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Investment in Unconsolidated Joint Ventures

6 Months Ended

Jun. 30, 2012

Investment in Unconsolidated Joint Ventures

Investment in Unconsolidated Joint Ventures

Note 4 - Investment in Unconsolidated Joint Ventures

In February 2012, the Company entered into a joint venture with an affiliate of Trammell Crow Company pursuant to which the venture contemplates re-developing a 6.2 acre site located in Plano, Texas into up to two Class A office buildings. The Company contributed this property to the joint venture in exchange for a 90% equity interest therein and Trammell Crow contributed $1,500,000 in exchange for a 10% equity interest therein which resulted in a $319,000 gain to the Company. At June 30, 2012, the Company’s investment in this VIE, which includes the original basis of the property it contributed to the joint venture adjusted for the Company’s share of net income for the six months ended June 30, 2012, was $12,115,000, which represents its maximum exposure to loss.

The Company’s six unconsolidated joint ventures each own and operate one property. At June 30, 2012 and December 31, 2011, the Company’s equity investment in unconsolidated joint ventures totaled $17,334,000 and $5,093,000, respectively. The Company recorded equity in earnings of $453,000 and $135,000 for the six months ended June 30, 2012 and 2011, respectively, and $384,000 and $105,000 for the three months ended June 30, 2012 and 2011, respectively. Equity in earnings for the three and six months ended June 30, 2012 includes the Company’s $233,000 equity share of income pertaining to the net settlement entered into with a former tenant.