PREFERRED EQUITY INVESTMENT AND DERIVATIVE INVESTMENT RECEIVABLE	12 Months Ended
Dec. 31, 2013
Equity [Abstract]
PREFERRED EQUITY INVESTMENT AND DERIVATIVE INVESTMENT RECEIVABLE	PREFERRED EQUITY INVESTMENT AND DERIVATIVE INVESTMENT RECEIVABLE Preferred Equity Investment During the year ended December 31, 2013, we entered into a limited liability agreement to form a joint venture with unrelated parties for the purpose of acquiring a multi-family portfolio comprised of 14 apartment communities across six states, which is being managed by a third party, national firm, specializing in multi-family assets. Under the terms of the joint venture agreement, we contributed $15 million through one of our wholly-owned subsidiaries that held the status of a preferred member. Another of our wholly-owned subsidiaries contributed no capital, but serves as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties. No other capital contributions were required by us. A non-IMHFC member served as the managing member of the joint venture. Our preferred member interest was secured by the other non-IMHFC members’ interest in each of the single member LLC’s that hold title to real property owned by each respective LLC. Under the terms of the joint venture agreement, the joint venture was required to redeem our preferred membership interest for the redemption price (as defined in the joint venture agreement) on or before the second anniversary of the closing date, or the redemption date could have been extended at the joint venture’s option for one additional year for a fee to the Company of $0.3 million. We were also entitled to a 15% annualized return on our $15 million preferred equity investment, and we were further entitled to an exit fee equal to the greater of 4% of our original investment or 1.5% of the fair market value of the portfolio assets of the joint venture at the two year preferred equity redemption date, as described further below. Additionally, we were entitled to retain a 15% carried interest in the profits of the entire investment portfolio, after payment of the preferred returns to us and similar preferred returns of non-IMHFC members. Further, we were entitled to effectively receive all available cash flow of the joint venture until we received the entirety of our preferred equity investment and any accrued and unpaid preferred return amounts. The non-IMHFC members are obligated to fund any shortfalls in our preferred return. During the fourth quarter of 2013, we sold our preferred equity investment in the joint venture to the holder of the other primary interests in the joint venture for approximately $19 million which exceeded the collective carrying value of our preferred equity investment and derivative investment receivable as of the closing date. However, the Company continues to serve as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties, and we may receive additional remuneration until we are released from the limited guarantee. We shall remain as a limited guarantor until the earlier of 1) the borrower's identification of a suitable substitute guarantor (which the borrower is actively pursuing) or 2) repayment of the senior indebtedness which matures on February 28, 2017. The Company is entitled to quarterly payments of $0.3 million to $0.5 million beginning in 2014 until the guarantee is released. The Company’s obligation would be limited to the amount of debt service payments in the event of default by the borrower. The principal balance of the senior indebtedness as of December 31, 2013 was approximately $95.3 million as compared to the estimated fair value of the underlying collateral of approximately $110.0 million (unaudited). The collateral consists of 12 operating multifamily properties with an average occupancy of approximately 82.9% (unaudited). The net operating cash flows has proven sufficient to cover debt service payments required under the loan which are collected through a lockbox. As a result, we have not recorded any liability related to our limited guarantee because we believe there is a remote likelihood of any liability to us given these factors; however, in the event of nonperformance by the borrowers, there could be a material impact to the Company. Accounting for Preferred Equity Investment As a result of the passive nature of this investment by us, the mandatory redemption feature of the investment, the defined preferred return, and other repayment and security features of the investment, the investment was accounted for as a debt security investment held to maturity, whereby we were recording the 15% annual preferred return over the term of the investment period using the effective interest method. Similarly, the deferred origination fees, net of direct costs was being amortized over the term of the investment using the effective interest method as an adjustment to yield. In addition, as described above, we were further entitled to an exit fee equal to the greater of 4% of our original investment or 1.5% of the fair market value of the portfolio assets of the joint venture at the two year preferred equity redemption date. At the date of execution of the agreement, we estimated that the fair market value of the underlying assets to be approximately $190 million at the redemption date. We then discounted the computed exit fee using a discount rate of 12%. Accordingly, we had recorded the exit fee as a derivative investment receivable in our consolidated balance sheet in the amount of $2.25 million. The offsetting amount was treated as a discount on the investment which was being amortized as an adjustment to investment income over the term of the investment using the effective interest method. During the year ended December 31, 2013 we recognized approximately $2.1 million in investment income relating to the recognition of the preferred return and amortization of the exit fee from this investment as described above. In addition, we recognized a gain of $3.0 million upon disposition of the investment which is included in investment and other interest income in the accompanying consolidated statement of operations. Also, in connection with the agreement for one of our wholly-owned subsidiaries to continue to serve as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties, we received $0.3 million in the fourth quarter of 2013 and we may receive additional remuneration in 2014 until we are released from the limited guarantee. Such payments are considered earned when paid.

PREFERRED EQUITY INVESTMENT AND DERIVATIVE INVESTMENT RECEIVABLE

Preferred Equity Investment

During the year ended December 31, 2013, we entered into a limited liability agreement to form a joint venture with unrelated parties for the purpose of acquiring a multi-family portfolio comprised of 14 apartment communities across six states, which is being managed by a third party, national firm, specializing in multi-family assets. Under the terms of the joint venture agreement, we contributed $15 million through one of our wholly-owned subsidiaries that held the status of a preferred member. Another of our wholly-owned subsidiaries contributed no capital, but serves as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties. No other capital contributions were required by us. A non-IMHFC member served as the managing member of the joint venture. Our preferred member interest was secured by the other non-IMHFC members’ interest in each of the single member LLC’s that hold title to real property owned by each respective LLC.

Under the terms of the joint venture agreement, the joint venture was required to redeem our preferred membership interest for the redemption price (as defined in the joint venture agreement) on or before the second anniversary of the closing date, or the redemption date could have been extended at the joint venture’s option for one additional year for a fee to the Company of $0.3 million. We were also entitled to a 15% annualized return on our $15 million preferred equity investment, and we were further entitled to an exit fee equal to the greater of 4% of our original investment or 1.5% of the fair market value of the portfolio assets of the joint venture at the two year preferred equity redemption date, as described further below.

Additionally, we were entitled to retain a 15% carried interest in the profits of the entire investment portfolio, after payment of the preferred returns to us and similar preferred returns of non-IMHFC members. Further, we were entitled to effectively receive all available cash flow of the joint venture until we received the entirety of our preferred equity investment and any accrued and unpaid preferred return amounts. The non-IMHFC members are obligated to fund any shortfalls in our preferred return.

During the fourth quarter of 2013, we sold our preferred equity investment in the joint venture to the holder of the other primary interests in the joint venture for approximately $19 million which exceeded the collective carrying value of our preferred equity investment and derivative investment receivable as of the closing date. However, the Company continues to serve as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties, and we may receive additional remuneration until we are released from the limited guarantee. We shall remain as a limited guarantor until the earlier of 1) the borrower's identification of a suitable substitute guarantor (which the borrower is actively pursuing) or 2) repayment of the senior indebtedness which matures on February 28, 2017. The Company is entitled to quarterly payments of $0.3 million to $0.5 million beginning in 2014 until the guarantee is released. The Company’s obligation would be limited to the amount of debt service payments in the event of default by the borrower. The principal balance of the senior indebtedness as of December 31, 2013 was approximately $95.3 million as compared to the estimated fair value of the underlying collateral of approximately $110.0 million (unaudited). The collateral consists of 12 operating multifamily properties with an average occupancy of approximately 82.9% (unaudited). The net operating cash flows has proven sufficient to cover debt service payments required under the loan which are collected through a lockbox. As a result, we have not recorded any liability related to our limited guarantee because we believe there is a remote likelihood of any liability to us given these factors; however, in the event of nonperformance by the borrowers, there could be a material impact to the Company.

Accounting for Preferred Equity Investment

As a result of the passive nature of this investment by us, the mandatory redemption feature of the investment, the defined preferred return, and other repayment and security features of the investment, the investment was accounted for as a debt security investment held to maturity, whereby we were recording the 15% annual preferred return over the term of the investment period using the effective interest method. Similarly, the deferred origination fees, net of direct costs was being amortized over the term of the investment using the effective interest method as an adjustment to yield.

In addition, as described above, we were further entitled to an exit fee equal to the greater of 4% of our original investment or 1.5% of the fair market value of the portfolio assets of the joint venture at the two year preferred equity redemption date. At the date of execution of the agreement, we estimated that the fair market value of the underlying assets to be approximately $190 million at the redemption date. We then discounted the computed exit fee using a discount rate of 12%. Accordingly, we had recorded the exit fee as a derivative investment receivable in our consolidated balance sheet in the amount of $2.25 million. The offsetting amount was treated as a discount on the investment which was being amortized as an adjustment to investment income over the term of the investment using the effective interest method.

During the year ended December 31, 2013 we recognized approximately $2.1 million in investment income relating to the recognition of the preferred return and amortization of the exit fee from this investment as described above. In addition, we recognized a gain of $3.0 million upon disposition of the investment which is included in investment and other interest income in the accompanying consolidated statement of operations. Also, in connection with the agreement for one of our wholly-owned subsidiaries to continue to serve as a limited guarantor member on the senior indebtedness of the joint venture that is secured by the acquired operating properties, we received $0.3 million in the fourth quarter of 2013 and we may receive additional remuneration in 2014 until we are released from the limited guarantee. Such payments are considered earned when paid.