | |
Notes Payable | 20,580 |
Accrued Interest | |
Total Debt | 20,580 |
Commercial [Member] | |
Notes Payable | 125,429 |
Accrued Interest | 617 |
Total Debt | 126,046 |
Land [Member] | |
Notes Payable | 15,823 |
Accrued Interest | 191 |
Total Debt | 16,014 |
Real Estate Subject To Sales Contract [Member] | |
Notes Payable | 649,541 |
Accrued Interest | 1,484 |
Total Debt | 651,025 |
Mezzanine Financing [Member] | |
Notes Payable | 93,423 |
Accrued Interest | 503 |
Total Debt | 93,926 |
Other [Member] | |
Notes Payable | 14,071 |
Accrued Interest | (777) |
Total Debt | 13,294 |
Notes Payable [Member] | |
Notes Payable | 980,970 |
Accrued Interest | 2,194 |
Total Debt | 983,164 |
Unamortized deferred borrowing costs | (17,941) |
Notes Payable, Net [Member] | |
Notes Payable | 963,029 |
Accrued Interest | 2,194 |
Total Debt | 965,223 |
Unamortized deferred borrowing costs | $ (17,941) |
NOTES AND INTEREST PAYABLE (D_2
NOTES AND INTEREST PAYABLE (Details Narrative) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Construction Loans [Member] | |
Proceeds from draw on loan facility | $ 66,600 |
BONDS PAYABLE (Details)
BONDS PAYABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Total | $ 161,010 | $ 113,047 |
Series A Bonds [Member] | ||
Bonds | 110,246 | 115,336 |
Series B Bonds [Member] | ||
Bonds | 37,965 | |
Bonds [Member] | ||
Less: deferred issuance expense, net | (8,827) | (5,916) |
Accrued Interest | 1,692 | 3,627 |
Total | 161,010 | $ 113,047 |
Series B Bonds Expansion [Member] | ||
Bonds | $ 19,934 |
BONDS PAYABLE (Details 1)
BONDS PAYABLE (Details 1) - Bonds [Member] $ in Thousands | Sep. 30, 2018USD ($) |
Year ended December 31, | |
2,019 | $ 22,049 |
2,020 | 22,049 |
2,021 | 22,049 |
2,022 | 33,629 |
Thereafter | 68,369 |
Total | $ 168,145 |
BONDS PAYABLE (Details Narrativ
BONDS PAYABLE (Details Narrative) ₪ in Thousands, $ in Thousands | Jul. 26, 2018USD ($) | Jul. 26, 2018ILS (₪) | Jan. 25, 2018USD ($) | Jan. 25, 2018ILS (₪) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Jul. 19, 2018USD ($) | Jul. 19, 2018ILS (₪) | Feb. 15, 2018USD ($) | Feb. 15, 2018ILS (₪) | Feb. 14, 2017USD ($) | Feb. 14, 2017ILS (₪) |
Interest paid to bondholders | $ 39,500 | $ 36,400 | ||||||||||
Series A Bonds [Member] | ||||||||||||
Effective interest rate | 9.17% | |||||||||||
Interest paid to bondholders | $ 4,300 | |||||||||||
Series A Bonds [Member] | Israel Shekel [Member] | ||||||||||||
Interest paid to bondholders | ₪ | ₪ 14,600 | |||||||||||
Nonconvertible Series A Bonds [Member] | ||||||||||||
Debentures offering amount | $ 39,200 | |||||||||||
Interest rate | 6.80% | 6.80% | ||||||||||
Series B Bonds [Member] | ||||||||||||
Debentures offering amount | $ 19,800 | $ 39,200 | ||||||||||
Interest rate | 6.80% | 6.80% | 6.80% | 6.80% | ||||||||
Effective interest rate | 9.60% | 9.60% | 7.99% | 7.99% | ||||||||
Bond issuance cost | $ 1,900 | $ 1,400 | ||||||||||
Series B Bonds [Member] | Israel Shekel [Member] | ||||||||||||
Debentures offering amount | ₪ | ₪ 72,300 | ₪ 137,700 | ||||||||||
Series A and B Bonds [Member] | ||||||||||||
Interest paid to bondholders | $ 5,200 | |||||||||||
Series A and B Bonds [Member] | Israel Shekel [Member] | ||||||||||||
Interest paid to bondholders | ₪ | ₪ 18,900 | |||||||||||
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 (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Due from Related Parties [RollForward] | ||||
Related party receivable, beginning | $ 111,665 | |||
Cash transfers | 26,637 | |||
Advisory fees | $ (2,735) | $ (2,595) | (8,209) | $ (7,402) |
Net income fee | (383) | $ (53) | (489) | $ (189) |
Fees and commissions | (1,205) | |||
Cost reimbursements | (3,264) | |||
Interest income | 5,135 | |||
Notes receivable purchased | (5,314) | |||
Expenses (paid)/received by advisor | 4,946 | |||
Financing (mortgage payments) | 5,714 | |||
Sales/purchases transactions | (7,826) | |||
Related party receivable, ending | 127,791 | 127,791 | ||
Pillar Income Asset Management, Inc [Member] | ||||
Due from Related Parties [RollForward] | ||||
Cash transfers | 26,637 | |||
Advisory fees | (8,208) | |||
Net income fee | (489) | |||
Fees and commissions | (1,205) | |||
Cost reimbursements | (3,264) | |||
Notes receivable purchased | (5,314) | |||
Expenses (paid)/received by advisor | 4,946 | |||
Financing (mortgage payments) | 5,714 | |||
Sales/purchases transactions | (7,826) | |||
Related party receivable, ending | 10,991 | 10,991 | ||
American Realty Investors, Inc [Member] | ||||
Due from Related Parties [RollForward] | ||||
Related party receivable, beginning | 111,665 | |||
Interest income | 5,135 | |||
Related party receivable, ending | $ 116,800 | $ 116,800 |
DEFERRED INCOME (Details Narrat
DEFERRED INCOME (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2018 | Aug. 22, 2018 | Dec. 31, 2017 | Jul. 17, 2009 | Jul. 16, 2009 |
Common stock, authorized | 10,000,000 | 10,000,000 | |||
Common stock, outstanding | 8,717,767 | 8,717,767 | |||
Income Opportunity Realty Investors, Inc. [Member] | |||||
Number of common shares acquired (in shares) | 2,518,934 | 1,037,184 | |||
Par value of common share acquired (in dollars per share) | $ 0.01 | ||||
Acquired price per share (in dollars per share) | $ 7.10 | ||||
Transaction Costs | $ 21,000 | $ 17,884 | |||
Percentage of ownership acquired | 60.40% | 25.00% | |||
Business acquired, assets | $ 112,000 | ||||
Business acquired, liability | $ 43,000 | ||||
Percentage of land acquired | 80.00% | 85.30% | |||
Common stock, authorized | 4,168,214 | ||||
Common stock, outstanding | 3,556,118 | ||||
Income Opportunity Realty Investors, Inc. [Member] | Deferred Income [Member] | |||||
Goodwill | $ 35,000 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | $ 33,505 | $ 31,491 | $ 96,194 | $ 94,328 |
Property operating expenses | (15,867) | (15,157) | (45,814) | (46,256) |
Depreciation and amortization | (6,891) | (6,326) | (19,859) | (19,008) |
Segment operating (loss) income | 5,771 | 5,766 | 15,600 | 16,804 |
Real estate assets | 1,053,452 | 1,053,452 | ||
Commercial Properties [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 8,228 | 8,170 | 23,187 | 25,308 |
Property operating expenses | (4,236) | (4,252) | (12,222) | (13,629) |
Depreciation and amortization | (2,523) | (2,298) | (7,138) | (6,903) |
Mortgage and loan interest | (1,921) | (1,902) | (5,662) | (5,629) |
Segment operating (loss) income | (452) | (282) | (1,835) | (853) |
Capital expenditures | 962 | 689 | 3,688 | 2,586 |
Real estate assets | 134,148 | 145,321 | 134,148 | 145,321 |
Property Sales | ||||
Sales price | 2,313 | |||
Cost of sale | (2,313) | |||
Apartments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 25,275 | 23,231 | 73,001 | 68,922 |
Property operating expenses | (11,345) | (10,659) | (33,127) | (31,615) |
Depreciation and amortization | (4,364) | (4,028) | (12,709) | (12,105) |
Mortgage and loan interest | (5,722) | (5,168) | (16,520) | (16,955) |
Recognition of deferred gain on sale of income - producing properties | 9,841 | 9,841 | ||
Segment operating (loss) income | 3,844 | 13,217 | 10,645 | 18,088 |
Capital expenditures | 543 | (2,398) | 543 | |
Real estate assets | 825,863 | 665,972 | 825,863 | 665,972 |
Property Sales | ||||
Sales price | 8,512 | |||
Cost of sale | (8,512) | |||
Recognized prior deferred gain | 9,841 | 9,841 | ||
Gain (loss) on sale | 9,841 | 9,841 | ||
Land [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 86 | 87 | ||
Property operating expenses | (78) | (115) | (162) | (429) |
Mortgage and loan interest | (212) | (387) | (175) | (1,248) |
Gain on land sales | 12,243 | 530 | 13,578 | 500 |
Segment operating (loss) income | 11,953 | 114 | 13,241 | (1,090) |
Capital expenditures | (74) | 55 | (692) | 641 |
Real estate assets | 92,798 | 117,642 | 92,798 | 117,642 |
Property Sales | ||||
Sales price | 35,518 | 850 | 38,503 | 2,446 |
Cost of sale | (23,275) | (320) | (24,925) | (1,946) |
Gain (loss) on sale | 12,243 | 530 | 13,578 | 500 |
Other [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 2 | 4 | 6 | 11 |
Property operating expenses | (206) | (131) | (301) | (583) |
Depreciation and amortization | (4) | (12) | ||
Mortgage and loan interest | (7,699) | (6,788) | (21,365) | (21,386) |
Interest income | 4,021 | 3,175 | 11,441 | 10,305 |
Segment operating (loss) income | (3,886) | (3,740) | (10,250) | (11,653) |
Real estate assets | 643 | 643 | ||
Total Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Rental and other property revenues | 33,505 | 31,491 | 96,194 | 94,328 |
Property operating expenses | (15,867) | (15,157) | (45,814) | (46,256) |
Depreciation and amortization | (6,891) | (6,326) | (19,859) | (19,008) |
Mortgage and loan interest | (15,555) | (14,245) | (43,823) | (45,218) |
Interest income | 4,021 | 3,175 | 11,441 | 10,305 |
Recognition of deferred gain on sale of income - producing properties | 9,841 | 9,841 | ||
Gain on land sales | 12,243 | 530 | 13,578 | 500 |
Segment operating (loss) income | 11,456 | 9,309 | 11,717 | 4,492 |
Capital expenditures | 888 | 1,287 | 598 | 3,770 |
Real estate assets | 1,053,452 | 928,935 | 1,053,452 | 928,935 |
Property Sales | ||||
Sales price | 35,518 | 850 | 38,503 | 2,446 |
Cost of sale | (23,275) | (320) | (24,925) | (1,946) |
Recognized prior deferred gain | 9,841 | 9,841 | ||
Gain (loss) on sale | $ 12,243 | $ 10,371 | $ 13,578 | $ 10,341 |
OPERATING SEGMENTS (Details 1)
OPERATING SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment operating income (loss) | $ 5,771 | $ 5,766 | $ 15,600 | $ 16,804 |
Other non-segment items of income (expense) | ||||
General and administrative | (1,858) | (1,594) | (6,223) | (4,669) |
Net income fee to related party | (383) | (53) | (489) | (189) |
Advisory fee to related party | (2,735) | (2,595) | (8,209) | (7,402) |
Other income | 18,722 | 190 | 28,030 | 1,529 |
Income tax (expense) | (792) | (792) | ||
Earnings (losses) from unconsolidated joint ventures and investees | (4) | 7 | (2) | (11) |
Net income (loss) from continuing operations | 23,118 | 7,170 | 30,389 | (8,091) |
Total Segments [Member] | ||||
Segment operating income (loss) | 11,456 | 9,309 | 11,717 | 4,492 |
Other non-segment items of income (expense) | ||||
General and administrative | (1,858) | (1,594) | (6,223) | (4,669) |
Net income fee to related party | (383) | (53) | (489) | (189) |
Advisory fee to related party | (2,735) | (2,595) | (8,209) | (7,402) |
Other income | 17,434 | 2,096 | 34,387 | (312) |
Income tax (expense) | (792) | (792) | ||
Earnings (losses) from unconsolidated joint ventures and investees | (4) | 7 | (2) | (11) |
Net income (loss) from continuing operations | $ 23,118 | $ 7,170 | $ 30,389 | $ (8,091) |
OPERATING SEGMENTS (Details 2)
OPERATING SEGMENTS (Details 2) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Segment assets | $ 1,053,452 | $ 979,870 | |
Investments in real estate partnerships | 2,774 | 2,472 | |
Total assets | 1,422,930 | $ 1,313,422 | |
Total Segments [Member] | |||
Segment assets | 1,053,452 | $ 928,935 | |
Investments in real estate partnerships | 2,774 | 2,435 | |
Notes and interest receivable | 82,239 | 62,698 | |
Other assets | 284,465 | 256,659 | |
Total assets | $ 1,422,930 | $ 1,250,727 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY (Details Narrative) - USD ($) $ in Thousands | Jul. 20, 2015 | Sep. 30, 2018 |
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.</p>" id="sjs-B5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc.</p> | |
Description of defendant | Dynex Commercial, Inc.</p>" id="sjs-B6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Dynex Commercial, Inc.</p> | |
Domicile of Litigation | 68th Judicial District Court in Dallas County, Texas</p>" id="sjs-B7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> 68th Judicial District Court in Dallas County, Texas</p> | |
Description of action taken by court | <font style="font: 10pt Times New Roman, Times, Serif">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.</font></p>" id="sjs-B8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">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.</font></p> | |
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 |
TAXES (Details Narrative)
TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax (expense) - current | $ (792) | $ (792) |
Current income tax expense | 1,900 | |
Chnage in valuation allowance | $ (1,100) |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 09, 2014 | Sep. 30, 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 |