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REAL ESTATE ACTIVITY

6 Months Ended

Jun. 30, 2015

Real Estate [Abstract]

REAL ESTATE ACTIVITY

NOTE 2. REAL ESTATE ACTIVITY

Below is a summary of the real estate owned as of June 30, 2015 (dollars in thousands):

Apartments		$	543,524
Apartments under construction			3,261
Commercial properties			216,941
Land held for development			158,117
Real estate subject to sales contract			21,507
Total real estate		$	943,350
Less accumulated depreciation			(141,436	)
Total real estate, net of depreciation		$	801,914

The highlights of our significant real estate transactions for the six months ended June 30, 2015 are listed below:

Purchases

For the six months ended June 30, 2015, the Company acquired three income-producing apartment complexes from third parties in the states of Texas (1) and Florida (2), increasing the total number of units by 349 for a combined purchase price of $31.5 million. In addition, the Company acquired two income-producing apartment complexes from related parties in the state of Texas (2), increasing the total number of units by 378 for a combined purchase price of $10.6 million. The Company also purchased a commercial office building in Texas, comprised of 92,723 square feet for $16.8 million.

Sales

For the six months ended June 30, 2015, the Company sold approximately 43 acres of land located in Texas to independent third parties for a total sales price of $9.1 million. We recorded a total gain of $4.1 million from the sales.

As of June 30, 2015, there is one apartment complex, one commercial building and 110 acres of land that TCI has sold to a related party and has deferred the recognition of the sale. These 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. TCI has reviewed each asset and taken impairment to the extent it feels the value of the property was less than its current basis. TCI did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and TCI’s questionable recovery of investment cost. TCI determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. The buyers received no compensation for the facilitation of the bankruptcy or debt restructuring process.

We continue to invest in the development of apartment projects. During the six months ended June 30, 2015, we have expended $3.2 million related to the construction or predevelopment of various apartment complexes and capitalized $25,109 of interest costs.