Real Estate Joint Venture And Acquisitions

3 Months Ended

Mar. 31, 2013

Real Estate Joint Venture And Acquisitions [Abstract]

Real Estate Joint Venture And Acquisitions

3. REAL ESTATE JOINT VENTURE AND ACQUISITIONS

MacArthur Park Joint Venture

On March 26, 2013, we completed the entry into the MacArthur Park Joint Venture with Goldman Sachs whereby we contributed our MacArthur Park property to the MacArthur Park Joint Venture for a  30% interest, and Goldman Sachs contributed cash for a  70% interest.  The MacArthur Park Joint Venture concurrently purchased the contiguous property to the north (“MacArthur Park Phase I”), excluding a Target store, for approximately $25.5 million and placed mortgage financing on the entire combined property of $43.9 million. The MacArthur Park Joint Venture fully repaid the mortgage loan securing the MacArthur Park debt of approximately $8.7 million (including a $2.1 million defeasance penalty). Upon closing the transaction, we received net cash proceeds of approximately $35.6 million, which were used to repay borrowings under our $75 Million Facility.  We recorded a gain of approximately $7.7 million representing the cash proceeds received in excess of 70% of the carrying value of the MacArthur Park net assets contributed by us.  We will continue to manage and lease the property on behalf of the MacArthur Park Joint Venture and we retain a right of first offer to acquire the project in the future, after a lock-out period. 

Our 30% ownership interest does not qualify for consolidation under GAAP. Accordingly, we deconsolidated this property on March 26, 2013.  Included on our consolidated balance sheet as of March 31, 2013 is our investment in the MacArthur Park Joint Venture of $8.8 million, which represents our historical basis in the MacArthur Park net assets plus post-closing cash contributions (distributions).  Our December 31, 2012 consolidated balance sheet includes MacArthur Park real estate assets of approximately $43.2 million and notes payable of approximately $6.6 million. The table below details the significant assets and liabilities of MacArthur Park that were deconsolidated during the period as a result of this transaction:

Summary of assets contributed	AmREIT		Goldman Sachs		Consolidated
and deconsolidated	(30%)		(70%)		Total
Real estate investments at cost	$	15,162	$	35,379	$	50,541
Less accumulated depreciation and amortization		(2,689)		(6,275)		(8,964)
Net real estate investments		12,473		29,104		41,577
Acquired lease intangibles, net		377		880		1,257
Tenant and accounts receivable, net		64		150		214
Loan costs and other assets		150		347		497
Notes payable		(1,977)		(4,613)		(6,590)
Accounts payable and other liabilities		(302)		(704)		(1,006)
Net assets and liabilities contributed	$	10,785	$	25,164	$	35,949

We have recorded our 30% retained interest in the MacArthur Park Joint Venture at its historical carrying value. Such retained interest as of March 31, 2013, differs from our proportionate share of the joint venture’s net assets by $2.9 million.This basis difference represents our proportionate difference between the historical carrying value and the fair value of the MacArthur Park net assets that we retained.  We amortize this basis difference over the related useful life of the related assets.

Our 30% ownership grants us the ability to exercise significant influence over the operation and management of the joint venture, and we account for our ownership under the equity method since the date of the formation of the joint venture. Additionally, our significant continuing involvement in MacArthur Park precludes us from treating our contribution of the property to the joint venture as discontinued operations. Accordingly, MacArthur Park’s historical operating results prior to the formation of the joint venture will continue to be reported as a component of our income from continuing operations.

Acquisitions

610 & Ella - We acquired 1.26 acres of unimproved land located at the intersection of Loop 610 & Ella Boulevard in Houston, Texas on April 4, 2013 for $2.2 million. We entered into a long-term, build-to-suit lease with CVS /pharmacy on the site.This acquisition was made through ARIC as it was acquired with the intent to resell it in the near-term. 

Preston & Royal Village – On December 12, 2012, we purchased the Preston Royal Village Shopping Center, a retail shopping center containing approximately 230,000 square feet of GLA located in Dallas, Texas, for a purchase price of $66.2 million, exclusive of closing costs. The property, originally built in 1956 and 1959, is comprised of a fee simple interest on the northwest corner portion and a ground leasehold interest on the northeast corner portion, with 27 years remaining on the ground lease. Collectively, the two corners are 97.3% leased as of March 31, 2013 with major tenants including Tom Thumb, Barnes & Noble and Chico’s. We account for each corner as a separate property for accounting and reporting purposes. The purchase price was funded through a combination of cash on hand, draws on our $75 Million Facility and $23.4 million in mortgage financing on the property.

The table below presents our pro forma results of operations for the three months ended March 31, 2012, assuming that we acquired the Preston Royal Shopping Center on January 1, 2012 (in thousands):

			Pro forma adjustments
	Historical		for Preston & Royal		Pro forma
Three months ended March 31, 2012	results		Shopping Center		results
Total revenues	$	10,060	$	1,655	$	11,715
Net income available to
stockholders	$	1,257	$	(654)	$	603