x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Nevada
|
94-6565852
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer ¨
|
Accelerated filer
|
¨
|
|
Non-accelerated filer ¨ (do not check if a smaller reporting company)
|
Smaller reporting company
|
x
|
Common Stock, $.01 par value
|
8,413,469
|
(Class)
|
(Outstanding at May 5, 2012)
|
PAGE
|
||
PART I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements
|
|
Consolidated Balance Sheets at March 31, 2012 (unaudited) and December 31, 2011
|
3
|
|
Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011 (unaudited)
|
4
|
|
Consolidated Statement of Shareholders’ Equity for the three months ended March 31, 2012 (unaudited)
|
5
|
|
Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2012 and 2011 (unaudited)
|
6
|
|
Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011 (unaudited)
|
7
|
|
Notes to Consolidated Financial Statements
|
8
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
19
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risks
|
27
|
Item 4.
|
Controls and Procedures
|
27
|
PART II.
|
OTHER INFORMATION
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
28
|
Item 6.
|
Exhibits
|
29
|
SIGNATURES
|
30
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
(unaudited)
|
||||||||
March 31,
|
December 31,
|
|||||||
2012
|
2011
|
|||||||
(dollars in thousands, except share
and par value amounts)
|
||||||||
Assets
|
||||||||
Real estate, at cost
|
$ | 1,030,501 | $ | 1,069,699 | ||||
Real estate held for sale at cost, net of depreciation $3,168 for 2012 and $1,752 for 2011)
|
28,663 | 15,015 | ||||||
Real estate subject to sales contracts at cost, net of depreciation ($7,415 for 2012 and $7,213 for 2011)
|
48,537 | 52,555 | ||||||
Less accumulated depreciation
|
(146,379 | ) | (148,930 | ) | ||||
Total real estate
|
961,322 | 988,339 | ||||||
Notes and interest receivable
|
||||||||
Performing (including $75,672 in 2012 and $78,852 in 2011 from affiliates and related parties)
|
75,673 | 79,161 | ||||||
Non-performing (including $3,279 in 2012 and $0 in 2011 from affiliates and related parties)
|
5,750 | 2,152 | ||||||
Less allowance for estimated losses (including $2,097 in 2012 and 2011 from affiliates
and related parties)
|
(3,942 | ) | (3,942 | ) | ||||
Total notes and interest receivable
|
77,481 | 77,371 | ||||||
Cash and cash equivalents
|
7,822 | 19,991 | ||||||
Investments in unconsolidated subsidiaries and investees
|
6,230 | 6,362 | ||||||
Other assets
|
62,204 | 68,261 | ||||||
Total assets
|
$ | 1,115,059 | $ | 1,160,324 | ||||
Liabilities and Shareholders’ Equity
|
||||||||
Liabilities:
|
||||||||
Notes and interest payable
|
$ | 800,368 | $ | 829,617 | ||||
Notes related to assets held for sale
|
20,089 | 13,830 | ||||||
Notes related to subject to sales contracts
|
34,434 | 38,376 | ||||||
Stock secured notes payable
|
2,351 | 2,482 | ||||||
Affiliate payables
|
25,915 | 17,465 | ||||||
Deferred gain (from sales to related parties)
|
58,637 | 65,607 | ||||||
Accounts payable and other liabilities (including $1,802 in 2012 and $1,746 in 2011 from affiliates
and related parties)
|
35,317 | 51,663 | ||||||
977,111 | 1,019,040 | |||||||
Shareholders’ equity:
|
||||||||
Preferred stock, Series C: $.01 par value, authorized 10,000,000 shares, issued and outstanding 30,000
shares in 2012 and 2011 respectively (liquidation preference $100 per share). Series D: $.01 par value,
authorized, issued and outstanding 100,000 shares in 2012 and 2011 respectively.
|
1 | 1 | ||||||
Common stock, $.01 par value, authorized 10,000,000 shares; issued 8,413,669 for 2012 and 2011, and
outstanding 8,413,469 for 2012 and 2011.
|
84 | 84 | ||||||
Treasury stock at cost; 200 shares in 2012 and 2011
|
(2 | ) | (2 | ) | ||||
Paid-in capital
|
273,609 | 273,886 | ||||||
Retained earnings
|
(152,442 | ) | (148,235 | ) | ||||
Total Transcontinental Realty Investors, Inc. shareholders' equity
|
121,250 | 125,734 | ||||||
Non-controlling interest
|
16,698 | 15,550 | ||||||
Total equity
|
137,948 | 141,284 | ||||||
Total liabilities and equity
|
$ | 1,115,059 | $ | 1,160,324 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||
(unaudited)
|
||||||||
For the Three Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
(dollars in thousands, except share
and per share amounts)
|
||||||||
Revenues:
|
||||||||
Rental and other property revenues (including $167 and $0 for the three months ended 2012 and
2011 respectively from affiliates and related parties)
|
$ | 28,945 | $ | 26,439 | ||||
Expenses:
|
||||||||
Property operating expenses (including $292 and $275 for the three months ended 2012 and 2011
respectively from affiliates and related parties)
|
14,989 | 14,770 | ||||||
Depreciation and amortization
|
5,494 | 5,302 | ||||||
General and administrative (including $666 and $842 for the three months ended 2012 and 2011
respectively from affiliates and related parties)
|
2,174 | 1,997 | ||||||
Provision on impairment of notes receivable and real estate assets
|
- | 5,178 | ||||||
Advisory fee to affiliate
|
2,303 | 2,620 | ||||||
Total operating expenses
|
24,960 | 29,867 | ||||||
Operating income (loss)
|
3,985 | (3,428 | ) | |||||
Other income (expense):
|
||||||||
Interest income (including $3,415 and $318 for the three months ended 2012 and 2011 respectively
from affiliates and related parties)
|
3,229 | 426 | ||||||
Other income (including $1,500 and $0 for the three months ended 2012 and 2011 respectively from
affiliates and related parties)
|
1,602 | 1,214 | ||||||
Mortgage and loan interest (including $754 and $298 for the three months ended 2012 and 2011
respectively from affiliates and related parties)
|
(16,429 | ) | (12,392 | ) | ||||
Loss on the sale of investments
|
(102 | ) | - | |||||
Earnings from unconsolidated subsidiaries and investees
|
(73 | ) | (61 | ) | ||||
Total other expenses
|
(11,773 | ) | (10,813 | ) | ||||
Loss before gain on land sales, non-controlling interest, and tax
|
(7,788 | ) | (14,241 | ) | ||||
Gain on land sales
|
423 | 796 | ||||||
Loss from continuing operations before tax
|
(7,365 | ) | (13,445 | ) | ||||
Income tax benefit
|
1,133 | 489 | ||||||
Net loss from continuing operations
|
(6,232 | ) | (12,956 | ) | ||||
Discontinued operations:
|
||||||||
Loss from discontinued operations
|
(351 | ) | (2,280 | ) | ||||
Gain on sale of real estate from discontinued operations
|
3,588 | 3,677 | ||||||
Income tax expense from discontinued operations
|
(1,133 | ) | (489 | ) | ||||
Net income from discontinued operations
|
2,104 | 908 | ||||||
Net loss
|
(4,128 | ) | (12,048 | ) | ||||
Net (income) loss attributable to non-controlling interest
|
(79 | ) | 85 | |||||
Net loss attributable to Transcontinental Realty Investors, Inc.
|
(4,207 | ) | (11,963 | ) | ||||
Preferred dividend requirement
|
(277 | ) | (274 | ) | ||||
Net loss applicable to common shares
|
$ | (4,484 | ) | $ | (12,237 | ) | ||
Earnings per share - basic
|
||||||||
Loss from continuing operations
|
$ | (0.78 | ) | $ | (1.61 | ) | ||
Income from discontinued operations
|
0.25 | 0.11 | ||||||
Net loss applicable to common shares
|
$ | (0.53 | ) | $ | (1.50 | ) | ||
Earnings per share - diluted
|
||||||||
Loss from continuing operations
|
$ | (0.78 | ) | $ | (1.61 | ) | ||
Income from discontinued operations
|
0.25 | 0.11 | ||||||
Net loss applicable to common shares
|
$ | (0.53 | ) | $ | (1.50 | ) | ||
Weighted average common share used in computing earnings per share
|
8,413,469 | 8,240,136 | ||||||
Weighted average common share used in computing diluted earnings per share
|
8,413,469 | 8,240,136 | ||||||
Amounts attributable to Transcontinental Realty Investors, Inc.
|
||||||||
Loss from continuing operations
|
$ | (6,311 | ) | $ | (12,871 | ) | ||
Income from discontinued operations
|
2,104 | 908 | ||||||
Net loss
|
$ | (4,207 | ) | $ | (11,963 | ) |
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2012
|
||||||||||||||||||||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||||||||||||||
|
Accumulated
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive
|
Preferred
|
Common Stock
|
Treasury
|
Paid-in
|
Retained
|
Other
Comprehensive |
Non-Controlling
|
|||||||||||||||||||||||||||||||||
Total
|
Loss
|
Stock
|
Shares
|
Amount
|
Stock
|
Capital
|
Earnings
|
Income (Loss)
|
Interest
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2011
|
$ | 141,284 | $ | (151,052 | ) | $ | 1 | 8,413,669 | $ | 84 | $ | (2 | ) | $ | 273,886 | $ | (148,235 | ) | $ | - | $ | 15,550 | ||||||||||||||||||
Series C preferred stock dividends (7.0% per year)
|
(53 | ) | - | - | - | - | - | (53 | ) | - | - | - | ||||||||||||||||||||||||||||
Series D preferred stock dividends (8.5% per year)
|
(224 | ) | - | - | - | - | - | (224 | ) | - | - | - | ||||||||||||||||||||||||||||
Net loss
|
(4,128 | ) | (4,128 | ) | - | - | - | - | - | (4,207 | ) | - | 79 | |||||||||||||||||||||||||||
Purchase of controlling interest
|
(69 | ) | - | - | - | - | - | - | - | - | (69 | ) | ||||||||||||||||||||||||||||
Sale of controlling interest
|
1,138 | - | - | - | - | - | - | - | - | 1,138 | ||||||||||||||||||||||||||||||
Balance, March 31, 2012
|
$ | 137,948 | $ | (155,180 | ) | $ | 1 | 8,413,669 | $ | 84 | $ | (2 | ) | $ | 273,609 | $ | (152,442 | ) | $ | - | $ | 16,698 | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||
(unaudited)
|
||||||||
For the Three Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
(dollars in thousands)
|
||||||||
Net loss
|
$ | (4,128 | ) | $ | (12,048 | ) | ||
Other comprehensive income (loss)
|
- | - | ||||||
Total other comprehensive income (loss)
|
- | - | ||||||
Comprehensive loss
|
(4,128 | ) | (12,048 | ) | ||||
Comprehensive (income) loss attributable to non-controlling interest
|
(79 | ) | 85 | |||||
Comprehensive loss attributable to Transcontinental Realty Investors, Inc.
|
$ | (4,207 | ) | $ | (11,963 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(unaudited)
|
||||||||
For the Three Months Ended
|
||||||||
March 31,
|
||||||||
2012
|
2011
|
|||||||
(dollars in thousands)
|
||||||||
Cash Flow From Operating Activities:
|
||||||||
Net loss
|
$ | (4,128 | ) | $ | (12,048 | ) | ||
Adjustments to reconcile net loss applicable to common
shares to net cash used in operating activities:
|
||||||||
Loss on sale of land
|
(423 | ) | (796 | ) | ||||
Loss on sale of income producing properties
|
(3,588 | ) | (3,677 | ) | ||||
Depreciation and amortization
|
5,737 | 6,637 | ||||||
Provision on impairment of notes receivable and real estate assets
|
- | 6,059 | ||||||
Amortization of deferred borrowing costs
|
898 | 1,008 | ||||||
Earnings from unconsolidated subsidiaries and investees
|
73 | 61 | ||||||
(Increase) decrease in assets:
|
||||||||
Accrued interest receivable
|
(2,824 | ) | 79 | |||||
Prepaid expense
|
7 | 917 | ||||||
Escrow
|
7,591 | 10,547 | ||||||
Rent receivables
|
(785 | ) | (537 | ) | ||||
Increase (decrease) in liabilities:
|
||||||||
Accrued interest payable
|
(1,500 | ) | 2,242 | |||||
Affiliate payables
|
8,450 | (14,229 | ) | |||||
Other liabilities
|
(9,147 | ) | (10,155 | ) | ||||
Net cash provided by (used in) operating activities
|
361 | (13,892 | ) | |||||
Cash Flow From Investing Activities:
|
||||||||
Proceeds from notes receivable
|
8,714 | 7,694 | ||||||
Originations or advances on notes receivable
|
(6,000 | ) | (793 | ) | ||||
Acquisition of land held for development
|
(10,445 | ) | - | |||||
Proceeds from sale of income producing properties
|
20,199 | 3,498 | ||||||
Proceeds from sale of land
|
6,034 | 39,630 | ||||||
Proceeds from sale of investment in unconsolidated real estate entities
|
- | 897 | ||||||
Proceeds from sale of investments
|
114 | - | ||||||
Investment in unconsolidated real estate entities
|
(55 | ) | (98 | ) | ||||
Improvement of land held for development
|
(136 | ) | (758 | ) | ||||
Improvement of income producing properties
|
(394 | ) | (68 | ) | ||||
Acquisition of non-controlling interest
|
(69 | ) | - | |||||
Sales of controlling interest
|
113 | 1,784 | ||||||
Construction and development of new properties
|
(3,111 | ) | (14,035 | ) | ||||
Net cash provided by investing activities
|
14,964 | 37,751 | ||||||
Cash Flow From Financing Activities:
|
||||||||
Proceeds from notes payable
|
60,830 | 30,429 | ||||||
Recurring amortization of principal on notes payable
|
(5,596 | ) | (2,535 | ) | ||||
Payments on maturing notes payable
|
(57,668 | ) | (57,331 | ) | ||||
Debt assumption by buyer
|
(23,129 | ) | - | |||||
Deferred financing costs
|
(1,654 | ) | (250 | ) | ||||
Common stock issuance
|
- | 1,530 | ||||||
Preferred stock dividends - Series C
|
(53 | ) | (52 | ) | ||||
Preferred stock dividends - Series D
|
(224 | ) | (222 | ) | ||||
Net cash used in financing activities
|
(27,494 | ) | (28,431 | ) | ||||
Net decrease in cash and cash equivalents
|
(12,169 | ) | (4,572 | ) | ||||
Cash and cash equivalents, beginning of period
|
19,991 | 11,259 | ||||||
Cash and cash equivalents, end of period
|
$ | 7,822 | $ | 6,687 | ||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
$ | 12,563 | $ | 13,278 | ||||
Schedule of noncash investing and financing activities:
|
||||||||
Notes receivable received from affiliate
|
$ | 6,000 | $ | - | ||||
Affiliate payable/receivable for ARL cost basis sales adjustment
|
$ | 10,445 | $ | - | ||||
Acquisition of land for ARL cost basis sales adjustment
|
$ | (10,445 | ) | $ | - | |||
The accompanying notes are an integral part of these consolidated financial statements.
|
|
•
|
16 commercial buildings totaling 3.6 million leasable square feet, consisting of 11 office buildings, one industrial warehouse, three retail centers and one parking garage;
|
|
•
|
48 apartment communities totaling 8,777 units; excluding apartments being developed; and
|
|
•
|
4,288 acres of developed and undeveloped land.
|
Level 1
|
–
|
Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets.
|
Level 2
|
–
|
Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
Level 3
|
–
|
Unobservable inputs that are significant to the fair value measurement.
|
Maturity
|
Interest
|
|||||||
Borrower
|
Date
|
Rate
|
Amount
|
Security
|
||||
Performing loans:
|
||||||||
Miscellaneous related party notes (1)
|
Various
|
Various
|
$ 665
|
Various secured interest
|
||||
Realty Advisors Management, Inc. (1)
|
12/16
|
4.00%
|
20,387
|
Unsecured
|
||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1)
|
12/27
|
5.25%
|
2,000
|
Unsecured
|
||||
Unified Housing Foundation, Inc. (Lakeshore Villas) (1)
|
12/27
|
5.25%
|
6,363
|
Membership interest in Housing for Seniors of Humble, LLC
|
||||
Unified Housing Foundation, Inc. (Echo Station) (1)
|
12/27
|
5.25%
|
1,481
|
100% Interest in Unified Housing of Temple, LLC
|
||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1)
|
12/27
|
5.25%
|
4,663
|
100% Interest in Unified Housing of Austin, LLC
|
||||
Unified Housing Foundation, Inc. (Limestone Canyon) (1)
|
07/15
|
5.25%
|
3,057
|
100% Interest in Unified Housing of Austin, LLC
|
||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1)
|
12/27
|
5.25%
|
6,000
|
100% Interest in Unified Housing of Vista Ridge, LLC
|
||||
Unified Housing Foundation, Inc. (Limestone Ranch) (1)
|
12/27
|
5.25%
|
2,250
|
100% Interest in Unified Housing of Vista Ridge, LLC
|
||||
Unified Housing Foundation, Inc. (Parkside Crossing) (1)
|
12/27
|
5.25%
|
1,936
|
100% Interest in Unified Housing of Parkside Crossing, LLC
|
||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1)
|
12/27
|
5.25%
|
4,812
|
100% Interest in Unified Housing of Sendero Ridge, LLC
|
||||
Unified Housing Foundation, Inc. (Sendero Ridge) (1)
|
12/27
|
5.25%
|
5,174
|
100% Interest in Unified Housing of Sendero Ridge, LLC
|
||||
Unified Housing Foundation, Inc. (Timbers of Terrell) (1)
|
12/27
|
5.25%
|
1,323
|
100% Interest in Unified Housing of Terrell, LLC
|
||||
Unified Housing Foundation, Inc. (Tivoli) (1)
|
12/27
|
5.25%
|
7,965
|
100% Interest in Unified Housing of Tivoli, LLC
|
||||
Unified Housing Foundation, Inc. (1)
|
12/12
|
5.00%
|
6,000
|
Unsecured
|
||||
Accrued interest
|
1,597
|
|||||||
Total Performing
|
$ 75,673
|
Non-Performing loans:
|
||||||||
130 Windmill Farms, L.P.
|
10/11
|
7.00%
|
507
|
Unsecured
|
||||
Dallas Fund XVII LP (2)
|
10/09
|
9.00%
|
1,432
|
Unsecured
|
||||
Miscellaneous non-related party notes
|
Various
|
Various
|
380
|
Various secured interest
|
||||
Ocean Beach Partners, L.P. (1)
|
12/11
|
7.00%
|
3,279
|
Folsom Land (36 acres in Farmers Branch, TX)
|
||||
Accrued interest
|
152
|
|||||||
$ 5,750
|
||||||||
|
Allowance for estimated losses
|
(3,942)
|
||||||
Total
|
$ 77,481
|
|||||||
(1) Related party notes
|
||||||||
(2) Note matured and allowance for estimated losses at full value of note
|
|
Percentage Ownership
|
||||||||
at March 31, 2012
|
at March 31, 2011
|
|||||||
American Realty Investors, Inc.(1)
|
2.03 | % | 2.47 | % | ||||
Garden Centura, L.P.(2)
|
0.00 | % | 5.00 | % | ||||
(1) Unconsolidated Investment in Parent Company
|
||||||||
(2) Other Investees sold as of 12/28/11
|
For the Three Months Ended March 31, 2012
|
Unconsolidated Subsidiaries
|
Other
Investees
|
Total
|
|||||||||
Real estate, net of accumulated depreciation
|
$ | 45,917 | $ | - | $ | 45,917 | ||||||
Notes receivable
|
23,106 | - | 23,106 | |||||||||
Other assets
|
153,627 | - | 153,627 | |||||||||
Notes payable
|
(63,821 | ) | - | (63,821 | ) | |||||||
Other liabilities
|
(86,475 | ) | - | (86,475 | ) | |||||||
Shareholders' equity/partners capital
|
(72,354 | ) | - | (72,354 | ) | |||||||
Revenue
|
$ | 1,509 | $ | - | $ | 1,509 | ||||||
Depreciation
|
(78 | ) | - | (78 | ) | |||||||
Operating expenses
|
(2,465 | ) | - | (2,465 | ) | |||||||
Loss on land sales
|
(1,444 | ) | - | (1,444 | ) | |||||||
Loss on sale of investment
|
(361 | ) | - | (361 | ) | |||||||
Interest expense
|
(1,305 | ) | - | (1,305 | ) | |||||||
Loss from continuing operations
|
$ | (4,144 | ) | $ | - | $ | (4,144 | ) | ||||
Loss from discontinued operations
|
(24 | ) | - | (24 | ) | |||||||
Net loss
|
$ | (4,168 | ) | $ | - | $ | (4,168 | ) | ||||
|
||||||||||||
Company's proportionate share of earnings
|
$ | (85 | ) | $ | - | $ | (85 | ) |
For the Three Months Ended March 31, 2011
|
Unconsolidated Subsidiaries
|
Other
Investees
|
Total
|
|||||||||
Real estate, net of accumulated depreciation
|
$ | 199,936 | $ | 73,906 | $ | 273,842 | ||||||
Notes Receivable
|
23,196 | - | 23,196 | |||||||||
Other assets
|
186,355 | 4,065 | 190,420 | |||||||||
Notes payable
|
(232,096 | ) | (48,173 | ) | (280,269 | ) | ||||||
Other liabilities
|
(118,877 | ) | (1,675 | ) | (120,552 | ) | ||||||
Shareholders equity/partners capital
|
(58,514 | ) | (28,123 | ) | (86,637 | ) | ||||||
Rents and interest and other income
|
$ | 1,823 | $ | 1,838 | $ | 3,661 | ||||||
Depreciation
|
(69 | ) | (796 | ) | (865 | ) | ||||||
Operating expenses
|
(3,199 | ) | (1,186 | ) | (4,385 | ) | ||||||
Gain on land sales
|
3,794 | - | 3,794 | |||||||||
Loss on sale of investment
|
(388 | ) | - | (388 | ) | |||||||
Interest expense
|
(2,331 | ) | (565 | ) | (2,896 | ) | ||||||
Loss from continuing operations
|
(370 | ) | (709 | ) | (1,079 | ) | ||||||
Loss from discontinued operations
|
(671 | ) | - | (671 | ) | |||||||
Net loss
|
$ | (1,041 | ) | $ | (709 | ) | $ | (1,750 | ) | |||
|
||||||||||||
Company's proportionate share of earnings
|
$ | (26 | ) | $ | (35 | ) | $ | (61 | ) |
Pillar
|
ARL
|
Total
|
||||||||||
Balance, December 31, 2011
|
$ | - | $ | (17,465 | ) | $ | (17,465 | ) | ||||
Cash transfers
|
(1,403 | ) | - | (1,403 | ) | |||||||
Advisory fees
|
(2,303 | ) | - | (2,303 | ) | |||||||
Commissions to Pillar/Regis
|
(1,388 | ) | (1,388 | ) | ||||||||
Net income fee
|
(42 | ) | (42 | ) | ||||||||
Cost reimbursements
|
(580 | ) | - | (580 | ) | |||||||
Interest to Advisor
|
(396 | ) | - | (396 | ) | |||||||
POA fees
|
(61 | ) | - | (61 | ) | |||||||
Expenses paid by Advisor
|
(1,465 | ) | - | (1,465 | ) | |||||||
Financing (mortgage payments)
|
1,862 | - | 1,862 | |||||||||
Note receivable with affiliate
|
6,268 | - | 6,268 | |||||||||
Sales/Purchases transactions
|
(17,661 | ) | - | (17,661 | ) | |||||||
Intercompany property transfers
|
8,719 | - | 8,719 | |||||||||
Purchase of obligations
|
8,450 | (8,450 | ) | - | ||||||||
Balance, March 31, 2012
|
$ | - | $ | (25,915 | ) | $ | (25,915 | ) |
Commercial
|
||||||||||||||||||||
For the Three Months Ended March 31, 2012
|
Properties
|
Apartments
|
Land
|
Other
|
Total
|
|||||||||||||||
Operating revenue
|
$ | 8,884 | $ | 20,020 | $ | - | $ | 41 | $ | 28,945 | ||||||||||
Operating expenses
|
5,145 | 9,278 | 255 | 311 | 14,989 | |||||||||||||||
Depreciation and amortization
|
1,651 | 3,843 | - | - | 5,494 | |||||||||||||||
Mortgage and loan interest
|
2,931 | 10,814 | 1,594 | 1,090 | 16,429 | |||||||||||||||
Interest income
|
- | - | - | 3,229 | 3,229 | |||||||||||||||
Gain on land sales
|
- | - | 423 | - | 423 | |||||||||||||||
Segment operating income (loss)
|
$ | (843 | ) | $ | (3,915 | ) | $ | (1,426 | ) | $ | 1,869 | $ | (4,315 | ) | ||||||
Capital expenditures
|
447 | 198 | 5 | - | 650 | |||||||||||||||
Assets
|
176,459 | 567,183 | 189,017 | - | 932,659 | |||||||||||||||
Property Sales
|
||||||||||||||||||||
Sales price
|
$ | - | $ | 21,146 | $ | 6,330 | $ | - | $ | 27,476 | ||||||||||
Cost of sale
|
- | 17,558 | 5,907 | - | 23,465 | |||||||||||||||
Deferred current gain
|
- | - | - | - | - | |||||||||||||||
Recognized prior deferred gain
|
- | - | - | - | - | |||||||||||||||
Gain on sale
|
$ | - | $ | 3,588 | $ | 423 | $ | - | $ | 4,011 | ||||||||||
Commercial
|
||||||||||||||||||||
For the Three Months Ended March 31, 2011
|
Properties
|
Apartments
|
Land
|
Other
|
Total
|
|||||||||||||||
Operating revenue
|
$ | 8,894 | $ | 17,298 | $ | 195 | $ | 52 | $ | 26,439 | ||||||||||
Operating expenses
|
5,560 | 8,645 | 539 | 26 | 14,770 | |||||||||||||||
Depreciation and amortization
|
1,955 | 3,347 | - | - | 5,302 | |||||||||||||||
Mortgage and loan interest
|
2,306 | 6,628 | 2,905 | 553 | 12,392 | |||||||||||||||
Interest income
|
- | - | - | 426 | 426 | |||||||||||||||
Gain on land sales
|
- | - | 796 | - | 796 | |||||||||||||||
Segment operating loss
|
$ | (927 | ) | $ | (1,322 | ) | $ | (2,453 | ) | $ | (101 | ) | $ | (4,803 | ) | |||||
Capital expenditures
|
53,253 | 10,049 | 3,142 | - | 66,444 | |||||||||||||||
Assets
|
188,095 | 545,707 | 272,442 | - | 1,006,244 | |||||||||||||||
Property Sales
|
||||||||||||||||||||
Sales price
|
$ | 5,168 | $ | - | $ | 43,139 | $ | - | $ | 48,307 | ||||||||||
Cost of sale
|
4,882 | - | 42,729 | - | 47,611 | |||||||||||||||
Deferred current gain
|
- | - | - | - | - | |||||||||||||||
Recognized prior deferred gain
|
3,391 | - | 386 | - | 3,777 | |||||||||||||||
Gain on sale
|
$ | 3,677 | $ | - | $ | 796 | $ | - | $ | 4,473 |
For Three Months
|
||||||||
|
Ended March 31, | |||||||
2012
|
2011
|
|||||||
Segment operating loss
|
$ | (4,315 | ) | $ | (4,803 | ) | ||
Other non-segment items of income (expense)
|
||||||||
General and administrative
|
(2,174 | ) | (1,997 | ) | ||||
Advisory fees
|
(2,303 | ) | (2,620 | ) | ||||
Provision on impairment of notes receivable and real estate assets
|
- | (5,178 | ) | |||||
Other income
|
1,602 | 1,214 | ||||||
Loss on sale of investments
|
(102 | ) | - | |||||
Equity in earnings of investees
|
(73 | ) | (61 | ) | ||||
Income tax benefit
|
1,133 | 489 | ||||||
Loss from continuing operations
|
$ | (6,232 | ) | $ | (12,956 | ) |
For Three Months Ended
|
||||||||
March 31, | ||||||||
2012
|
2011
|
|||||||
Segment assets
|
$ | 932,659 | $ | 1,006,244 | ||||
Investments in real estate partnerships
|
6,230 | 7,842 | ||||||
Other assets
|
147,507 | 140,265 | ||||||
Assets held for sale
|
28,663 | 169,442 | ||||||
Total assets
|
$ | 1,115,059 | $ | 1,323,793 |
For the Three Months Ended
|
||||||||
March 31,
|
||||||||
Revenue
|
2012
|
2011
|
||||||
Rental
|
$ | 1,359 | $ | 5,249 | ||||
Property operations
|
1,006 | 3,204 | ||||||
353 | 2,045 | |||||||
Expenses
|
||||||||
Other income
|
2 | - | ||||||
Interest
|
(368 | ) | (1,895 | ) | ||||
General and administrative
|
(95 | ) | (213 | ) | ||||
Depreciation
|
(243 | ) | (1,336 | ) | ||||
Provision on impairment of real estate assets
|
- | (881 | ) | |||||
(704 | ) | (4,325 | ) | |||||
Net loss from discontinued operations before gains on sale of real estate, taxes, and fees
|
(351 | ) | (2,280 | ) | ||||
Gain on sale of discontinued operations
|
3,588 | 3,677 | ||||||
Income from discontinued operations
|
3,237 | 1,397 | ||||||
Income tax expense
|
(1,133 | ) | (489 | ) | ||||
Net income from discontinued operations
|
$ | 2,104 | $ | 908 |
|
•
|
general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);
|
|
•
|
risks associated with the availability and terms of construction and mortgage financing and the use of debt to fund acquisitions and developments;
|
|
•
|
demand for apartments and commercial properties in the Company’s markets and the effect on occupancy and rental rates;
|
|
•
|
the Company’s ability to obtain financing, enter into joint venture arrangements in relation to or self-fund the development or acquisition of properties;
|
|
•
|
risks associated with the timing and amount of property sales and the resulting gains/losses associated with such sales;
|
|
•
|
failure to manage effectively our growth and expansion into new markets or to integrate acquisitions successfully;
|
|
•
|
risks and uncertainties affecting property development and construction (including, without limitation, construction delays, cost overruns, inability to obtain necessary permits and public opposition to such activities);
|
|
•
|
risks associated with downturns in the national and local economies, increases in interest rates, and volatility in the securities markets;
|
|
•
|
costs of compliance with the Americans with Disabilities Act and other similar laws and regulations;
|
|
•
|
potential liability for uninsured losses and environmental contamination;
|
|
•
|
risks associated with our dependence on key personnel whose continued service is not guaranteed; and
|
|
•
|
the other risk factors identified in this Form 10-Q, including those described under the caption “Risk Factors.”
|
Level 1
|
–
|
Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets.
|
Level 2
|
–
|
Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
Level 3
|
–
|
Unobservable inputs that are significant to the fair value measurement.
|
For the Three Months Ended
|
||||||||
March 31,
|
||||||||
Revenue
|
2012
|
2011
|
||||||
Rental
|
$ | 1,359 | $ | 5,249 | ||||
Property operations
|
1,006 | 3,204 | ||||||
353 | 2,045 | |||||||
Expenses
|
||||||||
Other income
|
2 | - | ||||||
Interest
|
(368 | ) | (1,895 | ) | ||||
General and administrative
|
(95 | ) | (213 | ) | ||||
Depreciation
|
(243 | ) | (1,336 | ) | ||||
Provision on impairment of real estate assets
|
- | (881 | ) | |||||
(704 | ) | (4,325 | ) | |||||
Net loss from discontinued operations before gains on sale of real estate, taxes, and fees
|
(351 | ) | (2,280 | ) | ||||
Gain on sale of discontinued operations
|
3,588 | 3,677 | ||||||
Income from discontinued operations
|
3,237 | 1,397 | ||||||
Income tax expense
|
(1,133 | ) | (489 | ) | ||||
Net income from discontinued operations
|
$ | 2,104 | $ | 908 |
|
•
|
fund normal recurring expenses;
|
|
•
|
meet debt service and principal repayment obligations including balloon payments on maturing debt;
|
|
•
|
fund capital expenditures, including tenant improvements and leasing costs;
|
|
•
|
fund development costs not covered under construction loans; and
|
|
•
|
fund possible property acquisitions.
|
|
•
|
property operations;
|
|
•
|
proceeds from land and income-producing property sales;
|
|
•
|
collection of mortgage notes receivable;
|
|
•
|
collection of receivables from affiliated companies;
|
|
•
|
refinancing of existing debt; and
|
|
•
|
additional borrowing, including mortgage notes payable and lines of credit.
|
March 31,
|
||||||||||||
2012
|
2011
|
Variance
|
||||||||||
Net cash provided by (used in) operating activities
|
$ | 361 | $ | (13,892 | ) | $ | 14,253 | |||||
Net cash provided by investing activities
|
$ | 14,964 | $ | 37,751 | $ | (22,787 | ) | |||||
Net cash used in financing activities
|
$ | (27,494 | ) | $ | (28,431 | ) | $ | 937 |
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|
Weighted
|
Effect of 1%
|
|||||||||||
Average
|
Increase In
|
|||||||||||
Balance
|
Interest Rate
|
Base Rates
|
||||||||||
Notes payable:
|
||||||||||||
Variable rate
|
$ | 178,887 | 5.03 | % | $ | 1,789 | ||||||
Total decrease in TCI’s annual net income
|
1,789 | |||||||||||
Per share
|
$ | 0.21 |
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Total Number of
|
Maximum Number of
|
|||||||||||||||
Shares Purchased
|
Shares that May
|
|||||||||||||||
Total Number of
|
Average Price
|
as Part of Publicly
|
Yet be Purchased
|
|||||||||||||
Period
|
Shares Purchased
|
Paid per share
|
Announced Program
|
Under the Program
|
||||||||||||
Balance at December 31, 2011
|
1,230,535 | 406,465 | ||||||||||||||
January 31, 2012
|
- | $ | - | 1,230,535 | 406,465 | |||||||||||
February 29, 2012
|
- | $ | - | 1,230,535 | 406,465 | |||||||||||
March 31, 2012
|
- | $ | - | 1,230,535 | 406,465 | |||||||||||
Total
|
- |
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
Description
|
3.0
|
Articles of Incorporation of Transcontinental Realty Investors, Inc., (incorporated by reference to Exhibit No. 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1991).
|
3.1
|
Certificate of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., (incorporated by reference to the Registrant’s Current Report on Form 8-K, dated June 3, 1996).
|
3.2
|
Certificate of Amendment of Articles of Incorporation of Transcontinental Realty Investors, Inc., dated October 10, 2000 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
|
3.3
|
Articles of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., setting forth the Certificate of Designations, Preferences and Rights of Series A Cumulative Convertible Preferred Stock, dated October 20, 1998 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998).
|
3.4
|
Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designations, References, Limitations, Restriction and Relative Rights of Series B Cumulative Convertible Preferred Stock, dated October 23, 2000 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
|
3.5
|
Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designating, Preferences, Limitations, Restrictions and Relative Rights of Series C Cumulative Convertible Preferred Stock, dated September 28, 2001 (incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
|
3.6
|
Articles of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., Decreasing the Number of Authorized Shares of and Eliminating Series B Preferred Stock dated December 14, 2001 (incorporated by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001).
|
3.7
|
By-Laws of Transcontinental Realty Investors, Inc. (incorporated by reference to Exhibit No. 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1991).
|
3.8
|
Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designations, Preferences, Limitations, Restrictions and Relative Rights of Series D Cumulative Preferred Stock filed August 14, 2006 with the Secretary of State of Nevada (incorporated by reference to Registrant’s Current Report on Form 8-K for event dated November 21, 2006 at Exhibit 3.8 thereof).
|
10.1
|
Advisory Agreement dated as of April 30, 2011, between Transcontinental Realty Investors, Inc., and Pillar Income Asset Management, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K for event occurring May 2, 2011).
|
31.1*
|
Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
|
31.2*
|
Certification by the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
|
32.1*
|
Certification pursuant to 18 U.S.C. 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101 | Interactive data files pursuant to Rule 405 of Regulation S-T. |
*
|
Filed herewith.
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
||
Date: May 15, 2012
|
By:
|
/s/ Daniel J. Moos
|
Daniel J. Moos
|
||
President and Chief Executive Officer
(Principal Executive Officer)
|
||
Date: May 15, 2012
|
By:
|
/s/ Gene S. Bertcher
|
Gene S. Bertcher
|
||
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
Exhibit
Number
|
Description of Exhibits
|
31.1*
|
Certification by the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
|
31.2*
|
Certification by the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended.
|
32.1*
|
Certification pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
*
|
Filed herewith
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Transcontinental Realty Investors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
|
(d)
|
Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 15, 2012
|
/s/ Daniel J. Moos
|
Daniel J. Moos
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Transcontinental Realty Investors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluations; and
|
|
(d)
|
Disclosed in the report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 15, 2012
|
/s/ Gene S. Bertcher
|
Gene S. Bertcher
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
(i)
|
The Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2012, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
|
|
(ii)
|
The information contained in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2012, fairly presents in all material respects, the financial condition and results of operations of the Company, at and for the periods indicated.
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
||
Date: May 15, 2012
|
By:
|
/s/ Daniel J. Moos
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Daniel J. Moos
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President and Chief Executive Officer
(Principal Executive Officer)
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Date: May 15, 2012
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By:
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/s/ Gene S. Bertcher
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Gene S. Bertcher
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Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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REAL ESTATE ACTIVITY
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3 Months Ended |
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Mar. 31, 2012
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REAL ESTATE ACTIVITY | |
REAL ESTATE ACTIVITY | NOTE 2. REAL ESTATE ACTIVITY
The highlights of our significant real estate transactions for the three months ended March 31, 2012 are listed below:
On January 1, 2012, ARL and TCI agreed to rescind the April 1, 2011 sale of 100% of the general and limited partnership interest in Garden Whispering Pines, LP, which owns Whispering Pines apartments, a 320-unit complex located in Topeka, Kansas.
On January 3, 2012, we recognized the March 23, 2011 sale of 82.2 acres of land known as Denton Coonrod land located in Denton County, Texas to Cross County National Associates, LP, a related party under common control, for a sales price of $1.8 million. The existing mortgage of $0.8 million, secured by the property, was paid in full when ownership transferred to the existing lender. We recorded a gain on sale of $0.04 million on the land parcel.
On January 30, 2012, we refinanced the existing mortgage on Parc at Maumelle apartments, a 240-unit complex located in Little Rock, Arkansas, for a new mortgage of $16.8 million. We paid off the existing mortgage of $16.1 million and $0.7 million in closing costs. The note accrues interest at 3.00% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2052.
On February 2, 2012, TCI and its subsidiary, 1340 Poydras, LLC, executed a guarantor settlement and consent agreement with the lender for the Amoco building, Petra CRE CDO 2007-1, Ltd (Petra) to transfer ownership of the Amoco building to a new entity, 1340 Owner, LLC, which is affiliated with the existing lender, Petra. Regis will continue to manage the property while under Petras ownership and TCI will have an option to repurchase the property during the option term which shall end two years following the commencement of the agreement. We have deferred the recognition of the sale in accordance with ASC 360-20 due to our continuing involvement related to the obligations under the note and guaranty agreements and the repurchase option.
On February 7, 2012, we recognized the September 1, 2011 sale of 22.92 acres of land known as Andrew B land, Denton County, Texas to TCI Luna Ventures, LLC, a related party under common control, for a sales price of $1.3 million. We received a credit of $2.1 million to satisfy a portion of the multi-tract collateral debt when ownership transferred to the existing lender. We recorded a gain on sale of $1.2 million on the land parcel.
On February 23, 2012, we sold a 220-unit apartment complex known as Wildflower Villas apartments located in Temple, Texas for a sales price of $19.6 million. The buyer assumed the existing debt of $13.7 million secured by the property. We recorded a gain on sale of $3.6 million on the apartment sale.
On February 29, 2012, we refinanced the existing mortgage on Huntington Ridge apartments, a 198-unit complex located in DeSoto, Texas, for a new mortgage of $15.0 million. We paid off the existing mortgage of $14.6 million and $0.4 million in closing costs. The note accrues interest at 3.03% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2052.
On February 29, 2012, we refinanced the existing mortgage on Laguna Vista apartments, a 206-unit complex located in Dallas, Texas, for a new mortgage of $17.7 million. We paid off the existing mortgage of $17.0 million and $0.3 million in closing costs. The note accrues interest at 3.03% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2052.
On February 29, 2012, we refinanced the existing mortgage on Savoy of Garland apartments, a 144-unit complex located in Garland, Texas, for a new mortgage of $10.3 million. We paid off the existing mortgage of $10.2 million and $0.1 million in closing costs. The note accrues interest at 3.03% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2052.
On March 1, 2012, we sold 100% of our interests in LaDue, LLC to ABC Land & Development, Inc., a related party under common control, for a sales price of $1.9 million. This entity owns 8.01 acres of land known as LaDue land located in Dallas County, Texas. We provided $1.3 million in seller-financing with a five-year note receivable. The note accrues interest at 5% and is payable at maturity on March 1, 2017. The buyer assumed the existing mortgage of $0.6 million, secured by the property. We have deferred the recognition of the sale in accordance with ASC 360-20 due to our continuing involvement, inadequate initial investment and questionable recovery of investment cost.
On March 5, 2012, we recognized the September 1, 2011 sale of 7.39 acres of land known as DeSoto Ranch land located in DeSoto, Texas to TCI Luna Ventures, LLC, a related party under common control, for a sales price of $1.3 million. We received a credit of $1.0 million to satisfy a portion of the multi-tract collateral debt when ownership transferred to the existing lender. We recorded a gain on sale of $0.1 million on the land parcel.
On March 27, 2012, we sold 319.07 acres of land known as Waco Ritchie land located in Waco, Texas for a sales price of $1.9 million. The existing mortgage of $1.5 million, secured by the property, was paid in full. We recorded a loss on sale of $0.8 million on the land parcel.
In December 2010, there were various commercial and land holdings sold to FRE Real Estate, Inc., a related party under common control. During the first three months of 2011, many of these transactions were rescinded as of the original transaction date and were subsequently sold to related parties under the same ownership as FRE Real Estate, Inc. As of March 31, 2012, there is one commercial building, Thermalloy, that remains in FRE Real Estate, Inc. We have deferred the recognition of the sales in accordance with ASC 360-20 due to our continuing involvement, inadequate initial investment and questionable recovery of investment cost.
We continue to invest in the development of apartment projects. During the three months ended March 31, 2012, we have expended $3.1 million on the construction of various apartment complexes and capitalized $0.1 million of interest costs.
The properties that we have sold to a related party under common control and have deferred the recognition of the sale are treated as subject to sales contract on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, we are currently in default on these mortgages primarily due to lack of payment although we are actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis. |
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