NOTE 4: INVESTMENTS IN REAL ESTATE

The table below summarizes our investments in real estate:

	Book Value
	As of March 31, 2016			As of December 31, 2015
Multi-family real estate properties (1)	$	1,820,062		$	1,842,704
Office real estate properties		387,537			395,224
Industrial real estate properties		94,938			94,938
Retail real estate properties		134,484			134,331
Parcels of land		50,613			50,448
Subtotal		2,487,634			2,517,645
Less: Accumulated depreciation and amortization (1)		(209,421	)		(198,326	)
Investments in real estate (2)	$	2,278,213		$	2,319,319

(1)

As of March 31, 2016, includes properties owned by Independence Realty Trust, Inc., or IRT, with a book value of $1,357,338 and accumulated depreciation of $44,422. As of December 31, 2015, includes properties owned by IRT, with a book value of $1,372,015 and accumulated depreciation of $39,638.

(2)

As of March 31, 2016, four of our multifamily real estate properties, two of IRT’s multifamily real estate properties and one parcel of land were considered held-for-sale. The carrying amount of our multifamily properties was $36,301. The carrying amount of the IRT properties was $39,347. The carrying amount of the parcel of land was $1,470.

As of March 31, 2016 and December 31, 2015, our investments in real estate were comprised of land of $408,755 and $415,707, respectively, and buildings and improvements of $2,078,878 and $2,101,938, respectively.

As of March 31, 2016, our investments in real estate of $2,278,213 were financed through $761,767 of mortgages or other debt held by third parties and $916,763 of mortgages held by our RAIT I and RAIT II CDO securitizations. As of December 31, 2015, our investments in real estate of $2,319,319 were financed through $815,745 of mortgages held by third parties and $889,786 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 first quarter of 2016, IRT received additional information regarding estimates IRT had made for certain accrued expenses related to the TSRE merger that was completed on September 17, 2015. This information led to an increase in fair value of the net assets IRT acquired of $91, which IRT recognized during the three months ended March 31, 2016.

During the first quarter of 2016, we received additional information regarding estimates we had made for certain assets including cash related to tenant security deposits related to our October 2015 acquisition of 10 industrial properties through our conversion of a mezzanine loan to real estate owned property. This information led to an increase in fair value of the net assets acquired of $437, which we recognized within interest income, as the converted loan was on non-accrual and the fair value of the net assets acquired exceeded the amount of the converted loan plus previously accrued interest.

During the first quarter of 2016, we received additional information regarding estimates we had made as part of the purchase price allocation related to our December 2015 acquisition of Erieview Tower & Parking. This information, which related to an allocation of the estimated costs required to stabilize this property and an adjacent property to which we have rights to collateral secured by a first mortgage, led to an increase in fair value of the net assets acquired of $1,499. This was offset by a decrease of $1,499 to the previously discussed collateral which is reported within investment in mortgages, loans and preferred equity interests on our consolidated balance sheets. The $1,499 increase in the net assets acquired was related to an increase in investments in real estate of $3,351, a decrease in intangible assets of $57 and an increase in intangible liabilities of $1,795. The cumulative catch up effect of the allocation (based on the different useful lives) was an increase to net income of $11.

Dispositions:

During the three months ended March 31, 2016, we disposed of one multifamily real estate property and one office property. IRT also disposed of one multifamily real estate property. The below table summarizes these dispositions and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:

					For the Three Months Ended March 31, 2016
Property Name	Property Type	Date of Sale	Sale Price		Gain (loss) on sale			Net income (loss) allocable to common shares
Cumberland Glen	IRT Multifamily	2/18/2016	$	18,000	$	2,453		$	52
Mineral/Lincoln	Office	3/25/2016		7,949		(374	)		5
Ventura	Multifamily	3/30/2016		8,750		120			37
Total			$	34,699	$	2,199		$	94

In April 2016, IRT sold one multifamily real estate property for a sale price of $23,000. IRT will recognize a gain on the sale of this asset.

In April 2016, we sold one parcel of land for a sale price of $1,500. We will recognize a gain on the sale of this asset.

In May 2016, IRT sold one multifamily real estate property for a sale price of $47,000. IRT will recognize a gain on the sale of this asset.

Impairment:

During the three months ended March 31, 2016, we recognized an impairment of a real estate asset of $3,922 as it was more likely than not we would dispose of the asset before the end of its previously estimated useful life and a portion of our recorded investment in that asset was determined to not be recoverable.