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INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES
 3 Months Ended
Mar. 31, 2013
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

 

 

 

2013

 

 

2012

 

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

 

 

10%

 

 

 

10%

 

 

Our interest in Eton Square in the amount of 10% is accounted for under the equity method because the general partner is a related party and we 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.  Due to the losses accounted for under the equity method, our investment is now at zero.

 

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.   A sale to an independent third party, that met the requirements of ASC 360-20, took place on April 8, 2013, when the existing lender took possession of the property.  IOT’s investment in TCI Eton Square, LP was zero, therefore recorded no gain or loss on the sale of its investment.

 

The market values as of the period ended March 31, 2013 and 2012 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 Three Months Ended March 31,

 

2013

 

 

2012

 

Real estate, net of accumulated depreciation

 

 

9,547

 

 

$

12,859

 

Other assets

 

 

658

 

 

 

631

 

Notes payable

 

 

(9,689

) 

 

 

(9,363

) 

Other liabilities

 

 

(4,005

) 

 

 

(3,860

) 

Shareholders equity/partners capital

 

 

3,489

 

 

 

(267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rents

 

 

289

 

 

 

369

 

Depreciation

 

 

(120

) 

 

 

(117

) 

Operating expenses

 

 

(184

) 

 

 

(201

) 

Interest expense

 

 

(155

) 

 

 

(150

) 

Loss from continuing operations

 

 

(170

) 

 

 

(99

) 

Net (loss)

 

 

(170

) 

 

 

(99

) 

Companys proportionate share of earnings

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

26