10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013
OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-16785

American Spectrum Realty, Inc.
(Exact name of Registrant as specified in its charter)

State of Maryland	52-2258674
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)
2401 Fountain View, Suite 750
Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)

(713) 706-6200

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 Regulation 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files. Yes þ No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o     Accelerated filer o     Non-accelerated filer o     Smaller reporting company þ

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes     þ No

As of July 31, 2013, 3,557,353 shares of Common Stock ($.01 par value) were outstanding.

TABLE OF CONTENTS

		Page No.
PART I	FINANCIAL INFORMATION		3
Item 1	Financial Statements		3
	Consolidated Balance Sheets at June 30, 2013 (unaudited) and December 31, 2012		3
	Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012
	(unaudited)		4
	Consolidated Statement of Equity for the six months ended June 30, 2013 (unaudited)		5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012
	(unaudited)		6
	Notes to Consolidated Financial Statements		8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
Item 4	Controls and Procedures		29
PART II	OTHER INFORMATION		30
Item 1	Legal Proceedings		30
Item 5	Exhibits		30

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AMERICAN SPECTRUM REALTY, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)

	June 30,			December 31
	2013			2012
ASSETS	(unaudited)
Real estate held for investment (includes $285,820 and $327,676 from consolidated
Variable Interest Entities ("VIE's"), respectively)	$	390,825		$	438,675
Accumulated depreciation (includes $38,377 and $37,127 from consolidated VIE's, respectively)		(73,028	)		(71,775	)
Real estate held for investment, net (includes $247,443 and $290,549 from consolidated VIE's, respectively)		317,797			366,900
Cash and cash equivalents		230			492
Restricted cash (includes $3,519 and $3,724 from consolidated VIE's, respectively)		3,519			3,724
Tenant and other receivables (includes $698 and $784 from consolidated VIE's, respectively),
net of allowance for doubtful accounts of $559 and $673 (includes $350 and $473 from consolidated VIE's, respectively		1,904			1,281
Deferred rents receivable (includes $2,506 and $2,204 from consolidated VIE's, respectively)		3,624			3,269
Purchased intangibles subject to amortization, net of accumulated amortization of $4,706 and $3,114, respectively		4,353			5,946
Deferred tax assets		13,201			11,308
Goodwill		6,687			6,687
Investment in unconsolidated real estate assets from related parties		389			332
Notes receivable from Evergreen		1,000			1,000
Interest receivable from Evergreen		272			272
Accounts receivable from Evergreen		414			414
Prepaid and other assets, net (includes $7,152 and $8,600 from consolidated VIE's, respectively)		13,573			15,753
Total Assets	$	366,963		$	417,378
LIABILITIES AND EQUITY
Liabilities:
Notes payable (includes $189,071 and $221,899 from consolidated VIE's, respectively)	$	279,846		$	312,662
Accounts payable (includes $140 and $398 from consolidated VIE's, respectively)		7,436			7,458
Accrued and other liabilities (includes $5,348 and $6,759 from consolidated VIE's, respectively		11,678			15,241
Total Liabilities		298,960			335,361
Commitments and Contingencies (Note 13):
American Spectrum Realty, Inc, stockholders' (deficit) equity:
Preferred stock par value $.01 per share, 25,000,000 authorized shares, 55,172 issued at June 30, 2013 and
December 31, 2012, respectively		1			1
Common stock par value $.01 per share, 100,000,000 authorized shares, 4,028,765 and 4,039,191 issued at
June 30, 2013 and December 31, 2012, respectively; 3,557,353 and 3,567,779 outstanding at June 30, 2013
and December 31, 2012, respectively		34			34
Additional paid-in capital		61,085			61,158
Accumulated deficit		(58,377	)		(55,096	)
Treasury stock, at cost, 471,412 shares at June 30, 2013 and December 31, 2012, respectively		(3,095	)		(3,095	)
Total American Spectrum Realty, Inc. stockholders' (deficit) equity		(352	)		3,002
Non-controlling interest		68,355			79,015
Total Equity		68,003			82,017
Total Liabilities and Equity	$	366,963		$	417,378

The accompanying notes are an integral part of these consolidated financial statements

3

AMERICAN SPECTRUM REALTY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share amounts)
(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
REVENUES:
Rental revenue	$	11,219		$	12,378		$	22,738		$	25,334
Third party management and leasing revenue		867			728			1,877			1,622
Interest income		3			40			4			86
Total revenues		12,089			13,146			24,619			27,042
EXPENSES:
Property operating expense		4,393			3,162			8,095			7,359
Corporate general and administrative		2,000			2,439			4,134			5,674
Depreciation and amortization		4,258			4,774			9,053			9,936
Interest expense		4,092			4,910			8,103			9,995
Impairment expense		269			-			1,385			481
Total expenses		15,012			15,285			30,770			33,445
OTHER INCOME (LOSS):
Other income (loss):		173			-			173			(151	)
Total other income (loss):		173			-			173			(151	)
Loss from continuing operation before deferred income tax benefit		(2,750	)		(2,139	)		(5,978	)		(6,554	)
Deferred income tax benefit		679			985			1,724			1,500
Loss from continuing operations		(2,071	)		(1,154	)		(4,254	)		(5,054	)
Discontinued operations:
Loss from operations		(277	)		(600	)		(413	)		(1,870	)
(Loss) gain on disposition of discontinued operations		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
(Loss) income from discontinued operations		(237	)		1,469			(326	)		3,931
Net (loss) income, including non-controlling interests		(2,308	)		315			(4,580	)		(1,123	)
Plus: Net loss (income) attributable to non-controlling interests		914			(308	)		1,299			1,542
Net (loss) income attributable to American Spectrum Realty, Inc.		(1,394	)		7			(3,281	)		419
Less: Preferred stock dividend		(60	)		(60	)		(120	)		(120	)
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	$	(1,454	)	$	(53	)	$	(3,401	)	$	299
Basic and diluted per share data:
Loss from continuing operations attributable to American Spectrum Realty, Inc.
common stockholders	$	(0.33	)	$	(0.38	)	$	(0.84	)	$	(0.79	)
(Loss) income from discontinued operations attributable to American Spectrum Realty, Inc.		(0.06	)		0.38			(0.08	)		0.91
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	$	(0.39	)	$	-		$	(0.92	)	$	0.12
Basic and diluted weighted average shares used		3,564,304			3,564,783			3,566,041			3,571,283
Amounts attributable to American Spectrum Realty, Inc. common stockholders:
Loss from continuing operations	$	(1,241	)	$	(1,393	)	$	(3,107	)	$	(2,958	)
(Loss) income from discontinuing operations	$	(213	)	$	1,340		$	(294	)	$	3,257
Net (loss) income	$	(1,454	)	$	(53	)	$	(3,401	)	$	299

The accompanying notes are an integral part of these consolidated financial statements

4

AMERICAN SPECTRUM REALTY, INC.
CONSOLIDATED STATEMENT OF EQUITY
(Dollars in thousands, except share amounts)

	Number	Number									Additional
	Preferred	Common		Non-controlling			Preferred		Common		Paid-In			Accumulated			Treasury			Total
	Shares	Shares		Interests			Stock		Stock		in Capital			Deficit			Stock			Equity
Balance January 1, 2013 (audited)	55,172	4,039,191		$	79,015		$	1	$	34	$	61,158		$	(55,096	)	$	(3,095	)	$	82,017
Preferred stock dividends	-	-			-			-		-		(120	)		-			-			(120	)
Stock-based compensation	-	-			-			-		-		30			-			-			30
Restricted stock forefeitures	-	(11,068	)		-			-		-		-			-			-			-
Conversion of OP units to common stock	-	642			(17	)		-		-		17			-			-			-
Deconsolidation of VIE's	-	-			(6,105	)		-		-		-			-			-			(6,105	)
Noncontrolling interests share of loss	-	-			(1,299	)		-		-		-			-			-			(1,299	)
Distributions	-	-			(3,250	)		-		-		-			-			-			(3,250	)
Contributions	-	-			11			-		-		-			-			-			11
Net loss	-	-			-			-		-		-			(3,281	)		-			(3,281	)
Balance June 30, 2013 (unaudited)	55,172	4,028,765		$	68,355		$	1	$	34	$	61,085		$	(58,377	)	$	(3,095	)	$	68,003

The accompanying notes are an integral part of these consolidated financial statements

5

AMERICAN SPECTRUM REALTY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

	Six Months Ended
	June 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss, including non-controlling interests	$	(4,580	)	$	(1,123	)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		9,212			11,751
Impairment expense		1,385			481
Income tax (benefit) expense		(1,894	)		241
Loss (gain) on disposition of real estate assets		83			(7,542	)
Stock-based compensation		30			158
Deferred rental income		(411	)		(418	)
Changes in operating assets and liabilities:
Increase in tenant and other receivables		(796	)		(559	)
(Increase) decrease in prepaid and other assets		94			630
Increase (decrease) in accounts payable		89			(1,141	)
(Decrease) increase in accrued and other liabilities		(1,694	)		1,874
Change in restricted cash		(326	)		1,773
Net cash provided by operating activities:		1,192			6,125
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds received from sales of real estate assets		-			18,787
Capital improvements to real estate assets		(914	)		(2,519	)
Net cash (used in) provided by investing activities:		(914	)		16,268
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings		20,992			6,825
Repayment of borrowings-property sales		-			(15,760	)
Repayment of borrowings-scheduled payments		(3,019	)		(2,520	)
Repayment of borrowings-other		(15,274	)		(5,543	)
Contributions from non-controlling interests		11			400
Distributions to non-controlling interests		(3,250	)		(4,753	)
Net cash used in financing activities:		(540	)		(21,351	)
(Decrease) increase in cash and cash equivalents		(262	)		1,042
Cash and cash equivalents, beginning of period		492			473
Cash and cash equivalents, end of period	$	230		$	1,515

The accompanying notes are an integral part of these consolidated financial statements

6

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

	Six Months Ended
	June 30,
	2013	2012
Conversion of operating partnership units to common stock	17	1,711
Conversion of accounts payable to common stock	-	203
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	8,892	5,567
Cash paid for taxes	70	-

The accompanying notes are an integral part of these consolidated financial statements

7

AMERICAN SPECTRUM REALTY, INC.
Notes to Consolidated Financial Statements
(unaudited)

NOTE 1 - DESCRIPTION OF BUSINESS

We provide comprehensive integrated real estate solutions for our own property portfolio (properties in which we own a controlling interest or in properties where we are the primary beneficiary of a variable interest entity, (“a VIE”)) and the portfolios of our third party clients. We own and/or manage commercial, industrial, retail, self-storage and multi-family, student housing income properties, and offer our third party clients comprehensive integrated real estate solutions, including management and transaction services based on our market expertise. We conduct our business in the continental United States. American Spectrum Realty, Inc. was incorporated in Maryland in August of 2000.

Our business is conducted through an Operating Partnership in which we are the sole general partner and a limited partner with a total equity interest of 93% at June 30, 2013. As the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership. In general, the Operating Partnership units that are not held by us (approximately 7% of the outstanding units) are exchangeable for either common stock on a one-to-one basis or cash equal to the value of such stock at our sole discretion.

At June 30, 2013, we consolidated 40 properties (including 19 properties primarily owned by us and 21 properties owned by VIE’s in which we were deemed the primary beneficiary), which consisted of 12 office properties, 12 self-storage facilities, 8 commercial/industrial properties, 5 multi-family properties, 2 retail properties and a parcel of land. The properties are located in 16 states. At June 30, 2013, the Company has determined to consider 800 & 888 Sam Houston Parkway and Gray Falls Center & 12000 Westheimer as four separate properties rather than two as reported in previous filings.

The operating segments in which management assesses performance and allocates resources are rental operations and management and leasing services. Our segments reflect management’s resource allocation and performance assessment in making decisions regarding our Company.

We deliver integrated property, facility, asset, business and engineering management services to a host of third party clients as well as to our own properties. We offer customized programs that focus on tenant retention through cost-efficient operations.

We are committed to expanding the scope of products and services offered. We believe this expansion will help us meet our own portfolio property needs as well as the needs of our third party clients. During 2013, we intend to expand the number of third party properties that we manage.

We refer to ourselves throughout this report as “the Company” or “ASR”.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for preparation of interim financial statements. The information furnished in this report reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the Company’s results of operations, financial position and cash flows, and such adjustments consist of items of a normal recurring nature. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year or for any other future period. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 included in the Company’s Annual Report on Form 10-K as filed with the SEC on April 1, 2013.

8

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we re-evaluate our judgments and estimates. We base our estimates and judgments on our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these policies.

The financial statements include the accounts of the Operating Partnership, all subsidiaries of the Company, and VIE’s where the Company is the primary beneficiary. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

The Company accounts for unconsolidated real estate investments using the equity method of accounting. Accordingly, the Company’s share of earnings of these real estate investments is included in the consolidated results of operations.

Certain prior year balances have been reclassified to conform to the current year presentation.

Summary of Critical and Significant Accounting Policies and Estimates

Reference is made to “Summary of Critical and Significant Accounting Policies and Estimates” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on April 1, 2013.

Segments

We have identified two reportable business segments: (i) rental operations and (ii) management and leasing services. We evaluate the performance of our operating segments based on operating income (loss). All inter-segment sales pricing is based on current market conditions. Unallocated corporate amounts include general expenses associated with managing our two reportable operating segments.

Recent Accounting Pronouncements

In July 2012, the FASB issued ASU 2012-02, “Intangibles, Goodwill, and Other (Topic 350): Testing Indefinite-Lived Intangibles for Impairment”. This ASU adds new accounting guidance that simplifies how an entity tests indefinite-lived intangible assets other than goodwill for impairment. It permits an entity to first assess qualitative factors to determine whether further testing for impairment of indefinite-lived intangible assets other than goodwill is required. This accounting guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this accounting guidance did not have a material effect on our financial condition or results of operations.

NOTE 3 - DISCONTINUED OPERATIONS

In June 2013, the lender for our 11500 Northwest Freeway property foreclosed on the asset. We had elected to discontinue servicing the unpaid balance of the debt, which totaled $3.9 million, due to the balance exceeding the market value of the property. The property securing the debt was held by a consolidated wholly-owned subsidiary that had not guaranteed the debt. The transaction generated a loss of $0.1 million. No proceeds were received as a result of the transaction. In July 2013, we sold 2620-2630 Fountain View. See Note 16 – Subsequent Events.

9

The consolidated statements of operations of discontinued operations for the three and six months ended June 30, 2013 and 2012 are summarized below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Rental Revenue	$	254		$	1,430		$	682		$	4,032
Less Expenses (1)		(531	)		(2,030	)		(1,095	)		(5,902	)
Loss from discontinued operations before net (loss) gain
on dispositions and income tax benefit (expense)		(277	)		(600	)		(413	)		(1,870	)
Net (loss) gain on dispositions of real estate assets		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
(Loss) income from discontinued operations	$	(237	)	$	1,469		$	(326	)	$	3,931

(1) Includes interest expense of approximately $0.2 million and $0.6 million for the three months ended June 30, 2013 and 2012, respectively, and $0.4 million and $2.0 million, for the six months ended June 30, 2013 and 2012, respectively. Mortgage debt related to the properties included in discontinued operations were individually secured, and as such, interest expense was based on the property’s debt.

Net loss from discontinued operations for the three months ended June 30, 2013 includes the net loss from the disposition of 11500 Northwest Freeway, its operating results thru the date of disposition and the operating results of 2620-2630 Fountain View. Income from discontinued operations for the three months ended June 30, 2012 includes the net gain on the dispositions of Bristol Bay and Pacific Spectrum, and the operating results of properties disposed of in 2013 and 2012.

Net loss from discontinued operations for the six months ended June 30, 2013 includes the net loss from the disposition of 11500 Northwest Freeway, its operating results thru the date of disposition and the operating results of 2620-2630 Fountain View. Income from discontinued operations for the six months ended June 30, 2012 includes the net gain from the dispositions of Park Ten Place I and II, Sierra Southwest Pointe, Foxborough Business Center Park, 6420 Atrium, Bristol Bay, and Pacific Spectrum, and the operating the results of properties disposed of in 2013 and 2012.

NOTE 4 - ASSET IMPAIRMENTS

Purchased Intangibles Subject to Amortization

During the six months ended June 30, 2013 and 2012, we had our contractual relationships terminated or modified by the entities that owned some of the third party properties we manage. Based on this triggering event we evaluated the management contracts associated with some of our purchased intangibles for impairment and determined that impairment had occurred. We recorded impairment charges of $1.4 million and $0.5 million, for the six months ended June 30, 2013 and 2012, respectively, which reduced the fair value of the impaired contracts to zero. (See Note 6 – Variable Interest Entities for additional information).

NOTE 5 - ASSETS HELD FOR SALE

Below is a listing of the consolidated properties we have listed for sale. We can make no guarantees as to our ability to sell any of our consolidated properties. We further cannot assure you that we will achieve a sales price that allows us to receive cash to fund our operations. 1501 Mockingbird, a property listed for sale at March 31, 2013, was foreclosed on in July 2013. See Note 16 - Subsequent Events.

		ASR
	Property	ownership	Carrying Values of		Carrying Value of
Property Name	Type	Percentage	Properties		Debt
			(in thousands)
Fountain View Office Tower (1)	Office	51%	$	11,500	$	11,465
2620 & 2630 Fountain View (2)	Office	51%		7,040		5,323
2640 & 2650 Fountain View	Office	100%		13,609		12,672
Windrose	Retail	100%		3,116		3,442
8100 Washington	Office	100%		1,802		2,052
			$	37,067	$	34,954

1)	Property fell out of sale contract with prospective buyer in second quarter of 2013.
2)	Property was sold in July 2013. See Note 16 – Subsequent Events

10

NOTE 6 - VARIABLE INTEREST ENTITIES

We have identified multiple Variable Interest Entities where we are the primary beneficiary for accounting purposes. As a result, these VIE entities were consolidated in the consolidated financial statements, after eliminating intercompany transactions and presenting the interests that are not owned by us as non-controlling interests in the condensed consolidated balance sheets.

The entities consolidated as of June 30, 2013 include 9 self-storage properties, 3 student housing properties, 7 commercial properties and 2 multifamily properties. The entities are generally financed through cash flows from property operations.

During the first quarter of 2013 we deconsolidated the VIE’s which owned College Park (a student housing property) and Fishers Indiana (a commercial property) after determining that we were no longer the primary beneficiary. We no longer manage or have a continuing involvement with these two properties.

The impact of the deconsolidation of VIE’s on our year to date Consolidated Financial Statements was a decrease in total assets of $38.9 million, a decrease in total liabilities of $32.8 million, and decrease in non-controlling interest of $6.1 million. No net income was attributable to non-controlling interests from the deconsolidated VIE’s for the three and six months ended June 30, 2013. The deconsolidation of the VIE’s did not result in a gain or loss in the Consolidated Statement of Operations, as the carrying amount of the non-controlling interest in the former subsidiaries at the deconsolidation dates were the same as the carrying amount of the former subsidiary’s assets minus liabilities at the date of the deconsolidation.

We own an insignificant interest in most of the VIE’s, and therefore, substantially all related operating results are included in the net income (loss) attributable to non-controlling interests.

The carrying amounts associated with the VIE’s, after eliminating the effect of intercompany transactions, were as follows (in thousands):

	June 30,		December 31,
	2013		2012
Assets
Restricted cash	$	3,519	$	3,724
Receivables		3,204		2,988
Fixed Assets, net		247,443		290,549
Other Assets		7,152		8,600
Total Assets	$	261,318	$	305,861
Liabilities
Accounts payable		140		398
Notes payable		189,071		221,899
Other liabilities		5,348		6,759
Total liabilities	$	194,559	$	229,056
Variable interest entity net carrying amount	$	66,759	$	76,805

At June 30, 2013, the liabilities in the above table are solely the obligations of the VIE’s and are not guaranteed by the Company. In addition, the Company does not have the ability to leverage the assets of the above identified VIE’s for the purpose of providing ourselves cash. The notes payable are solely secured by the property of the respective VIE’s.

During the six months ended June 30, 2013, we did not provide short term advances to any properties that have been consolidated or deconsolidated. An immaterial balance is still owed to us as of June 30, 2013 relating to prior advances. We do not believe we have significant exposure to losses related to the VIE’s.

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NOTE 7 - RELATED PARTY TRANSACTIONS

We pay a guarantee fee to William J. Carden and the estate of John N. Galardi (“the Guarantors”), in consideration for their guarantees of certain obligations of the Company. Mr. Carden is president, a principal shareholder and a director of the Company. Mr. Galardi, who died in April 2013, was a principal shareholder of the Company. The Guarantors are paid an annual guarantee fee equal to between .25% and .75% (depending on the nature of the guarantee) of the outstanding balance as of December 31 of the guaranteed obligations (“Guarantee Fee”). Guarantee fees for the six months ended June 30, 2013 totaled approximately $0.04 million, all of which was paid to Mr. Carden. The following property notes are being guaranteed: 800/888 Sam Houston Parkway, 2620/2630 Fountain View, 2640/2650 Fountain View, Windrose and Northwest Spectrum Plaza. There are also three corporate notes being guaranteed. The guaranteed notes total $16.1 million at June 30, 2013.

In January 2013, William J. Carden advanced $0.1 million to the Company.

NOTE 8 – SEGMENTS

The operating segments in which management assesses performance and allocates resources are rental operations and management and leasing services. Our segments reflect management’s resource allocation and performance assessment in making decisions regarding our Company.

The following table sets forth our segment information for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Rental Operations:
Revenues from external customers	$	11,219		$	12,378		$	22,738		$	25,334
Intersegment revenues		114			144			228			240
Net loss		(1,174	)		167			(1,748	)		(747	)
Total segment assets		339,028			423,134			339,028			423,134
Management Services:
Revenues from unaffiliated external customers	$	867		$	728		$	1,877		$	1,622
Intersegment revenues		411			546			845			1,175
Net loss		(388	)		(262	)		(1,610	)		(1,500	)
Total segment assets		14,302			17,071			14,302			17,071
Reconciliations:
Total segment revenues	$	12,611		$	13,796		$	25,688		$	28,371
Elimination of intersegment revenues		(525	)		(690	)		(1,073	)		(1,415	)
Interest income		3			40			4			86
Total consolidated revenues	$	12,089		$	13,146		$	24,619		$	27,042
Segment net loss	$	(1,562	)	$	(95	)	$	(3,358	)	$	(2,247	)
Unallocated expenses		(1,361	)		(2,044	)		(2,793	)		(4,156	)
Other income (expense)		173			-			173			(151	)
Deferred income tax benefit		679			985			1,724			1,500
(Loss) income from discontinued operations		(237	)		1,469			(326	)		3,931
Net loss (income) attributable to non-controlling interests		914			(308	)		1,299			1,542
Net (loss) income attributable to ASR	$	(1,394	)	$	7		$	(3,281	)	$	419
Total segment assets	$	353,330		$	440,205		$	353,330		$	440,205
Unallocated corporate assets		13,633			12,349			13,633			12,349
Total assets	$	366,963		$	452,554		$	366,963		$	452,554

12

NOTE 9 - NOTES PAYABLE

We had the following notes payable outstanding, as of June 30, 2013 and December 31, 2012, secured by the following properties (dollars in thousands):

		June 30, 2013					December 31, 2012
Property (unless otherwise noted)	Maturity Date	Principal			Interest		Principal			Interest
		Balance			Rate		Balance			Rate
Owned Properties - Fixed Rate:
Atrium 6430 (2)	05/11/2012			2,062		7.45%			2,050		7.45%
Corporate – Unsecured (2) (3)	05/31/2012			1,000		9.50%			1,000		9.50%
2640 - 2650 Fountain View (2) (3)	08/29/2012			726		10.00%			726		10.00%
Corporate - Secured by Northwest Spectrum Plaza (4)	03/28/2013			-		5.50%			1,145		5.50%
Corporate - Secured	03/31/2014			1,500		8.00%			1,500		8.00%
Corporate - Secured (5)	03/31/2014			1,750		12.00%			-		-
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			3,861		5.93%
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			279		5.93%
Morenci Professional Park (1)	07/01/2014			1,578		7.25%			1,578		7.25%
FMC Technology	09/01/2014			8,242		5.32%			8,309		5.32%
8100 Washington	02/22/2015			2,052		5.59%			2,005		5.59%
Corporate – Secured by Management Contracts (2) (3)	06/05/2015			379		5.50%			463		5.50%
2620 - 2630 Fountain View (3)	06/30/2015			5,323		7.00%			5,341		7.00%
1501 Mockingbird Lane	07/01/2015			3,089		5.28%			3,089		5.28%
5450 Northwest Central	09/01/2015			2,459		5.38%			2,499		5.38%
Ocala Self Storage	10/03/2015			1,412		4.25%			1,412		4.25%
Tampa Self Storage	10/03/2015			1,483		4.25%			1,504		4.25%
800 & 888 Sam Houston Parkway (3)	12/29/2015			4,234		6.25%			4,289		6.25%
Fountain View Office Tower	03/01/2016			11,465		5.82%			11,540		5.82%
Gray Falls and 12000 Westheimer	01/01/2017			7,021		5.70%			7,077		5.70%
2640 - 2650 Fountain View	04/29/2018			11,946		6.50%			12,010		6.50%
Corporate – Secured by Management Contracts	12/31/2019			9,280		5.00%			9,380		5.00%
Sabo Road Self Storage	07/01/2022			1,996		5.55%			2,015		5.55%
Corporate – Unsecured	Various			2,644		Various			1,514		Various
Corporate - Secured	Various			1,077		Various			1,163		Various
	Subtotal		$	82,718				$	85,749
Owned Properties - Variable Rate
Corporate – Unsecured (3)	12/12/2013			125		6.00%			175		6.00%
Northwest Spectrum Plaza (3) (6)	03/29/2018			4,490		5.00%			2,381		2.66%
Windrose Plaza (3) (7)	02/27/2023			3,442		5.50%			2,458		2.66%
	Subtotal		$	8,057				$	5,014
Subtotal ASR Principally Owned Properties				90,775					90,763

13

Consolidated VIE Properties
Fishers Indiana Distribution Center (8)	10/01/2012		-	5.42	%		17,058	5.42	%
University Springs San Marcos	12/01/2015		9,281	5.55	%		9,359	5.55	%
University Fountains Lubbock	01/01/2016		20,657	5.57	%		20,828	5.57	%
Dixon & 51st Logistics Center	01/01/2016		17,109	5.69	%		17,258	5.69	%
Campus Court Student Housing	05/11/2016		4,601	5.78	%		4,617	5.78	%
Houston South Mason (11)	06/25/2016		2,816	5.25	%		2,817	5.25	%
Grissom Road Self Storage	06/01/2017		2,295	7.00	%		2,308	7.00	%
Loop 1604 Self Storage	09/11/2017		4,222	6.70	%		4,249	6.70	%
College Park Student Apartments (8)	11/06/2017		-	6.35	%		14,283	6.35	%
Ohio II Residences at Newark & Sheffield	01/01/2018		9,277	6.74	%		9,334	6.74	%
Muirwood Village	02/01/2018		7,660	6.58	%		7,708	6.58	%
Aldine Westfield Self Storage	10/31/2018		1,017	4.76	%		1,031	4.76	%
Aldine	08/14/2019		1,156	6.07	%		1,171	6.07	%
Attic Space Self Storage - Blanco Rd.	04/01/2021		1,300	6.63	%		1,300	6.63	%
Attic Space Self Storage - Laredo Rd.	04/01/2021		1,694	6.63	%		1,721	6.63	%
Ft. Worth River Oaks Self Storage	07/01/2021		2,098	6.00	%		2,118	6.00	%
Ft. Worth Northwest Self Storage	04/01/2022		2,106	5.82	%		2,125	5.82	%
San Antonio III - AAA Stowaway / FOE	11/01/2022		9,545	5.50	%		9,635	5.50	%
Commerce Distribution Center (9)	05/07/2023		9,834	4.68	%		9,402	6.12	%
Strongsville Corporate Center	11/11/2034		13,428	5.50	%		13,882	5.50	%
Ohio Commerce Center	06/11/2035		18,245	5.64	%		18,412	5.64	%
Springs Commerce Center I	05/11/2036		16,388	5.75	%		16,548	5.75	%
Springs Office	06/11/2036		14,164	5.75	%		14,301	5.75	%
Spring Commerce Center II	07/11/2036		19,916	6.00	%		20,100	6.00	%
Other Unsecured Notes	Various		262	6.00	%		334	6.00	%
	Subtotal Consolidated VIE Properties	$	189,071			$	221,899
Grand Total		$	279,846			$	312,662

(1)	Property is in receivership.
(2)	We are currently negotiating extension terms with lender.
(3)	Loan or certain indemnification obligations are guaranteed by us and in some cases by Mr. Carden and/or the estate of Mr. Galardi.
(4)	Loan was paid in March 2013.
(5)	Represents new loan obtained in March 2013.
(6)	Loan was refinanced in March 2013.
(7)	Loan was refinanced in February 2013.
(8)	The VIE which owned the property was deconsolidated during the first quarter of 2013.
(9)	Loan was refinanced in May 2013. The new loan, in the amount of $9.9 million is for a ten-year term.
(10)	Lender foreclosed on the property in June 2013.
(11)	Lender extended maturity for an additional three year term in June 2013.

We are in default on the notes listed below due to non-payment of scheduled debt service. The balances disclosed on the table below exclude additional fees that may be the result of non-payment.

14

		Balance
	ASR Ownership	June 30, 2013
Property Secured by	Percentage	(in thousands)
Morenci Professional Park	100%	$	1,578
1501 Mockingbird	100%		3,089
6430 Richmond	100%		2,062
2640/2650 Fountain View	100%		726
Corporate - Unsecured	100%		1,000
TOTAL		$	8,455

As of June 30, 2013, we were in default on our debt secured by 1501 Mockingbird due to past due debt service. In July 2013, the lender foreclosed on the asset. See Note 16 – Subsequent Events.

We have elected not to make payment on the debt secured by Morenci Professional Park to operating deficiency of the property and the unpaid balances of the mortgage exceeding the market value of the property. The lender holding the debt on this property has placed this asset into receivership and has initiated foreclosure proceedings.

Two additional loans: one secured by 6430 Richmond and one by 2640/2650 Fountain View are matured. We are currently negotiating extensions with the lenders on these loans.

All of the properties securing the debt in default are held by consolidated wholly owned subsidiaries. These mortgages are not guaranteed by us. All of the notes in default have payment acceleration clauses and payment in full, including additional fees and interest, could be demanded by the lenders holding these notes.

We also are in default on a $1.0 million corporate note, which matured in May 2012. The loan is guaranteed by the estate of John N. Galardi. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

Unamortized financing costs at June 30, 2013 and December 31, 2012 were $1.4 million and $0.8 million, respectively. Most of our mortgage debt is not cross-collateralized. We have four mortgage loans that are cross-collateralized with a second property.

NOTE 10 - NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS

The following table summarizes the activity for the OP Units:

	OP Units
	(in thousands)
Balance, January 1, 2013	3,819
Issuances	-
Redemptions	(13	)
Balance, June 30, 2013	3,806
Ownership of Operating Partnership Units
ASR	3,557
All others	249
	3,806

15

The following represents the effects of changes in our equity related to non-controlling interests:

	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
Net (loss) income attributable to the Company	$	(3,281	)	$	419
Increase in the Company's paid-in-capital on exchange of OP Units for shares
of common stock		17			1,711
Increase in the Company's paid-in-capital on redemption of OP Units for cash		-			8,000
Change from net (loss) income attributable to the Company related to non-
controlling interest transactions	$	(3,264	)	$	10,130

NOTE 11 - NET (LOSS) INCOME PER SHARE

Net (loss) income per share is calculated based on the weighted average number of common shares outstanding. Stock options outstanding, OP Units and preferred shares have not been included in the net loss per share calculation since their effect on the losses would be antidilutive. Net (loss) income per share for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands, except for shares and per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Loss from continuing operations	$	(2,071	)	$	(1,154	)	$	(4,254	)	$	(5,054	)
Net loss (income) attributable to non-controlling interests from
continuing operations		890			(179	)		1,267			2,216
Loss from continuing operations attributable to American
Spectrum Realty Inc. common stockholders	$	(1,181	)	$	(1,333	)	$	(2,987	)	$	(2,838	)
Discontinued operations:
Loss from discontinued operations		(277	)		(600	)		(413	)		(1,870	)
(Loss) gain on disposition of discontinued operations		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
Net loss (income) attributable to non-controlling interests
from discontinued operations		24			(129	)		32			(674	)
(Loss) income from discontinued operations		(213	)		1,340			(294	)		3,257
Preferred stock dividend		(60	)		(60	)		(120	)		(120	)
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(1,454	)	$	(53	)	$	(3,401	)	$	299
Basic per share data:
Loss from continuing operations attributable to American
Spectrum Realty, Inc. common stockholders	$	(0.33	)	$	(0.38	)	$	(0.84	)	$	(0.79	)
(Loss) income from discontinued operations attributable to
American Spectrum Realty, Inc. common stockholders		(0.06	)		0.38			(0.08	)		0.91
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(0.39	)	$	-		$	(0.92	)	$	0.12
Basic weighted average shares used		3,564,304			3,564,783			3,566,041			3,571,283

16

The following weighted average preferred shares, stock options and OP units outstanding that may be redeemed for common stock on a one-for-one basis were excluded from the computation of diluted net (loss) income per share as they had an anti-dilutive effect:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
	(unaudited)		(unaudited)
Preferred shares	55,172	55,172	55,172	55,172
Stock options	-	17,500	-	17,500
OP Units	249,978	519,130	250,333	785,796
Total	305,150	591,802	305,505	858,468

NOTE 12 - STOCK-BASED COMPENSATION

Share-based compensation expense is measured at grant date, based on the fair value of the instrument, and is recognized as expense over the requisite service period.

The following table sets forth the total share-based compensation expense included in our Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013			2012
	(in thousands)				(in thousands)
General and administrative	$	7	$	27	$	30	$	158
Total	$	7	$	27	$	30	$	158

As of June 30, 2013 approximately $0.1 million total unrecognized share-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award over the weighted average period of 2.8 years.

Valuation Assumptions

The fair value of our restricted stock awards (RSA) is estimated on the date of grant based on the closing price of our stock on the grant date. Share-based compensation expense related to RSAs is recognized over the requisite service period.

Equity Incentive Program and Restricted Stock Awards

We grant RSA’s to employees and directors under the Omnibus Stock Incentive Plan (“the Plan”). New shares are issued for RSA’s released. RSA’s give the recipient the right to vote all shares, to receive and retain all cash dividends payable to holders of shares of record on or after the date of issuance and to exercise all other rights, powers and privileges of a holder of our shares, with the exception that the recipient may not transfer the shares during the restriction period that lapses over various periods ranging from one to five years.

We have reserved 360,000 shares under the Plan. As of June 30, 2013, we had issued 121,712 shares under the Plan.

17

The following table summarizes the combined activity under the equity incentive plan for the indicated periods:

			Weighted average
	Number of		Grant-date fair value
	RSAs		per Share
Balances at December 31, 2012	22,070		$	13.54
Granted	-		$	-
RSA Releases	(1,334	)	$	14.32
Forfeited/Expired	(11,068	)	$	16.42
Balances at June 30, 2013	9,668		$	10.14

The RSA’s had no intrinsic value as of June 30, 2013. The aggregate intrinsic value of the restricted stock awards outstanding at June 30, 2013 represents the total pretax intrinsic value, based on our closing stock price of $2.41 per share as of June 30, 2013, which would have been received by the grant holders if all restricted stock awards were vested as of June 30, 2013.

There was no incentive or nonqualified stock options outstanding at June 30, 2013 or December 31, 2012.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

On March 2, 2011, we filed an action against Evergreen Realty Group, LLC and certain of its affiliates ("Evergreen") relating to its acquisition of assets from Evergreen in January 2010. The purchase price of the assets was $18.0 million, subject to adjustment as provided in the purchase agreement, and was paid in the form of (a) the assumption of $500,000 of payables, (b) the issuance of a $9.5 million promissory note and (c) the issuance of 800,000 operating partnership units which would be redeemable by Evergreen after June 30, 2011 for a number of shares of our common stock (or, at our option, the cash equivalent) equal to the quotient obtained by dividing $8.0 million by the greater of our share price or net asset value as of December 31, 2010. (Our share price as of December 31, 2010 was $17.52; our net asset value as of December 31, 2010 has not been definitively determined.) In our action, we are alleging various offsets and adjustments to the purchase price, as well as defaults by Evergreen, and are seeking damages and a declaration that the principal amount of the promissory note should be reduced to zero, that the operating partnership units should be cancelled and that Evergreen should refund to us payments of at least $578,000 which have been made on the promissory note. On March 7, 2011, New West Realty, Inc. (“New West”), an affiliate of Evergreen, filed a complaint for damages in Orange County Superior Court against ASR and other related entities. New West alleges in the complaint that ASR had failed to pay amounts then due under a $9.5 million promissory note held by New West. We have subsequently paid all amounts currently due and payable under the note and therefore dispute the claim and deny that any payment is now due under the note, and we have filed a separate lawsuit against New West and others seeking damages in excess of the amount of New West’s claim.

In January 2013, we reached a tentative agreement with Evergreen to settle the $9.5 million promissory note. That agreement provides that we will pay $4.6 million in a combination of cash, a new note, and nonconvertible preferred stock as settlement of the note. The new debt will mature in 2017. However, that agreement has not been formalized. Negotiations are continuing to reach a settlement, but there can be no assurance that a resolution will be obtained. The lawsuit is set for trial in April 2014.

During the second quarter of 2012, we repurchased all of the operating partnership units (“OP Units”) issued to Evergreen Realty Group, LLC and certain of its affiliates (“Evergreen”) in 2010. We had issued the OP Units to Evergreen in connection with the acquisition of assets from Evergreen on January 17, 2010. The OP Units issued to Evergreen were repurchased by the Company for one dollar as provided in the purchase and sell agreement.

We are in default on a $1.0 million unsecured note, which matured in May 2012. The loan is guaranteed by Mr. Galardi. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

Some of our notes payable require that we maintain minimum cash and tangible net worth. We believe we are in compliance with these requirements, except as to our loans in default.

Certain other claims and lawsuits have arisen against us in our normal course of business including lawsuits by creditors with respect to past due accounts payable. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flows or results of operations.

18

NOTE 14 - PREFERRED STOCK

We are authorized to issue up to 25.0 million shares of one or more classes or series of preferred stock with a par value of $.01 per share.

On December 30, 2008, we filed Articles Supplementary to our Articles of Incorporation, which authorized the issuance of 68,965 of Series A Preferred Stock (“Preferred Stock”).

On December 31, 2008, we issued 55,172 shares of the Preferred Stock to Mr. Carden, Mr. Galardi and Timothy R. Brown. Each share of Preferred Stock was sold for $29.00 and is entitled to annual dividends, payable quarterly, at an annual rate of 15%, and to a preference on liquidation equal to the following: (a) if on or prior to December 31, 2011, the sum of $29.00 and any accrued and unpaid dividends or (b) if after December 31, 2011, the greater of (x) the sum of $29.00 and any accrued and unpaid dividends or (y) the amount which would be paid on account of each share of common stock upon liquidation if each share of Preferred Stock had hypothetically been converted into one share of common stock. The Preferred Stock is not required to be redeemed by us and the holders will have no right to require redemption. The Preferred Stock is redeemable at our option at any time after December 31, 2011. The shares were issued in a private transaction exempt from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended.

As of June 30, 2013 there were accrued and unpaid dividends on the outstanding preferred shares of $0.5 million, or $.13 per common share.

NOTE 15 – INCOME TAXES

For the six months ended June 30, 2013 we recorded an income tax benefit of $1.9 million. The income tax benefit was recorded solely on the net loss attributable to the Company. We utilized an effective tax rate of 36.6% on our net loss.

NOTE 16 – SUBSEQUENT EVENTS

In July 2013, 2620-2630 Fountain View, an office property located in Houston, Texas, was sold for approximately $8.9 million. The sale generated net proceeds of approximately $3.0 million to the property’s partnership, in which we own a 51% interest. The net proceeds are currently held in escrow due to a distribution dispute with the minority owner of the property. We anticipate we will reach an agreement on the distribution of the net proceeds with the minority owner in the third quarter of 2013.

In July 2013, the lender for 1501 Mockingbird foreclosed on the asset. We do not anticipate recording a significant gain or loss on the transaction in the third quarter of 2013.

We had forecasted cash proceeds of $1.8 million related to the above transactions as part of our plan to meet our cash needs for on-going operations. In addition, a contract in place to sale a building held for sale that would have generated $2.0 million of cash flow in a subsequent period has terminated. We are forecasting the funds held in escrow of approximately $1.5 million related to 2620-2630 Fountain View to be released in the third quarter. We have also received offers in the form of letters of intent for two other held for sale properties that would generate $2.0 million to $4.0 million of cash flow expected to occur in third or fourth quarter of 2013. There can be no assurance that these sales and/or the sales of our other held for sale properties will occur.

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This financial review presents our operating results for the three and six months ended June 30, 2013 and 2012, as well as our financialcondition at June 30, 2013 and December 31, 2012. The following discussionshould be read in conjunction with the unaudited condensed consolidatedfinancial statements and related notes included in this report and our auditedconsolidated financial statements and related notes in our Annual Report onForm 10-K for the fiscal year ended December 31, 2012, filed with theSecurities and Exchange Commission (“SEC”) on April 1, 2013.

Except for the historical information contained herein, this discussioncontains forward-looking statements that involve risks and uncertainties, suchas statements of our plans, objectives, expectations and intentions. Factorsthat could cause or contribute to these differences include those discussed in“Risk Factors” under Item 1A of Part II as those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 andelsewhere. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,”“estimate” and variations of such words and similar expressions are intended to identify such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The cautionary statements made herein should be read as applying to all related forward-looking statements wherever they appear herein.

19

Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us” and “ASR” refer to American Spectrum Realty, Inc. and its consolidated subsidiaries.

Business Overview

We provide comprehensive integrated real estate solutions for our own property portfolio and the portfolios of our third party clients. We own and manage; commercial, industrial, retail, self-storage and multi-family, student housing income properties, and offer our third party clients comprehensive integrated real estate solutions, including management and transaction services based on our market expertise. We conduct our business in the continental United States.

Our business is conducted through an Operating Partnership in which we are the sole general partner and a limited partner with a total equity interest of 93% at June 30, 2013. As the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership. We periodically examine our corporate structure in order to evaluate if we are positioned to take advantage of the most favorable tax treatments for ourselves, our shareholders and our clients. We evaluate the potential tax benefits and consequences of a variety of business models that include but are not limited to; joint ventures, partnerships, limited liability companies (LLC), limited liability partnerships (LLP) and real estate investment trusts (REIT) for ourselves and our investors. It is our objective to consider all applicable tax laws that legally reduce the tax consequences and maximize the tax benefits associated with real estate transactions.

The REIT structure has many specific requirements that must be met and maintained in order to qualify. As of June 30 2013 the Company’s ownership structure does not allow the company to elect REIT status.

Our primary business objective is to acquire and manage multiple tenant real estate in strategically located areas where our cost effective enhancements combined with effective leasing and management strategies, can improve the long term values and economic returns of those properties. We focus on the following fundamentals to achieve this objective:

-An opportunistic and disciplined disposition strategy that enhances investment performance and takes advantage of realized gains. We typically dispose of properties when the return from selling is higher than the projected return from holding the property,

-Organic (internally developed opportunities) and in-organic (acquisition generated opportunities) growth of our third party property management contracts and transaction service fees coupled with;

-An opportunistic yet disciplined acquisition strategy that focuses on mid-tier multi-tenant real estate in locations that allow us to capitalize on our existing management infrastructure currently servicing our own properties and that of our third party clients;

As of June 30, 2013, the properties that we manage were as follows:

	ASR owned		Consolidated VIE's		Third Party		Total
		Square		Square		Square		Square
Property type	Number	footage	Number	footage	Number	footage	Number	footage
Commercial/Industrial/Retail	15	1,150,773	7	3,972,553	4	90,167	26	5,213,493
Self-Storage	3	182,552	9	1,165,575	29	2,195,668	41	3,543,795
Multi-family	-	-	2	360,389	2	269,316	4	629,705
Student housing	-	-	3	533,446	-	-	3	533,446
Land	1	-	-	-	2	-	3	-
Total	19	1,333,325	21	6,031,963	37	2,555,151	77	9,920,439

In April 2013, we were assigned the management of 20 additional self-storage properties. The self-storage properties total over 1.5 million square feet across seven states.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we re-evaluate our judgments and estimates. We base our estimates and judgments on our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these policies. 

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Reference is made to “Critical Accounting Policies” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on April 1, 2013.

Financial Operations Overview

Rental Revenues. We derive rental revenues from tenants that occupy space in our portfolio of consolidated properties. There are three key drivers to rental revenue;

1. Occupancy - Rental revenues are dependent on our ability to lease spaces to quality tenants.

	Weighted Average Occupancy
	As of June 30,
Property Type	2013	2012
Industrial properties	88%	87%
Office properties	82%	82%
Retail properties	90%	79%
Residential properties	93%	96%
Self storage properties	86%	82%

We are currently in the process of aggressively marketing all vacated spaces but cannot make any guarantees as to the speed at which we will be able to find quality tenants or what, if any, reduction in rental rates we might experience.

2. Rental rates – Market rental rates are often inversely related to vacancy rates. Increased vacancy in the market place tends to drive down rental rates. Our leases typically have one to ten year terms based on property type. As leases expire, we replace the existing leases with new leases at the current market rental rate.

	Annualized Weighted Average Base Rent
	Per Occupied Square Foot
	As of June 30,
Property Type	2013		2012
Industrial properties	$	4.05	$	4.14
Office properties	$	15.30	$	15.33
Retail properties	$	10.95	$	15.30
Residential properties	$	13.34	$	9.22
Self storage properties	$	6.04	$	7.49

We are currently actively marketing our empty square footage but do not know if, when or at what rental rates we will be able to lease the vacant office spaces.

3. Tenant retention - Retaining existing tenants is essential, as high customer retention leads to increased occupancy, less downtime between leases, and reduced leasing costs. We believe in providing superior customer service; hiring, training, retaining and empowering our employees. We strive to create an environment of open communication both internally and externally with our customers.

We continue to aggressively pursue high quality tenants for all of our vacant square footage. We can make no guarantees as to our ability to fill vacant space in a timely manner or at the same or higher rents than historically charged.

Third party management and leasing revenue. We derive these revenues from the fees charged to our third party clients for management services, tenant acquisition fees, leasing fees and loan advisory fees for arranging financing related to properties under management. When and if our third party clients elect to sell a property we manage for them, we will receive transaction fees and commissions relating to the sale of the property. Our same core skill set that influences our rental income also drives our third party client revenue. Many of the fees we charge our third party clients are linked to occupancy, rental rates and customer retention. 

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Expenses:

Property operating expenses. Property operating expenses consist primarily of property taxes, insurance, repairs and maintenance, personnel costs and building service contracts.

General and administrative expenses. General and administrative expenses consist primarily of personnel expenses for accounting, human resources, information technology and corporate administration, professional fees including audit and legal fees.

Depreciation and amortization expenses. Depreciation and amortization expensesconsist primarily of depreciation associated with our real estate held for investment, amortization of purchased intangibles, depreciation of additional capital improvements and the amortization of lease costs associated with consolidated properties.

Interest expenses. Interest expenses consist primarily of the interest owed to creditors for debt associated with our consolidated properties.

RESULTS OF OPERATIONS

Discussion of the three months ended June 30, 2013 and 2012.

Revenues by Period

The following table sets forth revenues for the three months ended June 30, 2013 and 2012, and the change between periods (unaudited, in thousands except percentages):

	Three Months Ended
	June 30,				Dollar			Percentage
	2013		2012		Change			Change
	(in thousands, except percentages)
Rental revenue	$	11,219	$	12,378	$	(1,159	)	-9	%
Third party management and leasing revenue	$	867	$	728	$	139		19	%

The changes in revenues during the three months ended June 30, 2013 compared to the three months ended June 30, 2012 were primarily due to the following:

• Rental revenue decreased by approximately $1.2 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The decrease in rental revenue was primarily due the deconsolidation of VIEs, which resulted in a reduction in rental revenue of approximately $1.4 million. Rental revenue from properties consolidated for the full three months ended June 30, 2013 and 2012 increased by approximately $0.2 million. This increase was primarily attributable to our owned properties. The weighted average occupancy of our owned properties was 84% at June 30, 2013. The weighted average occupancy of all properties consolidated increased was 88% at June 30, 2013.
   
• Third party management and leasing revenue increased by approximately $0.1 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The increase was primarily due to an increase in third party management contracts. In April 2013, we were assigned the management of 20 additional self-storage properties. The self-storage properties total over 1.5 million square feet.

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Operating Expenses by Period

The following table sets forth expenses for the three months ended June 30, 2013 and 2012, and the percentage and dollar change between periods.

	Three Months Ended
	June 30,				Dollar			Percentage
	2013		2012		Change			Change
	(in thousands, except percentages)
Property operating expenses	$	4,393	$	3,162	$	1,231		39	%
Corporate general and administrative	$	2,000	$	2,439	$	(439	)	-18	%
Depreciation and amortization	$	4,258	$	4,774	$	(516	)	-11	%
Interest expense	$	4,092	$	4,910	$	(818	)	-17	%
Impairment of real estate assets	$	269	$	-	$	269		N/A

The changes in operating expenses during the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 were primarily due to the following:

• Property operating expenses increased by approximately $1.2 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The increase in property operating expenses was in large party attributable to VIE’s, which accounted for approximately $0.7 of the increase. An increase in property operating expenses on our owned properties accounted for the remaining increase of approximately $0.5 million. This increase was primarily attributable to higher utilities costs, repairs and maintenance costs and insurance expense between periods.
   
• Corporate general and administrative expenses decreased by approximately $0.4 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The decrease was primarily due to a decrease in corporate personnel costs, principally due to the relocation of our accounting department from our Irvine office to our Houston office, in addition to other cost cutting measures implemented by management.
   
• Depreciation and amortization expense decreased by approximately $0.5 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. The decrease was due the deconsolidation of VIE’s during the first quarter of 2013, which accounted for the decrease. Depreciation and amortization expense for properties consolidated for the full three months ended June 30, 2013 and 2012 was unchanged.
   
• Interest expense decreased by approximately $0.8 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. This decrease was partially due to the deconsolidation of VIE’s during the first quarter of 2013, which accounted for approximately $0.5 million of the decrease. Interest expense for properties consolidated for the full three months ended June 30, 2013 and 2012 accounted for the remaining decrease of $0.3 million. This decrease was primarily due to a decrease in late penalties on debt between periods and a due to a decrease in the accrual of interest on our on $9.4 million note payable to Evergreen.
   
• Impairment expense increased by approximately $0.3 million for the three months ended June 30, 2013 compared to the three months ended June 30, 2012. This increase was due to impairment charges on purchased intangibles related to lost management contracts recorded during the second quarter of 2013.

All of our expenses are significantly influenced by the number of VIEs which are consolidated. We expect all our operating expenses to remain relatively the same over the next year for the properties consolidated as of June 30, 2013.

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Other Income Statement Items by Period

The following table sets forth our other income statement items for the three months ended June 30, 2013 and 2012, and the dollar and percentage change between periods.

	Three Months Ended
	June 30,						Dollar			Percentage
	2013			2012			Change			Change
	(in thousands)
Interest income	$	3		$	40		$	(37	)	-93	%
Discontinued operations	$	(237	)	$	1,469		$	(1,706	)	-116	%
Non-controlling interest	$	914		$	(308	)	$	1,222		-397	%
Other income	$	173		$	-		$	173		N/A

The changes in other income statement items for the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 were primarily due to the following:

• Net loss from discontinued operations for the three months ended June 30, 2013 represents the operating results of 11500 Northwest Freeway and 2620-2630 Fountain View, the net gain from the disposal of 11500 Northwest Freeway and related income tax benefit. Net income from discontinued operations for the three months ended June 30, 2012 represents the net gain from properties disposed of during the second quarter of 2012, the operating results of properties disposed of in 2013 and 2012, and related income tax expense.
   
• Non-controlling interests consist of operating partnership unit holders other than us, the non-controlling interests in our partially owned properties, and the non-controlling interests in our VIEs held by others. The increase in non-controlling interest was in large part attributable to an increase in loss from our VIE’s held by others between periods.
   
• Other income for 2013 represents discounts negotiated with accounts payable creditors

Discussion of the six months ended June 30, 2013 and 2012.

Revenues by Period

The following table sets forth revenues for the six months ended June 30, 2013 and 2012, and the change between periods (unaudited, in thousands except percentages):

	Six Months Ended
	June 30,				Dollar			Percentage
	2013		2012		Change			Change
	(in thousands, except percentages)
Rental revenue	$	22,738	$	25,334	$	(2,596	)	-10	%
Third party management and leasing revenue	$	1,877	$	1,622	$	255		16	%

The changes in revenues during the six months ended June 30, 2013 compared to the six months ended June 30, 2012 were primarily due to the following:

• Rental revenue decreased by approximately $2.6 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The decrease in rental revenue was primarily due the deconsolidation of VIEs, which resulted in a reduction in rental revenue of approximately $2.6 million. Rental revenue from properties consolidated for the full six months ended June 30, 2013 and 2012 was unchanged. The weighted average occupancy of our owned properties was 84% at June 30, 3013. The weighted average occupancy of all properties consolidated increased was 88% June 30, 2013.
   
• Third party management and leasing revenue increased by approximately $0.3 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The increase was primarily due to an increase in third party management contracts. In April 2013, we were assigned the management of 20 additional self-storage properties. The self-storage properties total over 1.5 million square feet.

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Operating Expenses by Period

The following table sets forth expenses for the six months ended June 30, 2013 and 2012, and the percentage and dollar change between periods.

	Six Months Ended
	June 30,				Dollar			Percentage
	2013		2012		Change			Change
	(in thousands, except percentages)
Property operating expenses	$	8,095	$	7,359	$	736		10	%
Corporate general and administrative	$	4,134	$	5,674	$	(1,540	)	-27	%
Depreciation and amortization	$	9,053	$	9,936	$	(883	)	-9	%
Interest expense	$	8,103	$	9,995	$	(1,892	)	-19	%
Impairment of real estate assets	$	1,385	$	481	$	904		N/A

The changes in operating expenses during the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 were primarily due to the following:

• Property operating expenses increased by approximately $0.7 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The increase was primarily attributable to an increase in property operating expenses for our owned properties. This increase was principally due to higher utilities costs, repairs and maintenance costs and insurance expense between periods.
   
• Corporate general and administrative expenses decreased by approximately $1.5 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The decrease was primarily due to a decrease in corporate personnel costs, principally due to the relocation of our accounting department from our Irvine office to our Houston office. The decrease was also attributable to a decrease in deferred compensation expense, in addition to other cost cutting measures implemented by management.
   
• Depreciation and amortization expense decreased by approximately $0.9 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The decrease was primarily due the deconsolidation of VIE’s during the first quarter of 2013, which accounted for approximately $1.0 million of the decrease. Depreciation and amortization expense for properties consolidated for the full three months ended June 30, 2013 and 2012 increased by approximately $0.1 million.
   
• Interest expense decreased by approximately $1.9 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. This decrease was partially due to the deconsolidation of VIE’s during the first quarter of 2013, which accounted for approximately $1.0 million of the decrease. Interest expense for properties consolidated for the full six months ended June 30, 2013 and 2012 accounted for the remaining decrease of $0.9 million. This decrease was primarily due to a decrease in late penalties on debt between periods and a due to a decrease in the accrual of interest on our on $9.4 million note payable to Evergreen.
   
• Impairment expense increased by approximately $0.9 million for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. This increase was due to an increase in impairment charges on purchased intangibles related to lost management contracts recorded between periods.

All of our expenses are significantly influenced by the number of VIEs which are consolidated. We expect all our operating expenses to remain relatively the same over the next year for the properties consolidated as of June 30, 2013.

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Other Income Statement Items by Period

The following table sets forth our other income statement items for the six months ended June 30, 2013 and 2012, and the dollar and percentage change between periods.

	Six Months Ended
	June 30,						Dollar			Percentage
	2013			2012			Change			Change
	(in thousands)
Interest income	$	4		$	86		$	(82	)	-95	%
Discontinued operations	$	(326	)	$	3,931		$	(4,257	)	-108	%
Non-controlling interest	$	1,299		$	1,542		$	(243	)	-16	%
Other income (expense)	$	173		$	(151	)	$	324		N/A

The changes in other income statement items for the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 were primarily due to the following:

• Net loss from discontinued operations for the six months ended June 30, 2013 represents the operating results of 11500 Northwest Freeway and 2620-2630 Fountain View, the net gain from the disposal of 11500 Northwest Freeway and related income tax benefit. Net income from discontinued operations for the six months ended June 30, 2012 represents the net gain from properties disposed of during the six months ended June 30, 2012, the operating results of properties disposed of in 2013 and 2012, and related income tax expense.
   
• Non-controlling interests consist of operating partnership unit holders other than us, the non-controlling interests in our partially owned properties, and the non-controlling interests in our VIE’s held by others. The decrease in non-controlling interest was in large part attributable to a decrease in loss attributable to our VIE’s held by others between periods.
   
• Other income for 2013 represents discounts negotiated with accounts payable creditors.

We anticipate continuing to offer certain properties for sale and currently have four consolidated properties on the market after selling the 2620-2630 Fountain View property in July, 2013. We can make no guarantees as to the timing of the sale of any of our consolidated properties or the cash that we will be able to receive as a result of those sales.

LIQUIDITY AND CAPITAL RESOURCES

We have a need for significant amounts of cash to fund our operations. Not all cash generated by our consolidated business is available to pay all liabilities presented on the balance sheet. We separately disclose on the face of the balance sheet (in parentheses) assets and liabilities relating to our consolidated VIE’s. Those assets and liabilities are the exclusive responsibility of the VIE’s, as our actual ownership percentage and the business structure of the VIE’s does not allow the assets and liabilities to be comingled with those of ASR.

With regards to our wholly owned properties, our rental revenues was virtually unchanged for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. Third party management and leasing revenue increased by approximately $0.3 million for the six months ended June 30, 2013 in comparison to the six months ended June 30, 2012, primarily due to an increase in third party management contracts. In April 2013, we were assigned the management of 20 additional self-storage properties. The self-storage properties total over 1.5 million square feet across seven states.

With regards to the properties in which we have a variable interest and the cash associated with these properties is available only to service their own debts, we experienced a decrease in rental revenue of $2.6 million for the six months ended June 30, 2013 in comparison to the six months ended June 30, 2012. This decrease was the attributable to the deconsolidation of VIE’s due to foreclosures.

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We are in default on the notes listed below. The balances disclosed in the table below exclude additional fees that may be the result of non-payment.

			Balance
	ASR Ownership		June 30, 2013
Property Secured by	Percentage		(in thousands)
Morenci Professional Park	100	%	$	1,578
1501 Mockingbird	100	%		3,089
6430 Richmond	100	%		2,062
2640/2650 Fountain View	100	%		726
Corporate - Unsecured	100	%		1,000
TOTAL			$	8,455

As of June 30, 2013, we were in default on our debt secured by 1501 Mockingbird due to past due debt service. In July 2013, the lender foreclosed on the property which will be included in discontinued operations in the third quarter in accordance with our policy. See Note 16. – Subsequent Events.

We have elected not to make payments on the debt secured by Morenci Professional Park due to operating deficiencies of the property due to unpaid balances of the mortgage exceeding the market value of the property. The lender holding the debt on this property has placed the asset into receivership and has initiated foreclosure proceedings.

Two additional loans, one secured by 6430 Richmond and one by 2640/2650 Fountain View, are matured. We are currently negotiating extensions with the lenders on these loans.

All of the properties securing the debt in default are held by consolidated wholly owned subsidiaries or consolidated VIE’s. These mortgages are not guaranteed by us. All of the notes in default have payment acceleration clauses and payment in full, including additional fees and interest, could be demanded by the lenders holding these notes.

We have three mortgage loans that are cross-collateralized by a second property.

We also are in default on a $1.0 million corporate note, which matured in May 2012. The loan is guaranteed by the estate of John N. Galardi. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

We can make no guarantee as to the timing of the sale of any of these properties. We cannot guarantee that the lenders on the properties in some stage of foreclosure will not take back the properties before we can sell them or renegotiate the debt. All of the notes on which we have strategically defaulted have payment acceleration clauses, and payment in full could be demanded by the lenders holding these notes. The loans not being paid are secured only by the real estate assets. The disposal of these properties is not expected to have a material effect on our cash flows subsequent to the disposals.

See Notes 9 and 13 for additional details of notes payable and commitments.

As of June 30, 2013, we had accounts payable over 90 days totaling approximately $7.0 million (all of it relating to properties owned primarily by us and corporate). In addition, we have extended payment terms with creditors holding payables as of June 30, 2013, which total approximately $2.6 million. These payables are recorded as notes payable.

We have taken the following steps to meet our liquidity needs:

1.	We reduced our overhead structure as compared to 2012, primarily due to the relocation of our accounting department from Irvine, California to Houston, Texas.
2.	We continue to strategically default on mortgages where we have determined that the market value of the property does not and will not exceed the balance of the notes payable securing the property in the foreseeable future and/or the property is in a severe and sustained negative cash flow position.
3.	We are currently marketing properties for sale in an effort to generate cash for operations and debt reduction in the next year.
4.	We will continue to focus on increasing occupancy rates and managing our cost structure.
5.	We will continue to reduce our expenses, restructure our operations, and negotiate with our creditors for extended terms in order to meet our cash flow needs.

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The liquidity matters discussed above are a continuation of the economic and market factors that have been affecting us and the overall real estate industry for several years. Although there are indicators of improvement and resurgence in the real estate industry, we continue to struggle with cash flow deficits from operations after debt service and capital expenditures, primarily related to office/commercial buildings. In order to meet our cash needs, we have been and will continue to sell properties that have appreciated values in addition to steps previously discussed above. Proceeds from the sale of assets were $42.9 million and $51.1 million for 2012 and 2011, respectively. These sales provided the net proceeds after repayment of related debt and other obligations that were sufficient to meet our ongoing cash deficits from operations. We are forecasting sales of real estate of approximately $52.9 million in 2013 from which the net proceeds will exceed our forecasted cash deficit from operations.

Through June 30, 2013, as forecasted, we refinanced our mortgage debt on Windrose and Northwest Spectrum Plaza. Net proceeds from the transactions totaled approximately $0.9 million, which were primarily used to reduce debt and other obligations.

Through June 30, 2013, as forecasted, we obtained a $1.8 million loan to assist with liquidity needs. We intend to repay the loan upon the sale of two of our properties held for sale.

As previously reported, we had executed sale contracts on two properties and a letter of intent to sale on another property held for sale. One of these sales has closed as described below. The other contract and letter of intent have terminated for various reasons. We currently have no contracts on our assets held for sale. We are forecasting the funds held in escrow of approximately $1.5 million related to 2620-2630 Fountain View to be released in the third quarter. We have also received offers in the form of letters of intent for two other held for sale properties that would generate $2.0 million to $4.0 million of cash flow expected to occur in the third or fourth quarter of 2013. There can be no assurance that these sales and/or the sales of our other held for sale properties will occur.

As of June 30, 2013, we have five properties held for sale and are forecasting these to be sold in the third and fourth quarters of 2013, although there can be no assurances that they will be. We forecast that the proceeds available from these sales after repayment of debt and other related obligations will generate approximately $8.8 million. This amount is in excess of our forecasted deficit from operations for 2013. We believe that our forecast is achievable due to our history of demonstrating our ability in consummating sales in prior years when we have been under similar cash shortages. In addition to property sales, we continue to negotiate refinancing of properties allowing for reduced interest and monthly payments as well as refinancing that allow us to access funds from appreciated values. The combination of the forecasted sales of real estate and the refinancing of loans is expected to meet our cash needs in the short-term and allow us to reduce our accounts payable.

In July 2013, 2620-2630 Fountain View (one of the five properties held for sale) was sold for approximately $8.9 million. The sale generated net proceeds of approximately $3.0 million to the property’s partnership, in which we own a 51% interest. The net proceeds are currently held in escrow due to a distribution dispute with the minority owner of the property. We anticipate we will reach an agreement on the distribution of the net proceeds with the minority owner in the third quarter of 2013.

We have a number of properties that we believe have appreciated in addition to the properties held for sale, and we will continue this approach over the long-term until we meet our cash needs through profitable operations, infusion of cash from other investors allowing us to reduce debt and expand operations, or other strategies being considered.

There can be no assurance as to our ability to meet our short-term or long-term cash needs. Our plan to generate sufficient cash flow is described above. If we cannot sell properties held for sale as forecasted, we may not have sufficient cash to meet our obligations and could have a material adverse effect on our business, financial condition and results of operations.

DISCUSSION OF THE CONSOLIDATED STATEMENT OF CASH FLOWS

FROM OPERATIONS:

Historically and currently, our consolidated cash from operations has been provided by rent payments, management fees and transaction fees. Our historic and current uses of consolidated cash from operations have mainly been property operating costs, general and administrative costs and interest on debt service. During the six months ended June 30, 2013, our consolidated operations provided $1.2 million in cash, of which $5.1 million was provided by our consolidated VIE’s.

FROM INVESTING ACTIVITIES:

Historically and currently, our consolidated cash from investing activities has been provided by proceeds from the sale of assets. Our historic and current uses of consolidated cash from investing activities have primarily been property improvements. During the six months ended June 30, 2013, our consolidated investing activities used $0.9 million in cash for capital improvements to real estate assets.

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FROM FINANCING ACTIVITIES:

Historically and currently, our consolidated cash from financing activities has been provided by proceeds from borrowing money and proceeds from equity placements. Our historic and current uses of consolidated cash from financing activities have primarily been principal payments on borrowings and cash used to acquire assets. During the six months ended June 30, 2013, our consolidated operations used $0.5 million in cash. We received proceeds from borrowings of $21.0 million and repaid borrowings of $18.3 million. We also made distributions to non-controlling interests of $3.2 million.

FUNDS FROM OPERATIONS

We believe that Funds From Operations (“FFO”) is a useful supplemental measure of our operating performance. We computed FFO in accordance with standards established by the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in April 2002. The White Paper defines FFO as net income or loss computed in accordance with Generally Accepted Accounting Principles (“GAAP”), excluding extraordinary items, as defined by GAAP, and gains and losses from sales of depreciable operating property plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We believe that FFO is helpful to investors as a measure of our performance because, along with cash flow from operating activities, FFO provides investors with an indication of our ability to incur and service debt, to make capital expenditures and to fund other cash needs. FFO is a non-GAAP financial measure. FFO does not represent net income or cash flows from operations, as defined by GAAP, and should not be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our operating performance or as an alternative to cash flows from operating, investing and financing activities (determined in accordance with GAAP) as a measure of liquidity. FFO does not necessarily indicate that cash flows will be sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to stockholders. Further, FFO as disclosed by other companies may not be comparable to our calculation of FFO.

The following table sets forth our calculation of FFO for the six months ended June 30, 2013 and 2012:

	Six Months Ended June 30,
	2013			2012
	(in thousands)
Net (loss) income attributable to ASR	$	(3,281	)	$	419
Depreciation and amortization from discontinued operations		159			1,815
Loss (gain) from disposition of discontinued operations		77			(6,171	)
Deferred income tax (benefit) expense		(1,894	)		241
Depreciation and amortization attributable to ASR properties		2,665			2,202
FFO	$	(2,274	)	$	(1,494	)

INFLATION

Inflation has not had a significant impact on our results because of the relatively low inflation rate in our geographic areas of operation. Additionally, most of our leases require the customers to pay their pro rata share of operating expenses, including common area maintenance, real estate taxes, utilities and insurance, thereby reducing our exposure to increases in operating expenses resulting from inflation.

FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements are based on management’s beliefs and expectations, which may not be correct. Important factors that could cause actual results to differ materially from the expectations reflected in these forward-looking statements include the following: the Company’s level of indebtedness and ability to refinance its debt; risks inherent in the Company’s acquisition and development of properties in the future, including risks associated with the Company’s strategy of investing in under-valued assets; general economic, business and market conditions; changes in federal and local laws, and regulations; increased competitive pressures; and other factors, as well as factors set forth elsewhere in this Report on Form 10-Q.

ITEM 4 - CONTROLS AND PROCEDURES

Management, including the Company’s Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the quarter covered by this report. Based on, and as of the date of, that evaluation, the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

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There were no changes made in the Company’s internal controls over financial reporting during the second quarter of 2013 that materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

On March 2, 2011, we filed an action against Evergreen Realty Group, LLC and certain of its affiliates ("Evergreen") relating to our acquisition of assets from Evergreen in January 2010. The purchase price of the assets was $18.0 million, subject to adjustment as provided in the purchase agreement, and was paid in the form of (a) the assumption of $500,000 of payables, (b) the issuance of a $9.5 million promissory note and (c) the issuance of operating partnership units which would be redeemable by Evergreen after June 30, 2011 for a number of shares of our common stock (or, at our option, the cash equivalent) equal to the quotient obtained by dividing $8.0 million by the greater of our share price or net asset value as of December 31, 2010. (Our share price as of December 31, 2010 was $17.52; our net asset value as of December 31, 2010 has not been definitively determined.) In our action, we are alleging various offsets and adjustments to the purchase price, as well as defaults by Evergreen, and are seeking damages and a declaration that the principal amount of the promissory note should be reduced to zero, that the operating partnership units should be cancelled and that Evergreen should refund to us payments of at least $578,000 which have been made on the promissory note. On March 7, 2011, New West Realty, Inc. (“New West”), an affiliate of Evergreen, filed a complaint for damages in Orange County Superior Court against ASR and other related entities. New West alleges in the complaint that ASR had failed to pay amounts then due under a $9.5 million promissory note held by New West. We have subsequently paid all amounts currently due and payable under the note and therefore dispute the claim and deny that any payment is now due under the note, and we have filed a separate lawsuit against New West and others seeking damages in excess of the amount of New West’s claim.

During the second quarter of 2012, we repurchased all of the operating partnership units (“OP Units”) issued to Evergreen Realty Group, LLC and certain of its affiliates (“Evergreen”) in 2010. We had issued the OP Units to Evergreen in connection with the acquisition of assets from Evergreen on January 17, 2010. The OP Units issued to Evergreen were repurchased by the Company for one dollar as provided in the purchase and sell agreement.

In January 2013, we reached a tentative agreement with Evergreen to settle the $9.5 million promissory note. That agreement provides that we will pay $4.6 million in a combination of cash, a new note, and nonconvertible preferred stock as settlement of the note. The new debt will mature in 2017. However, that agreement has not been formalized. Negotiations are continuing to reach a settlement, but there can be no assurance that a resolution will be obtained. The lawsuit is set for trial in April 2014.

We are in default on a $1.0 million unsecured note, which matured in May 2012. The loan is guaranteed by John N. Galardi, a principal shareholder. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

Certain other claims and lawsuits have arisen against us in our normal course of business, including lawsuits by creditors with respect to past due accounts payable. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flows or results of operations.

ITEM 5 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

The Exhibit Index attached hereto is hereby incorporated by reference this item.

(b) Reports on Form 8-K:

On April 1, 2013, a report on Form 8-K was filed with respect to Item 2.02
On April 15, 2013, a report on Form 8-K was filed with respect to Item 2.02
On May 15, 2013, a report on Form 8-K was filed with respect to Item 2.02
On June 11, 2013, a report on Form 8-K was filed with respect to Item 5.07

30

SIGNATURES

Pursuant to the requirements of Section l3 or l5(d) of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN SPECTRUM REALTY, INC.

Date: August 14, 2013		/s/ William J. Carden
	By:
		William J. Carden
		Chairman of the Board, President and,
		Chief Executive Officer
		(Principal Executive Officer)
Date: August 14, 2013		/s/ G. Anthony Eppolito
	By:
		G. Anthony Eppolito
		Vice President, Chief Financial Officer,
		(Principal Financial Officer and Accounting Officer),
		Treasurer and Secretary

EXHIBIT INDEX

Exhibit No.	Exhibit Title
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

31

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William J. Carden, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of American Spectrum Realty, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 14, 2013	By:	/s/ William J. Carden
		William J. Carden
		Chief Executive Officer

32

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, G. Anthony Eppolito, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of American Spectrum Realty, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statement for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5)	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013	By:	/s/ G. Anthony Eppolito
		G. Anthony Eppolito
		Chief Financial Officer

33 

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Spectrum Realty, Inc.(the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Carden, President and Chief Executive Officer of the Company, certify, pursuant to and for purposes of 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates indicated and results of operations of the Company for the period indicated.

Dated: August 14, 2013

/s/ William J. Carden

William J. Carden

President and Chief Executive Officer

34

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Spectrum Realty, Inc.(the “Company”) on Form 10-Q for the period ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony Eppolito, Chief Financial Officer of the Company, certify, pursuant to and for purposes of 18 U.S.C. §1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates indicated and results of operations of the Company for the period indicated.

Dated: August 14, 2013

/s/ G. Anthony Eppolito

G. Anthony Eppolito

Vice President and Chief Financial Officer

35

XML

NET (LOSS) INCOME PER SHARE

6 Months Ended

Jun. 30, 2013

NET (LOSS) INCOME PER SHARE [Abstract]

NET (LOSS) INCOME PER SHARE

NOTE 11 - NET (LOSS) INCOME PER SHARE

Net (loss) income per share is calculated based on the weighted average number of common shares outstanding. Stock options outstanding, OP Units and preferred shares have not been included in the net loss per share calculation since their effect on the losses would be antidilutive. Net (loss) income per share for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands, except for shares and per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Loss from continuing operations	$	(2,071	)	$	(1,154	)	$	(4,254	)	$	(5,054	)
Net loss (income) attributable to non-controlling interests from
continuing operations		890			(179	)		1,267			2,216
Loss from continuing operations attributable to American
Spectrum Realty Inc. common stockholders	$	(1,181	)	$	(1,333	)	$	(2,987	)	$	(2,838	)
Discontinued operations:
Loss from discontinued operations		(277	)		(600	)		(413	)		(1,870	)
(Loss) gain on disposition of discontinued operations		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
Net loss (income) attributable to non-controlling interests
from discontinued operations		24			(129	)		32			(674	)
(Loss) income from discontinued operations		(213	)		1,340			(294	)		3,257
Preferred stock dividend		(60	)		(60	)		(120	)		(120	)
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(1,454	)	$	(53	)	$	(3,401	)	$	299
Basic per share data:
Loss from continuing operations attributable to American
Spectrum Realty, Inc. common stockholders	$	(0.33	)	$	(0.38	)	$	(0.84	)	$	(0.79	)
(Loss) income from discontinued operations attributable to
American Spectrum Realty, Inc. common stockholders		(0.06	)		0.38			(0.08	)		0.91
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(0.39	)	$	-		$	(0.92	)	$	0.12
Basic weighted average shares used		3,564,304			3,564,783			3,566,041			3,571,283

The following weighted average preferred shares, stock options and OP units outstanding that may be redeemed for common stock on a one-for-one basis were excluded from the computation of diluted net (loss) income per share as they had an anti-dilutive effect:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
	(unaudited)		(unaudited)
Preferred shares	55,172	55,172	55,172	55,172
Stock options	-	17,500	-	17,500
OP Units	249,978	519,130	250,333	785,796
Total	305,150	591,802	305,505	858,468

XML

INCOME TAXES (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
INCOME TAXES [Abstract]
Income tax (benefit) expense	$ (1,894)	$ 241
Effective tax rate utilized	36.60%

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
REVENUES:
Rental revenue	$ 11,219	$ 12,378	$ 22,738	$ 25,334
Third party management and leasing revenue	867	728	1,877	1,622
Interest income	3	40	4	86
Total revenues	12,089	13,146	24,619	27,042
EXPENSES:
Property operating expense	4,393	3,162	8,095	7,359
Corporate general and administrative	2,000	2,439	4,134	5,674
Depreciation and amortization	4,258	4,774	9,053	9,936
Interest expense	4,092	4,910	8,103	9,995
Impairment expense	269		1,385	481
Total expenses	15,012	15,285	30,770	33,445
OTHER INCOME (LOSS):
Other income (loss):	173		173	(151)
Total other income (loss):	173		173	(151)
Loss from continuing operation before deferred income tax benefit	(2,750)	(2,139)	(5,978)	(6,554)
Deferred income tax benefit	679	985	1,724	1,500
Loss from continuing operations	(2,071)	(1,154)	(4,254)	(5,054)
Discontinued operations:
Loss from operations	(277)	(600)	(413)	(1,870)
(Loss) gain on disposition of discontinued operations	(83)	2,934	(83)	7,542
Income tax benefit (expense)	123	(865)	170	(1,741)
Income from discontinued operations	(237)	1,469	(326)	3,931
Net (loss) income, including non-controlling interests	(2,308)	315	(4,580)	(1,123)
Plus: Net loss (income) attributable to non-controlling interests	914	(308)	1,299	1,542
Net (loss) income attributable to American Spectrum Realty, Inc.	(1,394)	7	(3,281)	419
Less: Preferred stock dividend	(60)	(60)	(120)	(120)
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	(1,454)	(53)	(3,401)	299
Basic and diluted per share data:
Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders	$ (0.33)	$ (0.38)	$ (0.84)	$ (0.79)
(Loss) income from discontinued operations attributable to American Spectrum Realty, Inc.	$ (0.06)	$ 0.38	$ (0.08)	$ 0.91
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	$ (0.39)		$ (0.92)	$ 0.12
Basic and diluted weighted average shares used	3,564,304	3,564,783	3,566,041	3,571,283
Amounts attributable to American Spectrum Realty, Inc. common stockholders:
Loss from continuing operations	(1,241)	(1,393)	(3,107)	(2,958)
(Loss) income from discontinuing operations	(213)	1,340	(294)	3,257
Net (loss) income	$ (1,454)	$ (53)	$ (3,401)	$ 299

XML

ASSET IMPAIRMENTS

6 Months Ended

Jun. 30, 2013

ASSET IMPAIRMENTS [Abstract]

ASSET IMPAIRMENTS

NOTE 4 - ASSET IMPAIRMENTS

Purchased Intangibles Subject to Amortization

During the six months ended June 30, 2013 and 2012, we had our contractual relationships terminated or modified by the entities that owned some of the third party properties we manage. Based on this triggering event we evaluated the management contracts associated with some of our purchased intangibles for impairment and determined that impairment had occurred. We recorded impairment charges of $1.4 million and $0.5 million, for the six months ended June 30, 2013 and 2012, respectively, which reduced the fair value of the impaired contracts to zero. (See Note 6 - Variable Interest Entities for additional information).

XML

DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2013

DISCONTINUED OPERATIONS [Abstract]

Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

The consolidated statements of operations of discontinued operations for the three and six months ended June 30, 2013 and 2012 are summarized below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Rental Revenue	$	254		$	1,430		$	682		$	4,032
Less Expenses (1)		(531	)		(2,030	)		(1,095	)		(5,902	)
Loss from discontinued operations before net (loss) gain
on dispositions and income tax benefit (expense)		(277	)		(600	)		(413	)		(1,870	)
Net (loss) gain on dispositions of real estate assets		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
(Loss) income from discontinued operations	$	(237	)	$	1,469		$	(326	)	$	3,931

(1) Includes interest expense of approximately $0.2 million and $0.6 million for the three months ended June 30, 2013 and 2012, respectively, and $0.4 million and $2.0 million, for the six months ended June 30, 2013 and 2012, respectively. Mortgage debt related to the properties included in discontinued operations were individually secured, and as such, interest expense was based on the property's debt.

XML

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

NOTE 12 - STOCK-BASED COMPENSATION

Share-based compensation expense is measured at grant date, based on the fair value of the instrument, and is recognized as expense over the requisite service period.

The following table sets forth the total share-based compensation expense included in our Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013			2012
	(in thousands)				(in thousands)
General and administrative	$	7	$	27	$	30	$	158
Total	$	7	$	27	$	30	$	158

As of June 30, 2013 approximately $0.1 million total unrecognized share-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award over the weighted average period of 2.8 years.

Valuation Assumptions

The fair value of our restricted stock awards (RSA) is estimated on the date of grant based on the closing price of our stock on the grant date. Share-based compensation expense related to RSAs is recognized over the requisite service period.

Equity Incentive Program and Restricted Stock Awards

We grant RSA's to employees and directors under the Omnibus Stock Incentive Plan ("the Plan"). New shares are issued for RSA's released. RSA's give the recipient the right to vote all shares, to receive and retain all cash dividends payable to holders of shares of record on or after the date of issuance and to exercise all other rights, powers and privileges of a holder of our shares, with the exception that the recipient may not transfer the shares during the restriction period that lapses over various periods ranging from one to five years.

We have reserved 360,000 shares under the Plan. As of June 30, 2013, we had issued 121,712 shares under the Plan.

The following table summarizes the combined activity under the equity incentive plan for the indicated periods:

			Weighted average
	Number of		Grant-date fair value
	RSAs		per Share
Balances at December 31, 2012	22,070		$	13.54
Granted	-		$	-
RSA Releases	(1,334	)	$	14.32
Forfeited/Expired	(11,068	)	$	16.42
Balances at June 30, 2013	9,668		$	10.14

The RSA's had no intrinsic value as of June 30, 2013. The aggregate intrinsic value of the restricted stock awards outstanding at June 30, 2013 represents the total pretax intrinsic value, based on our closing stock price of $2.41 per share as of June 30, 2013, which would have been received by the grant holders if all restricted stock awards were vested as of June 30, 2013.

There was no incentive or nonqualified stock options outstanding at June 30, 2013 or December 31, 2012.

XML

STOCK-BASED COMPENSATION (Schedule of Share-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 7	$ 27	$ 30	$ 158
General and Administrative Expense [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 7	$ 27	$ 30	$ 158

XML

VARIABLE INTEREST ENTITIES (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Number of properties	40
Self Storage Building [Member]
Number of properties	12
Office Properties [Member]
Number of properties	12
Multi-Family Properties [Member]
Number of properties	5
Variable Interest Entity, Primary Beneficiary [Member]
Increase (Decrease) in total Assets	$ (38.9)
Increase (Decrease) in Total Liabilities	(32.8)
Noncontrolling Interest, Period Increase (Decrease)	$ (6.1)
Variable Interest Entity, Primary Beneficiary [Member] | Self Storage Building [Member]
Number of properties	9
Variable Interest Entity, Primary Beneficiary [Member] | Student Housing Building [Member]
Number of properties	3
Variable Interest Entity, Primary Beneficiary [Member] | Office Properties [Member]
Number of properties	7
Variable Interest Entity, Primary Beneficiary [Member] | Multi-Family Properties [Member]
Number of properties	2

XML

SEGMENTS (Tables)

6 Months Ended

Jun. 30, 2013

SEGMENTS [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table sets forth our segment information for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Rental Operations:
Revenues from external customers	$	11,219		$	12,378		$	22,738		$	25,334
Intersegment revenues		114			144			228			240
Net loss		(1,174	)		167			(1,748	)		(747	)
Total segment assets		339,028			423,134			339,028			423,134
Management Services:
Revenues from unaffiliated external customers	$	867		$	728		$	1,877		$	1,622
Intersegment revenues		411			546			845			1,175
Net loss		(388	)		(262	)		(1,610	)		(1,500	)
Total segment assets		14,302			17,071			14,302			17,071
Reconciliations:
Total segment revenues	$	12,611		$	13,796		$	25,688		$	28,371
Elimination of intersegment revenues		(525	)		(690	)		(1,073	)		(1,415	)
Interest income		3			40			4			86
Total consolidated revenues	$	12,089		$	13,146		$	24,619		$	27,042
Segment net loss	$	(1,562	)	$	(95	)	$	(3,358	)	$	(2,247	)
Unallocated expenses		(1,361	)		(2,044	)		(2,793	)		(4,156	)
Other income (expense)		173			-			173			(151	)
Deferred income tax benefit		679			985			1,724			1,500
(Loss) income from discontinued operations		(237	)		1,469			(326	)		3,931
Net loss (income) attributable to non-controlling interests		914			(308	)		1,299			1,542
Net (loss) income attributable to ASR	$	(1,394	)	$	7		$	(3,281	)	$	419
Total segment assets	$	353,330		$	440,205		$	353,330		$	440,205
Unallocated corporate assets		13,633			12,349			13,633			12,349
Total assets	$	366,963		$	452,554		$	366,963		$	452,554

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2013

VARIABLE INTEREST ENTITIES [Abstract]

Schedule of Variable Interest Entities

The carrying amounts associated with the VIE's, after eliminating the effect of intercompany transactions, were as follows (in thousands):

	June 30,		December 31,
	2013		2012
Assets
Restricted cash	$	3,519	$	3,724
Receivables		3,204		2,988
Fixed Assets, net		247,443		290,549
Other Assets		7,152		8,600
Total Assets	$	261,318	$	305,861
Liabilities
Accounts payable		140		398
Notes payable		189,071		221,899
Other liabilities		5,348		6,759
Total liabilities	$	194,559	$	229,056
Variable interest entity net carrying amount	$	66,759	$	76,805

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NET (LOSS) INCOME PER SHARE (Schedule of Earnings Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
NET (LOSS) INCOME PER SHARE [Abstract]
Loss from continuing operations	$ (2,071)	$ (1,154)	$ (4,254)	$ (5,054)
Net loss (income) attributable to non-controlling interests from continuing operations	890	(179)	1,267	2,216
Loss from continuing operations attributable to American Spectrum Realty Inc. common stockholders	(1,181)	(1,333)	(2,987)	(2,838)
Discontinued operations:
Loss from discontinued operations	(277)	(600)	(413)	(1,870)
(Loss) gain on disposition of discontinued operations	(83)	2,934	(83)	7,542
Income tax benefit (expense)	123	(865)	170	(1,741)
Net loss (income) attributable to non-controlling interests from discontinued operations	24	(129)	32	(674)
(Loss) income from discontinued operations	(213)	1,340	(294)	3,257
Preferred stock dividend	(60)	(60)	(120)	(120)
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	$ (1,454)	$ (53)	$ (3,401)	$ 299
Basic per share data:
Loss from continuing operations attributable to American Spectrum Realty, Inc. common stockholders	$ (0.33)	$ (0.38)	$ (0.84)	$ (0.79)
(Loss) income from discontinued operations attributable to American Spectrum Realty, Inc. common stockholders	$ (0.06)	$ 0.38	$ (0.08)	$ 0.91
Net (loss) income attributable to American Spectrum Realty, Inc. common stockholders	$ (0.39)		$ (0.92)	$ 0.12
Basic weighted average shares used	3,564,304	3,564,783	3,566,041	3,571,283

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DISCONTINUED OPERATIONS (Narrative) (Details) (Northwest Freeway 11500 [Member], USD $)	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Northwest Freeway 11500 [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Principal Balance		$ 3,900,000
Loss on foreclosed asset	$ (100,000)

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SEGMENTS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Segment Reporting Information [Line Items]
Revenues	$ 12,089	$ 13,146	$ 24,619	$ 27,042
Interest income	3	40	4	86
Other income (expense)	173		173	(151)
Deferred income tax benefit	679	985	1,724	1,500
(Loss) income from discontinued operations	(237)	1,469	(326)	3,931
Net loss (income) attributable to non-controlling interests	914	(308)	1,299	1,542
Net (loss) income attributable to American Spectrum Realty, Inc.	(1,394)	7	(3,281)	419
Assets	366,963	452,554	366,963	452,554	417,378
Operating Segments [Member]
Segment Reporting Information [Line Items]
Revenues	12,611	13,796	25,688	28,371
Segment net loss	(1,562)	(95)	(3,358)	(2,247)
Assets	353,330	440,205	353,330	440,205
Operating Segments [Member] | Rental Operations [Member]
Segment Reporting Information [Line Items]
Revenues	11,219	12,378	22,738	25,334
Segment net loss	(1,174)	167	(1,748)	(747)
Assets	339,028	423,134	339,028	423,134
Operating Segments [Member] | Management Services [Member]
Segment Reporting Information [Line Items]
Revenues	867	728	1,877	1,622
Segment net loss	(388)	(262)	(1,610)	(1,500)
Assets	14,302	17,071	14,302	17,071
Intersegment Eliminations [Member]
Segment Reporting Information [Line Items]
Revenues	525	690	1,073	1,415
Intersegment Eliminations [Member] | Rental Operations [Member]
Segment Reporting Information [Line Items]
Revenues	114	144	228	240
Intersegment Eliminations [Member] | Management Services [Member]
Segment Reporting Information [Line Items]
Revenues	411	546	845	1,175
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Interest income	3	40	4	86
Corporate [Member]
Segment Reporting Information [Line Items]
Segment net loss	(1,361)	(2,044)	(2,793)	(4,156)
Assets	$ 13,633	$ 12,349	$ 13,633	$ 12,349

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STOCK-BASED COMPENSATION (Schedule of RSA Activity) (Details) (Restricted Stock [Member], USD $)	6 Months Ended
	Jun. 30, 2013
Restricted Stock [Member]
Number of RSAs
Beginning balances	22,070
Granted
RSA Releases	(1,334)
Forfeited/Expired	(11,068)
Ending balances	9,668
Weighted average Grant-date fair value per Share
Beginning balances	$ 13.54
Granted
RSA Releases	$ 14.32
Forfeited/Expired	$ 16.42
Ending balances	$ 10.14

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2013

STOCK-BASED COMPENSATION [Abstract]

Schedule of Share-Based Compensation Expense

The following table sets forth the total share-based compensation expense included in our Consolidated Statements of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013			2012
	(in thousands)				(in thousands)
General and administrative	$	7	$	27	$	30	$	158
Total	$	7	$	27	$	30	$	158

Schedule of Combined Activity Under Equity Incentive Plan

The following table summarizes the combined activity under the equity incentive plan for the indicated periods:

			Weighted average
	Number of		Grant-date fair value
	RSAs		per Share
Balances at December 31, 2012	22,070		$	13.54
Granted	-		$	-
RSA Releases	(1,334	)	$	14.32
Forfeited/Expired	(11,068	)	$	16.42
Balances at June 30, 2013	9,668		$	10.14

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NOTES PAYABLE (Narrative) (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Default on debt, amount	$ 8,455,000
Unamortized financing costs	1,400,000	800,000
Corporate - Unsecured [Member]
Debt Instrument [Line Items]
Default on debt, amount	$ 1,000,000

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ASSETS HELD FOR SALE (Tables)

6 Months Ended

Jun. 30, 2013

ASSETS HELD FOR SALE [Abstract]

Disclosure of Long Lived Assets Held-for-sale

Below is a listing of the consolidated properties we have listed for sale. We can make no guarantees as to our ability to sell any of our consolidated properties. We further cannot assure you that we will achieve a sales price that allows us to receive cash to fund our operations. 1501 Mockingbird, a property listed for sale at March 31, 2013, was foreclosed on in July 2013. See Note 16 - Subsequent Events.

		ASR
	Property	ownership	Carrying Values of		Carrying Value of
Property Name	Type	Percentage	Properties		Debt
			(in thousands)
Fountain View Office Tower (1)	Office	51%	$	11,500	$	11,465
2620 & 2630 Fountain View (2)	Office	51%		7,040		5,323
2640 & 2650 Fountain View	Office	100%		13,609		12,672
Windrose	Retail	100%		3,116		3,442
8100 Washington	Office	100%		1,802		2,052
			$	37,067	$	34,954

1)	Property fell out of sale contract with prospective buyer in second quarter of 2013.
2)	Property was sold in July 2013. See Note 16 - Subsequent Events

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss, including non-controlling interests	$ (4,580)	$ (1,123)
Adjustment to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	9,212	11,751
Impairment expense	1,385	481
Income tax (benefit) expense	(1,894)	241
Loss (gain) on disposition of real estate assets	83	(7,542)
Stock-based compensation	30	158
Deferred rental income	(411)	(418)
Changes in operating assets and liabilities:
Increase in tenant and other receivables	(796)	(559)
(Increase) decrease in prepaid and other assets	94	630
Increase (decrease) in accounts payable	89	(1,141)
(Decrease) increase in accrued and other liabilities	(1,694)	1,874
Change in restricted cash	(326)	1,773
Net cash provided by operating activities:	1,192	6,125
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds received from sales of real estate assets		18,787
Capital improvements to real estate assets	(914)	(2,519)
Net cash (used in) provided by investing activities:	(914)	16,268
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings	20,992	6,825
Repayment of borrowings-property sales		(15,760)
Repayment of borrowings-scheduled payments	(3,019)	(2,520)
Repayment of borrowings-other	(15,274)	(5,543)
Contributions from non-controlling interests	11	400
Distributions to non-controlling interests	(3,250)	(4,753)
Net cash used in financing activities:	(540)	(21,351)
(Decrease) increase in cash and cash equivalents	(262)	1,042
Cash and cash equivalents, beginning of period	492	473
Cash and cash equivalents, end of period	230	1,515
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of operating partnership units to common stock	17	1,711
Conversion of accounts payable to common stock		203
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	8,892	5,567
Cash paid for taxes	$ 70

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission (the "SEC") for preparation of interim financial statements. The information furnished in this report reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the Company's results of operations, financial position and cash flows, and such adjustments consist of items of a normal recurring nature. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year or for any other future period. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 included in the Company's Annual Report on Form 10-K as filed with the SEC on April 1, 2013.

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we re-evaluate our judgments and estimates. We base our estimates and judgments on our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these policies.

The financial statements include the accounts of the Operating Partnership, all subsidiaries of the Company, and VIE's where the Company is the primary beneficiary. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

The Company accounts for unconsolidated real estate investments using the equity method of accounting. Accordingly, the Company's share of earnings of these real estate investments is included in the consolidated results of operations.

Certain prior year balances have been reclassified to conform to the current year presentation.

Summary of Critical and Significant Accounting Policies and Estimates

Reference is made to "Summary of Critical and Significant Accounting Policies and Estimates" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on April 1, 2013.

Segments

We have identified two reportable business segments: (i) rental operations and (ii) management and leasing services. We evaluate the performance of our operating segments based on operating income (loss). All inter-segment sales pricing is based on current market conditions. Unallocated corporate amounts include general expenses associated with managing our two reportable operating segments.

Recent Accounting Pronouncements

In July 2012, the FASB issued ASU 2012-02, "Intangibles, Goodwill, and Other (Topic 350): Testing Indefinite-Lived Intangibles for Impairment". This ASU adds new accounting guidance that simplifies how an entity tests indefinite-lived intangible assets other than goodwill for impairment. It permits an entity to first assess qualitative factors to determine whether further testing for impairment of indefinite-lived intangible assets other than goodwill is required. This accounting guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this accounting guidance did not have a material effect on our financial condition or results of operations.

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ASSETS HELD FOR SALE

6 Months Ended

Jun. 30, 2013

ASSETS HELD FOR SALE [Abstract]

ASSETS HELD FOR SALE

NOTE 5 - ASSETS HELD FOR SALE

Below is a listing of the consolidated properties we have listed for sale. We can make no guarantees as to our ability to sell any of our consolidated properties. We further cannot assure you that we will achieve a sales price that allows us to receive cash to fund our operations. 1501 Mockingbird, a property listed for sale at March 31, 2013, was foreclosed on in July 2013. See Note 16 - Subsequent Events.

		ASR
	Property	ownership	Carrying Values of		Carrying Value of
Property Name	Type	Percentage	Properties		Debt
			(in thousands)
Fountain View Office Tower (1)	Office	51%	$	11,500	$	11,465
2620 & 2630 Fountain View (2)	Office	51%		7,040		5,323
2640 & 2650 Fountain View	Office	100%		13,609		12,672
Windrose	Retail	100%		3,116		3,442
8100 Washington	Office	100%		1,802		2,052
			$	37,067	$	34,954

1)	Property fell out of sale contract with prospective buyer in second quarter of 2013.
2)	Property was sold in July 2013. See Note 16 - Subsequent Events

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DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2013

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

NOTE 3 - DISCONTINUED OPERATIONS

In June 2013, the lender for our 11500 Northwest Freeway property foreclosed on the asset. We had elected to discontinue servicing the unpaid balance of the debt, which totaled $3.9 million, due to the balance exceeding the market value of the property. The property securing the debt was held by a consolidated wholly-owned subsidiary that had not guaranteed the debt. The transaction generated a loss of $0.1 million. No proceeds were received as a result of the transaction. In July 2013, we sold 2620-2630 Fountain View. See Note 16 - Subsequent Events.

The consolidated statements of operations of discontinued operations for the three and six months ended June 30, 2013 and 2012 are summarized below:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Rental Revenue	$	254		$	1,430		$	682		$	4,032
Less Expenses (1)		(531	)		(2,030	)		(1,095	)		(5,902	)
Loss from discontinued operations before net (loss) gain
on dispositions and income tax benefit (expense)		(277	)		(600	)		(413	)		(1,870	)
Net (loss) gain on dispositions of real estate assets		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
(Loss) income from discontinued operations	$	(237	)	$	1,469		$	(326	)	$	3,931

(1) Includes interest expense of approximately $0.2 million and $0.6 million for the three months ended June 30, 2013 and 2012, respectively, and $0.4 million and $2.0 million, for the six months ended June 30, 2013 and 2012, respectively. Mortgage debt related to the properties included in discontinued operations were individually secured, and as such, interest expense was based on the property's debt.

Net loss from discontinued operations for the three months ended June 30, 2013 includes the net loss from the disposition of 11500 Northwest Freeway, its operating results thru the date of disposition and the operating results of 2620-2630 Fountain View. Income from discontinued operations for the three months ended June 30, 2012 includes the net gain on the dispositions of Bristol Bay and Pacific Spectrum, and the operating results of properties disposed of in 2013 and 2012.

Net loss from discontinued operations for the six months ended June 30, 2013 includes the net loss from the disposition of 11500 Northwest Freeway, its operating results thru the date of disposition and the operating results of 2620-2630 Fountain View. Income from discontinued operations for the six months ended June 30, 2012 includes the net gain from the dispositions of Park Ten Place I and II, Sierra Southwest Pointe, Foxborough Business Center Park, 6420 Atrium, Bristol Bay, and Pacific Spectrum, and the operating the results of properties disposed of in 2013 and 2012.

XML

NOTES PAYABLE (Schedule of Notes Payable) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Dec. 31, 2012
Debt Instrument [Line Items]
Principal Balance	$ 279,846		$ 312,662
Principally Owned Properties [Member]
Debt Instrument [Line Items]
Principal Balance	90,775		90,763
Fixed Rate:
Principal Balance	82,718		85,749
Variable Rate:
Principal Balance	8,057		5,014
Atrium 6430 [Member]
Debt Instrument [Line Items]
Maturity Date	May 11, 2012	[1]
Fixed Rate:
Principal Balance	2,062	[1]	2,050	[1]
Interest Rate	7.45%	[1]	7.45%	[1]
Corporate - Unsecured [Member]
Debt Instrument [Line Items]
Maturity Date	May 31, 2012	[1],[2]
Fixed Rate:
Principal Balance	1,000		1,000	[1],[2]
Interest Rate	9.50%	[1],[2]	9.50%	[1],[2]
2640 - 2650 Fountain View [Member]
Debt Instrument [Line Items]
Maturity Date	Aug. 29, 2012	[1],[2]
Fixed Rate:
Principal Balance	726	[1],[2]	726	[1],[2]
Interest Rate	10.00%	[1],[2]	10.00%	[1],[2]
Corporate - Secured by Northwest Spectrum Plaza [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 28, 2013	[3]
Fixed Rate:
Principal Balance		[3]	1,145	[3]
Interest Rate	5.50%	[3]	5.50%	[3]
Corporate - Secured [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 31, 2014
Fixed Rate:
Principal Balance	1,500		1,500
Interest Rate	8.00%		8.00%
Corporate - Secured [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 31, 2014	[4]
Fixed Rate:
Principal Balance	1,750	[4]		[4]
Interest Rate	12.00%	[4]		[4]
11500 Northwest Freeway [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 01, 2014	[5]
Fixed Rate:
Principal Balance		[5]	3,861	[5]
Interest Rate	5.93%	[5]	5.93%	[5]
11500 Northwest Freeway [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 01, 2014	[5]
Fixed Rate:
Principal Balance		[5]	279	[5]
Interest Rate	5.93%	[5]	5.93%	[5]
Morenci Professional Park [Member]
Debt Instrument [Line Items]
Maturity Date	Jul. 01, 2014	[6]
Fixed Rate:
Principal Balance	1,578	[6]	1,578	[6]
Interest Rate	7.25%	[6]	7.25%	[6]
FMC Technology [Member]
Debt Instrument [Line Items]
Maturity Date	Sep. 01, 2014
Fixed Rate:
Principal Balance	8,242		8,309
Interest Rate	5.32%		5.32%
8100 Washington [Member]
Debt Instrument [Line Items]
Maturity Date	Feb. 22, 2015
Fixed Rate:
Principal Balance	2,052		2,005
Interest Rate	5.59%		5.59%
Corporate - Secured by Management Contracts [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 05, 2015	[1],[2]
Fixed Rate:
Principal Balance	379	[1],[2]	463	[1],[2]
Interest Rate	5.50%	[1],[2]	5.50%	[1],[2]
2620 - 2630 Fountain View [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 30, 2015	[2]
Fixed Rate:
Principal Balance	5,323	[2]	5,341	[2]
Interest Rate	7.00%	[2]	7.00%	[2]
1501 Mockingbird Lane [Member]
Debt Instrument [Line Items]
Maturity Date	Jul. 01, 2015
Fixed Rate:
Principal Balance	3,089		3,089
Interest Rate	5.28%		5.28%
5450 Northwest Central [Member]
Debt Instrument [Line Items]
Maturity Date	Sep. 01, 2015
Fixed Rate:
Principal Balance	2,459		2,499
Interest Rate	5.38%		5.38%
Ocala Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Oct. 03, 2015
Fixed Rate:
Principal Balance	1,412		1,412
Interest Rate	4.25%		4.25%
Tampa Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Oct. 03, 2015
Fixed Rate:
Principal Balance	1,483		1,504
Interest Rate	4.25%		4.25%
800 & 888 Sam Houston Parkway [Member]
Debt Instrument [Line Items]
Maturity Date	Dec. 29, 2015	[2]
Fixed Rate:
Principal Balance	4,234	[2]	4,289	[2]
Interest Rate	6.25%	[2]	6.25%	[2]
Fountain View Office Tower [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 01, 2016
Fixed Rate:
Principal Balance	11,465		11,540
Interest Rate	5.82%		5.82%
Gray Falls and 12000 Westheimer [Member]
Debt Instrument [Line Items]
Maturity Date	Jan. 01, 2017
Fixed Rate:
Principal Balance	7,021		7,077
Interest Rate	5.70%		5.70%
2640 - 2650 Fountain View [Member]
Debt Instrument [Line Items]
Maturity Date	Apr. 29, 2018
Fixed Rate:
Principal Balance	11,946		12,010
Interest Rate	6.50%		6.50%
Corporate - Secured by Management Contracts [Member]
Debt Instrument [Line Items]
Maturity Date	Dec. 31, 2019
Fixed Rate:
Principal Balance	9,280		9,380
Interest Rate	5.00%		5.00%
Sabo Road Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Jul. 01, 2022
Fixed Rate:
Principal Balance	1,996		2,015
Interest Rate	5.55%		5.55%
Corporate - Unsecured [Member]
Fixed Rate:
Principal Balance	2,644		1,514
Corporate - Secured [Member]
Fixed Rate:
Principal Balance	1,077		1,163
Corporate - Unsecured [Member]
Debt Instrument [Line Items]
Maturity Date	Dec. 12, 2013	[2]
Variable Rate:
Principal Balance	125	[2]	175	[2]
Interest Rate	6.00%	[2]	6.00%	[2]
Northwest Spectrum Plaza [Member]
Debt Instrument [Line Items]
Maturity Date	Mar. 29, 2018	[2],[7]
Variable Rate:
Principal Balance	4,490	[2],[7]	2,381	[2],[7]
Interest Rate	5.00%	[2],[7]	2.66%	[2],[7]
Windrose Plaza [Member]
Debt Instrument [Line Items]
Maturity Date	Feb. 27, 2023	[2],[8]
Variable Rate:
Principal Balance	3,442	[2],[8]	2,458	[2],[8]
Interest Rate	5.50%	[2],[8]	2.66%	[2],[8]
Variable Interest Entity, Primary Beneficiary [Member]
Debt Instrument [Line Items]
Principal Balance	189,071		221,899
Variable Interest Entity, Primary Beneficiary [Member] | Fishers Indiana Distribution Center [Member]
Debt Instrument [Line Items]
Maturity Date	Oct. 01, 2012	[9]
Principal Balance		[9]	17,058	[9]
Interest Rate	5.42%	[9]	5.42%	[9]
Variable Interest Entity, Primary Beneficiary [Member] | University Springs San Marcos [Member]
Debt Instrument [Line Items]
Maturity Date	Dec. 01, 2015
Principal Balance	9,281		9,359
Interest Rate	5.55%		5.55%
Variable Interest Entity, Primary Beneficiary [Member] | University Fountains Lubbock [Member]
Debt Instrument [Line Items]
Maturity Date	Jan. 01, 2016
Principal Balance	20,657		20,828
Interest Rate	5.57%		5.57%
Variable Interest Entity, Primary Beneficiary [Member] | Dixon & 51st Logistics Center [Member]
Debt Instrument [Line Items]
Maturity Date	Jan. 01, 2016
Principal Balance	17,109		17,258
Interest Rate	5.69%		5.69%
Variable Interest Entity, Primary Beneficiary [Member] | Campus Court Student Housing [Member]
Debt Instrument [Line Items]
Maturity Date	May 11, 2016
Principal Balance	4,601		4,617
Interest Rate	5.78%		5.78%
Variable Interest Entity, Primary Beneficiary [Member] | Houston South Mason [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 25, 2016	[10]
Principal Balance	2,816	[10]	2,817	[10]
Interest Rate	5.25%	[10]	5.25%	[10]
Variable Rate:
Debt term	3 years
Variable Interest Entity, Primary Beneficiary [Member] | Grissom Road Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 01, 2017
Principal Balance	2,295		2,308
Interest Rate	7.00%		7.00%
Variable Interest Entity, Primary Beneficiary [Member] | Loop 1604 Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Sep. 11, 2017
Principal Balance	4,222		4,249
Interest Rate	6.70%		6.70%
Variable Interest Entity, Primary Beneficiary [Member] | College Park Student Apartments [Member]
Debt Instrument [Line Items]
Maturity Date	Nov. 06, 2017	[9]
Principal Balance		[9]	14,283	[9]
Interest Rate	6.35%	[9]	6.35%	[9]
Variable Interest Entity, Primary Beneficiary [Member] | Ohio II Residences at Newark & Sheffield [Member]
Debt Instrument [Line Items]
Maturity Date	Jan. 01, 2018
Principal Balance	9,277		9,334
Interest Rate	6.74%		6.74%
Variable Interest Entity, Primary Beneficiary [Member] | Muirwood Village [Member]
Debt Instrument [Line Items]
Maturity Date	Feb. 01, 2018
Principal Balance	7,660		7,708
Interest Rate	6.58%		6.58%
Variable Interest Entity, Primary Beneficiary [Member] | Aldine Westfield Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Oct. 31, 2018
Principal Balance	1,017		1,031
Interest Rate	4.76%		4.76%
Variable Interest Entity, Primary Beneficiary [Member] | Aldine [Member]
Debt Instrument [Line Items]
Maturity Date	Aug. 14, 2019
Principal Balance	1,156		1,171
Interest Rate	6.07%		6.07%
Variable Interest Entity, Primary Beneficiary [Member] | Attic Space Self Storage - Blanco Rd [Member]
Debt Instrument [Line Items]
Maturity Date	Apr. 01, 2021
Principal Balance	1,300		1,300
Interest Rate	6.63%		6.63%
Variable Interest Entity, Primary Beneficiary [Member] | Attic Space Self Storage - Laredo Rd [Member]
Debt Instrument [Line Items]
Maturity Date	Apr. 01, 2021
Principal Balance	1,694		1,721
Interest Rate	6.63%		6.63%
Variable Interest Entity, Primary Beneficiary [Member] | Ft. Worth River Oaks Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Jul. 01, 2021
Principal Balance	2,098		2,118
Interest Rate	6.00%		6.00%
Variable Interest Entity, Primary Beneficiary [Member] | Ft. Worth Northwest Self Storage [Member]
Debt Instrument [Line Items]
Maturity Date	Apr. 01, 2022
Principal Balance	2,106		2,125
Interest Rate	5.82%		5.82%
Variable Interest Entity, Primary Beneficiary [Member] | San Antonio III - AAA Stowaway / FOE [Member]
Debt Instrument [Line Items]
Maturity Date	Nov. 01, 2022
Principal Balance	9,545		9,635
Interest Rate	5.50%		5.50%
Variable Interest Entity, Primary Beneficiary [Member] | Commerce Distribution Center [Member]
Debt Instrument [Line Items]
Maturity Date	May 07, 2023	[11]
Principal Balance	9,834	[11]	9,402	[11]
Interest Rate	4.68%	[11]	6.12%	[11]
Variable Rate:
Debt term	10 years
Variable Interest Entity, Primary Beneficiary [Member] | Strongsville Corporate Center [Member]
Debt Instrument [Line Items]
Maturity Date	Nov. 11, 2034
Principal Balance	13,428		13,882
Interest Rate	5.50%		5.50%
Variable Interest Entity, Primary Beneficiary [Member] | Ohio Commerce Center [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 11, 2035
Principal Balance	18,245		18,412
Interest Rate	5.64%		5.64%
Variable Interest Entity, Primary Beneficiary [Member] | Springs Commerce Center I [Member]
Debt Instrument [Line Items]
Maturity Date	May 11, 2036
Principal Balance	16,388		16,548
Interest Rate	5.75%		5.75%
Variable Interest Entity, Primary Beneficiary [Member] | Springs Office [Member]
Debt Instrument [Line Items]
Maturity Date	Jun. 11, 2036
Principal Balance	14,164		14,301
Interest Rate	5.75%		5.75%
Variable Interest Entity, Primary Beneficiary [Member] | Spring Commerce Center II [Member]
Debt Instrument [Line Items]
Maturity Date	Jul. 11, 2036
Principal Balance	19,916		20,100
Interest Rate	6.00%		6.00%
Variable Interest Entity, Primary Beneficiary [Member] | Other Unsecured Notes [Member]
Debt Instrument [Line Items]
Principal Balance	$ 262		$ 334
Interest Rate	6.00%		6.00%

[1] We are currently negotiating extension terms with lender.

[2] Loan or certain indemnification obligations are guaranteed by us and in some cases by Mr. Carden and/or the estate of Mr. Galardi.

[3] Loan was paid in March 2013.

[4] Represents new loan obtained in March 2013.

[5] Lender foreclosed on the property in June 2013.

[6] Property is in receivership.

[7] Loan was refinanced in March 2013.

[8] Loan was refinanced in February 2013.

[9] The VIE which owned the property was deconsolidated during the first quarter of 2013.

[10] Lender extended maturity for an additional three year term in June 2013.

[11] Loan was refinanced in May 2013. The new loan, in the amount of $9.9 million is for a ten-year term.

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NOTES PAYABLE (Tables)

6 Months Ended

Jun. 30, 2013

NOTES PAYABLE [Abstract]

Schedule of Debt

We had the following notes payable outstanding, as of June 30, 2013 and December 31, 2012, secured by the following properties (dollars in thousands):

		June 30, 2013					December 31, 2012
Property (unless otherwise noted)	Maturity Date	Principal			Interest		Principal			Interest
		Balance			Rate		Balance			Rate
Owned Properties - Fixed Rate:
Atrium 6430 (2)	05/11/2012			2,062		7.45%			2,050		7.45%
Corporate - Unsecured (2) (3)	05/31/2012			1,000		9.50%			1,000		9.50%
2640 - 2650 Fountain View (2) (3)	08/29/2012			726		10.00%			726		10.00%
Corporate - Secured by Northwest Spectrum Plaza (4)	03/28/2013			-		5.50%			1,145		5.50%
Corporate - Secured	03/31/2014			1,500		8.00%			1,500		8.00%
Corporate - Secured (5)	03/31/2014			1,750		12.00%			-		-
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			3,861		5.93%
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			279		5.93%
Morenci Professional Park (1)	07/01/2014			1,578		7.25%			1,578		7.25%
FMC Technology	09/01/2014			8,242		5.32%			8,309		5.32%
8100 Washington	02/22/2015			2,052		5.59%			2,005		5.59%
Corporate - Secured by Management Contracts (2) (3)	06/05/2015			379		5.50%			463		5.50%
2620 - 2630 Fountain View (3)	06/30/2015			5,323		7.00%			5,341		7.00%
1501 Mockingbird Lane	07/01/2015			3,089		5.28%			3,089		5.28%
5450 Northwest Central	09/01/2015			2,459		5.38%			2,499		5.38%
Ocala Self Storage	10/03/2015			1,412		4.25%			1,412		4.25%
Tampa Self Storage	10/03/2015			1,483		4.25%			1,504		4.25%
800 & 888 Sam Houston Parkway (3)	12/29/2015			4,234		6.25%			4,289		6.25%
Fountain View Office Tower	03/01/2016			11,465		5.82%			11,540		5.82%
Gray Falls and 12000 Westheimer	01/01/2017			7,021		5.70%			7,077		5.70%
2640 - 2650 Fountain View	04/29/2018			11,946		6.50%			12,010		6.50%
Corporate - Secured by Management Contracts	12/31/2019			9,280		5.00%			9,380		5.00%
Sabo Road Self Storage	07/01/2022			1,996		5.55%			2,015		5.55%
Corporate - Unsecured	Various			2,644		Various			1,514		Various
Corporate - Secured	Various			1,077		Various			1,163		Various
	Subtotal		$	82,718				$	85,749
Owned Properties - Variable Rate
Corporate - Unsecured (3)	12/12/2013			125		6.00%			175		6.00%
Northwest Spectrum Plaza (3) (6)	03/29/2018			4,490		5.00%			2,381		2.66%
Windrose Plaza (3) (7)	02/27/2023			3,442		5.50%			2,458		2.66%
	Subtotal		$	8,057				$	5,014
Subtotal ASR Principally Owned Properties				90,775					90,763

Consolidated VIE Properties
Fishers Indiana Distribution Center (8)	10/01/2012		-	5.42	%		17,058	5.42	%
University Springs San Marcos	12/01/2015		9,281	5.55	%		9,359	5.55	%
University Fountains Lubbock	01/01/2016		20,657	5.57	%		20,828	5.57	%
Dixon & 51st Logistics Center	01/01/2016		17,109	5.69	%		17,258	5.69	%
Campus Court Student Housing	05/11/2016		4,601	5.78	%		4,617	5.78	%
Houston South Mason (11)	06/25/2016		2,816	5.25	%		2,817	5.25	%
Grissom Road Self Storage	06/01/2017		2,295	7.00	%		2,308	7.00	%
Loop 1604 Self Storage	09/11/2017		4,222	6.70	%		4,249	6.70	%
College Park Student Apartments (8)	11/06/2017		-	6.35	%		14,283	6.35	%
Ohio II Residences at Newark & Sheffield	01/01/2018		9,277	6.74	%		9,334	6.74	%
Muirwood Village	02/01/2018		7,660	6.58	%		7,708	6.58	%
Aldine Westfield Self Storage	10/31/2018		1,017	4.76	%		1,031	4.76	%
Aldine	08/14/2019		1,156	6.07	%		1,171	6.07	%
Attic Space Self Storage - Blanco Rd.	04/01/2021		1,300	6.63	%		1,300	6.63	%
Attic Space Self Storage - Laredo Rd.	04/01/2021		1,694	6.63	%		1,721	6.63	%
Ft. Worth River Oaks Self Storage	07/01/2021		2,098	6.00	%		2,118	6.00	%
Ft. Worth Northwest Self Storage	04/01/2022		2,106	5.82	%		2,125	5.82	%
San Antonio III - AAA Stowaway / FOE	11/01/2022		9,545	5.50	%		9,635	5.50	%
Commerce Distribution Center (9)	05/07/2023		9,834	4.68	%		9,402	6.12	%
Strongsville Corporate Center	11/11/2034		13,428	5.50	%		13,882	5.50	%
Ohio Commerce Center	06/11/2035		18,245	5.64	%		18,412	5.64	%
Springs Commerce Center I	05/11/2036		16,388	5.75	%		16,548	5.75	%
Springs Office	06/11/2036		14,164	5.75	%		14,301	5.75	%
Spring Commerce Center II	07/11/2036		19,916	6.00	%		20,100	6.00	%
Other Unsecured Notes	Various		262	6.00	%		334	6.00	%
	Subtotal Consolidated VIE Properties	$	189,071			$	221,899
Grand Total		$	279,846			$	312,662

(1)	Property is in receivership.
(2)	We are currently negotiating extension terms with lender.
(3)	Loan or certain indemnification obligations are guaranteed by us and in some cases by Mr. Carden and/or the estate of Mr. Galardi.
(4)	Loan was paid in March 2013.
(5)	Represents new loan obtained in March 2013.
(6)	Loan was refinanced in March 2013.
(7)	Loan was refinanced in February 2013.
(8)	The VIE which owned the property was deconsolidated during the first quarter of 2013.
(9)	Loan was refinanced in May 2013. The new loan, in the amount of $9.9 million is for a ten-year term.
(10)	Lender foreclosed on the property in June 2013.
(11)	Lender extended maturity for an additional three year term in June 2013.

Schedule of Nonpayment Debt Service

We are in default on the notes listed below due to non-payment of scheduled debt service. The balances disclosed on the table below exclude additional fees that may be the result of non-payment.

		Balance
	ASR Ownership	June 30, 2013
Property Secured by	Percentage	(in thousands)
Morenci Professional Park	100%	$	1,578
1501 Mockingbird	100%		3,089
6430 Richmond	100%		2,062
2640/2650 Fountain View	100%		726
Corporate - Unsecured	100%		1,000
TOTAL		$	8,455

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DESCRIPTION OF BUSINESS (Details)	Jun. 30, 2013 states properties
Noncontrolling Interest [Line Items]
Ownership interest in Operating Partnership	93.00%
Noncontrolling interest in Operating Partnership	7.00%
Real Estate Properties [Line Items]
Number of properties	40
Number of states	16
800 & 888 Sam Houston Parkway and Gray Falls Center & 12000 Westheimer [Member]
Real Estate Properties [Line Items]
Number of properties	4
Scenario, Previously Reported [Member] | 800 & 888 Sam Houston Parkway and Gray Falls Center & 12000 Westheimer [Member]
Real Estate Properties [Line Items]
Number of properties	2
Office Properties [Member]
Real Estate Properties [Line Items]
Number of properties	12
Self Storage Building [Member]
Real Estate Properties [Line Items]
Number of properties	12
Commercial and Industrial Property [Member]
Real Estate Properties [Line Items]
Number of properties	8
Multi-Family Properties [Member]
Real Estate Properties [Line Items]
Number of properties	5
Retail Site [Member]
Real Estate Properties [Line Items]
Number of properties	2
Land [Member]
Real Estate Properties [Line Items]
Number of properties	1
Wholly Owned Properties [Member]
Real Estate Properties [Line Items]
Number of properties	19
Consolidated Properties [Member]
Real Estate Properties [Line Items]
Number of properties	21

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VARIABLE INTEREST ENTITIES (Schedule of Carrying Amounts) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets
Total Assets	$ 261,318	$ 305,861
Liabilities
Total liabilities	194,559	229,056
Variable interest entity net carrying amount	66,759	76,805
Restricted Cash [Member]
Assets
Total Assets	3,519	3,724
Receivables [Member]
Assets
Total Assets	3,204	2,988
Fixed Assets, Net [Member]
Assets
Total Assets	247,443	290,549
Other Assets [Member]
Assets
Total Assets	7,152	8,600
Accounts Payable [Member]
Liabilities
Total liabilities	140	398
Notes Payable [Member]
Liabilities
Total liabilities	189,071	221,899
Other Liabilities [Member]
Liabilities
Total liabilities	$ 5,348	$ 6,759

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STOCK-BASED COMPENSATION (Narrative) (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
STOCK-BASED COMPENSATION [Abstract]
Unrecognized share-based compensation expense	$ 0.1
Unrecognized share-based compensation expense, recognition period	2 years 9 months 18 days
Shares reserved under plan	360,000
Shares issued under plan	121,712
Closing stock price	$ 2.41

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NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS (Schedule of Effects of Changes in Equity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS [Abstract]
Net (loss) income attributable to the Company	$ (1,394)	$ 7	$ (3,281)	$ 419
Increase in the Company's paid-in-capital on exchange of OP Units for shares of common stock			17	1,711
Increase in the Company's paid-in-capital on redemption of OP Units for cash				8,000
Change from net (loss) income attributable to the Company related to non- controlling interest transactions			$ (3,264)	$ 10,130

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Real estate held for investment to VIE's	$ 390,825	$ 438,675
Accumulated depreciation to VIE's	73,028	71,775
Real estate held for investment, net to VIE's	317,797	366,900
Restricted cash to VIE's	3,519	3,724
Tenant and other receivables to VIE's	1,904	1,281
Allowance for doubtful accounts of tenant and other receivables	559	673
Deferred rents receivable to VIE's	3,624	3,269
Accumulated amortization	4,706	3,114
Prepaid and other assets, net to VIE's	13,573	15,753
Notes payable to VIE's	279,846	312,662
Accounts payable to VIE's	7,436	7,458
Accrued and other liabilities to VIE's	11,678	15,241
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized (in shares)	25,000,000	25,000,000
Preferred Stock, Shares Issued (in shares)	55,172	55,172
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, Shares Authorized (in shares)	100,000,000	100,000,000
Common Stock, Shares, Issued (in shares)	4,028,765	4,039,191
Common Stock, Shares, Outstanding (in shares)	3,557,353	3,567,779
Treasury Stock, Shares (in shares)	471,412	471,412
Variable Interest Entity, Primary Beneficiary [Member]
Real estate held for investment to VIE's	285,820	327,676
Accumulated depreciation to VIE's	38,377	37,127
Real estate held for investment, net to VIE's	247,443	290,549
Restricted cash to VIE's	3,519	3,724
Tenant and other receivables to VIE's	698	784
Allowance for doubtful accounts of tenant and other receivables	350	473
Deferred rents receivable to VIE's	2,506	2,204
Prepaid and other assets, net to VIE's	7,152	8,600
Notes payable to VIE's	189,071	221,899
Accounts payable to VIE's	140	398
Accrued and other liabilities to VIE's	$ 5,348	$ 6,759

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SEGMENTS

6 Months Ended

Jun. 30, 2013

SEGMENTS [Abstract]

SEGMENTS

NOTE 8 - SEGMENTS

The operating segments in which management assesses performance and allocates resources are rental operations and management and leasing services. Our segments reflect management's resource allocation and performance assessment in making decisions regarding our Company.

The following table sets forth our segment information for the periods presented:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Rental Operations:
Revenues from external customers	$	11,219		$	12,378		$	22,738		$	25,334
Intersegment revenues		114			144			228			240
Net loss		(1,174	)		167			(1,748	)		(747	)
Total segment assets		339,028			423,134			339,028			423,134
Management Services:
Revenues from unaffiliated external customers	$	867		$	728		$	1,877		$	1,622
Intersegment revenues		411			546			845			1,175
Net loss		(388	)		(262	)		(1,610	)		(1,500	)
Total segment assets		14,302			17,071			14,302			17,071
Reconciliations:
Total segment revenues	$	12,611		$	13,796		$	25,688		$	28,371
Elimination of intersegment revenues		(525	)		(690	)		(1,073	)		(1,415	)
Interest income		3			40			4			86
Total consolidated revenues	$	12,089		$	13,146		$	24,619		$	27,042
Segment net loss	$	(1,562	)	$	(95	)	$	(3,358	)	$	(2,247	)
Unallocated expenses		(1,361	)		(2,044	)		(2,793	)		(4,156	)
Other income (expense)		173			-			173			(151	)
Deferred income tax benefit		679			985			1,724			1,500
(Loss) income from discontinued operations		(237	)		1,469			(326	)		3,931
Net loss (income) attributable to non-controlling interests		914			(308	)		1,299			1,542
Net (loss) income attributable to ASR	$	(1,394	)	$	7		$	(3,281	)	$	419
Total segment assets	$	353,330		$	440,205		$	353,330		$	440,205
Unallocated corporate assets		13,633			12,349			13,633			12,349
Total assets	$	366,963		$	452,554		$	366,963		$	452,554

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CONSOLIDATED STATEMENT OF EQUITY (USD $) In Thousands, except Share data	Total	Preferred Stock [Member]	Common Stock [Member]	Noncontrolling Interest [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]
Balance at Dec. 31, 2012	$ 82,017	$ 1	$ 34	$ 79,015	$ 61,158	$ (55,096)	$ (3,095)
Balance, shares at Dec. 31, 2012		55,172	4,039,191
Preferred stock dividends	(120)				(120)
Stock-based compensation	30				30
Restricted stock forefeitures
Restricted stock forefeitures, shares			(11,068)
Conversion of OP units to common stock				(17)	17
Conversion of OP units to common stock, shares			642
Deconsolidation of VIE's	(6,105)			(6,105)
Noncontrolling interests share of loss	(1,299)			(1,299)
Distributions	(3,250)			(3,250)
Contributions	11			11
Net loss	(3,281)					(3,281)
Balance at Jun. 30, 2013	$ 68,003	$ 1	$ 34	$ 68,355	$ 61,085	$ (58,377)	$ (3,095)
Balance, shares at Jun. 30, 2013		55,172	4,028,765

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Real estate held for investment (includes $285,820 and $327,676 from consolidated Variable Interest Entities ("VIE's"), respectively)	$ 390,825	$ 438,675
Accumulated depreciation (includes $38,377 and $37,127 from consolidated VIE's, respectively)	(73,028)	(71,775)
Real estate held for investment, net (includes $247,443 and $290,549 from consolidated VIE's, respectively)	317,797	366,900
Cash and cash equivalents	230	492
Restricted cash (includes $3,519 and $3,724 from consolidated VIE's, respectively)	3,519	3,724
Tenant and other receivables (includes $698 and $784 from consolidated VIE's, respectively), net of allowance for doubtful accounts of $559 and $673 (includes $350 and $473 from consolidated VIE's, respectively	1,904	1,281
Deferred rents receivable (includes $2,506 and $2,204 from consolidated VIE's, respectively)	3,624	3,269
Purchased intangibles subject to amortization, net of accumulated amortization of $4,706 and $3,114, respectively	4,353	5,946
Deferred tax assets	13,201	11,308
Goodwill	6,687	6,687
Investment in unconsolidated real estate assets from related parties	389	332
Notes receivable from Evergreen	1,000	1,000
Interest receivable from Evergreen	272	272
Accounts receivable from Evergreen	414	414
Prepaid and other assets, net (includes $7,152 and $8,600 from consolidated VIE's, respectively)	13,573	15,753
Total Assets	366,963	417,378
Liabilities:
Notes payable (includes $189,071 and $221,899 from consolidated VIE's, respectively)	279,846	312,662
Accounts payable (includes $140 and $398 from consolidated VIE's, respectively)	7,436	7,458
Accrued and other liabilities (includes $5,348 and $6,759 from consolidated VIE's, respectively	11,678	15,241
Total Liabilities	298,960	335,361
Commitments and Contingencies (Note 13):
American Spectrum Realty, Inc, stockholders' (deficit) equity:
Preferred stock par value $.01 per share, 25,000,000 authorized shares, 55,172 issued at June 30, 2013 and December 31, 2012, respectively	1	1
Common stock par value $.01 per share, 100,000,000 authorized shares, 4,028,765 and 4,039,191 issued at June 30, 2013 and December 31, 2012, respectively; 3,557,353 and 3,567,779 outstanding at June 30, 2013 and December 31, 2012, respectively	34	34
Additional paid-in capital	61,085	61,158
Accumulated deficit	(58,377)	(55,096)
Treasury stock, at cost, 471,412 shares at June 30, 2013 and December 31, 2012, respectively	(3,095)	(3,095)
Total American Spectrum Realty, Inc. stockholders' (deficit) equity	(352)	3,002
Non-controlling interest	68,355	79,015
Total Equity	68,003	82,017
Total Liabilities and Equity	$ 366,963	$ 417,378

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	0 Months Ended				12 Months Ended	1 Months Ended	12 Months Ended
	Mar. 02, 2011	Jun. 30, 2013	Dec. 31, 2010	Jun. 30, 2013 Corporate - Unsecured [Member]	Dec. 31, 2010 Payments Sought by ARS [Member]	Jan. 31, 2013 New West Realty, Inc. Action [Member]	Dec. 31, 2011 New West Realty, Inc. Action [Member]
Loss Contingencies [Line Items]
Purchase price of assets	$ 18,000,000
Assumption of payables	500,000
Promissory note issued	9,500,000
Issuance of equity	800,000
Dividing Amount By Greater Of Share Price			8,000,000
Common Stock Share Price Per Share (in dollars per share)			$ 17.52
Damages sought					578,000		9,500,000
Default on debt, amount		8,455,000		1,000,000
Amount of settlement						$ 4,600,000

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NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS (Tables)

6 Months Ended

Jun. 30, 2013

NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS [Abstract]

Schedule of Operating Partnership Units Activity

The following table summarizes the activity for the OP Units:

	OP Units
	(in thousands)
Balance, January 1, 2013	3,819
Issuances	-
Redemptions	(13	)
Balance, June 30, 2013	3,806
Ownership of Operating Partnership Units
ASR	3,557
All others	249
	3,806

Schedule of Effects of Changes in Equity Related to Non-Controlling Interests

The following represents the effects of changes in our equity related to non-controlling interests:

	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
Net (loss) income attributable to the Company	$	(3,281	)	$	419
Increase in the Company's paid-in-capital on exchange of OP Units for shares
of common stock		17			1,711
Increase in the Company's paid-in-capital on redemption of OP Units for cash		-			8,000
Change from net (loss) income attributable to the Company related to non-
controlling interest transactions	$	(3,264	)	$	10,130

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements and related notes have been prepared in conformity with generally accepted accounting principles in the United States and the rules and regulations of the Securities and Exchange Commission (the "SEC") for preparation of interim financial statements. The information furnished in this report reflects all adjustments that, in the opinion of management, are necessary for a fair presentation of the Company's results of operations, financial position and cash flows, and such adjustments consist of items of a normal recurring nature. The results for such periods are not necessarily indicative of the results to be expected for the full fiscal year or for any other future period. The following unaudited condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the company believes that the disclosures made are adequate to make the information not misleading. These consolidated financial statements included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2012 included in the Company's Annual Report on Form 10-K as filed with the SEC on April 1, 2013.

The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we re-evaluate our judgments and estimates. We base our estimates and judgments on our historical experience, knowledge of current conditions and our belief of what could occur in the future considering available information, including assumptions that we believe to be reasonable under the circumstances. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty and actual results could differ materially from the amounts reported based on these policies.

The financial statements include the accounts of the Operating Partnership, all subsidiaries of the Company, and VIE's where the Company is the primary beneficiary. All significant intercompany transactions, receivables and payables have been eliminated in consolidation.

The Company accounts for unconsolidated real estate investments using the equity method of accounting. Accordingly, the Company's share of earnings of these real estate investments is included in the consolidated results of operations.

Certain prior year balances have been reclassified to conform to the current year presentation.

Summary of Critical and Significant Accounting Policies and Estimates

Summary of Critical and Significant Accounting Policies and Estimates

Reference is made to "Summary of Critical and Significant Accounting Policies and Estimates" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 as filed with the SEC on April 1, 2013.

Segments

Segments

We have identified two reportable business segments: (i) rental operations and (ii) management and leasing services. We evaluate the performance of our operating segments based on operating income (loss). All inter-segment sales pricing is based on current market conditions. Unallocated corporate amounts include general expenses associated with managing our two reportable operating segments.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In July 2012, the FASB issued ASU 2012-02, "Intangibles, Goodwill, and Other (Topic 350): Testing Indefinite-Lived Intangibles for Impairment". This ASU adds new accounting guidance that simplifies how an entity tests indefinite-lived intangible assets other than goodwill for impairment. It permits an entity to first assess qualitative factors to determine whether further testing for impairment of indefinite-lived intangible assets other than goodwill is required. This accounting guidance will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this accounting guidance did not have a material effect on our financial condition or results of operations.

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NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS (Schedule of OP Unit Activity) (Details) (Reportable Legal Entities [Member], Operating Partnership [Member])	6 Months Ended
	Jun. 30, 2013
Noncontrolling Interest [Line Items]
Balance	3,819
Issuances
Redemptions	(13)
Balance	3,806
Parent [Member]
Noncontrolling Interest [Line Items]
Balance	3,557
Noncontrolling Interest [Member]
Noncontrolling Interest [Line Items]
Balance	249

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SUBSEQUENT EVENTS (Details) (USD $) In Millions, unless otherwise specified			1 Months Ended
	Jun. 30, 2013	Jul. 31, 2013 Subsequent Event [Member] Fountain View Partnership [Member]	Jul. 31, 2013 Subsequent Event [Member] Fountain View 2620 - 2630 [Member]	Jul. 31, 2013 Subsequent Event [Member] Fountain View 2620 - 2630 [Member] Scenario, Forecast [Member]	Jul. 31, 2013 Subsequent Event [Member] Fountain View 2620 - 2630 [Member] Fountain View Partnership [Member]	Jul. 31, 2013 Subsequent Event [Member] Sale of Buildings Held for Sale [Member] Scenario, Plan [Member]	Jul. 31, 2013 Subsequent Event [Member] Sales of Two Additional Properties [Member] Minimum [Member]	Jul. 31, 2013 Subsequent Event [Member] Sales of Two Additional Properties [Member] Maximum [Member]
Proceeds from Sale of Property Held-for-sale			$ 8.9	$ 1.8	$ 3.0	$ 2.0	$ 2.0	$ 4.0
ASR Ownership Percentage	93.00%	51.00%
Escrow deposits released				$ 1.5

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RELATED PARTY TRANSACTIONS (Details) (USD $) In Millions, unless otherwise specified	1 Months Ended	6 Months Ended
	Jan. 31, 2013	Jun. 30, 2013
Minimum [Member]
Related Party Transaction [Line Items]
Percentage of annual guarantee fee		0.25%
Maximum [Member]
Related Party Transaction [Line Items]
Percentage of annual guarantee fee		0.75%
William J. Carden [Member]
Related Party Transaction [Line Items]
Proceeds from related party advances	$ 0.1
Guarantee fees paid		0.04
Value of notes guaranteed		$ 16.1

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ASSET IMPAIRMENTS (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Impairment expense	$ 1,385	$ 481
Contractual Rights [Member]
Impairment expense	$ 1,400	$ 500

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ASSETS HELD FOR SALE (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Long Lived Assets Held-for-sale [Line Items]
ASR Ownership Percentage	93.00%
Fountain View Office Tower [Member]
Long Lived Assets Held-for-sale [Line Items]
Property Type	Office	[1]
ASR Ownership Percentage	51.00%	[1]
Carrying Values of Properties	$ 11,500	[1]
Carrying Value of Debt	11,465	[1]
2620 & 2630 Fountain View [Member]
Long Lived Assets Held-for-sale [Line Items]
Property Type	Office	[2]
ASR Ownership Percentage	51.00%	[2]
Carrying Values of Properties	7,040	[2]
Carrying Value of Debt	5,323	[2]
2640 & 2650 Fountain View [Member]
Long Lived Assets Held-for-sale [Line Items]
Property Type	Office
ASR Ownership Percentage	100.00%
Carrying Values of Properties	13,609
Carrying Value of Debt	12,672
Windrose Plaza [Member]
Long Lived Assets Held-for-sale [Line Items]
Property Type	Retail
ASR Ownership Percentage	100.00%
Carrying Values of Properties	3,116
Carrying Value of Debt	3,442
8100 Washington [Member]
Long Lived Assets Held-for-sale [Line Items]
Property Type	Office
ASR Ownership Percentage	100.00%
Carrying Values of Properties	1,802
Carrying Value of Debt	$ 2,052

[1] Property fell out of sale contract with prospective buyer in second quarter of 2013.

[2] Property was sold in July 2013. See Note 16 - Subsequent Events

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2013

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 7 - RELATED PARTY TRANSACTIONS

We pay a guarantee fee to William J. Carden and the estate of John N. Galardi ("the Guarantors"), in consideration for their guarantees of certain obligations of the Company. Mr. Carden is president, a principal shareholder and a director of the Company. Mr. Galardi, who died in April 2013, was a principal shareholder of the Company. The Guarantors are paid an annual guarantee fee equal to between .25% and .75% (depending on the nature of the guarantee) of the outstanding balance as of December 31 of the guaranteed obligations ("Guarantee Fee"). Guarantee fees for the six months ended June 30, 2013 totaled approximately $0.04 million, all of which was paid to Mr. Carden. The following property notes are being guaranteed: 800/888 Sam Houston Parkway, 2620/2630 Fountain View, 2640/2650 Fountain View, Windrose and Northwest Spectrum Plaza. There are also three corporate notes being guaranteed. The guaranteed notes total $16.1 million at June 30, 2013.

In January 2013, William J. Carden advanced $0.1 million to the Company.

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NET (LOSS) INCOME PER SHARE (Tables)

6 Months Ended

Jun. 30, 2013

NET (LOSS) INCOME PER SHARE [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Net (loss) income per share is calculated based on the weighted average number of common shares outstanding. Stock options outstanding, OP Units and preferred shares have not been included in the net loss per share calculation since their effect on the losses would be antidilutive. Net (loss) income per share for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands, except for shares and per share amounts):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Loss from continuing operations	$	(2,071	)	$	(1,154	)	$	(4,254	)	$	(5,054	)
Net loss (income) attributable to non-controlling interests from
continuing operations		890			(179	)		1,267			2,216
Loss from continuing operations attributable to American
Spectrum Realty Inc. common stockholders	$	(1,181	)	$	(1,333	)	$	(2,987	)	$	(2,838	)
Discontinued operations:
Loss from discontinued operations		(277	)		(600	)		(413	)		(1,870	)
(Loss) gain on disposition of discontinued operations		(83	)		2,934			(83	)		7,542
Income tax benefit (expense)		123			(865	)		170			(1,741	)
Net loss (income) attributable to non-controlling interests
from discontinued operations		24			(129	)		32			(674	)
(Loss) income from discontinued operations		(213	)		1,340			(294	)		3,257
Preferred stock dividend		(60	)		(60	)		(120	)		(120	)
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(1,454	)	$	(53	)	$	(3,401	)	$	299
Basic per share data:
Loss from continuing operations attributable to American
Spectrum Realty, Inc. common stockholders	$	(0.33	)	$	(0.38	)	$	(0.84	)	$	(0.79	)
(Loss) income from discontinued operations attributable to
American Spectrum Realty, Inc. common stockholders		(0.06	)		0.38			(0.08	)		0.91
Net (loss) income attributable to American Spectrum
Realty Inc. common stockholders	$	(0.39	)	$	-		$	(0.92	)	$	0.12
Basic weighted average shares used		3,564,304			3,564,783			3,566,041			3,571,283

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following weighted average preferred shares, stock options and OP units outstanding that may be redeemed for common stock on a one-for-one basis were excluded from the computation of diluted net (loss) income per share as they had an anti-dilutive effect:

	Three Months Ended June 30,		Six Months Ended June 30,
	2013	2012	2013	2012
	(unaudited)		(unaudited)
Preferred shares	55,172	55,172	55,172	55,172
Stock options	-	17,500	-	17,500
OP Units	249,978	519,130	250,333	785,796
Total	305,150	591,802	305,505	858,468

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NOTES PAYABLE (Schedule of Notes in Default) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Debt Instrument [Line Items]
Debt Instrument, Debt Default, Amount	$ 8,455
Morenci Professional Park [Member]
Debt Instrument [Line Items]
ASR Ownership Percentage	100.00%
Debt Instrument, Debt Default, Amount	1,578
Mockingbird Lane 1501 [Member]
Debt Instrument [Line Items]
ASR Ownership Percentage	100.00%
Debt Instrument, Debt Default, Amount	3,089
6430 Richmond [Member]
Debt Instrument [Line Items]
ASR Ownership Percentage	100.00%
Debt Instrument, Debt Default, Amount	2,062
2640 - 2650 Fountain View [Member]
Debt Instrument [Line Items]
ASR Ownership Percentage	100.00%
Debt Instrument, Debt Default, Amount	726
Corporate - Unsecured [Member]
Debt Instrument [Line Items]
ASR Ownership Percentage	100.00%
Debt Instrument, Debt Default, Amount	$ 1,000

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NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS

6 Months Ended

Jun. 30, 2013

NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS [Abstract]

NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS

NOTE 10 - NON-CONTROLLING INTERESTS AND OPERATING PARTNERSHIP UNITS

The following table summarizes the activity for the OP Units:

	OP Units
	(in thousands)
Balance, January 1, 2013	3,819
Issuances	-
Redemptions	(13	)
Balance, June 30, 2013	3,806
Ownership of Operating Partnership Units
ASR	3,557
All others	249
	3,806

The following represents the effects of changes in our equity related to non-controlling interests:

	Six Months Ended
	June 30,
	2013			2012
	(in thousands)
Net (loss) income attributable to the Company	$	(3,281	)	$	419
Increase in the Company's paid-in-capital on exchange of OP Units for shares
of common stock		17			1,711
Increase in the Company's paid-in-capital on redemption of OP Units for cash		-			8,000
Change from net (loss) income attributable to the Company related to non-
controlling interest transactions	$	(3,264	)	$	10,130

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2013

VARIABLE INTEREST ENTITIES [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 6 - VARIABLE INTEREST ENTITIES

We have identified multiple Variable Interest Entities where we are the primary beneficiary for accounting purposes. As a result, these VIE entities were consolidated in the consolidated financial statements, after eliminating intercompany transactions and presenting the interests that are not owned by us as non-controlling interests in the condensed consolidated balance sheets.

The entities consolidated as of June 30, 2013 include 9 self-storage properties, 3 student housing properties, 7 commercial properties and 2 multifamily properties. The entities are generally financed through cash flows from property operations.

During the first quarter of 2013 we deconsolidated the VIE's which owned College Park (a student housing property) and Fishers Indiana (a commercial property) after determining that we were no longer the primary beneficiary. We no longer manage or have a continuing involvement with these two properties.

The impact of the deconsolidation of VIE's on our year to date Consolidated Financial Statements was a decrease in total assets of $38.9 million, a decrease in total liabilities of $32.8 million, and decrease in non-controlling interest of $6.1 million. No net income was attributable to non-controlling interests from the deconsolidated VIE's for the three and six months ended June 30, 2013. The deconsolidation of the VIE's did not result in a gain or loss in the Consolidated Statement of Operations, as the carrying amount of the non-controlling interest in the former subsidiaries at the deconsolidation dates were the same as the carrying amount of the former subsidiary's assets minus liabilities at the date of the deconsolidation.

We own an insignificant interest in most of the VIE's, and therefore, substantially all related operating results are included in the net income (loss) attributable to non-controlling interests.

The carrying amounts associated with the VIE's, after eliminating the effect of intercompany transactions, were as follows (in thousands):

	June 30,		December 31,
	2013		2012
Assets
Restricted cash	$	3,519	$	3,724
Receivables		3,204		2,988
Fixed Assets, net		247,443		290,549
Other Assets		7,152		8,600
Total Assets	$	261,318	$	305,861
Liabilities
Accounts payable		140		398
Notes payable		189,071		221,899
Other liabilities		5,348		6,759
Total liabilities	$	194,559	$	229,056
Variable interest entity net carrying amount	$	66,759	$	76,805

At June 30, 2013, the liabilities in the above table are solely the obligations of the VIE's and are not guaranteed by the Company. In addition, the Company does not have the ability to leverage the assets of the above identified VIE's for the purpose of providing ourselves cash. The notes payable are solely secured by the property of the respective VIE's.

During the six months ended June 30, 2013, we did not provide short term advances to any properties that have been consolidated or deconsolidated. An immaterial balance is still owed to us as of June 30, 2013 relating to prior advances. We do not believe we have significant exposure to losses related to the VIE's.

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DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2013

DESCRIPTION OF BUSINESS [Abstract]

DESCRIPTION OF BUSINESS

NOTE 1 - DESCRIPTION OF BUSINESS

We provide comprehensive integrated real estate solutions for our own property portfolio (properties in which we own a controlling interest or in properties where we are the primary beneficiary of a variable interest entity, ("a VIE")) and the portfolios of our third party clients. We own and/or manage commercial, industrial, retail, self-storage and multi-family, student housing income properties, and offer our third party clients comprehensive integrated real estate solutions, including management and transaction services based on our market expertise. We conduct our business in the continental United States. American Spectrum Realty, Inc. was incorporated in Maryland in August of 2000.

Our business is conducted through an Operating Partnership in which we are the sole general partner and a limited partner with a total equity interest of 93% at June 30, 2013. As the sole general partner of the Operating Partnership, we have the exclusive power to manage and conduct the business of the Operating Partnership. In general, the Operating Partnership units that are not held by us (approximately 7% of the outstanding units) are exchangeable for either common stock on a one-to-one basis or cash equal to the value of such stock at our sole discretion.

At June 30, 2013, we consolidated 40 properties (including 19 properties primarily owned by us and 21 properties owned by VIE's in which we were deemed the primary beneficiary), which consisted of 12 office properties, 12 self-storage facilities, 8 commercial/industrial properties, 5 multi-family properties, 2 retail properties and a parcel of land. The properties are located in 16 states. At June 30, 2013, the Company has determined to consider 800 & 888 Sam Houston Parkway and Gray Falls Center & 12000 Westheimer as four separate properties rather than two as reported in previous filings.

The operating segments in which management assesses performance and allocates resources are rental operations and management and leasing services. Our segments reflect management's resource allocation and performance assessment in making decisions regarding our Company.

We deliver integrated property, facility, asset, business and engineering management services to a host of third party clients as well as to our own properties. We offer customized programs that focus on tenant retention through cost-efficient operations.

We are committed to expanding the scope of products and services offered. We believe this expansion will help us meet our own portfolio property needs as well as the needs of our third party clients. During 2013, we intend to expand the number of third party properties that we manage.

We refer to ourselves throughout this report as "the Company" or "ASR".

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PREFERRED STOCK (Details) (USD $) In Millions, except Share data, unless otherwise specified	6 Months Ended		1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Dec. 31, 2008 Mr. Carden, Mr. Galardi and Timothy R. Brown [Member]	Dec. 30, 2008 Series A Preferred Stock [Member]
Preferred Stock, Shares Authorized (in shares)	25,000,000	25,000,000		68,965
Preferred Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.01	$ 0.01
Issuance of common stock (in shares)			55,172
Shares Issued, Price Per Share			$ 29.00
Preferred Stock, Dividend Rate, Percentage	15.00%
Dividends Payable	$ 0.5
Preferred Stock, Dividends Per Share, Declared (in dollars per share)	$ 0.13

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NET (LOSS) INCOME PER SHARE (Schedule of Securities Excluded) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	305,150	591,802	305,505	858,468
Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	55,172	55,172	55,172	55,172
Stock Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		17,500		17,500
Operating Partnership Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	249,978	519,130	250,333	785,796

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DISCONTINUED OPERATIONS (Schedule of Discontinued Operations) (Details) (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
DISCONTINUED OPERATIONS [Abstract]
Rental Revenue	$ 254,000		$ 1,430,000		$ 682,000		$ 4,032,000
Less Expenses	(531,000)	[1]	(2,030,000)	[1]	(1,095,000)	[1]	(5,902,000)	[1]
Loss from discontinued operations before net (loss) gain on dispositions and income tax benefit (expense)	(277,000)		(600,000)		(413,000)		(1,870,000)
Net (loss) gain on dispositions of real estate assets	(83,000)		2,934,000		(83,000)		7,542,000
Income tax benefit (expense)	123,000		(865,000)		170,000		(1,741,000)
Income from discontinued operations	(237,000)		1,469,000		(326,000)		3,931,000
Interest expense	$ 200,000		$ 600,000		$ 400,000		$ 2,000,000

[1] Includes interest expense of approximately $0.2 million and $0.6 million for the three months ended June 30, 2013 and 2012, respectively, and $0.4 million and $2.0 million, for the six months ended June 30, 2013 and 2012, respectively. Mortgage debt related to the properties included in discontinued operations were individually secured, and as such, interest expense was based on the property's debt.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 13 - COMMITMENTS AND CONTINGENCIES

On March 2, 2011, we filed an action against Evergreen Realty Group, LLC and certain of its affiliates ("Evergreen") relating to its acquisition of assets from Evergreen in January 2010. The purchase price of the assets was $18.0 million, subject to adjustment as provided in the purchase agreement, and was paid in the form of (a) the assumption of $500,000 of payables, (b) the issuance of a $9.5 million promissory note and (c) the issuance of 800,000 operating partnership units which would be redeemable by Evergreen after June 30, 2011 for a number of shares of our common stock (or, at our option, the cash equivalent) equal to the quotient obtained by dividing $8.0 million by the greater of our share price or net asset value as of December 31, 2010. (Our share price as of December 31, 2010 was $17.52; our net asset value as of December 31, 2010 has not been definitively determined.) In our action, we are alleging various offsets and adjustments to the purchase price, as well as defaults by Evergreen, and are seeking damages and a declaration that the principal amount of the promissory note should be reduced to zero, that the operating partnership units should be cancelled and that Evergreen should refund to us payments of at least $578,000 which have been made on the promissory note. On March 7, 2011, New West Realty, Inc. ("New West"), an affiliate of Evergreen, filed a complaint for damages in Orange County Superior Court against ASR and other related entities. New West alleges in the complaint that ASR had failed to pay amounts then due under a $9.5 million promissory note held by New West. We have subsequently paid all amounts currently due and payable under the note and therefore dispute the claim and deny that any payment is now due under the note, and we have filed a separate lawsuit against New West and others seeking damages in excess of the amount of New West's claim.

In January 2013, we reached a tentative agreement with Evergreen to settle the $9.5 million promissory note. That agreement provides that we will pay $4.6 million in a combination of cash, a new note, and nonconvertible preferred stock as settlement of the note. The new debt will mature in 2017. However, that agreement has not been formalized. Negotiations are continuing to reach a settlement, but there can be no assurance that a resolution will be obtained. The lawsuit is set for trial in April 2014.

During the second quarter of 2012, we repurchased all of the operating partnership units ("OP Units") issued to Evergreen Realty Group, LLC and certain of its affiliates ("Evergreen") in 2010. We had issued the OP Units to Evergreen in connection with the acquisition of assets from Evergreen on January 17, 2010. The OP Units issued to Evergreen were repurchased by the Company for one dollar as provided in the purchase and sell agreement.

We are in default on a $1.0 million unsecured note, which matured in May 2012. The loan is guaranteed by Mr. Galardi. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

Some of our notes payable require that we maintain minimum cash and tangible net worth. We believe we are in compliance with these requirements, except as to our loans in default.

Certain other claims and lawsuits have arisen against us in our normal course of business including lawsuits by creditors with respect to past due accounts payable. We believe that such claims and lawsuits will not have a material adverse effect on our financial position, cash flows or results of operations.

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NOTES PAYABLE

6 Months Ended

Jun. 30, 2013

NOTES PAYABLE [Abstract]

NOTES PAYABLE

NOTE 9 - NOTES PAYABLE

We had the following notes payable outstanding, as of June 30, 2013 and December 31, 2012, secured by the following properties (dollars in thousands):

		June 30, 2013					December 31, 2012
Property (unless otherwise noted)	Maturity Date	Principal			Interest		Principal			Interest
		Balance			Rate		Balance			Rate
Owned Properties - Fixed Rate:
Atrium 6430 (2)	05/11/2012			2,062		7.45%			2,050		7.45%
Corporate - Unsecured (2) (3)	05/31/2012			1,000		9.50%			1,000		9.50%
2640 - 2650 Fountain View (2) (3)	08/29/2012			726		10.00%			726		10.00%
Corporate - Secured by Northwest Spectrum Plaza (4)	03/28/2013			-		5.50%			1,145		5.50%
Corporate - Secured	03/31/2014			1,500		8.00%			1,500		8.00%
Corporate - Secured (5)	03/31/2014			1,750		12.00%			-		-
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			3,861		5.93%
11500 Northwest Freeway (10)	06/01/2014			-		5.93%			279		5.93%
Morenci Professional Park (1)	07/01/2014			1,578		7.25%			1,578		7.25%
FMC Technology	09/01/2014			8,242		5.32%			8,309		5.32%
8100 Washington	02/22/2015			2,052		5.59%			2,005		5.59%
Corporate - Secured by Management Contracts (2) (3)	06/05/2015			379		5.50%			463		5.50%
2620 - 2630 Fountain View (3)	06/30/2015			5,323		7.00%			5,341		7.00%
1501 Mockingbird Lane	07/01/2015			3,089		5.28%			3,089		5.28%
5450 Northwest Central	09/01/2015			2,459		5.38%			2,499		5.38%
Ocala Self Storage	10/03/2015			1,412		4.25%			1,412		4.25%
Tampa Self Storage	10/03/2015			1,483		4.25%			1,504		4.25%
800 & 888 Sam Houston Parkway (3)	12/29/2015			4,234		6.25%			4,289		6.25%
Fountain View Office Tower	03/01/2016			11,465		5.82%			11,540		5.82%
Gray Falls and 12000 Westheimer	01/01/2017			7,021		5.70%			7,077		5.70%
2640 - 2650 Fountain View	04/29/2018			11,946		6.50%			12,010		6.50%
Corporate - Secured by Management Contracts	12/31/2019			9,280		5.00%			9,380		5.00%
Sabo Road Self Storage	07/01/2022			1,996		5.55%			2,015		5.55%
Corporate - Unsecured	Various			2,644		Various			1,514		Various
Corporate - Secured	Various			1,077		Various			1,163		Various
	Subtotal		$	82,718				$	85,749
Owned Properties - Variable Rate
Corporate - Unsecured (3)	12/12/2013			125		6.00%			175		6.00%
Northwest Spectrum Plaza (3) (6)	03/29/2018			4,490		5.00%			2,381		2.66%
Windrose Plaza (3) (7)	02/27/2023			3,442		5.50%			2,458		2.66%
	Subtotal		$	8,057				$	5,014
Subtotal ASR Principally Owned Properties				90,775					90,763

Consolidated VIE Properties
Fishers Indiana Distribution Center (8)	10/01/2012		-	5.42	%		17,058	5.42	%
University Springs San Marcos	12/01/2015		9,281	5.55	%		9,359	5.55	%
University Fountains Lubbock	01/01/2016		20,657	5.57	%		20,828	5.57	%
Dixon & 51st Logistics Center	01/01/2016		17,109	5.69	%		17,258	5.69	%
Campus Court Student Housing	05/11/2016		4,601	5.78	%		4,617	5.78	%
Houston South Mason (11)	06/25/2016		2,816	5.25	%		2,817	5.25	%
Grissom Road Self Storage	06/01/2017		2,295	7.00	%		2,308	7.00	%
Loop 1604 Self Storage	09/11/2017		4,222	6.70	%		4,249	6.70	%
College Park Student Apartments (8)	11/06/2017		-	6.35	%		14,283	6.35	%
Ohio II Residences at Newark & Sheffield	01/01/2018		9,277	6.74	%		9,334	6.74	%
Muirwood Village	02/01/2018		7,660	6.58	%		7,708	6.58	%
Aldine Westfield Self Storage	10/31/2018		1,017	4.76	%		1,031	4.76	%
Aldine	08/14/2019		1,156	6.07	%		1,171	6.07	%
Attic Space Self Storage - Blanco Rd.	04/01/2021		1,300	6.63	%		1,300	6.63	%
Attic Space Self Storage - Laredo Rd.	04/01/2021		1,694	6.63	%		1,721	6.63	%
Ft. Worth River Oaks Self Storage	07/01/2021		2,098	6.00	%		2,118	6.00	%
Ft. Worth Northwest Self Storage	04/01/2022		2,106	5.82	%		2,125	5.82	%
San Antonio III - AAA Stowaway / FOE	11/01/2022		9,545	5.50	%		9,635	5.50	%
Commerce Distribution Center (9)	05/07/2023		9,834	4.68	%		9,402	6.12	%
Strongsville Corporate Center	11/11/2034		13,428	5.50	%		13,882	5.50	%
Ohio Commerce Center	06/11/2035		18,245	5.64	%		18,412	5.64	%
Springs Commerce Center I	05/11/2036		16,388	5.75	%		16,548	5.75	%
Springs Office	06/11/2036		14,164	5.75	%		14,301	5.75	%
Spring Commerce Center II	07/11/2036		19,916	6.00	%		20,100	6.00	%
Other Unsecured Notes	Various		262	6.00	%		334	6.00	%
	Subtotal Consolidated VIE Properties	$	189,071			$	221,899
Grand Total		$	279,846			$	312,662

(1)	Property is in receivership.
(2)	We are currently negotiating extension terms with lender.
(3)	Loan or certain indemnification obligations are guaranteed by us and in some cases by Mr. Carden and/or the estate of Mr. Galardi.
(4)	Loan was paid in March 2013.
(5)	Represents new loan obtained in March 2013.
(6)	Loan was refinanced in March 2013.
(7)	Loan was refinanced in February 2013.
(8)	The VIE which owned the property was deconsolidated during the first quarter of 2013.
(9)	Loan was refinanced in May 2013. The new loan, in the amount of $9.9 million is for a ten-year term.
(10)	Lender foreclosed on the property in June 2013.
(11)	Lender extended maturity for an additional three year term in June 2013.

We are in default on the notes listed below due to non-payment of scheduled debt service. The balances disclosed on the table below exclude additional fees that may be the result of non-payment.

		Balance
	ASR Ownership	June 30, 2013
Property Secured by	Percentage	(in thousands)
Morenci Professional Park	100%	$	1,578
1501 Mockingbird	100%		3,089
6430 Richmond	100%		2,062
2640/2650 Fountain View	100%		726
Corporate - Unsecured	100%		1,000
TOTAL		$	8,455

As of June 30, 2013, we were in default on our debt secured by 1501 Mockingbird due to past due debt service. In July 2013, the lender foreclosed on the asset. See Note 16 - Subsequent Events.

We have elected not to make payment on the debt secured by Morenci Professional Park to operating deficiency of the property and the unpaid balances of the mortgage exceeding the market value of the property. The lender holding the debt on this property has placed this asset into receivership and has initiated foreclosure proceedings.

Two additional loans: one secured by 6430 Richmond and one by 2640/2650 Fountain View are matured. We are currently negotiating extensions with the lenders on these loans.

All of the properties securing the debt in default are held by consolidated wholly owned subsidiaries. These mortgages are not guaranteed by us. All of the notes in default have payment acceleration clauses and payment in full, including additional fees and interest, could be demanded by the lenders holding these notes.

We also are in default on a $1.0 million corporate note, which matured in May 2012. The loan is guaranteed by the estate of John N. Galardi. The lender on the note has initiated legal proceedings to collect on the debt. Negotiations are in progress to settle this debt.

Unamortized financing costs at June 30, 2013 and December 31, 2012 were $1.4 million and $0.8 million, respectively. Most of our mortgage debt is not cross-collateralized. We have four mortgage loans that are cross-collateralized with a second property.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 16 - SUBSEQUENT EVENTS

In July 2013, 2620-2630 Fountain View, an office property located in Houston, Texas, was sold for approximately $8.9 million. The sale generated net proceeds of approximately $3.0 million to the property's partnership, in which we own a 51% interest. The net proceeds are currently held in escrow due to a distribution dispute with the minority owner of the property. We anticipate we will reach an agreement on the distribution of the net proceeds with the minority owner in the third quarter of 2013.

In July 2013, the lender for 1501 Mockingbird foreclosed on the asset. We do not anticipate recording a significant gain or loss on the transaction in the third quarter of 2013.

We had forecasted cash proceeds of $1.8 million related to the above transactions as part of our plan to meet our cash needs for on-going operations. In addition, a contract in place to sale a building held for sale that would have generated $2.0 million of cash flow in a subsequent period has terminated. We are forecasting the funds held in escrow of approximately $1.5 million related to 2620-2630 Fountain View to be released in the third quarter. We have also received offers in the form of letters of intent for two other held for sale properties that would generate $2.0 million to $4.0 million of cash flow expected to occur in third or fourth quarter of 2013. There can be no assurance that these sales and/or the sales of our other held for sale properties will occur.

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PREFERRED STOCK

6 Months Ended

Jun. 30, 2013

PREFERRED STOCK [Abstract]

PREFERRED STOCK

NOTE 14 - PREFERRED STOCK

We are authorized to issue up to 25.0 million shares of one or more classes or series of preferred stock with a par value of $.01 per share.

On December 30, 2008, we filed Articles Supplementary to our Articles of Incorporation, which authorized the issuance of 68,965 of Series A Preferred Stock ("Preferred Stock").

On December 31, 2008, we issued 55,172 shares of the Preferred Stock to Mr. Carden, Mr. Galardi and Timothy R. Brown. Each share of Preferred Stock was sold for $29.00 and is entitled to annual dividends, payable quarterly, at an annual rate of 15%, and to a preference on liquidation equal to the following: (a) if on or prior to December 31, 2011, the sum of $29.00 and any accrued and unpaid dividends or (b) if after December 31, 2011, the greater of (x) the sum of $29.00 and any accrued and unpaid dividends or (y) the amount which would be paid on account of each share of common stock upon liquidation if each share of Preferred Stock had hypothetically been converted into one share of common stock. The Preferred Stock is not required to be redeemed by us and the holders will have no right to require redemption. The Preferred Stock is redeemable at our option at any time after December 31, 2011. The shares were issued in a private transaction exempt from registration pursuant to Section 4(2) under the Securities Act of 1933, as amended.

As of June 30, 2013 there were accrued and unpaid dividends on the outstanding preferred shares of $0.5 million, or $.13 per common share.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Jul. 31, 2013
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Entity Registrant Name	AMERICAN SPECTRUM REALTY INC
Entity Central Index Key	0001121783
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2013
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,557,353

XML

INCOME TAXES

6 Months Ended

Jun. 30, 2013

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 15 - INCOME TAXES

For the six months ended June 30, 2013 we recorded an income tax benefit of $1.9 million. The income tax benefit was recorded solely on the net loss attributable to the Company. We utilized an effective tax rate of 36.6% on our net loss.