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INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

6 Months Ended

Jun. 30, 2012

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

NOTE 4. INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

Investments in unconsolidated subsidiaries, jointly owned companies and other investees in which we have a 20% to 50% interest or otherwise exercise significant influence are carried at cost, adjusted for the Company’s proportionate share of their undistributed earnings or losses, via the equity method of accounting. Investments accounted for via the equity method consists of the following:

Investee		Percent ownership
		2012				2011
TCI Eton Square, L.P. ("Eton Square")			10.00	%			10.00	%

Our interest in Eton Square in the amount of 10% is accounted for under the equity method because the general partner is an affiliated entity, thus allowing us to exercise significant influence over the operations and financial activities. Accordingly, the investment is carried at cost, adjusted for the companies’ proportionate share of earnings or losses.

On May 18, 2010, we sold our 10.0% investment in TCI Eton Square, LP to TX Highland RS Corp, a related party under common control, for a sales price of $1.37 million. This entity owns a 225,566 square foot office and retail center known as Eton Square located in Tulsa, Oklahoma. A three-year note receivable for the full sales price was given as consideration, with an interest rate of prime plus 2%, payable at maturity on May 18, 2013. IOT has deferred the recognition of the sale in accordance with ASC 360-20 due to our continuing involvement, the inadequate initial investment and questionable recovery of investment cost.

The market values as of the period ended June 30, 2012 and 2011 were not determinable as there were no traded markets, either active or inactive, for this investment.

The following is a summary of the financial position and results of operations from our investees (dollars in thousands):

		For the Six Months Ended June 30,
		2012				2011
Real estate, net of accumulated depreciation		$	12,761			$	13,142
Other assets			660				347
Notes payable			(9,363	)			(9,363	)
Other liabilities			(3,916	)			(3,733	)
Shareholders equity/partners capital		$	(142	)		$	(393	)


Revenue		$	677			$	463
Depreciation			(233	)			(235	)
Operating expenses			(422	)			(420	)
Interest expense			(246	)			(300	)
Loss from continuing operations			(224	)			(492	)
Income from discontinued operations			-				-
Net loss		$	(224	)		$	(492	)

Company's proportionate share of earnings		$	(22	)		$	(49	)

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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