INVESTMENT IN UNCONSOLIDATED ENTITIES AND RELATED MATTERS

As described in Note 1, during the second quarter of 2015, the Company, through certain subsidiaries, obtained certain real estate assets and equity interests in a number of limited liability companies and limited partnerships with various real estate holdings and related assets as a result of certain enforcement and collection efforts. Several of the limited liability companies and partnerships hold interests in real property and are now co-owned with various unrelated third parties. Certain of these entities have been consolidated in the accompanying condensed consolidated financial statements while others have been accounted for under the equity method of accounting, based on the extent of the Company’s controlling financial interest in each such entity. For entities where the Company does not control the real estate venture, and the other partners (or the equivalent) hold substantive participating rights, the Company uses the equity method of accounting.

ASC 323 Investments - Equity Method and Joint Ventures and Article 4.08(g) of Regulation S-X require that summarized financial information of material investments accounted for under the equity method be provided for the investee’s financial position and results of operations including assets, liabilities and results of operations. Notwithstanding the extensive efforts of the Company to compile the necessary financial information, the Company has determined that the information needed for the preparation of historical financial statements of these entities to satisfy these requirements is not available or otherwise sufficiently reliable. As a result, the Company has elected to present financial information on its investment in these entities based on the fair value of the underlying real estate assets and estimable liabilities as of September 30, 2015, as it believes this information is reliable and relevant to the users of its financial statements.

The initial accounting for the business combination is incomplete with respect to the values assigned to other potential tangible and intangible assets acquired and liabilities assumed as the Company did not have sufficient time to finalize these respective valuations and, accordingly, the amounts recognized in these condensed consolidated financial statements are provisional. We are continuing to investigate and evaluate the remaining assets and liabilities of these entities, but after elimination of intercompany balances, do not believe such amounts are material. Further, although the Company acknowledges that the information provided does not comply with all of the provisions of ASC 323 or Article 4.08(g) of Regulation S-X, it does not believe that the lack of the omitted disclosure, or the information of the financial position reflecting the cost basis of its investment provided, results in a material omission or misstatement of the Company’s condensed consolidated financial statements taken as a whole.

The following information summarizes the financial position of the entities in which the Company holds investments that are recorded on the equity method of accounting as of September 30, 2015 (in thousands).



Summary of Financial Position	Total assets		Total liabilities		Total Equity		Total Liabilities and Equity		Company's Investment
	$	15,575	$	927	$	14,648	$	15,575	$	3,064

The assets of the foregoing entities include primarily unimproved real estate and rights to develop water located in the Southwestern United States. The Company does not consolidate the foregoing entities because the Company and the other owners of equity interests in these entities share decision making abilities and have joint control over the entities, and/or because the Company does not control the activities of the entities. Under the court-approved settlement, the Company does not have any obligation to fund the outstanding liabilities or working capital needs of these entities. The Company’s interests in these entities range from 2.4% to 48.0% and, collectively, the Company’s net investment in these entities totals $3.1 million at September 30, 2015.

The results of operations of our acquired interest in these entities have been included in the accompanying consolidated statements of operations since the respective acquisition closing dates. We have not presented pro forma consolidated financial information for the Company for three and nine months ended September 30, 2015 and 2014 as if the acquired interest in these entities discussed above had occurred at the beginning of the earliest period presented because, as described above, the information needed for the preparation of historical financial statements of these entities to satisfy these requirements is not available or otherwise sufficiently reliable. Moreover, we believe that there was minimal activity during the last two fiscal years. Accordingly, we do not believe that the lack of the omitted disclosure results in a material omission or misstatement of the Company’s condensed consolidated financial statements taken as a whole.

Guarantee on Preferred Investment Senior Secured Indebtedness

In connection with the sale of our preferred equity investment in a joint venture to the holder of the other primary interests in the joint venture during the fourth quarter of 2013, the Company agreed to continue to serve as a limited guarantor on the senior indebtedness of the joint venture that was secured by the joint venture’s operating properties and for which we were entitled to receive certain remuneration until we were released from the limited guarantee. We agreed to remain as a limited guarantor until the earlier of 1) the borrower’s identification of a suitable substitute guarantor, the approval thereof by the senior lender, and our release from the guarantee, or 2) repayment of the senior indebtedness which was scheduled to mature in February 2017. As consideration for its limited guarantee, the Company received aggregate payments of $0.5 million and $1.1 million during the nine months ended September 30, 2015 and 2014, respectively. Such payments were considered earned when received. During the first quarter of 2015, the borrower secured a replacement guarantor on the senior loan, and we entered into a court-approved settlement with the borrower pursuant to which the Company received a settlement payment of $1.3 million and was released from any potential liability under the guarantee.