As of December 31, 2014, we have investments in four entities, 5433 Westheimer, Casa Linda, Woodlake Pointe, and PTC/BSQ Holding Company LLC, through which we owned an interest in six properties that are accounted for using the equity method of accounting due to our ability to exercise significant influence over them. Our investment balances as reported on our Consolidated Balance Sheets are as follows (in thousands):

PTC/BSQ - We own a 20% interest in PTC/BSQ Holding Company LLC, which owns three multi-tenant retail properties located in Plano, Texas with a combined GLA of 442,072 square feet. The remaining 80% is owned by an unaffiliated third party. We initiated a redevelopment in January 2012 which was substantially completed in the fourth quarter of 2013. As of December 31, 2014, approximately $11.6 million in redevelopment costs have been incurred out of a total expected cost of $12.4 million, including tenant improvements and leasing costs. Our PTC/BSQ joint venture refinanced its debt on June 28, 2013, increasing the total debt from $44.4 million to $54.0 million with an additional $4.5 million available for future capital improvements. The loan has a three-year maturity with two one-year extension options. During 2013, we received a distribution from our PTC/BSQ joint venture in the amount of $1.9 million and used the proceeds to repaid approximately $1.4 million of notes payable-related party.

PTC/BSQ Holding Company LLC has an interest rate swap with a notional amount of $54.0 million, effectively fixing the interest rate on this debt at 2.51% in order to manage the volatility inherent in a variable-rate mortgage. The interest rate swap was designated as a hedge for financial reporting purposes. Changes in fair value of derivatives that qualify as cash flow hedges are recognized in other comprehensive income. For the year ended December 31, 2014, our portion of the increase in fair value totaled $20,000. For the year ended 2013, our portion of the decrease in fair value totaled $55,000 and is recorded as “equity portion of change in fair value of derivative held by non-consolidated entity” on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Casa Linda - We own a 50% interest in AmREIT Casa Linda, LP, which owns a 324,569 square foot retail shopping center located in Dallas, Texas. The remaining 50% is owned by MIG IV, an affiliate of our General Partner. The property was purchased from an unaffiliated third-party. Albertson’s is the largest tenant, occupying 59,561 square feet with a lease scheduled to expire in July 2016. Additional tenants include Petco, Starbucks, Wells Fargo, Chili’s, Pei Wei, Just Fitness 4 U and Supercuts. The property was originally built between 1946 and 1949.

During 2012, we and MIG IV initiated a lease-up strategy at our Casa Linda property (a 50% joint venture between us and MIG IV). As of December 31, 2014, the joint venture had incurred approximately $2.6 million of the $3.0 million in planned capital expenditures, including certain tenant build-out and site improvements. The property is secured by a $38.0 million mortgage loan that was refinanced in December 2013 with a four-year, non-recourse loan. The new loan contains a provision that would allow for an additional funding of approximately $4.5 million should the joint venture elect to acquire an adjacent property. The mortgage loan matures in December 2017. The mortgage loan bears interest at a variable rate; however, in connection with the refinancing, we and MIG IV entered into an interest rate cap agreement that provides for a maximum rate of 3% per annum. The interest rate cap was not designated as a hedge for financial reporting purposes, and our portion of the change in fair value is recognized in income (loss) from non-consolidated entities. For the years ended December 31, 2014 and 2013, our portion of the change in fair value was a $51,000 decrease and an $11,000 increase, respectively, and is included in loss from non-consolidated entities on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Woodlake Pointe - We own a 30% interest in AmREIT Westheimer Gessner, LP, which owns Woodlake Pointe, a multi-tenant retail property located in Houston, Texas with a combined GLA of 82,120 square feet. The remaining 70% is owned by affiliated AmREIT entities, MIG IV (60%) and ARIC (10%).

This property is under redevelopment, however, we have experienced challenges in executing a long term lease with a tenant to redevelop the property. While we continue to pursue redevelopment opportunities that will optimize the property’s value, we can provide no assurance that such opportunities will result in a recovery of the property’s book value, or that, if executed, such opportunities would provide an increase in value that would warrant the additional investment, risk and hold period. Accordingly, we reviewed this property for impairment as of December 31, 2014. The property was appraised at approximately $8.2 million. In arriving at our fair value estimate we considered numerous factors. We estimated fair value utilizing both comparable sales information of similar properties assuming a “sell as is” scenario and a discounted cash flow model assuming that the property entered into a long term lease and redeveloped the property. The fair value determined under each of these scenarios was approximately $8.2 million. Accordingly, we recorded an impairment at the property of $2.0 million as of December 31, 2014. $600,000 of which, represents our 30% portion and is included in our loss from non-consolidated entities on our Consolidated Statements of Operations and Comprehensive Income (Loss).

During 2011, we signed a lease with a large national fitness tenant, and we completed construction of a 45,000 square foot building on the property during 2012 for a total redevelopment costs of $6.7 million. On September 30, 2013, our Woodlake Pointe joint venture sold the 45,000 square foot single-tenant building and land parcel at our Woodlake Pointe property for $12.0 million to an unrelated third party. The land and building were secured by a $6.6 million loan that was repaid in full with proceeds from the sale. We received a distribution of $1.5 million on October 1, 2013 in connection with this sale. We subsequently repaid approximately $650,000 of notes payable - related party and retained the remainder of the proceeds as cash on hand.

5433 Westheimer – We own a 57.5% interest in 5433 Westheimer, LP, which owns an office building with 133,881 square feet of GLA and formerly owned a 152-room hotel in Houston, Texas. The remaining 42.5% is owned by a third party, joint venture partner. The property is accounted for under the equity method of accounting as we and our joint venture partner share equally in decision-making rights. We completed an initial redevelopment of the office building and construction of a 152-room hotel in October 2009 at a total cost of approximately $31.7 million, and we mortgaged our interest in this property with a $32.9 million, three-year variable-rate loan with a third party lender. The debt matured unpaid on December 31, 2011. On April 10, 2012, 5433 Westheimer, LP sold the 152-room hotel for $28.7 million, and the net proceeds received were used to pay down the existing loan balance to $3.8 million. 5433 Westheimer, LP continues to own and operate the office building.

On October 19, 2012, 5433 Westheimer, LP refinanced this debt with a five-year term loan in the amount of $8.7 million, which includes amounts to be funded in the form of construction draws for the redevelopment of the property. We and our joint venture partner are joint and several guarantors of 25% of this debt. On October 18, 2014, our 5433 Westheimer joint venture modified its mortgage loan. Among other things, the modification waived prior non-compliance with its debt covenants through October 18, 2014, modified ongoing debt service operating covenants, extended the term to October 2017 and extended the interest-only payment terms to October 2015. As of December 31, 2014, this loan had an outstanding balance of $8.2 million. While we serve as guarantor on this debt, we do not believe that we would be required to perform under the guarantee as we believe the fair value of the property exceeds the amount of the loan.

We and our joint venture partner initiated a redevelopment plan, primarily in the form of building and site improvements, which was completed as we made the property ready for sale. Redevelopment costs totaled approximately $6.6 million as of December 31, 2014, out of a total expected cost of approximately $8.2 million (including lease-up costs). We and our joint venture partner believe that recent market improvements have made disposition of this property attractive and have begun to market the property for sale.

During 2014, 5433 Westheimer did not have adequate cash to fund the renovation costs needed to ready the property for sale or pay its property taxes due in January 2015. Additionally, the property owed ARIC and us approximately $400,000 in deferred asset management fees and margin taxes. As such, we and the joint venture entered into an advancing promissory note with 10% interest to fund up to approximately $1.5 million to:

Based upon estimates of fair value, sufficient equity exists in the property post-renovation to recover our current investment and any current and future loans to the joint venture. However, we can provide no assurances that we will be able to do so, or under circumstances and timing that allow us to maximize the value of the property; thus, all or a portion of our investment of $2.4 million is subject to risk.

Woodlake Square - We previously owned a 3% interest in the Woodlake Square property through a joint venture arrangement with affiliates of our General Partner, MIG IV (6% ownership interest), ARIC (1% ownership interest) and an unaffiliated third party institutional partner (the remaining 90% ownership interest). On September 18, 2013, VIF II/AmREIT Woodlake L.P. sold Woodlake Square to AmREIT for $41.6 million based on arms-length negotiations between AmREIT and our third party institutional partner that owned a 90% interest in the property. Our remaining interest at December 31, 2013 represents undistributed sales proceeds.

We report our investments in these entities using the equity method of accounting due to our ability to exercise significant influence over them. Combined condensed financial information for our non-consolidated entities (at 100%) is summarized as of December 31, 2014 and 2013, and for the years ended December 31, 2014, 2013 and 2012 as follows:

	As of December 31,
Combined balance sheets (in thousands)	2014		2013
Assets
Property, net	$	145,653	$	148,774
Cash		5,605		4,806
Other assets		9,806		10,726
Total assets	$	161,064	$	164,306

Liabilities and partners’ capital
Notes payable	$	102,524	$	100,286
Other liabilities		9,102		8,441
Partners’ capital		49,438		55,579
Total liabilities and partners’ capital	$	161,064	$	164,306

MIG III share of net assets	$	14,991	$	16,825

	For the year ended December 31,
Combined statements of operations (in thousands)	2014			2013			2012

Revenues
Total revenues	$	17,023		$	15,996		$	15,270

Expenses
Depreciation and amortization		6,383			6,004			5,788
Interest		3,847			4,241			4,250
Other		9,200			4,891			7,475
Total expenses	$	19,430		$	15,136		$	17,513

Net income (loss)	$	(2,407	)	$	860		$	(2,243	)

MIG III share of net income (loss)	$	(1,094	)	$	(295	)	$	(1,325	)