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NOTES AND INTEREST PAYABLE

6 Months Ended

Jun. 30, 2013

NOTES AND INTEREST PAYABLE [Abstract]

NOTE 5. NOTES AND INTEREST PAYABLE

The following table lists the mortgage notes payable as of June 30, 2013 (dollars in thousands):

Lender	Maturity	Principal Balance
BDF TCI Mercer III, LLC*	04/12/13	$	27,710
Propel Financial Services	06/01/20		4
Accrued interest			685
		$	28,399

* This mortgage note represents the allocation, based upon the original funding, of a note with an aggregate outstanding balance of $36.0 million and accrued interest of $0.9 million as of June 30, 2013. The remaining balance of this is held on the books of TCI, the company’s parent. As a joint grantor of the mortgage loan, we have joint and several liability of the obligations and liabilities of the loan in its entirety, which include, but are not limited to, payment of all unpaid and accrued interest and principal for the entire outstanding loan balance. Since April 11, 2010, interest has accrued on the loan and as of April 12, 2011, the borrower is in default under the current loan documents and the lender accelerated the maturity of the indebtedness. On April 28, 2011, a one-year forbearance agreement was entered into between the borrower, the guarantor and the lender in order to temporarily suspend the lender from the exercise of its rights and remedies under the loan documents and foreclose on the property. The forbearance agreement has been subsequently modified and the Fourth Modification to the Forbearance Agreement expired on April 12, 2013.

On June 7, 2013 a wholly-owned subsidiary of the Company entered into a Settlement and Release Agreement and a Loan Purchase Agreement in order to purchase the Mercer/Travelers land mortgage note due to BDF TCI Mercer III, LLC (“BDF”), the existing lender, at a discount. Under the agreement, the Company is required to make monthly deposits of $250,000 through August 6, 2013 or, if an extension option is exercised, September 5, 2013, with a final lump sum payment of $28,663,277 due October 4, 2013. Under these agreements, the Company also agreed to purchase an obligation known as the Lamar land loan, due by a subsidiary of its parent, TCI, from BDF. The Lamar land loan is to be purchased for $1,836,723, requiring a cash payment of $336,723 due September 5, 2013 or, if the extension option is exercised, October 4, 2013, and two promissory notes of $750,000 each. The promissory notes will accrue interest at 5% and are due in full on the maturity dates, which will be six and twelve months from the closing date of September 5, 2013 or, if the extension option is exercised, October 4, 2013.

During this time, the Company is still obligated to make monthly mortgage payments of $150,000 per month according to the Fourth Modification to the Forbearance Agreement.

There is also a property tax loan in the amount of $4,449 that accrues interest at 12.50% and matures on June 1, 2020.