Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2013

Real Estate Investments

Schedule of information about consolidated properties

The following table presents certain information about our consolidated properties as of June 30, 2013:

Property Name	Location	Approximate Rentable Square Footage	Description	Ownership Interest		Year Acquired
Las Colinas Commons	Irving, Texas	239,000	3-building office complex	100	%	2006
4950 S. Bowen Road	Arlington, Texas	—	land	100	%	2007
Northpoint Central	Houston, Texas	180,000	9-story office building	100	%	2007
Northborough Tower	Houston, Texas	207,000	14-story office building	100	%	2008
Chase Park Plaza	St. Louis, Missouri	—	hotel and condominium development property	95	%	2006
The Lodge & Spa at Cordillera	Edwards, Colorado	—	land, hotel and development property	94	%	2007
Frisco Square	Frisco, Texas	100,500	mixed-use development (multifamily, retail, office, and restaurant)	100	%	2007
Royal Island(1)	Commonwealth of Bahamas	—	land and planned development	87	%	2012

(1) We consolidated Royal Island as of June 6, 2012 when we obtained all of the outstanding shares of Royal Island (Australia) Pty Limited.  A third party indirectly owns 12.71% of Royal Island.

Summary of amounts of identified assets and liabilities acquired at acquisition date

The following table summarizes the amounts of identified assets and liabilities consolidated on February 19, 2013 ($ in thousands):

	Chase Park Plaza Hotel
Cash	$	143
Account receivable (1)	2,007
Receivable from related party	36
Prepaid expenses and other assets	463
Total identifiable net assets	$	2,649
Accounts payable	$	1,308
Accrued and other liabilities	1,341
Total identifiable net liabilities	$	2,649

(1) As of the date that the hotel lease was terminated, the payables related to the hotel’s operations exceeded the receivables and cash on hand.  Under the lease agreement, Kingsdell L.P., as lessee, is responsible for payment of negative working capital.  We have reserved $1.2 million related to the lease agreement as bad debt in the accompanying condensed consolidated statements of operations related to receivables associated with estimated working capital shortfalls.

Summary of unaudited pro forma consolidated information

The following unaudited pro forma summary presents financial information as if the hotel operations had been consolidated on January 1, 2012 ($ in thousands):

	Pro Forma for the Three Months Ended June 30,						Pro Forma for the Six Months Ended June 30,
	2013			2012			2013			2012
Rental revenue	$	4,821		$	4,876		$	9,753		$	9,690
Hotel revenue	$	9,190		$	8,759		$	15,976		$	14,743
Property operating expenses	$	3,635		$	2,497		$	6,133		$	4,255
Hotel operating expenses	$	5,257		$	5,787		$	12,419		$	11,617
Bad debt expense	$	—		$	106		$	—		$	1,256	(1)
Net loss	$	300		$	(14,825	)	$	(7,733	)	$	(25,801	)
Net loss per share	$	(0.01	)	$	(.27	)	$	(0.14	)	$	(0.46	)

(1) Approximately $1.2 million related to receivables associated with estimated working capital shortfalls.

Schedule of information about unconsolidated investments

The following table presents certain information about our unconsolidated investments as of June 30, 2013 and December 31, 2012 ($ in thousands):

			Carrying Value of Investment
Property Name	Ownership Interest (1)		June 30, 2013		December 31, 2012
Central Europe Joint Venture	47.01	%	$	19,323	$	19,259

(1) Effective January 1, 2013, ownership interest changed from 47.27% to 47.01% due to additional contributions made to the joint venture by the other partner.

Schedule of proportionate share of combined assets and liabilities of investment properties

Our investments in unconsolidated joint ventures as of June 30, 2013 and December 31, 2012 consisted of our proportionate share of the combined assets and liabilities of our investment properties shown at 100% as follows: ($ in thousands):

	June 30,		December 31,
	2013		2012
Real estate assets, net	$	110,429	$	114,590
Cash and cash equivalents	3,569		3,856
Other assets	1,818		2,020
Total assets	$	115,816	$	120,466
Notes payable	$	79,333	$	83,696
Other liabilities	2,750		2,924
Total liabilities	82,083		86,620
Equity	33,733		33,846
Total liabilities and equity	$	115,816	$	120,466

Schedule of proportionate share of combined losses of unconsolidated joint ventures

Our equity in earnings and losses from these investments is our proportionate share of the combined earnings and (losses) of our unconsolidated joint ventures for the three and six months ended June 30, 2013 and 2012 shown at 100% as follows ($ in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012 (2)			2013		2012 (2)
Revenue	$	2,689	$	2,931		$	5,816	$	6,191
Operating expenses:
Operating expenses	688		1,352			1,431		3,235
Property taxes	79		(438		)	159		(273		)
Total operating expenses	767		914			1,590		2,962
Operating income	1,922		2,017			4,226		3,229
Non-operating expenses:
Depreciation and amortization	1,145		1,321			2,468		2,751
Interest and other, net	635		5,064			876		12,275
Total non-operating expenses	1,780		6,385			3,344		15,026
Net income (loss)	$	142	$	(4,368	)	$	882	$	(11,797	)
Equity in earnings (losses) of unconsolidated joint ventures (1)	$	64	$	(1,080	)	$	414	$	(3,747	)

(1) Company’s share of net earnings and (losses).

(2) Includes the activity related to Royal Island for the period prior to June 6, 2012, when we began consolidating the operations of Royal Island and the activity for Santa Clara 800 which was sold on May 4, 2012.