Real Estate Activity

9 Months Ended

Sep. 30, 2024

Below is a summary of our real estate as of September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
Land	$	104,156	$	104,156
Building and improvements	374,892		372,399
Tenant improvements	16,503		16,286
Construction in progress	108,112		76,110
Total cost	603,663		568,951
Less accumulated depreciation	(76,101)		(67,365)
Total real estate	$	527,562	$	501,586

We incurred depreciation expense of $2,966 and $3,313 for the three months ended September 30, 2024 and 2023, respectively, and $8,970 and $9,615 for the nine months ended September 30, 2024 and 2023, respectively.

Construction Activities

Construction in progress includes the cost of development of Windmill Farms and the costs associated with our multifamily development projects.

On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida ("Alera") that is expected to be completed in 2025 for a total cost of approximately $55,330. The cost of construction will be funded in part by a $33,000 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,637 fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $31,878 in development costs, including $1,005 in development fees.

On November 6, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in McKinney, Texas ("Merano") that is expected to be completed in 2025 for a total cost of approximately $51,910. The cost of construction will be funded in part by a $25,407 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,551 fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $15,588 in development costs, including $809 in development fees.

On December 15, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in Temple, Texas ("Bandera Ridge") that is expected to be completed in 2025 for a total cost of approximately $49,603. The cost of construction will be funded in part by a $23,500 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,607 fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $11,087 in development costs, including $336 in development fees.

Loss on Real Estate Transactions

We had been engaged in litigation with David Clapper and entities related to Mr. Clapper (collectively, the “Clapper") since 1999. The matter originally involved a transaction in 1998 in which we were to acquire eight multifamily properties from the Clapper. Through the years, several rulings, both for and against us, were issued. In a 2011 ruling, Clapper was awarded a judgment for approximately $148,000. This award was later reduced and later appealed by Clapper. In 2021, the verdict was reversed by the U. S. Court of Appeals for the Fifth Circuit and remanded to the trial court for further proceedings, which resulted in a contrary decision of no liability. On March 8, 2024, decision was appealed by Clapper, and the U. S. Court of Appeals for the Fifth Circuit remanded the case back to the lower court for a new trial. On October 31, 2024, we paid $23,400 to Clapper to resolve all claims. We accrued the settlement as a loss on real estate transactions during the three and nine months ended September 30, 2024.