Business Combinations

12 Months Ended

Dec. 31, 2011

Business Combinations

Business Combination Disclosure [Text Block]

Note 4 — Real Estate Acquisitions

On December 28, 2010, the Joint Venture acquired a retail shopping center located in Richardson, Texas for an aggregate purchase price of $19.15 million on an all cash basis from the seller, LNR Partners, LLC.  The property is located at 100 South Central Expressway, Richardson, Texas and commonly known as Richardson Heights Shopping Center.  The property consists of approximately 201,000 square feet and was 56.7% occupied at the acquisition date.  Richardson is a suburb of Dallas, Texas.  

As noted in Note 3, on November 1, 2011 the Company acquired the remaining 51% interest we previously did not control.  In accordance with ASC Topic 810 – Business Combinations, the Company re-measured its previously held 49% interest, with a carrying value of $9,361,988.  The acquisition date fair value of the previous equity interest in the Joint Venture was $9,870,035.  Therefore, we recognized a gain of $508,047 as a result of revaluing our prior equity interest held before the acquisition to fair value as of October 31, 2011.  The gain is reflected as “gain on re-measurement” in the consolidated statements of operations.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date:

Assets acquired:
Real estate assets	$	18,968,145
Cash and cash equivalents		830,671
Accounts receivable		36,608
Other assets		285,011
Total assets acquired		20,120,435
Liabilities assumed:
Note payable		9,575,000
Accounts payable and accrued expenses		504,658
Tenant security deposits		68,556
Due to related parties		351,814
Total liabilities assumed		10,500,028
Fair value of net assets acquired	$	9,620,407

The Company acquired the controlling interest in the Joint Venture without the transfer of consideration, as defined in ASC Topic 815, as control was obtained by a distribution of equity to the former controlling interest.  Therefore, as required by ASC Topic 815, in order to determine whether the Company had goodwill or a bargain purchase gain as a result of this transaction, the fair value of the assets acquired and liabilities assumed  is compared to the value of the investment in the acquired entity.  The fair value of the identifiable assets and liabilities assumed were less than the fair value of the investment in the Joint Venture.  As a result we recognized goodwill of $249,686.  None of the goodwill recognized is expected to be deductible for tax purposes.  Management has determined that the goodwill asset has not been impaired as of December 31, 2011 and accordingly no impairment loss has been recorded for the year then ended.

As further discussed in Note 3, the Company’s interest in the now former Unconsolidated Joint Venture increased from 49% to 100% effective November 1, 2011.  For the period from November 1, 2011 through December 31, 2011, the accounts of Hartman Richardson Heights Properties, LLC are consolidated with the accounts of the Company.  All significant inter-company balances have been eliminated.