NOTE 5: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:


	As of June 30, 2014					As of December 31, 2013
	Book Value			Number of Properties		Book Value			Number of Properties
Multi-family real estate properties (a)	$	957,858			47	$	716,708			37
Office real estate properties		322,477			13		282,371			11
Retail real estate properties		84,088			4		83,653			4
Parcels of land		50,097			10		49,199			10

Subtotal		1,414,520			74		1,131,931			62
Less: Accumulated depreciation and amortization (a)		(145,751	)				(127,745	)

Investments in real estate	$	1,268,769				$	1,004,186

(a)	Includes 19 apartment properties owned by Independence Realty Trust, Inc., with 5,342 units and a book value of $362,323 and accumulated depreciation of $18,804 as of June 30, 2014.

As of June 30, 2014, our investments in real estate of $1,268,769 are financed through $311,576 of mortgages held by third parties and $939,962 of mortgages held by our RAIT I and RAIT II CDO securitizations. 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. 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.

Acquisitions:

During the six-month period ended June 30, 2014, we acquired 11 multi-family properties and two office properties with a combined purchase price of $282,280, for which we assumed first mortgages on some of these properties. Upon acquisition, we recorded the investment in real estate, including any related working capital and intangible assets, at fair value of $287,931 and recorded a gain on assets of $5,651. Of these acquisitions, Independence Realty Trust, Inc., or IRT, acquired nine properties at a fair value of $173,881. We consolidate IRT as it is a VIE and we are the primary beneficiary. See Note 9 for additional disclosures pertaining to VIEs.

The following table summarizes the aggregate estimated fair value of the assets and liabilities associated with the 13 properties acquired during the six-month period ended June 30, 2014, on the respective date of each acquisition, for the real estate accounted for under FASB ASC Topic 805.


Description	Estimated Fair Value
Assets acquired:
Investments in real estate	$	281,989
Cash and cash equivalents		283
Restricted cash		1,565
Other assets		1,667
Deferred financing costs		711
Intangible assets		5,942

Total assets acquired		292,157
Liabilities assumed:
Loans payable on real estate		126,485
Accounts payable and accrued expenses		3,882
Other liabilities		2,209

Total liabilities assumed		132,576
Noncontrolling interests assumed:		3,000

Estimated fair value of net assets acquired	$	156,581

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 and cash	$	149,481
Other considerations		7,100

Total fair value of consideration transferred	$	156,581

During the six-month period ended June 30, 2014, these investments contributed revenue of $12,003 and a net income allocable to common shares of $996. During the six-month period ended June 30, 2014, we incurred $456 of third-party acquisition-related costs, which is included in general and administrative expense in the accompanying consolidated statements of operations.

The table below presents the revenue, net income and earnings per share effect of the acquired properties, as reported in our consolidated financial statements and on a pro forma basis as if the acquisitions occurred on January 1, 2013. 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 Six-Month Period Ended June 30, 2014		For the Six-Month Period Ended June 30, 2013
Total revenue of real estate properties acquired, as reported	$	12,003	$	0
Pro forma revenue of real estate properties acquired		17,722		17,406
Net income (loss) allocable to common shares of real estate properties acquired, as reported		996		0
Pro forma net income (loss) allocable to common shares of real estate properties acquired		2,167		3,511
Earnings (loss) per share attributable to common shareholders of real estate properties acquired
Basic and diluted—as reported		0.01		0.00
Basic and diluted—as pro forma		0.03		0.05

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. During the six-month period ended June 30, 2014, we have not recorded any adjustments for prior period real estate acquisitions.

Dispositions:

During the six-month period ended June 30, 2014, we disposed of one multi-family real estate property for a total sale price of $4,250. We recorded a loss on the sale of this asset of $2,528, of which $321 is included in the accompanying consolidated statements of operations during the six-month period ended June 30, 2014.