NOTES AND INTEREST PAYABLE

12 Months Ended

Dec. 31, 2015

NOTES AND INTEREST PAYABLE

NOTES AND INTEREST PAYABLE

NOTE 5.          NOTES AND INTEREST PAYABLE

On December 30, 2013, Realty Advisors, Inc. (“RAI”), a related party, obtained a $20 million mortgage to a lender on the Company’s behalf, secured by land owned by the Company and 100.05 acres of land owned by its parent TCI. The Company and TCI executed a promissory note to RAI for the same terms as the lender’s loan with a maturity of December 30, 2016, and a variable interest rate of prime plus 1.5% with an interest rate floor of 6%. In November 2015 the Company entered into a sales contract with an unrelated party.  The contract was for all of the developable land owned by the Company.  In addition, TCI, ARL and RAI also sold land in this transaction.  Total consideration for the sale was $75 million. The agreement between the parties and TCI related to this transaction provides for TCI to hold the subordinated note from the buyer in the amount of $50 million.  At the closing, the Note Payable to related parties of $9.6 million was paid off.  Due to an inadequate down payment from the buyer and the level of seller financing involved, the transaction is being accounted for under the deposit method.  Under the deposit method, the no revenue is recognized and the asset sold remains on the books until the criteria for full revenue recognition are met.