Investment Properties

3 Months Ended

Mar. 31, 2017

Real Estate [Abstract]

Investment Properties

(3) Investment Properties

As of March 31, 2017, the Partnership owned one parcel of land consisting of approximately 44 acres.

(a) The Partnership has taken the steps necessary to reduce costs and maintain sufficient reserves of cash and cash equivalents to cover all costs for an extended period of time. As of March 31, 2017, there were no farm leases in place. During April 2016, a farm lease was signed for the tillable portion of Parcel 20. The rental income from this lease covered the real estate taxes and insurance expense for 2016. Our general partner has agreed to make a supplemental capital contribution to the Partnership to the extent that real estate taxes and insurance payable with respect to our land during a given calendar year exceeds the revenue earned by us from leasing our land during such year. Since there currently are no farm leases in place, the general partner is anticipating that a supplemental capital contribution will be owed at the end of the calendar year. As of March 31, 2017, estimated real estate tax expense and insurance expense totals $3,594. Any supplemental capital contribution will be repaid only after limited partners have received, over the life of our Partnership, a return of their original capital plus the 15% cumulative return. Our remaining land is not encumbered by debt and is located in an area that we believe is in the path of future development. As such, the Partnership has the ability to hold on to the remaining parcel until such time as a reasonable and acceptable offer is received; however, management formally changed its intent from holding the remaining parcel for an indefinite period of time to attempting to sell the parcel by the end of the year, if possible.

In addition, on a quarterly basis, the Partnership reviews impairment indicators and if necessary, conducts an impairment analysis to ensure that the carrying value of each investment property does not exceed its estimated fair value. If this were to occur, the Partnership would be required to record an impairment loss equal to the excess of the carrying value over the estimated fair value.

In determining the value of an investment property and whether the property is impaired, management considers several indicators which require difficult, complex and/or subjective judgments, such as projected sales prices, capital expenditures, assessment of current economic conditions, and management’s intent to hold on to a property until such time as a reasonable and acceptable offer is received. The aforementioned indicators are considered by management in determining the value of any particular property. The value of any particular property is sensitive to the actual results of any of these uncertain indicators, either individually or taken as a whole. Should the actual results differ from management’s judgment, the valuation could be negatively or positively affected.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on management’s continuous process of analyzing each property. During the first quarter of 2016, management formally changed its intent from holding the remaining parcels for an indefinite period of time to attempting to sell the parcels in the next year, if possible. Management deemed the change in intent as a trigger for impairment. In addition, as a result of the sale of Parcel 8 on April 15, 2016, the Partnership has only one remaining land parcel. Based on offers and the knowledge of the real estate market gathered for the auction of Parcel 20, management determined the value of the parcel was impaired. For the three months ended March 31, 2017 and 2016, the Partnership recorded an impairment of $0 and $2,680,000, respectively on Parcel 20, which reduced the remaining book value to the estimated fair value. Subsequent costs incurred above the estimated fair value for the remaining parcel will be expensed and included in land operating expenses.

(b) Reconciliation of investment properties owned:

	March 31,		December 31,
	2017		2016
Balance at January 1,	$	4,122,424		11,063,438
Additions during period		0		1,289
Provision for loss on investment property held for sale		0		(585,937	)
Impairment loss on land		0		(2,680,000	)
Investment property held for sale		0		(3,676,366	)
Balance at end of period,	$	4,122,424		4,122,424

The value of the investment property owned as of March 31, 2017 was measured utilizing Level 3 inputs, which represents fair value.