NOTES AND INTEREST RECEIVABLE

6 Months Ended

Jun. 30, 2013

NOTES AND INTEREST RECEIVABLE

NOTES AND INTEREST RECEIVABLE

NOTE 3. NOTES AND INTEREST RECEIVABLE

A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, 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.

Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands):

			Maturity	Interest
		Borrower	Date	Rate	Amount	Security
Performing loans:
	Miscellaneous non-related party notes		Various	Various	$           4,097	Various security interests
	Miscellaneous related party notes (1)		Various	Various	2,656	Various security interests
	One Realco Corporation (1)(2)		01/17	3.00%	7,000	Unsecured
	Realty Advisors Management, Inc. (1)		12/16	2.19%	20,387	Unsecured
	S Breeze I-V, LLC		09/13	5.00%	2,933	6% Class A and 25% Class B Limited Partner Interests
	Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)		12/32	12.00%	2,097	100% Membership Interest in Unified Housing of McKinney, LLC
	Unified Housing Foundation, Inc. (Echo Station) (1)		12/32	12.00%	1,481	100% Membership Interest in Unified Housing of Temple, LLC
	Unified Housing Foundation, Inc. (Inwood on the Park) (1)		12/32	12.00%	5,059	100% Membership Interest in Unified Housing Inwood, LLC
	Unified Housing Foundation, Inc. (Kensington Park) (1)		12/32	12.00%	3,936	100% Membership Interest in Unified Housing Kensington, LLC
	Unified Housing Foundation, Inc.  (Lakeshore Villas) (1)		12/32	12.00%	2,000	Unsecured
	Unified Housing Foundation, Inc.  (Lakeshore Villas) (1)		12/32	12.00%	9,096	Membership interest in Housing for Seniors of Humble, LLC
	Unified Housing Foundation, Inc. (Limestone Canyon) (1)		12/32	12.00%	3,057	100% Membership Interest in Unified Housing of Austin, LLC
	Unified Housing Foundation, Inc. (Limestone Canyon) (1)		12/32	12.00%	4,663	100% Membership Interest in Unified Housing of Austin, LLC
	Unified Housing Foundation, Inc. (Limestone Ranch) (1)		12/32	12.00%	2,250	100% Membership Interest in Unified Housing of Vista Ridge, LLC
	Unified Housing Foundation, Inc. (Limestone Ranch) (1)		12/32	12.00%	6,000	100% Membership Interest in Unified Housing of Vista Ridge, LLC
	Unified Housing Foundation, Inc. (Parkside Crossing) (1)		12/32	12.00%	1,936	100% Membership Interest in Unified Housing of Parkside Crossing, LLC
	Unified Housing Foundation, Inc. (Sendero Ridge) (1)		12/32	12.00%	5,174	100% Membership Interest in Unified Housing of Sendero Ridge, LLC
	Unified Housing Foundation, Inc. (Sendero Ridge) (1)		12/32	12.00%	4,812	100% Membership Interest in Unified Housing of Sendero Ridge, LLC
	Unified Housing Foundation, Inc. (Timbers at the Park) (1)		12/32	12.00%	1,323	100% Membership Interest in Unified Housing of Terrell, LLC
	Unified Housing Foundation, Inc. (Tivoli) (1)		12/32	12.00%	7,966	100% Membership Interest in Unified Housing of Tivoli, LLC
	Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1)		12/32	12.00%	2,485	100% Membership Interest in Unified Housing of Harvest Hill I, LLC
	Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1)		12/32	12.00%	2,555	100% Membership Interest in Unified Housing of Harvest Hill, LLC
	Unified Housing Foundation, Inc. (Trails at White Rock) (1)		12/32	12.00%	3,815	100% Membership Interest in Unified Housing of Harvest Hill III, LLC
	Unified Housing Foundation, Inc. (1)		12/13	5.00%	6,000	100% Membership Interest in Unified Housing of Tivoli, LLC
	Accrued interest				6,190
Total Performing					$       118,968
Non-Performing loans:
	Leman Development, Ltd (2)		07/11	7.00%	1,500	Unsecured
	Tracy Suttles (2)		12/11	0.00%	1,077	Unsecured
	Miscellaneous non-related party notes		Various	Various	1,279	Various secured interest
	Accrued interest				370
Total Non-Performing					$           4,226
	Allowance for estimated losses				(19,504)
Total					$       103,690
(1)  Related party notes
(2)  An allowance was taken for estimated losses at full value of note.

The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”).  UHF is determined to be a related party to the company due to our significant investment in the performance of the collateral secured under the notes receivable and its consulting agreement with TCI.

Payments are due from surplus cash flow of operations; sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes.  These notes are cross-collateralized but to the extent cash is received from a specific UHF property, it is applied 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.

As of January 1, 2013, the Company agreed to extend the maturity on the surplus cash flow notes receivable from UHF for an additional term of five years in exchange for the early termination of the preferred interest rate.  The original notes gave a five-year period of preferred interest rate at 5.25%, before returning to the original note rate of 12.0%.