NOTE 5: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:


	As of December 31, 2013					As of December 31, 2012
	Book Value			Number of Properties		Book Value			Number of Properties
Multi-family real estate properties	$	716,708			37	$	613,888			34
Office real estate properties		282,371			11		271,847			11
Retail real estate properties		83,653			4		82,081			4
Parcels of land		49,199			10		47,765			10

Subtotal		1,131,931			62		1,015,581			59
Less: Accumulated depreciation and amortization		(127,745	)				(97,392	)

Investments in real estate	$	1,004,186				$	918,189

As of December 31, 2013 and 2012, our investments in real estate were comprised of land of $235,052 and $218,500, respectively, and buildings and improvements of $896,879 and $797,081, respectively.

As of December 31, 2013, our investments in real estate of $1,004,186 are financed through $171,223 of mortgages held by third parties and $864,689 of mortgages held by our RAIT I and RAIT II CDO securitizations. As of December 31, 2012, our investments in real estate of $918,189 are financed through $144,645 of mortgages held by third parties and $830,077 of mortgages held by our RAIT I and RAIT II CDO securitizations. Together, along with commercial real estate loans held by RAIT I and RAIT II, these mortgages serve as collateral for the CDO notes payable issued by the RAIT I and RAIT II CDO securitizations. All intercompany balances and interest charges are eliminated in consolidation.

For our investments in real estate, the leases for our multi-family properties are generally one-year or less and leases for our office and retail properties are operating leases. The following table represents the minimum future rentals under expiring leases for our non-residential properties as of December 31, 2013.


2014	$	4,388
2015		4,991
2016		3,969
2017		5,566
2018		1,657
2019 and thereafter		11,638

Total	$	32,209

Acquisitions:

During the year ended December 31, 2013, we acquired four multi-family properties with a purchase price of $101,650, which consisted of the assumption of three commercial real estate loans and the issuance of limited liability company membership units. These units are redeemable for our common shares in defined circumstances. Upon acquisition, we recorded the investment in real estate, including any related working capital and intangible assets, at a fair value of $103,200 and recorded a gain on asset of $1,550.

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the four properties acquired during the year ended December 31, 2013, on the respective date of each conversion, for the real estate accounted for under FASB ASC Topic 805.


Description	Estimated Fair Value
Assets acquired:
Investments in real estate	$	101,733
Cash and cash equivalents		187
Restricted cash		1,089
Other assets		412
Intangible assets		1,467

Total assets acquired		104,888
Liabilities assumed:
Accounts payable and accrued expenses		991
Other liabilities		308

Total liabilities assumed		1,299

Estimated fair value of net assets acquired	$	103,589

The following table summarizes the consideration transferred to acquire the real estate properties and the amounts of identified assets acquired and liabilities assumed at the respective conversion date:


Description	Estimated Fair Value
Fair value of consideration transferred:
Commercial real estate loans	$	101,733
Other considerations		1,856

Total fair value of consideration transferred	$	103,589

During the year ended December 31, 2013, these investments contributed revenue of $4,323 and a net income allocable to common shares of $249. During the year ended December 31, 2013, we incurred $263 of third-party acquisition-related costs.

Our consolidated unaudited pro forma information, after including the acquisition of real estate properties, is presented below as if the acquisitions occurred on January 1, 2012. These pro forma results are not necessarily indicative of the results which actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods:


Description	For the Year Ended December 31, 2013			For the Year Ended December 31, 2012
Total revenue, as reported	$	246,875		$	200,784
Pro forma revenue		255,992			213,551
Net income (loss) allocable to common shares, as reported		(308,008	)		(182,805	)
Pro forma net income (loss) allocable to common shares		(304,588	)		(178,470	)

We have not yet completed the process of estimating the fair value of assets acquired and liabilities assumed. Accordingly, our preliminary estimates and the allocation of the purchase price to the assets acquired and liabilities assumed may change as we complete the process. In accordance with FASB ASC Topic 805, changes, if any, to the preliminary estimates and allocation will be reported in our financial statements retrospectively.

Subsequent to December 31, 2013, we acquired three multi-family properties and one office real estate property with a purchase price of $113,601, which consisted of the assumption of three real estate loans. We are completing the process of estimating the fair value of the assets acquired.

Dispositions:

During the year ended December 31, 2013, we disposed of one multi-family real estate property for a total purchase price of $3,300. We recorded losses on the sale of this asset of $1,517, which is included in the accompanying consolidated statement of operations. Subsequent to December 31, 2013, we entered into a purchase and sale agreement for the disposition of one multi-family real estate property. As a result, we have recorded an estimated loss on the sale of this asset of $2,207, which is included in the accompanying consolidated statement of operations.