Discontined Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Discontinued Operations

In June 2010, the Company completed a sales transaction whereby the Ohio Properties were sold to three new ownership entities controlled by an unaffiliated not-for-profit entity and in October 2011, the three limited partnerships that own the Ohio Properties admitted two entities that are affiliates of BC Partners as new limited partners as part of a syndication of LIHTCs. The BC Partners agreed to contribute equity to these limited partnerships, subject to the Ohio Properties meeting certain debt service coverage ratios specified in the applicable limited partnership agreements. As such, there was not sufficient equity invested at closing by the not-for-profit or BC Partners into the Ohio Properties to allow the Company to recognize a real estate sale for accounting purposes. During the first quarter of 2013, BC Partners contributed $6.5 million of capital into the Ohio Properties which was sufficient to allow the Company to recognize the sale for accounting purposes. This gain on sale of discontinued operations was approximately $1.8 million. The sale of this discontinued operation allowed the Company to begin reporting the tax-exempt mortgage revenue bonds related to the Ohio Properties as assets beginning with the March 31, 2013 consolidated financial statements.

The deposit method of accounting for real estate sales required both the deferral of the gain from the real estate sale and also did not allow recognition of the tax-exempt interest payments by the Ohio Properties to the Company between June 2010 and the date of the equity contribution by BC Partners. In conjunction with the recognition of the real estate sale, approximately $3.5 million of tax-exempt interest has been recognized within investment income in the first quarter of 2013 which represents the tax-exempt interest payments received from the Ohio Properties between June 2010 and December 2012. In addition, the Partnership reported approximately $1.1 million in taxable note interest income received from the Ohio Properties and $250,000 guarantee fee from the general partner of the Ohio Properties during the first quarter of 2013 (Note 2). The Ohio Properties contributed approximately $138,000 to income from discontinued operations for the three months ended March 31, 2012.

In October 2012, the limited partnership that owns the Greens Property admitted two entities that are affiliates of BC Partners as new limited partners as part of a syndication of LIHTCs on the Greens Property. Prior to the execution of the admittance of the new limited partners, the Company had entered into an agreement to sell the Greens Property for approximately $7.3 million to an unaffiliated not-for-profit which is the general partner of the limited partnership that now owns the Greens Property.  That sale was conditional on securing the tax-exempt bond and low-income housing tax credits from the North Carolina Housing Finance Agency.  At closing, the BC Partners invested $961,000 of equity into this limited partnership and is obligated to invest another $2.2 million at contractual scheduled milestones tied to construction, the property reaching a specified debt service coverage ratio, the designation from the state of the tax credits, with the final payment being received no earlier than October 1, 2013.  The Company purchased 100% of the tax-exempt mortgage revenue bonds issued as part of the agreement to finance the acquisition and rehabilitation of the Greens Property. The Series A bonds have approximately $8.5 million par value and bear interest at 6.5%. The Series B bond has a $950,000 par value and bears interest at 12.0%. Both series of bonds mature in October 1, 2047. The Company also obtained an $850,000 taxable loan secured by the Greens Property at closing.  The construction is estimated to be 75% completed by June 30, 2013 and fully completed by October 31, 2013, and each of these milestones requires capital contributions by the limited partners. As there will be sufficient equity invested to recognize a real estate sale for accounting purposes at 75% completion of construction and the Company no longer has responsibility for the general operations of the property,this MF Property has met the criteria for discontinued operations presentation and has been reported as such in the condensed consolidated financial statements for all periods presented.  The net fixed assets and total assets of the Greens Property were approximately $8.2 million and $10.0 million at March 31, 2013, and $8.4 million and $12.2 million at December 31, 2012. The Greens Property contributed approximately $157,000 and $17,000 of Income from discontinued operations for the quarters ended March 31, 2013 and 2012.

The Eagle Ridge property was sold in November 2012 and resulted in the property being reported as a discontinued operations for the period ended March 31, 2012. There were no assets of the Eagle Ridge property reported at March 31, 2013 or December 31, 2012. Eagle Ridge contributed approximately $34,000 to income from discontinued operations for the three months ended March 31, 2012.

In August 2012, the Commons at Churchland property was sold and therefore reported no assets in assets of discontinued operations at March 31, 2013 or December 31, 2012. Churchland contributed approximately $46,000 to income from discontinued operations for the three months ended March 31, 2012.

The following represents the components of the assets and liabilities of the discontinued operations:

	March 31, 2013			December 31, 2012
Cash and cash equivalents	$	50,882		$	158,727
Restricted cash	1,089,020			4,035,360
Land	1,748,481			3,828,345
Buildings and improvements	7,815,832			28,316,081
Real estate assets before accumulated depreciation	9,564,313			32,144,426
Accumulated depreciation	(1,332,596		)	(5,208,176		)
Net real estate assets	8,231,717			26,936,250
Other assets	591,620			1,450,090
Total assets from discontinued operations	9,963,239			32,580,427
Accounts payable and accrued expenses	115,668			1,531,462
Total liabilities from discontinued operations	115,668			1,531,462
Net assets of discontinued operations	$	9,847,571		$	31,048,965

The following presents the revenues, expenses and income from discontinued operations:

	For Three Months Ended March 31,
	2013		2012
Rental revenues	$	347,143	$	1,557,633
Expenses	189,651		1,322,485
Income from continuing operations of the discontinued operations	157,492		235,148
Gain on sale of discontinued operations	1,775,527		—
Net income from discontinued operations	$	1,933,019	$	235,148