Investment in Unconsolidated Ventures

3 Months Ended

Mar. 31, 2012

Investment in Unconsolidated Ventures [Abstract]

Investment in Unconsolidated Ventures

Note 7—Investment in Unconsolidated Ventures

At first quarter-end 2012, we had ownership interests generally ranging from 25 to 50 percent in 11 ventures that we account for using the equity method. We have no real estate ventures that are accounted for using the cost method.

In first quarter 2012, we acquired from CL Realty and Temco their interest in 17 residential and mixed-use projects for $47,000,000, principally representing $31,891,000 in real estate and $14,236,000 in investment in unconsolidated ventures. Please read Note 3 for additional information. Also in first quarter 2012, we sold our 25 percent interest in Palisades West LLC, which owns two office buildings and an accompanying parking garage in Austin, to Dimensional Fund Advisors, LP for $32,095,000, resulting in a gain on sale of $11,675,000.

Summary information regarding our ventures at first quarter-end 2012 follows:

•

CL Realty’s remaining assets consist of one commercial development site located on the Texas gulf coast and about 900 net mineral acres leased in the Fort Worth Basin with about 23 wells currently producing from the Barnett Shale natural gas formation.

•

Temco’s remaining assets consist of about 5,700 acres of undeveloped land and a golf course and country club property, both located in Paulding County, Georgia.

•

Other ventures include three investments in unconsolidated ventures acquired from CL Realty and our net share of the equity in these ventures is $14,660,000 at first quarter-end 2012. These investments represent residential and mixed-use projects located in Houston and San Antonio.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:


		First Quarter-End 2012																				Year-End 2011
		CL Realty				Temco				Palisades West				Other Ventures				Total				CL Realty				Temco				Palisades West				Other Ventures				Total
		(In thousands)
Real estate		$	7,546			$	12,967			$	—			$	97,404			$	117,917			$	50,050			$	18,741			$	119,017			$	71,842			$	259,650
Total assets			8,193				13,408				—				113,662				135,263				51,096				18,922				124,588				75,060				269,666
Borrowings ^(a)			—				2,750				—				73,968				76,718				1,056				2,787				—				70,975				74,818
Total liabilities			209				2,974				—				91,343				94,526				2,488				3,026				42,953	^(b)			85,704				134,171
Equity			7,984				10,434				—				22,319				40,737				48,608				15,896				81,635				(10,644	)			135,495
Our share of their equity ^{(c )}			3,992				5,217				—				26,977				36,186				24,304				7,948				20,412				12,495				65,159
Unrecognized deferred gain ^(d)			—				—				—				(926	)			(926	)			—				—				—				(936	)			(936	)

Investment in real estate ventures		$	3,992			$	5,217			$	—			$	26,051			$	35,260			$	24,304			$	7,948			$	20,412			$	11,559			$	64,223

Combined summarized income statement information for our ventures accounted for using the equity method follows:


		First Quarter
		2012				2011
		(In thousands)
Revenues:
CL Realty		$	1,667			$	1,869
Temco			440				58
Palisades West			—				4,030
Other ventures			4,678				1,549

Total		$	6,785			$	7,506

Earnings (Loss):
CL Realty		$	552			$	656
Temco			(58	)			(204	)
Palisades West			—				1,456
Other ventures			541				(870	)

Total		$	1,035			$	1,038


Our equity in their earnings (loss):
CL Realty		$	276			$	328
Temco			(29	)			(102	)
Palisades West			—				364
Other ventures ^{(c )}			467				(8	)
Amortization of deferred gain			10				—

Total		$	724			$	582

^(a)	Total includes current maturities of $73,146,000 at first quarter-end 2012, of which $44,062,000 is non-recourse to us, and $71,816,000 at year-end 2011, of which $43,144,000 is non-recourse to us.

^(b)

Principally included deferred income from leasehold improvements funded by tenants in excess of leasehold improvement allowances. These amounts were recognized as rental income over the lease term and were offset by depreciation expense related to these tenant improvements. There was no effect on venture net income.

^(c)	Our share of the equity in other ventures reflects our ownership interests generally ranging from 25 to 50 percent, excluding venture losses that exceed our investment where we are not obligated to fund those losses.

^(d)	Represents deferred gains on real estate contributed by us to ventures. We are recognizing income as real estate is sold to third parties. The deferred gains are reflected as a reduction to our investment in unconsolidated ventures.

In first quarter 2012, we invested $117,000 in these ventures and received $266,000 in distributions; in first quarter 2011, we invested $673,000 in these ventures and received $3,044,000 in distributions. Distributions include both return of investments and distributions of earnings.

At first quarter-end 2012, other ventures include three partnerships we participate in that have total assets of $48,967,000 and total liabilities of $79,335,000, which includes $63,463,000 of borrowings classified as current maturities. These partnerships are managed by third parties who intend to extend or refinance these borrowings; however, there is no assurance that this can be done. Although these borrowings may be guaranteed by third parties, we may under certain circumstances elect or be required to provide additional equity to these partnerships. We do not believe that the ultimate resolution of these matters will have a significant effect on our earnings or financial position. Our investment in these partnerships is $1,884,000 at first quarter-end 2012. These three partnerships are variable interest entities. Please read Note 16 for additional information.

We have provided performance bonds and letters of credit on behalf of certain ventures totaling $310,000 at first quarter-end 2012. Generally these performance bonds and letters of credit would be drawn on due to lack of performance by us or the ventures, such as failure to timely deliver streets and utilities in accordance with local codes and ordinances.

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details