NOTE 4: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:

	Book Value
	As of June 30, 2018			As of December 31, 2017
Multifamily real estate properties	$	17,230		$	17,163
Office real estate properties		77,056			130,125
Retail real estate properties		75,996			106,817
Parcels of land		20,567			20,567
Subtotal		190,849			274,672
Less: Accumulated depreciation and amortization		(13,671	)		(28,768	)
Investments in real estate, net (1)	$	177,178		$	245,904

(1)

As of June 30, 2018, one of our office and one of our retail properties, with a combined carrying amount of $27,554, were considered held-for-sale. As of December 31, 2017, there were no properties considered held-for-sale.

As of June 30, 2018, our investments in real estate were comprised of land of $57,643 and buildings and improvements of $133,206. As of December 31, 2017, our investments in real estate were comprised of land of $73,003 and buildings and improvements of $201,669.

As of June 30, 2018, our investments in real estate of $190,849 were financed through $41,082 of mortgage loans or other debt held by third parties and $266,407 of mortgage loans held directly by RAIT or through our RAIT I and RAIT II CDO securitizations. As of December 31, 2017, our investments in real estate of $274,672 were financed through $62,297 of mortgage loans or other debt held by third parties and $298,050 of mortgage loans held directly by RAIT or through our RAIT I and RAIT II CDO securitizations. Together, along with commercial real estate loans held by RAIT I and RAIT II, these mortgage loans serve as collateral for the CDO notes payable issued by the RAIT I and RAIT II CDO securitizations. All intercompany balances and interest charges are eliminated in consolidation.

Property Sales:

During the six months ended June 30, 2018, we disposed of one office property. We also recognized $6 of losses on sales related to properties sold in the prior year, as we settled remaining amounts with third parties subsequent to the sale date. The below table summarizes the current year dispositions recorded at sale and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

							Net income (loss) allocable to common shares
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale		For the Three Months Ended June 30, 2018			For the Six Months Ended June 30, 2018
1501 Yamato Road (1)	Office	6/15/2018	$	42,050	$	906	$	(99	)	$	(259	)
Total			$	42,050	$	906	$	(99	)	$	(259	)

(1)

We also recognized a loss on extinguishment of debt related to the sale of this property, resulting from a defeasance premium of $1,943.

In August 2018, we disposed of one office property and one retail property in a single transaction for a sales price of $30,000. We do not expect to recognize a significant gain or loss on the sale of this asset.

Impairment:

During the three and six months ended June 30, 2018, we recognized impairment charges related to certain real estate assets of $21,625 and $30,816, respectively, as it was more likely than not that we would dispose of the assets before the end of their previously estimated useful lives and a portion of our recorded investment in these assets was determined to not be recoverable.

During the three months ended June 30, 2018, due to the current conditions affecting one of our retail properties in its local market as well as our current efforts to increase our liquidity, we accepted a letter of intent to purchase this property which resulted in an impairment charge of $17,522. During the three months ended June 30, 2018, we began to market two other retail real estate assets for sale. We recognized $3,440 of impairment charges on these assets based on letters of intent to purchase these properties. During the three months ended June 30, 2018, we also recognized $662 of impairment charges related to another asset based on the status of negotiations for the sale of the asset.

During the six months ended June 30, 2018, we recognized additional impairment charges on two of our real estate assets of $9,191. We recognized an impairment charge of $5,593 on one of the assets based on the status of negotiations for the sale of the asset. The impairment charge of $3,598 on the other asset was driven by a default on the asset’s associated ground lease.

See Note 7: Fair Value of Financial Instruments for further information regarding our non-recurring fair value measurements.

Other Dispositions:

During the six months ended June 30, 2017, we incurred a non-cash loss on deconsolidation of properties of $15,947 relating to an industrial real estate portfolio containing ten properties with carrying value of $82,501 of investments in real estate and $81,941 of related cross-collateralized non-recourse debt as of December 31, 2016. During the six months ended June 30, 2017, the senior lender foreclosed on the mortgage liens encumbering five of these industrial properties and disposed of the properties through auction processes. These five properties, including other assets, net of related liabilities, had an aggregate carrying value of $43,414. Upon foreclosure, we derecognized these net assets and extinguished related debt of $27,467 based on the proceeds received by the senior lender at the auctions. The difference between the net carrying value and the debt extinguished resulted in the non-cash loss noted above as full release of the remaining cross-collateralized non-recourse debt had not yet been received. The remaining five of these industrial properties had a carrying value of $38,516 of investments in real estate and $54,475 of related cross-collateralized non-recourse debt as of June 30, 2017. During the remainder of 2017, the remaining properties within this portfolio were foreclosed upon and, as a result, there were no assets or liabilities related to this portfolio on our balance sheet as of December 31, 2017.