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INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES
 12 Months Ended
Dec. 31, 2012
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES  
INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

NOTE 4.        INVESTMENTS 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.

 

 

 

Percent ownership

 

 

 

 

Investee

 

2012

 

 

2011

 

 

2010

 

TCI Eton Square, L.P. ("Eton Square")

 

 

10

%

 

 

10

%

 

 

10

%

 

            Our interest in Eton Square in the amount of 10% is accounted for under the equity method; the investment is carried at cost, and adjusted for the companies’ proportionate share of earnings or losses.  Due to the losses accounted for under the equity method, our investment is now at zero.  Due to the sale being disclosed but not recognized or recorded below, we have not changed our method of recording financial activity for our investment.  Upon the sale of the building to a third party, we will record the disposition of our investment.

 

On May 18, 2010, we sold our 10.0% investment in TCI Eton Square, LP to TX Highland RS Corp, a related party, 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.  The Company did not recognize or record the sale in accordance with ASC 360-20 due to the buyer’s inadequate initial investment and the Company’s questionable recovery of investment cost.  The Company determined that no sale had occurred for financial reporting purposes and therefore the investment remained on the books.

 

The market values as of the year ended December 31, 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):

 

 

 

2012

 

 

2011

 

 

2010

 

Real Estate, net of accumulated depreciation

 

$

12,060

 

 

$

12,976

 

 

$

13,318

 

Other assets

 

 

640

 

 

 

533

 

 

 

576

 

Notes payable

 

 

(9,363

)

 

 

(9,363

)

 

 

(9,363

)

Other liabilities

 

 

(3,972

)

 

 

(3,779

)

 

 

(3,641

)

Shareholders equity/partners capital

 

$

635

 

 

$

(367

)

 

$

(890

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rents

 

$

1,117

 

 

$

1,385

 

 

$

1,893

 

Depreciation

 

 

(877

)

 

 

(462

)

 

 

(504

)

Operating expenses

 

 

(843

)

 

 

(843

)

 

 

(821

)

Interest expense

 

 

(398

)

 

 

(599

)

 

 

(601

)

Loss from continuing operations

 

 

(1,001

)

 

 

(519

)

 

 

(33

)

Income from discontinued operations

 

 

-

 

 

 

-

 

 

 

-

 

Net loss

 

$

(1,001

)

 

$

(519

)

 

$

(33

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Company's proportionate share of earnings*

 

$

(36

)

 

$

(52

)

 

$

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

*Losses are recorded to the extent of the carrying value of the partner's capital contribution.