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REAL ESTATE | 12 Months Ended
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Dec. 31, 2015
Real Estate [Abstract] |
REAL ESTATE |
NOTE 2. | REAL ESTATE
A summary of our real estate owned as of the end of the year is listed below (dollars in thousands):
|  |  | 2015 |  |  |  | 2014 |
Apartments |  | $ | 622,761 |  |  | $ | 455,602 |
Apartments under construction |  |  | 18,230 |  |  |  | 1,512 |
Commercial properties |  |  | 215,609 |  |  |  | 193,197 |
Land held for development |  |  | 97,790 |  |  |  | 159,903 |
Real estate held for sale |  |  | — |  |  |  | — |
Real estate subject to sales contract |  |  | 49,155 |  |  |  | 21,326 |
Total real estate, at cost, less impairment |  |  | 1,003,545 |  |  |  | 831,540 |
Less accumulated deprecation |  |  | (150,038 | ) |  |  | (131,777 | )
Total real estate, net of depreciation |  | $ | 853,507 |  |  | $ | 699,763 |
Expenditures for repairs and maintenance are charged to operations as incurred. Significant betterments are capitalized. When assets are sold or retired, their costs and related accumulated depreciation are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period. Depreciation is computed on a straight line basis over the estimated useful lives of the assets as follows:
Land improvements | 25 to 40 years
Buildings and improvements | 10 to 40 years
Tenant improvements | Shorter of useful life or terms of related lease
Furniture, fixtures and equipment | 3 to 7 years
Provision for Impairment Losses For the year ended December 31, 2015, the Company provided an impairment of $5.3 million for the golf course and related assets located in the U.S. Virgin Islands. This impairment relates to the decision to sell the development parcels in the U.S. Virgin Islands and the resultant decrease in the estimated fair value of the remaining assets. There was no provision for impairment for the year ended December 31, 2014. In 2013, impairment was recorded as an additional loss in the commercial portfolio of $9.6 million, the land portfolio of $1.6 million and the remaining $7.8 million was related to a provision for losses taken on our notes receivable. A recent appraisal done during the refinance of an office building in Dallas, Texas, resulted in a fair value lower than book basis. The impairment in our land portfolio was due to a potential sale of land at a value lower than the book basis as well as a disposal of another property due to bankruptcy. Fair Value Measurement The Company applies the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures,” to the valuation of real estate assets. The Company is required to assess the fair value of its consolidated real estate assets with indicators of impairment. The value of impaired real estate assets is determined using widely accepted valuation techniques, including discounted cash flow analyses on the expected cash flow of each asset, as well as the income capitalization approach, which considers prevailing market capitalization rates, analyses of recent comparable sales transactions, information from actual sales negotiations and bona fide purchase offers received from third parties. The methods used to measure fair value may produce an amount that may not be indicative of net realizable value or reflective of future values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value measurements used in these evaluations are considered to be Level 2 and 3 valuations within the fair value hierarchy in the accounting rules, as there are significant observable (Level 2) and unobservable inputs (Level 3). Examples of Level 2 inputs the Company utilizes in its fair value calculations are appraisals and bona fide purchase offers from third parties. Examples of Level 3 inputs the Company utilizes in its fair value calculations are discount rates, market capitalization rates, expected lease rental rates, timing of new leases, an estimate of future sales prices and comparable sales prices of similar assets, if available. All of the impairment charges outlined above were recorded in the statements of operations, either in continuing operations or discontinued operations.
|  |  |  |  |  | Fair Value Measurements Using (dollars in thousands): |
December 31, 2015 |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
| Commercial |  |  | $ | 3,000 |  |  | $ | — |  |  | $ | --- |  |  | $ | 3,000 |
A commercial property (golf course) with a carrying value of approximately $8.3 million was written down to its fair value of $3.0 million resulting in an impairment charge of $5.3 million. The method used to determine fair value was an analysis of the discounted cash flow of the asset. There was no provision for impairment for the year ended December 31, 2014
|  |  |  |  |  | Fair Value Measurements Using (dollars in thousands): |
December 31, 2013 |  |  | Fair Value |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
| Land |  |  | $ | 4,899 |  |  | $ | — |  |  | $ | 4,899 |  |  | $ | --- |
| Commercial |  |  | $ | 26,194 |  |  | $ | — |  |  | $ | 26,194 |  |  | $ | — |
Land with a carrying amount of $6.5 million was written down to its fair value of $4.9 million resulting in an impairment charge of $1.6 million in 2013. Level 2 inputs used to determine the fair values above included third party appraisals and taking the debt balance on the collateralized acres plus the book value of the uncollateralized acres. A commercial building with a carrying amount of $35.8 million was written down to its fair value of $26.2 million resulting in an impairment charge of $9.6 million in 2013. The Level 2 input used to determine the fair value above was a third party appraisal. The following is a brief description of the more significant property acquisitions and sales in 2015: Purchases For the year ended December 31, 2015, the Company acquired five income-producing apartment complexes from third parties in the states of Texas (3), Tennessee (1) and Alabama (1), increasing the total number of units by 990, for a combined purchase price of $82.9 million. In addition, the Company acquired six income-producing apartment complexes from related parties in the states of Texas (2) Florida (2), Tennessee (1) and Mississippi (1) increasing the total number of units by 835, for a combined purchase price of $29.3 million. The Company also purchased a commercial office building in Texas, comprised of 92,723 square feet, for $16.8 million. Sales For the year ended December 31, 2015, the Company sold approximately 595 acres of land located in Texas to independent third parties for a total sales price of $107.3 million. We recorded a total gain of $18.9 million from the sales. In addition we recognized $2.7 million in deferred gain from prior years land sales. In November 2015, the Company sold approximately 88 acres of land located in the U.S. Virgin Islands to an unrelated party. The sales represents most of the development land owned by the Company in the U.S. Virgin Islands. Total cash consideration for the sale was $33.9 million. We recorded a gain of $12.0 million related to the transaction. In November 2015, the Company entered into a sales contract with an unrelated party. The contract was for most of the developable land owned by the Company in the Mercer Crossing Development located in Farmers Branch, Texas. In addition, TCI, IOT and RAI also sold land in this transaction. Total consideration for the sale was $75 million. The ultimate allocation of sales proceeds to the parties involved is yet to be determined and will be complete when the final use of the land, certain development commitments are completed and the note is collected. The agreement between TCI and the other parties related to this transaction provides for TCI to hold the subordinated note from the buyer in the amount of $50 million. At the closing, the note payable to related parties of $16.1 million was paid off. Due to an inadequate down payment from the buyer and the level of seller financing involved, the transaction is being accounted for under the deposit method. Under the deposit method, no revenue is recognized and the asset sold remains on the books until the criteria for full revenue recognition is met. In addition, one income-producing apartment complex consisting of 200 units located in Ohio was foreclosed upon. The Company recorded a gain of $0.7 million related to the extinguishment of debt. As of December 31, 2015, the Company has approximately 91acres of land, at various locations that were sold to related parties in multiple transactions. These transactions are treated as “subject to sales contract” on the Consolidated Balance Sheets. Due to the related party nature of the transactions TCI has deferred the recording of the sales in accordance with ASC 360-20.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 6 -Subparagraph a -Article 5 + Details
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