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REAL ESTATE ACTIVITY
 9 Months Ended
Sep. 30, 2016
Real Estate [Abstract]  
REAL ESTATE ACTIVITY

NOTE 2. REAL ESTATE ACTIVITY

 

Below is a summary of the real estate owned as of September 30, 2016 (dollars in thousands):

 

Apartments  $661,003 
Apartments under construction   52,035 
Commercial properties   217,974 
Land held for development   95,223 
Real estate subject to sales contract   49,155 
Total real estate  $1,075,390 
Less accumulated depreciation   (165,681)
Total real estate, net of depreciation  $909,709 

 

The highlights of our significant real estate transactions for the nine months ended September 30, 2016 are discussed below.

 

Purchases

 

For the nine months ended September 30, 2016, we acquired two income-producing apartment communities for a total purchase price of $40.0 million. In addition, we acquired three land parcels for future development for a total purchase price of $8.9 million, adding 31.04 acres to the development portfolio.

 

Sales

 

For the nine months ended September 30, 2016, TCI sold a combined 57.9 acres of land located in Forney, Texas and McKinney, Texas to independent third parties for a total sales price of $8.1 million, resulting in an aggregate $1.9 million gain from the land sales. In addition, TCI sold one apartment community located in Irving, Texas to an independent third party for a total sales price of $8.1 million. We recorded a gain of $5.2 million from this sale. The Company also sold an industrial warehouse consisting of approximately 177,805 square feet. The sale resulted in a loss of approximately $0.2 million.

 

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 Realty Advisors, Inc. (“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 completed 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.

 

As of September 30, 2016, the Company has approximately 91 acres 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.

 

We continue to invest in the development of apartment projects. During the nine months ended September 30, 2016, we have expended $18.7 million related to the construction or predevelopment of various apartment complexes and capitalized $0.7 million of interest costs.