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NOTES PAYABLE | 9 Months Ended
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Sep. 30, 2013
NOTES PAYABLE |
NOTES PAYABLE | NOTE 5. NOTES PAYABLE Below is a summary of our notes and interest payable as of September 30, 2013 (dollars in thousands):
|  | Notes Payable |  |  | Accrued Interest |  |  | Total Debt |
Apartments |  | $ | 501,769 |  |  | $ | 1,579 |  |  | $ | 503,348 |
Commercial |  |  | 113,852 |  |  |  | 259 |  |  |  | 114,111 |
Land held for development |  |  | 114,838 |  |  |  | 2,236 |  |  |  | 117,074 |
Real estate held for sale |  |  | 2,457 |  |  |  | 9 |  |  |  | 2,466 |
Real estate subject to sales contract |  |  | 26,616 |  |  |  | 1,452 |  |  |  | 28,068 |
Other |  |  | 15,213 |  |  |  | 1,248 |  |  |  | 16,461 |
Total |  | $ | 774,745 |  |  | $ | 6,783 |  |  | $ | 781,528 |
On January 24, 2013, TCI refinanced the existing mortgage on Breakwater Bay apartments, a 176-unit complex located in Beaumont, Texas, for a new mortgage of $9.8 million. TCI paid off the existing mortgage of $9.1 million and $0.7 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. On January 25, 2013, TCI refinanced the existing mortgage on Northside on Travis apartments, a 200-unit complex located in Sherman, Texas, for a new mortgage of $13.9 million. TCI paid off the existing mortgage of $13.5 million and $1.3 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. On January 28, 2013, TCI refinanced the existing mortgage on Capitol Hill apartments, a 156-unit complex located in Little Rock, Arkansas, for a new mortgage of $9.4 million. TCI paid off the existing mortgage of $8.8 million and $0.6 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on February 1, 2053. On February 12, 2013, the construction loan in the amount of $17.0 million that was taken out on May 13, 2010 to fund the development of Toulon apartments, a 240-unit complex located in Gautier, Mississippi, closed into permanent financing. The note accrues interest at 5.37% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on December 1, 2051. On February 25, 2013, TCI refinanced the existing mortgage on Mansions of Mansfield apartments, a 208-unit complex located in Mansfield, Texas, for a new mortgage of $16.3 million. TCI paid off the existing mortgage of $15.8 million and $1.4 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2053. On February 25, 2013, TCI refinanced the existing mortgage on Preserve at Pecan Creek apartments, a 192-unit complex located in Denton, Texas, for a new mortgage of $15.1 million. TCI paid off the existing mortgage of $14.6 million and $1.2 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on March 1, 2053. On March 25, 2013, TCI refinanced the existing mortgage on Parc at Clarksville apartments, a 168-unit complex, located in Clarksville, Tennessee, for a new mortgage of $13.4 million. TCI paid off the existing mortgage of $13.0 million and $0.7 million in closing costs and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based upon a 40-year amortization schedule, maturing on April 1, 2053. On May 6, 2013, TCI signed a $5.0 million promissory note to Petra CRE CDO relating to the Amoco building settlement agreement. The promissory note is collateralized with ARL Series K preferred stock acquired by TCI. On June 7, 2013, a wholly-owned subsidiary of IOT entered into a Settlement and Release Agreement and a Loan Purchase Agreement in order to purchase the Mercer/Travelers land mortgage note due to BDF TCI Mercer III, LLC (“BDF”), the existing lender, at a discount. Under the agreement, IOT is required to make monthly deposits of $250,000 through August 6, 2013 or, if an extension option is exercised, September 5, 2013, with a final lump sum payment of $28,663,277 due October 4, 2013. Under these agreements, IOT also agreed to purchase an obligation known as the Lamar land loan, due by TCI, from BDF. The Lamar land loan is to be purchased for $1,836,723, requiring a cash payment of $336,723 due September 5, 2013 or, if the extension option is exercised, October 4, 2013, and two promissory notes of $750,000 each. The promissory notes will accrue interest at 5.0% and are due in full on the maturity dates, which will be six and twelve months from the closing date of September 5, 2013 or, if the extension option is exercised, October 4, 2013. During this time, IOT is still obligated to make monthly mortgage interest payments of $150,000 per month according to the Fourth Modification to the Forbearance Agreement. On October 5, 2013, the Loan Purchase Agreement was modified. IOT was required to pay an extension fee of $300,000 and the close was extended to November 5, 2013. IOT has the option to pay a second extension fee of $400,000 and extend the close to December 5, 2013. On June 26, 2013,TCI refinanced the existing mortgage on Dorado Ranch apartments, a 224-unit complex located in Dallas, Texas, for a new mortgage of $16.6 million. TCI paid off the existing mortgage of $16.2 million and $1.4 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on July 1, 2053. On June 26, 2013,TCI refinanced the existing mortgage on Legends of El Paso apartments, a 240-unit complex located in El Paso, Texas, for a new mortgage of $16.0 million. TCI paid off the existing mortgage of $15.2 million and $1.2 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on July 1, 2053. On June 26, 2013,TCI refinanced the existing mortgage on Vistas of Pinnacle Park apartments, a 332-unit complex located in Dallas, Texas, for a new mortgage of $19.0 million. TCI paid off the existing mortgage of $18.6 million and $2 million in closing cost and escrows. The note accrues interest at 2.50% and payments of interest and principal are due monthly based on a 40-year amortization schedule, maturing on June 26, 2053. On July 26, 2013, ARL and various parties entered into a settlement agreement with Far East National Bank (“FENB”) related to a deficiency claim on three hotels in Fresno, California that were foreclosed upon by FENB in July, 2011. In the settlement agreement, ARL is required to pay FENB $3.7 million to resolve and settle in full and without exception the dispute filed against them. The settlement agreement calls for thirty-seven equal monthly payments of $100,000. The settlement amount is secured by an accommodation pledge of shares of Series A cumulative convertible preferred stock in ARL with a liquidation value of $10.0 million, owned by Realty Advisors, Inc., the owner of more than a majority of the common stock of ARL. ARL has also agreed to indemnify Realty Advisors, Inc. for any loss it may incur as a result of the accommodation pledge of the preferred stock. On August 30, 2013, TCI obtained a loan of $1.9 million, secured by 4.02 acres of land known as Denham Springs, located in Denham Springs, Louisiana, 2.90 acres of land known as Sugar Mill, located in Baton Rouge, Louisiana, and 23.24 acres of land known as Cooks Lane, located in Fort Worth, Texas. The existing loan on Denham Springs land for $0.1 million was paid with the proceeds from the loan. In conjunction with the development of various apartment projects and other developments, we drew down $0.3 million in construction loans during the nine months ended September 30, 2013. This was related to the permanent closing of the construction loan for Toulon apartments. There are various land mortgages, secured by the property, that are in the process of a modification or extension to the original note due to expiration of the loan. We are in constant contact with these lenders, working together in order to modify the terms of these loans and we anticipate a timely resolution that is similar to the existing agreement or subsequent modification. The properties that we have sold to a related party 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, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairmentto the extent we feel the value of the property was less than our current basis.

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