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3. NOTES AND INTEREST RECEIVABLE
 6 Months Ended
Jun. 30, 2014
NOTES AND INTEREST RECEIVABLE  
NOTES AND INTEREST RECEIVABLE

A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured. Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. 

 

 Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands):

 

               Maturity   Interest         
Borrower             Date   Rate   Amount   Security
Performing loans:                        
       Miscellaneous non-related party notes     Various   Various    $           3,297   Various secured interests
       Miscellaneous related party notes (1)     Various   Various                 3,441   Various secured interests
       One Realco Corporation (1) (2)     01/17   3.00%                 7,000   Unsecured
       Realty Advisors Management, Inc. (1)     12/16   2.20%               20,387   Unsecured
       S Breeze I-V, LLC         06/14   5.00%                 3,314   6% Class A and 25% Class B Limited Partner Interests
       Woodhaven-Hawthorn, Inc. (1)     10/19   5.50%                    985   Unsecured
       Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)   12/32   12.00%                 2,097   100% Membership Interest in Unified Housing of McKinney, LLC
       Unified Housing Foundation, Inc. (Echo Station) (1)   12/32   12.00%                 1,481   100% Membership Interest in Unified Housing of Temple, LLC
       Unified Housing Foundation, Inc. (Inwood on the Park) (1)   12/32   12.00%                 5,059   100% Membership Interest in Unified Housing Inwood, LLC
       Unified Housing Foundation, Inc. (Kensington Park) (1)   12/32   12.00%                 3,936   100% Membership Interest in Unified Housing Kensington, LLC
       Unified Housing Foundation, Inc. (Lakeshore Villas) (1)   12/32   12.00%                 2,000   Unsecured
       Unified Housing Foundation, Inc. (Lakeshore Villas) (1)   12/32   12.00%                 9,096   Membership interest in Housing for Seniors of Humble, LLC
       Unified Housing Foundation, Inc. (Limestone Canyon) (1)   12/32   12.00%                 3,057   100% Membership Interest in Unified Housing of Austin, LLC
       Unified Housing Foundation, Inc. (Limestone Canyon) (1)   12/32   12.00%                 4,663   100% Membership Interest in Unified Housing of Austin, LLC
       Unified Housing Foundation, Inc. (Limestone Ranch) (1)   12/32   12.00%                 2,250   100% Membership Interest in Unified Housing of Vista Ridge, LLC
       Unified Housing Foundation, Inc. (Limestone Ranch) (1)   12/32   12.00%                 6,000   100% Membership Interest in Unified Housing of Vista Ridge, LLC
       Unified Housing Foundation, Inc. (Parkside Crossing) (1)   12/32   12.00%                 2,272   100% Membership Interest in Unified Housing of Parkside Crossing, LLC
       Unified Housing Foundation, Inc. (Sendero Ridge) (1)   12/32   12.00%                 5,174   100% Membership Interest in Unified Housing of Sendero Ridge, LLC
       Unified Housing Foundation, Inc. (Sendero Ridge) (1)   12/32   12.00%                 4,812   100% Membership Interest in Unified Housing of Sendero Ridge, LLC
       Unified Housing Foundation, Inc. (Timbers at the Park) (1)   12/32   12.00%                 1,323   100% Membership Interest in Unified Housing of Terrell, LLC
       Unified Housing Foundation, Inc. (Tivoli) (1)   12/32   12.00%                 7,966   100% Membership Interest in Unified Housing of Tivoli, LLC
       Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1) 12/32   12.00%                 2,485   100% Membership Interest in Unified Housing of Harvest Hill I, LLC
       Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1) 12/32   12.00%                 2,555   100% Membership Interest in Unified Housing of Harvest Hill, LLC
       Unified Housing Foundation, Inc. (Trails at White Rock) (1)   12/32   12.00%                 3,815   100% Membership Interest in Unified Housing of Harvest Hill III, LLC
       Unified Housing Foundation, Inc. (1)     12/13   5.00%                 6,000   Unsecured
       Unified Housing Foundation, Inc. (1)     12/15   12.00%               17,928   Unsecured
       Unified Housing Foundation, Inc. (1)     12/16   12.00%                 3,657   Unsecured
       Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) 03/19   12.00%                 1,810   Unsecured
       Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1) 03/17   12.00%                 1,156   Unsecured
       Foundation for Better Housing, Inc. (Vista Ridge) (1)   04/19   12.00%                 3,923   Unsecured
       Accrued interest                             11,471    
Total Performing                    $       154,410    
                             
Non-Performing loans:                      
       Leman Development, Ltd (2)       07/11   7.00%                 1,500   Unsecured
       Tracy Suttles (2)         12/11   0.00%                 1,077   Unsecured
       Miscellaneous non-related party notes     Various   Various                    507   Various secured interests
       Accrued interest                                    57    
Total Non-Performing                  $           3,141    
                             
        Allowance for doubtful accounts                       (19,537)    
Total                      $       138,014    
                             
                             
 (1)  Related party notes                      
 (2)  An allowance was taken for estimated losses at full value of note              

 

At June 30, 2014, we had junior mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $131.0 million. We recognized interest income of $7.8 million related to these notes receivables.

 

The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”).  UHF is determined to be a related party to the Company due to our significant investment in the performance of the collateral secured under the notes receivable.  Payments are due from surplus cash flow of operations.  Sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes.  These notes are cross-collateralized but to the extent cash is received from a specific UHF property, it is applied against any outstanding interest for the related-property note.  The allowance on the UHF notes was a purchase allowance that was netted against the notes when acquired.

 

On March 31, 2014, TCI invested $3.2 million of notes and accrued interest receivable from Foundation for Better Housing, Inc. for the acquisition and refinance of Preserve at Prairie Pointe.  The notes accrue interest at 12% and mature at various times.

 

On April 1, 2014, TCI invested $4.0 million of a note and accrued interest receivable from Foundation for Better Housing, Inc. for the acquisition of Vista Ridge.  The note accrues interest at 12% and matures in April 2019.