[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland
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46-0778087
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(State or Other Jurisdiction
|
(I.R.S. Employer Identification No.)
|
|
of Incorporation or Organization)
|
||
2221 Olympic Boulevard
|
||
Walnut Creek, California
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94595
|
|
(Address of Principal Executive Offices)
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(Zip Code)
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(925) 935-3840
Registrant's Telephone Number, Including Area Code
|
Large accelerated filer [ ]
|
Accelerated filer [X]
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Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [ ]
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PART I – FINANCIAL INFORMATION
|
||||
Page
|
||||
PART II – OTHER INFORMATION
|
September 30,
2016
|
December 31,
2015
|
||||||
ASSETS
|
|||||||
Cash and cash equivalents
|
$
|
10,702,632
|
$
|
1,255,842
|
|||
Restricted cash
|
6,500,000
|
7,225,371
|
|||||
Loans, net of allowance for loan losses of $1,741,955 in 2016 and $1,842,446 in 2015
|
111,732,895
|
104,901,361
|
|||||
Interest and other receivables
|
2,117,376
|
1,764,918
|
|||||
Other assets, net of accumulated depreciation and amortization of $318,013 in 2016 and $275,277 in 2015
|
935,529
|
741,001
|
|||||
Deferred financing costs, net of accumulated amortization of $305,007 in 2016 and $323,325 in 2015
|
180,329
|
126,308
|
|||||
Deferred tax assets, net
|
7,629,683
|
—
|
|||||
Investment in limited liability company
|
2,187,146
|
2,141,032
|
|||||
Real estate held for sale
|
73,581,787
|
100,191,166
|
|||||
Real estate held for investment, net of accumulated depreciation of $2,870,054 in 2016 and $2,915,596 in 2015
|
37,315,319
|
53,647,246
|
|||||
Total assets
|
$
|
252,882,696
|
$
|
271,994,245
|
|||
LIABILITIES AND EQUITY
|
|||||||
LIABILITIES:
|
|||||||
Dividends payable
|
$
|
819,798
|
$
|
2,133,455
|
|||
Due to Manager
|
321,451
|
408,643
|
|||||
Accounts payable and accrued liabilities
|
4,918,575
|
3,359,294
|
|||||
Deferred gain on sale of real estate
|
209,662
|
209,662
|
|||||
Lines of credit payable
|
—
|
20,915,500
|
|||||
Notes and loans payable on real estate
|
28,474,266
|
45,458,844
|
|||||
Total liabilities
|
34,743,752
|
72,485,398
|
|||||
Commitments and Contingencies (Note 14)
|
|||||||
EQUITY:
|
|||||||
Stockholders' equity:
|
|||||||
Preferred stock, $.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2016 and December 31,2015
|
—
|
—
|
|||||
Common stock, $.01 par value per share, 50,000,000 shares authorized, 11,198,119 shares issued, 10,247,477 shares outstanding at September 30, 2016 and December 31, 2015
|
111,981
|
111,981
|
|||||
Additional paid-in capital
|
182,437,522
|
182,437,522
|
|||||
Treasury stock, at cost – 950,642 shares at September 30, 2016 and December 31, 2015
|
(12,852,058
|
)
|
(12,852,058
|
)
|
|||
Retained earnings
|
48,408,815
|
25,282,553
|
|||||
Total stockholders' equity
|
218,106,260
|
194,979,998
|
|||||
Non-controlling interests
|
32,684
|
4,528,849
|
|||||
Total equity
|
218,138,944
|
199,508,847
|
|||||
Total liabilities and equity
|
$
|
252,882,696
|
$
|
271,994,245
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||
|
2016
|
2015
|
2016
|
2015
|
|||||||||
Revenues:
|
|||||||||||||
Interest income on loans
|
$
|
2,256,816
|
$
|
1,372,739
|
$
|
6,495,836
|
$
|
6,697,476
|
|||||
Rental and other income from real estate properties
|
2,191,357
|
2,996,873
|
6,782,758
|
9,983,138
|
|||||||||
Income from investment in limited liability company
|
45,804
|
44,605
|
133,114
|
130,483
|
|||||||||
Total revenues
|
4,493,977
|
4,414,217
|
13,411,708
|
16,811,097
|
|||||||||
Expenses:
|
|||||||||||||
Management fees to Manager
|
808,247
|
513,292
|
2,398,911
|
1,410,293
|
|||||||||
Servicing fees to Manager
|
73,477
|
46,663
|
218,083
|
128,208
|
|||||||||
General and administrative expense
|
338,696
|
292,531
|
1,242,040
|
951,579
|
|||||||||
Rental and other expenses on real estate properties
|
2,045,722
|
2,070,680
|
5,885,029
|
6,420,490
|
|||||||||
Depreciation and amortization
|
305,105
|
526,178
|
958,025
|
1,712,136
|
|||||||||
Interest expense
|
960,861
|
354,163
|
2,649,616
|
1,413,109
|
|||||||||
Bad debt expense from uncollectible rent
|
—
|
150,402
|
—
|
150,537
|
|||||||||
(Recovery of) provision for loan losses
|
(38,966
|
)
|
44,316
|
347,029
|
472,359
|
||||||||
Impairment losses on real estate properties
|
1,094,071
|
—
|
3,204,221
|
1,256,434
|
|||||||||
Total expenses
|
5,587,213
|
3,998,225
|
16,902,954
|
13,915,145
|
|||||||||
Operating (loss) income
|
(1,093,236
|
)
|
415,992
|
(3,491,246
|
)
|
2,895,952
|
|||||||
Gain on sales of real estate, net
|
20,195,367
|
—
|
25,034,182
|
15,031,299
|
|||||||||
Net income before income tax benefit
|
19,102,131
|
415,992
|
21,542,936
|
17,927,251
|
|||||||||
Income tax benefit
|
260,848
|
—
|
7,629,683
|
—
|
|||||||||
Net income
|
19,362,979
|
415,992
|
29,172,619
|
17,927,251
|
|||||||||
Less: Net income attributable to non-controlling interests
|
(3,630,318
|
)
|
(31,671
|
)
|
(3,586,963
|
)
|
(2,630,434
|
)
|
|||||
Net income attributable to common stockholders
|
$
|
15,732,661
|
$
|
384,321
|
$
|
25,585,656
|
$
|
15,296,817
|
|||||
|
|||||||||||||
Per common share data:
|
|||||||||||||
Basic and diluted earnings per common share
|
$
|
1.54
|
$
|
0.04
|
$
|
2.50
|
$
|
1.43
|
|||||
Basic and diluted weighted average number of common shares outstanding
|
10,247,477
|
10,538,735
|
10,247,477
|
10,690,736
|
|||||||||
Dividends declared per share of common stock
|
$
|
0.08
|
$
|
0.08
|
$
|
0.24
|
$
|
0.33
|
|||||
Common Stock
|
Additional
Paid-in
Capital
|
Treasury Stock
|
Total
Stockholders'
Equity
|
Non-
controlling
Interests
|
|||||||||||||||||||||||
Retained Earnings
|
Total
Equity
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
||||||||||||||||||||||||
Balances, December 31, 2014
|
11,198,119
|
$
|
111,981
|
$
|
182,437,522
|
(430,118
|
)
|
$
|
(5,349,156
|
)
|
$
|
7,371,511
|
$
|
184,571,858
|
$
|
4,174,753
|
$
|
188,746,611
|
|||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
15,296,817
|
15,296,817
|
2,630,434
|
17,927,251
|
||||||||||||||||||
Dividends declared
|
—
|
—
|
—
|
—
|
—
|
(3,524,619
|
)
|
(3,524,619
|
)
|
—
|
(3,524,619
|
)
|
|||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
(360,263
|
)
|
(5,252,848
|
)
|
—
|
(5,252,848
|
)
|
—
|
(5,252,848
|
)
|
||||||||||||||
Contribution from non-controlling interest
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
279,184
|
279,184
|
||||||||||||||||||
Distributions to non-controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(2,483,791
|
)
|
(2,483,791
|
)
|
||||||||||||||||
Balances, September 30, 2015
|
11,198,119
|
$
|
111,981
|
$
|
182,437,522
|
(790,381
|
)
|
$
|
(10,602,004
|
)
|
$
|
19,143,709
|
$
|
191,091,208
|
$
|
4,600,580
|
$
|
195,691,788
|
|||||||||
Balances, December 31, 2015
|
11,198,119
|
$
|
111,981
|
$
|
182,437,522
|
(950,642
|
)
|
(12,852,058
|
)
|
$
|
25,282,553
|
$
|
194,979,998
|
$
|
4,528,849
|
$
|
199,508,847
|
||||||||||
Net income
|
—
|
—
|
—
|
—
|
—
|
25,585,656
|
25,585,656
|
3,586,963
|
29,172,619
|
||||||||||||||||||
Dividends declared
|
—
|
—
|
—
|
—
|
—
|
(2,459,394
|
)
|
(2,459,394
|
)
|
—
|
(2,459,394
|
)
|
|||||||||||||||
Purchase of treasury stock
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Contribution from non-controlling interest
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
44,207
|
44,207
|
||||||||||||||||||
Distributions to non-controlling interests
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(8,127,335
|
)
|
(8,127,335
|
)
|
||||||||||||||||
Balances, September 30, 2016
|
11,198,119
|
$
|
111,981
|
$
|
182,437,522
|
(950,642
|
)
|
$
|
(12,852,058
|
)
|
$
|
48,408,815
|
$
|
218,106,260
|
$
|
32,684
|
$
|
218,138,944
|
|||||||||
Nine Months Ended September 30,
|
|||||||
2016
|
2015
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net income
|
$
|
29,172,619
|
$
|
17,927,251
|
|||
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|||||||
Gain on sales of real estate, net
|
(25,034,182
|
)
|
(15,031,299
|
)
|
|||
Deferred income tax (benefit) expense
|
(7,629,683
|
)
|
—
|
||||
Income from investment in limited liability company
|
(133,114
|
)
|
(130,483
|
)
|
|||
Provision for loan losses
|
347,029
|
472,359
|
|||||
Impairment losses on real estate properties
|
3,204,221
|
1,256,434
|
|||||
Depreciation and amortization of real estate and related assets
|
958,025
|
1,712,136
|
|||||
Amortization of deferred financing costs to interest expense
|
413,612
|
266,862
|
|||||
Accretion of discount on loan to interest income
|
—
|
(536,816
|
)
|
||||
Changes in operating assets and liabilities:
|
|||||||
Interest and other receivables
|
(422,026
|
)
|
(206,568
|
)
|
|||
Other assets
|
(476,830
|
)
|
(46,149
|
)
|
|||
Accounts payable and accrued liabilities
|
(1,891,375
|
)
|
91,447
|
||||
Due to Manager
|
(87,192
|
)
|
(49,056
|
)
|
|||
Net cash (used in) provided by operating activities
|
(1,578,896
|
)
|
5,726,118
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Principal collected on loans
|
41,563,690
|
31,698,649
|
|||||
Investments in loans
|
(49,373,485
|
)
|
(39,962,408
|
)
|
|||
Investment in real estate properties
|
(17,388,416
|
)
|
(15,475,195
|
)
|
|||
Net proceeds from disposition of real estate properties and other assets
|
85,734,829
|
34,865,173
|
|||||
Purchases of furniture, fixtures and equipment
|
(29,887
|
)
|
(48,402
|
)
|
|||
Transfer from (to) restricted cash, net
|
725,371
|
(1,246,591
|
)
|
||||
Distribution received from investment in limited liability company
|
87,000
|
85,000
|
|||||
Net cash provided by investing activities
|
61,319,102
|
9,916,226
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Advances on notes payable
|
16,117,737
|
23,538,846
|
|||||
Repayments on notes payable
|
(33,384,892
|
)
|
(19,910,613
|
)
|
|||
Advances on lines of credit
|
62,972,415
|
30,161,000
|
|||||
Repayments on lines of credit
|
(83,887,915
|
)
|
(32,657,000
|
)
|
|||
Payment of deferred financing costs
|
(254,582
|
)
|
(41,735
|
)
|
|||
Distributions to non-controlling interests
|
(8,127,335
|
)
|
(2,483,791
|
)
|
|||
Contributions from non-controlling interest
|
44,207
|
279,184
|
|||||
Purchase of treasury stock
|
—
|
(5,252,848
|
)
|
||||
Dividends paid
|
(3,773,051
|
)
|
(3,981,246
|
)
|
|||
Net cash used in financing activities
|
(50,293,416
|
)
|
(10,348,203
|
)
|
|||
Net increase in cash and cash equivalents
|
9,446,790
|
5,294,141
|
|||||
Cash and cash equivalents at beginning of period
|
1,255,842
|
1,413,545
|
|||||
Cash and cash equivalents at end of period
|
$
|
10,702,632
|
$
|
6,707,686
|
|||
Supplemental Disclosures of Cash Flow Information
|
|||||||
Cash paid during the period for interest (excluding amounts capitalized)
|
$
|
2,297,766
|
$
|
1,207,669
|
|||
Cash paid during the period for interest that was capitalized
|
317,153
|
187,784
|
Supplemental Disclosures of Non-Cash Activity
|
|||||||
Increase in real estate from loan foreclosures
|
$
|
700,800
|
$
|
—
|
|||
Decrease in loans, net of allowance for loan losses, from loan foreclosures
|
(631,232
|
)
|
—
|
||||
Decrease in interest and other receivables from loan foreclosures
|
(69,568
|
)
|
—
|
||||
Capital expenditures financed through accounts payable
|
(3,450,656
|
)
|
(2,343,109
|
)
|
|||
Deferred financing costs paid from construction loan
|
399,558
|
—
|
|||||
Amortization of deferred financing costs capitalized to construction project
|
(69,526
|
)
|
(155,510
|
)
|
|||
Dividends declared but not paid
|
(819,798
|
)
|
(835,533
|
)
|
2016
|
Commercial
|
Residential
|
Land
|
Total
|
||||
|
|
|||||||
Allowance for loan losses:
|
|
|||||||
Three Months Ended September 30, 2016
|
||||||||
Beginning balance
|
$
|
764,900
|
$
|
604,329
|
$
|
411,692
|
$
|
1,780,921
|
Charge-offs
|
—
|
—
|
—
|
—
|
||||
Provision
|
(50,112
|
) |
11,146
|
—
|
(38,966)
|
|||
Ending Balance
|
$
|
714,788
|
$
|
615,475
|
$
|
411,692
|
$
|
1,741,955
|
Nine Months Ended September 30, 2016
|
||||||||
Beginning balance
|
$
|
1,140,530
|
$
|
455,587
|
$
|
246,329
|
$
|
1,842,446
|
Charge-offs
|
(447,520
|
) |
—
|
—
|
(447,520)
|
|||
Provision
|
21,778
|
159,888
|
165,363
|
347,029
|
||||
Ending balance
|
$
|
714,788
|
$
|
615,475
|
$
|
411,692
|
$
|
1,741,955
|
|
||||||||
September 30, 2016
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
714,788
|
$
|
615,475
|
$
|
411,692
|
$
|
1,741,955
|
Ending balance
|
$
|
714,788
|
$
|
615,475
|
$
|
411,692
|
$
|
1,741,955
|
Loans:
|
|
|||||||
Ending balance
|
$
|
86,087,300
|
$
|
20,744,027
|
$
|
6,643,523
|
$
|
113,474,850
|
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
1,432,000
|
$
|
6,228,377
|
$
|
—
|
$
|
7,660,377
|
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
84,655,300
|
$
|
14,515,650
|
$
|
6,643,523
|
$
|
105,814,473
|
2015
|
Commercial
|
Residential
|
Land
|
Total
|
||||
|
|
|||||||
Allowance for loan losses:
|
|
|||||||
Three Months Ended September 30, 2015
|
||||||||
Beginning balance
|
$
|
940,215
|
$
|
2,074,617
|
$
|
282,566
|
$
|
3,297,398
|
Charge-offs
|
—
|
—
|
—
|
—
|
||||
Provision
|
(40,858)
|
85,174
|
—
|
44,316
|
||||
Ending Balance
|
$
|
899,357
|
$
|
2,159,791
|
$
|
282,566
|
$
|
3,341,714
|
Nine Months Ended September 30, 2015
|
||||||||
Beginning balance
|
$
|
888,260
|
$
|
1,975,112
|
$
|
5,983
|
$
|
2,869,355
|
Charge-offs
|
—
|
—
|
—
|
—
|
||||
Provision
|
11,097
|
184,679
|
276,583
|
472,359
|
||||
Ending balance
|
$
|
899,357
|
$
|
2,159,791
|
$
|
282,566
|
$
|
3,341,714
|
|
||||||||
December 31, 2015
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
485,823
|
$
|
—
|
$
|
—
|
$
|
485,823
|
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
654,707
|
$
|
455,587
|
$
|
246,329
|
$
|
1,356,623
|
Ending balance
|
$
|
1,140,530
|
$
|
455,587
|
$
|
246,329
|
$
|
1,842,446
|
Loans:
|
|
|||||||
Ending balance
|
$
|
76,800,297
|
$
|
24,675,867
|
$
|
5,267,643
|
$
|
106,743,807
|
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
1,078,752
|
$
|
7,615,055
|
$
|
—
|
$
|
8,693,807
|
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
75,721,545
|
$
|
17,060,812
|
$
|
5,267,643
|
$
|
98,050,000
|
September 30, 2016
|
Loans
30-59 Days
Past Due
|
Loans
60-89 Days
Past Due
|
Loans
90 or More Days
Past Due
|
Total Past
Due Loans
|
Current Loans
|
Total Loans
|
||||||
|
||||||||||||
Commercial
|
$
|
4,250,000
|
$
|
—
|
$
|
1,432,000
|
$
|
5,682,000
|
$
|
80,405,300
|
$
|
86,087,300
|
Residential
|
—
|
—
|
6,228,377
|
6,228,377
|
14,515,650
|
20,744,027
|
||||||
Land
|
—
|
—
|
—
|
—
|
6,643,523
|
6,643,523
|
||||||
|
$
|
4,250,000
|
$
|
—
|
$
|
7,660,377
|
$
|
11,910,377
|
$
|
101,564,473
|
$
|
113,474,850
|
December 31, 2015
|
Loans
30-59 Days
Past Due
|
Loans
60-89 Days
Past Due
|
Loans
90 or More Days
Past Due
|
Total Past
Due Loans
|
Current Loans
|
Total Loans
|
||||||
|
||||||||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
1,078,752
|
$
|
1,078,752
|
$
|
75,721,545
|
$
|
76,800,297
|
Residential
|
—
|
—
|
7,615,055
|
7,615,055
|
17,060,812
|
24,675,867
|
||||||
Land
|
—
|
—
|
—
|
—
|
5,267,643
|
5,267,643
|
||||||
|
$
|
—
|
$
|
—
|
$
|
8,693,807
|
$
|
8,693,807
|
$
|
98,050,000
|
$
|
106,743,807
|
September 30, 2016
|
||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
||||
With no related allowance recorded:
|
||||||
Commercial
|
$
|
1,441,089
|
$
|
1,432,000
|
$
|
—
|
Residential
|
6,697,772
|
6,228,377
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
8,138,861
|
$
|
7,660,377
|
$
|
—
|
|
With an allowance recorded:
|
||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
—
|
Residential
|
—
|
—
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
—
|
$
|
—
|
$
|
—
|
|
Totals:
|
||||||
Commercial
|
$
|
1,441,089
|
$
|
1,432,000
|
$
|
—
|
Residential
|
6,697,772
|
6,228,377
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
8,138,861
|
$
|
7,660,377
|
$
|
—
|
Three Months Ended September 30, 2016
|
Nine Months Ended September 30, 2016
|
|||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||
With no related allowance recorded:
|
||||||||
Commercial
|
$
|
1,444,271
|
$
|
19,093
|
$
|
1,926,261
|
$
|
19,093
|
Residential
|
6,846,012
|
5,117
|
6,616,418
|
15,548
|
||||
Land
|
—
|
—
|
—
|
—
|
||||
$
|
8,290,283
|
$
|
24,210
|
$
|
8,542,679
|
$
|
34,641
|
|
With an allowance recorded:
|
||||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
1,153,713
|
$
|
—
|
Residential
|
—
|
—
|
—
|
—
|
||||
Land
|
—
|
—
|
—
|
—
|
||||
$
|
—
|
$
|
—
|
$
|
1,153,713
|
$
|
—
|
|
Totals:
|
||||||||
Commercial
|
$
|
1,444,271
|
$
|
19,093
|
$
|
3,079,974
|
$
|
19,093
|
Residential
|
6,846,012
|
5,117
|
6,616,418
|
15,548
|
||||
Land
|
—
|
—
|
—
|
—
|
||||
$
|
8,290,283
|
$
|
24,210
|
$
|
9,696,392
|
$
|
34,641
|
December 31, 2015
|
||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
||||
With no related allowance recorded:
|
||||||
Commercial
|
$
|
—
|
$
|
—
|
$
|
—
|
Residential
|
8,063,450
|
7,615,055
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
8,063,450
|
$
|
7,615,055
|
$
|
—
|
|
With an allowance recorded:
|
||||||
Commercial
|
$
|
1,144,864
|
$
|
1,078,752
|
$
|
485,823
|
Residential
|
—
|
—
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
1,144,864
|
$
|
1,078,752
|
$
|
485,823
|
|
Totals:
|
||||||
Commercial
|
$
|
1,144,864
|
$
|
1,078,752
|
$
|
485,823
|
Residential
|
8,063,450
|
7,615,055
|
—
|
|||
Land
|
—
|
—
|
—
|
|||
$
|
9,208,314
|
$
|
8,693,807
|
$
|
485,823
|
Three Months Ended September 30, 2015
|
Nine Months Ended September 30, 2015
|
|||||||
Average
Recorded
Investment
|
Interest
Income
Recognized
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
|||||
With no related allowance recorded:
|
||||||||
Commercial
|
$
|
487,818
|
$
|
9,547
|
$
|
2,741,825
|
$
|
611,206
|
Residential
|
245,725
|
5,654
|
248,762
|
16,581
|
||||
Land
|
—
|
—
|
413,348
|
216,904
|
||||
$
|
733,543
|
$
|
15,201
|
$
|
3,403,935
|
$
|
844,691
|
|
With an allowance recorded:
|
||||||||
Commercial
|
$
|
1,148,627
|
$
|
17,979
|
$
|
1,111,170
|
$
|
40,452
|
Residential
|
7,983,345
|
35,000
|
7,983,345
|
157,600
|
||||
Land
|
—
|
—
|
—
|
—
|
||||
$
|
9,131,972
|
$
|
52,979
|
$
|
9,094,515
|
$
|
198,052
|
|
Totals:
|
||||||||
Commercial
|
$
|
1,636,445
|
$
|
27,526
|
$
|
3,852,995
|
$
|
651,658
|
Residential
|
8,229,070
|
40,654
|
8,232,107
|
174,181
|
||||
Land
|
—
|
—
|
413,348
|
216,904
|
||||
$
|
9,865,515
|
$
|
68,180
|
$
|
12,498,450
|
$
|
1,042,743
|
|
September 30,
2016
|
December 31,
2015
|
|||||
Land (including land under development)
|
$
|
67,135,384
|
$
|
42,071,143
|
|||
Residential
|
—
|
51,942,601
|
|||||
Office
|
4,494,465
|
4,716,487
|
|||||
Industrial
|
—
|
1,460,935
|
|||||
Golf course
|
1,951,938
|
—
|
|||||
$
|
73,581,787
|
$
|
100,191,166
|
|
September 30,
2016
|
December 31,
2015
|
|||||
Retail
|
$
|
16,962,247
|
$
|
23,122,714
|
|||
Land
|
4,234,131
|
8,112,676
|
|||||
Residential
|
2,417,550
|
6,673,540
|
|||||
Assisted care
|
5,672,065
|
5,402,376
|
|||||
Office
|
3,981,349
|
4,315,608
|
|||||
Marina
|
4,047,977
|
4,079,087
|
|||||
Golf course
|
—
|
1,941,245
|
|||||
$
|
37,315,319
|
$
|
53,647,246
|
September 30,
2016
|
December 31,
2015
|
|||||||
Land and land improvements
|
$
|
11,420,690
|
$
|
23,443,676
|
||||
Buildings and improvements
|
28,764,683
|
33,119,166
|
||||||
Less: Accumulated depreciation
|
(2,870,054
|
)
|
(2,915,596
|
)
|
||||
$
|
37,315,319
|
$
|
53,647,246
|
Twelve months ending September 30:
|
||||
2017
|
$
|
2,444,094
|
||
2018
|
2,192,574
|
|||
2019
|
1,739,781
|
|||
2020
|
770,129
|
|||
2021
|
499,403
|
|||
Thereafter (through 2024)
|
1,094,910
|
|||
Total
|
$
|
8,740,891
|
|
|
September 30, 2016
|
|
December 31, 2015
|
|
||||||||
|
|
|
|
|
|
|
|
||||||
|
Outstanding
Balance
|
|
Total
Commitment
|
|
Outstanding
Balance
|
|
Total
Commitment
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||
CB&T Line of Credit
|
|
$
|
—
|
|
$
|
31,120,097
|
|
$
|
8,289,500
|
|
$
|
22,574,753
|
|
Opus Bank Line of Credit |
—
|
—
|
12,626,000 | 12,626,000 | |||||||||
Total
|
|
$
|
—
|
|
$
|
31,120,097
|
|
$
|
20,915,500
|
|
$
|
35,200,753
|
|
Loans:
|
September 30,
2016
|
|||
Commercial
|
$
|
40,298,303
|
||
Residential
|
5,265,493
|
|||
Total
|
$
|
45,563,796
|
|
September 30,
2016
|
Interest Rate
|
December 31,
2015
|
Interest Rate
|
Payment Terms/Frequency
|
Maturity Date
|
||||||||
Tahoe Stateline Venture, LLC Note #1
|
$
|
2,900,000
|
5.00%
|
$
|
2,900,000
|
5.00%
|
Interest Only
Semi-annual
|
December 2016
|
||||||
Tahoe Stateline Venture, LLC Note #2
|
—
|
—%
|
500,000
|
5.00%
|
Interest Only
Quarterly
|
August 2017
|
||||||||
TOTB North, LLC Construction Loan Payable
|
—
|
—%
|
16,009,906
|
4.61%
|
Amortizing
Monthly
|
June 2017
|
||||||||
TOTB Miami, LLC Loan Payable
|
—
|
—%
|
12,693,231
|
4.61%
|
Amortizing
Monthly
|
November 2017
|
||||||||
Tahoe Stateline Venture, LLC Loan Payable
|
13,730,877
|
3.47%
|
14,013,901
|
3.47%
|
Amortizing
Monthly
|
January 2021
|
||||||||
Zalanta Construction Loan Payable
|
12,364,914
|
5.00%
|
—
|
—%
|
Interest Only
Monthly
|
August 2018
|
||||||||
Principal amount
|
$
|
28,995,791
|
$
|
46,117,038
|
||||||||||
Less unamortized deferred financing costs
|
(521,525
|
)
|
(658,194
|
)
|
||||||||||
Notes and loans payable, net
|
$
|
28,474,266
|
$
|
45,458,844
|
Twelve months ending September 30:
|
||||
2017
|
$
|
15,653,905
|
||
2018
|
402,705
|
|||
2019
|
416,904
|
|||
2020
|
431,603
|
|||
2021
|
12,090,674
|
|||
Thereafter
|
—
|
|||
Total
|
$
|
28,995,791
|
|
|
For the Three Months Ended September 30, 2016
|
||||||||
|
Federal
|
|
State and Local
|
|
Total
|
|
||||
|
|
|
|
|
|
|
|
|||
Deferred (expense) benefit
|
|
$
|
(193,509
|
)
|
$
|
454,357
|
|
$
|
260,848
|
|
Income tax (expense) benefit
|
|
$
|
(193,509
|
)
|
$
|
454,357
|
|
$
|
260,848
|
|
For the Nine Months Ended September 30, 2016
|
||||||||||
Federal
|
State and Local
|
Total
|
||||||||
Deferred benefit
|
$
|
6,242,655
|
$
|
1,387,028
|
$
|
7,629,683
|
||||
Income tax benefit
|
$
|
6,242,655
|
$
|
1,387,028
|
$
|
7,629,683
|
For the Three Months Ended
September 30, 2016
|
For the Nine Months Ended
September 30, 2016
|
||||||
Tax expense (benefit) at Federal statutory rate
|
$
|
—
|
—
|
||||
State income tax expense (benefit), net of federal effect
|
—
|
—
|
|||||
Real estate basis differences
|
238,163
|
8,161,775
|
|||||
Net operating losses
|
142,661
|
142,661
|
|||||
Change in valuation allowance
|
(119,976
|
)
|
(674,753
|
)
|
|||
Income tax benefit
|
$
|
260,848
|
$
|
7,629,683
|
Deferred tax assets (liabilities):
|
As of
September 30, 2016
|
|||
Real estate basis differences
|
$
|
8,161,775
|
||
Net operating losses
|
142,661
|
|||
Total deferred tax assets
|
8,304,436
|
|||
Valuation allowance
|
(674,753
|
)
|
||
Net deferred tax assets
|
$
|
7,629,683
|
Fair Value Measurements Using
|
||||||||
Fair Value
|
Quoted Prices In Active Markets for Identical Assets
(Level 1) |
Significant Other Observable Inputs
(Level 2) |
Significant Unobservable Inputs
(Level 3) |
|||||
September 30, 2016
|
||||||||
Nonrecurring:
|
||||||||
Real estate properties:
|
||||||||
Land
|
$
|
2,113,850
|
$
|
—
|
$
|
—
|
$
|
2,113,850
|
Commercial
|
4,494,465
|
—
|
3,738,340
|
756,125
|
||||
Total real estate properties
|
$
|
6,608,315
|
$
|
—
|
$
|
3,738,340
|
$
|
2,869,975
|
December 31, 2015
|
||||||||
Nonrecurring:
|
||||||||
Impaired loans:
|
||||||||
Commercial
|
$
|
659,041
|
$
|
—
|
$
|
—
|
$
|
659,041
|
Total impaired loans
|
$
|
659,041
|
$
|
—
|
$
|
—
|
$
|
659,041
|
Real estate properties:
|
||||||||
Land
|
$
|
4,224,000
|
$
|
—
|
$
|
—
|
$
|
4,224,000
|
Total real estate properties
|
$
|
4,224,000
|
$
|
—
|
$
|
—
|
$
|
4,224,000
|
Description
|
Fair Value
|
Valuation Technique
|
Significant Unobservable Inputs
|
Input/Range
|
Weighted Average
|
|||||
Real Estate Properties:
|
||||||||||
Land
|
$
|
2,113,850
|
Appraisal
|
Comparable Sales Adjustment
|
(64.9)%
|
N/A
|
||||
Commercial
|
756,125
|
Appraisal
|
Comparable Sales
Adjustment
|
(5.0)% to 5.0%
|
N/A
|
|||||
Capitalization Rate
|
7.3%
|
N/A
|
||||||||
Estimated Cost of
Improvements
|
42.8%
|
N/A
|
Description
|
Fair Value
|
Valuation Technique
|
Significant Unobservable Inputs
|
Input/Range
|
Weighted Average
|
|||||
Impaired Loans:
|
||||||||||
Commercial
|
$
|
659,041
|
Appraisal
|
Estimate Cost of Improvements
|
31.9%
|
N/A
|
||||
Capitalization Rate
|
7.0%
|
N/A
|
||||||||
Comparable Sales Adjustment
|
(20)% to 30%
|
N/A
|
||||||||
Real Estate Properties:
|
||||||||||
Land
|
$
|
4,224,000
|
Appraisal
|
Comparable Sales Adjustment
|
(33.4)%
|
N/A
|
Fair Value Measurements at September 30, 2016
|
|||||||||||
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||
Financial assets
|
|||||||||||
Cash and cash equivalents
|
$
|
10,703,000
|
$
|
10,703,000
|
$
|
—
|
$
|
—
|
$
|
10,703,000
|
|
Restricted cash
|
6,500,000
|
6,500,000
|
—
|
—
|
6,500,000
|
||||||
Loans, net
|
111,733,000
|
—
|
—
|
111,651,000
|
111,651,000
|
||||||
Investment in limited liability company
|
2,187,000
|
—
|
—
|
2,352,000
|
2,352,000
|
||||||
Accrued interest and advances receivable
|
1,245,000
|
—
|
—
|
1,245,000
|
1,245,000
|
||||||
Financial liabilities
|
|||||||||||
Accrued interest payable
|
$
|
180,000
|
$
|
—
|
$
|
92,000
|
$
|
88,000
|
$
|
180,000
|
|
Lines of credit payable
|
—
|
—
|
—
|
—
|
—
|
||||||
Notes and loans payable
|
28,474,000
|
—
|
12,365,000
|
16,,487,000
|
28,852,000
|
Fair Value Measurements at December 31, 2015
|
|||||||||||
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||
Financial assets
|
|||||||||||
Cash and cash equivalents
|
$
|
1,256,000
|
$
|
1,256,000
|
$
|
—
|
$
|
—
|
$
|
1,256,000
|
|
Restricted cash
|
7,225,000
|
7,225,000
|
—
|
—
|
7,225,000
|
||||||
Loans, net
|
104,901,000
|
—
|
—
|
104,895,000
|
104,895,000
|
||||||
Investment in limited liability company
|
2,141,000
|
—
|
—
|
2,352,000
|
2,352,000
|
||||||
Accrued interest and advances receivable
|
1,105,000
|
—
|
—
|
1,105,000
|
1,105,000
|
||||||
Financial liabilities
|
|||||||||||
Accrued interest payable
|
$
|
229,000
|
$
|
—
|
$
|
170,000
|
$
|
59,000
|
$
|
229,000
|
|
Lines of credit payable
|
20,916,000
|
20,916,000
|
—
|
20,916,000
|
|||||||
Notes and loans payable
|
45,459,000
|
—
|
28,703,000
|
17,245,000
|
45,948,000
|
·
|
the level of foreclosures and related loan and real estate losses experienced;
|
·
|
the income or losses from foreclosed properties prior to the time of disposal;
|
·
|
the amount of cash available to invest in loans;
|
·
|
the amount of borrowing to finance loan investments and our cost of funds on such borrowing;
|
·
|
the level of real estate lending activity in the markets serviced;
|
·
|
the ability to identify and lend to suitable borrowers;
|
·
|
the interest rates we are able to charge on loans; and
|
·
|
the level of delinquencies on loans.
|
·
|
Capitalize on market lending opportunity by leveraging our existing origination network to expand our commercial real estate loan portfolio.
|
·
|
Enhance and reposition our commercial real estate assets through the investment of capital and strategic management.
|
·
|
Increase liquidity available for lending activities by focusing on opportunities to remove real estate assets from our balance sheet.
|
·
|
Manage leverage to marginally expand sources of liquidity while maintaining a conservative balance sheet.
|
·
|
An increase in gain on sales of real estate of $20,195,000 and $10,003,000 during the three and nine months ended September 30, 2016, as compared to 2015, due to the sales of four and six real estate properties during the three and nine months ended September 30, 2016, resulting in gain on sales of real estate totaling $20,195,000 and $25,034,000 (or $16,479,000 and $21,318,000 net of $3,716,000 gain attributable to non-controlling interest). We sold no properties during the three months ended September 30, 2015 and four properties during the nine months ended September 30, 2015, resulting in gain on sales of real estate totaling $15,031,000 (or $12,552,000 net of $2,479,000 gain attributable to non-controlling interest).
|
·
|
An increase in interest income on loans of $884,000 during the three months ended September 30, 2016, as compared to 2015, due primarily to an increase in interest income from performing loans as the average balance of performing loans in the quarter ended September 30, 2016 increased approximately 45% as compared to the quarter ended September 30, 2015.
|
·
|
A decrease in rental and other expenses on real estate properties of $25,000 and $535,000 during the three and nine months ended September 30, 2016, as compared to 2015, due primarily to the sale of four operating properties during 2015 and two in the beginning of 2016.
|
·
|
A decrease in depreciation and amortization expense of $221,000 and $754,000 during the three and nine months ended September 30, 2016, as compared to 2015, primarily due to the discontinuation of depreciation on certain properties that were moved to Held for Sale during 2015 and 2016.
|
·
|
An increase in income tax benefit of $261,000 and $7,630,000 during the three and nine months ended September 30, 2016, as compared to 2015, as a result of the conversion of ZRV into a taxable REIT subsidiary and the contribution of additional real estate assets into ZRV with book and tax basis differences that required the recording of deferred tax assets (and adjustments thereto).
|
·
|
A decrease in rental and other income on real estate properties of $806,000 and $3,200,000 during the three and nine months ended September 30, 2016, as compared to 2015, due primarily to the sale of four operating properties during 2015 and two in the beginning of 2016.
|
·
|
An increase in total management and service fees of $322,000 and $1,078,000 during the three and nine months ended September 30, 2016, as compared to 2015, due to an increase in the average balance of loans in our portfolio of 57% and 70% for the three and nine months ended September 30, 2016, as compared to 2015.
|
·
|
An increase in interest expense of $607,000 and $1,237,000 during the three and nine months ended September 30, 2016, as compared to 2015, due to increased interest incurred on our lines of credit as the balances were higher during the three and nine months ended September 30, 2016, due to an additional $3,830,000 advance taken on the Tahoe Stateline Venture loan during the third quarter of 2015 and due to the fact that interest incurred on the TOTB North loan could no longer be capitalized to the renovation project beginning in March 2016 as construction was completed, net of reduced interest expense as a result of the repayment of the 720 University loan during the second quarter of 2015.
|
·
|
An increase in impairment losses on real estate properties of $1,094,000 and $1,948,000 during the three and nine months ended September 30, 2016, as compared to 2015, related to the Company signing an agreement to sell the medical office condominium property located in Gilbert, Arizona at a price that is less than the book value, resulting in an impairment loss of $1,094,000 and due to an impairment loss recorded of $2,110,000 on the unimproved residential and commercial land located in Gypsum, Colorado due to a reduction in the net fair market value estimated by management and a decrease in the listing price of the property.
|
|
Three Months Ended September 30,
|
Increase/(Decrease)
|
|||||||||||
2016
|
2015
|
Amount
|
Percent
|
||||||||||
Revenues:
|
|||||||||||||
Interest income on loans
|
$
|
2,256,816
|
$
|
1,372,739
|
$
|
884,077
|
64
|
%
|
|||||
Rental and other income from real estate properties
|
2,191,357
|
2,996,873
|
(805,516
|
)
|
(27)
|
%
|
|||||||
Income from investment in limited liability company
|
45,804
|
44,605
|
1,199
|
3
|
%
|
||||||||
Total revenues
|
4,493,977
|
4,414,217
|
79,760
|
2
|
%
|
||||||||
Expenses:
|
|||||||||||||
Management fees to Manager
|
808,247
|
513,292
|
294,955
|
57
|
%
|
||||||||
Servicing fees to Manager
|
73,477
|
46,663
|
26,814
|
57
|
%
|
||||||||
General and administrative expense
|
338,696
|
292,531
|
46,165
|
16
|
%
|
||||||||
Rental and other expenses on real estate properties
|
2,045,722
|
2,070,680
|
(24,958
|
)
|
(1)
|
%
|
|||||||
Depreciation and amortization
|
305,105
|
526,178
|
(221,073
|
)
|
(42)
|
%
|
|||||||
Interest expense
|
960,861
|
354,163
|
606,698
|
nm
|
|||||||||
Bad debt expense from uncollectible rent
|
—
|
150,402
|
(150,402
|
)
|
(100)
|
%
|
|||||||
(Recovery of) provision for loan losses
|
(38,966
|
)
|
44,316
|
(83,282
|
)
|
nm
|
|||||||
Impairment losses on real estate properties
|
1,094,071
|
—
|
1,094,071
|
100
|
%
|
||||||||
Total expenses
|
5,587,213
|
3,998,225
|
1,588,988
|
40
|
%
|
||||||||
Operating (loss) income
|
(1,093,236
|
)
|
415,992
|
(1,509,228
|
)
|
nm
|
|||||||
Gain on sales of real estate, net
|
20,195,367
|
—
|
20,195,367
|
100
|
%
|
||||||||
Net income before income taxes
|
19,102,131
|
415,992
|
18,686,139
|
nm
|
|||||||||
Income tax benefit
|
260,848
|
—
|
260,848
|
100
|
%
|
||||||||
Net income
|
19,362,979
|
415,992
|
18,946,987
|
nm
|
|||||||||
Net income attributable to non-controlling interests
|
(3,630,318
|
)
|
(31,671
|
)
|
(3,598,647
|
)
|
nm
|
||||||
Net income attributable to common stockholders
|
$
|
15,732,661
|
$
|
384,321
|
$
|
15,348,340
|
nm
|
|
Nine Months Ended September 30,
|
Increase/(Decrease)
|
|||||||||||
2016
|
2015
|
Amount
|
Percent
|
||||||||||
Revenues:
|
|||||||||||||
Interest income on loans
|
$
|
6,495,836
|
$
|
6,697,476
|
$
|
(201,640
|
)
|
(3)
|
%
|
||||
Rental and other income from real estate properties
|
6,782,758
|
9,983,138
|
(3,200,380
|
)
|
(32)
|
%
|
|||||||
Income from investment in limited liability company
|
133,114
|
130,483
|
2,631
|
2
|
%
|
||||||||
Total revenues
|
13,411,708
|
16,811,097
|
(3,399,389
|
)
|
(20)
|
%
|
|||||||
Expenses:
|
|||||||||||||
Management fees to Manager
|
2,398,911
|
1,410,293
|
988,618
|
70
|
%
|
||||||||
Servicing fees to Manager
|
218,083
|
128,208
|
89,875
|
70
|
%
|
||||||||
General and administrative expense
|
1,242,040
|
951,579
|
290,461
|
31
|
%
|
||||||||
Rental and other expenses on real estate properties
|
5,885,029
|
6,420,490
|
(535,461
|
)
|
(8)
|
%
|
|||||||
Depreciation and amortization
|
958,025
|
1,712,136
|
(754,111
|
)
|
(44)
|
%
|
|||||||
Interest expense
|
2,649,616
|
1,413,109
|
1,236,507
|
88
|
%
|
||||||||
Bad debt expense from uncollectible rent
|
—
|
150,537
|
(150,537
|
)
|
(100)
|
%
|
|||||||
Provision for loan losses
|
347,029
|
472,359
|
(125,330
|
)
|
(27)
|
%
|
|||||||
Impairment losses on real estate properties
|
3,204,221
|
1,256,434
|
1,947,787
|
nm
|
|||||||||
Total expenses
|
16,902,954
|
13,915,145
|
2,987,809
|
21
|
%
|
||||||||
Operating (loss) income
|
(3,491,246
|
)
|
2,895,952
|
(6,387,198
|
)
|
nm
|
|||||||
Gain on sales of real estate, net
|
25,034,182
|
15,031,299
|
10,002,883
|
67
|
%
|
||||||||
Net (loss) income before income taxes
|
21,542,936
|
17,927,251
|
3,615,685
|
20
|
%
|
||||||||
Income tax benefit
|
7,629,683
|
—
|
7,629,683
|
100
|
%
|
||||||||
Net income
|
29,172,619
|
17,927,251
|
11,245,368
|
63
|
%
|
||||||||
Net loss (income) attributable to non-controlling interests
|
(3,586,963
|
)
|
(2,630,434
|
)
|
(956,529
|
)
|
36
|
%
|
|||||
Net income attributable to common stockholders
|
$
|
25,585,656
|
$
|
15,296,817
|
$
|
10,288,839
|
67
|
%
|
September 30,
2016
|
December 31,
2015
|
||||||
By Property Type:
|
|||||||
Commercial
|
$
|
86,087,300
|
$
|
76,800,297
|
|||
Residential
|
20,744,027
|
24,675,867
|
|||||
Land
|
6,643,523
|
5,267,643
|
|||||
|
$ |
113,474,850
|
$ |
106,743,807
|
|||
By Position:
|
|
|
|||||
Senior loans
|
$ |
110,665,462
|
$ |
103,716,010
|
|||
Junior loans
|
2,809,388
|
3,027,797
|
|||||
$
|
113,474,850
|
$
|
106,743,807
|
September 30,
2016
|
December 31,
2015
|
||||||
Commercial Real Estate Loans:
|
|||||||
Apartment
|
$
|
13,055,547
|
$
|
13,094,806
|
|||
Assisted care
|
1,303,547
|
947,645
|
|||||
Church
|
1,175,000
|
1,175,000
|
|||||
Golf course
|
1,145,000
|
1,145,000
|
|||||
Hotel
|
9,027,493
|
7,985,000
|
|||||
Industrial
|
4,376,477
|
3,483,318
|
|||||
Marina
|
3,500,000
|
3,500,000
|
|||||
Office
|
23,284,538
|
28,210,997
|
|||||
Restaurant
|
400,000
|
400,000
|
|||||
Retail
|
19,561,708
|
9,206,415
|
|||||
Storage
|
9,257,990
|
7,652,116
|
|||||
$
|
86,087,300
|
$
|
76,800,297
|
Fixed
|
Variable
|
|||||||||
Interest
|
Interest
|
|||||||||
Rate
|
Rate
|
Total
|
||||||||
Year ending September 30:
|
||||||||||
2016 (past maturity)
|
$
|
12,444,182
|
$
|
—
|
$
|
12,444,182
|
||||
2017
|
28,982,332
|
5,809,183
|
34,791,515
|
|||||||
2018
|
48,577,865
|
4,950,000
|
53,527,865
|
|||||||
2019
|
8,505,000
|
3,974,538
|
12,479,538
|
|||||||
2020
|
—
|
—
|
—
|
|||||||
2021
|
—
|
—
|
—
|
|||||||
Thereafter (through Mar. 2028)
|
231,750
|
—
|
231,750
|
|||||||
$
|
98,741,129
|
$
|
14,733,721
|
$
|
113,474,850
|
September 30, 2016
|
Portfolio
|
December 31, 2015
|
Portfolio
|
||||||||
Balance
|
Percentage
|
Balance
|
Percentage
|
||||||||
Arizona
|
$
|
8,796,627
|
7.75%
|
$
|
10,103,722
|
9.47%
|
|||||
California
|
84,130,596
|
74.14%
|
82,406,162
|
77.20%
|
|||||||
Hawaii
|
1,450,000
|
1.28%
|
1,450,000
|
1.36%
|
|||||||
Michigan
|
7,377,493
|
6.50%
|
6,335,000
|
5.93%
|
|||||||
Nevada
|
5,807,787
|
5.12%
|
6,298,923
|
5.90%
|
|||||||
Oregon
|
—
|
—%
|
150,000
|
0.14%
|
|||||||
Texas
|
5,912,347
|
5.21%
|
—
|
—%
|
|||||||
$
|
113,474,850
|
100.00%
|
$
|
106,743,807
|
100.00%
|
September 30,
2016
|
September 30,
2015
|
||||||
Balance, beginning of period
|
$
|
1,842,446
|
$
|
2,869,355
|
|||
Provision for loan losses
|
347,029
|
472,359
|
|||||
Charge-offs
|
(447,520
|
)
|
—
|
||||
Balance, end of period
|
$
|
1,741,955
|
$
|
3,341,714
|
|
September 30,
2016
|
December 31,
2015
|
||||
Undeveloped, industrial land, San Jose, California
|
$
|
1,970,448
|
$
|
1,958,400
|
||
Light industrial building, Paso Robles, California – sold in January 2016
|
—
|
1,460,935
|
||||
75 improved, residential lots, Auburn, California (held within Zalanta Resort at the Village, LLC) – transferred from held for investment and two lots sold in 2016
|
3,781,867
|
—
|
||||
Golf course, Auburn, California (held within Lone Star Golf, Inc.) – transferred from held for investment in 2016
|
1,951,937
|
—
|
||||
Medical office condominium complex, Gilbert, Arizona (held within Zalanta Resort at the Village, LLC)
|
3,738,340
|
4,716,487
|
||||
61 condominium units, Lakewood, Washington (held within Phillips Road, LLC) – transferred from held for investment and sold in 2016
|
—
|
—
|
||||
169 condominium units and 160 unit renovated and unoccupied apartment building, Miami, Florida (held within TOTB Miami, LLC) – sold in 2016
|
—
|
51,942,602
|
||||
Unimproved, residential and commercial land, Gypsum, Colorado
|
2,113,850
|
4,224,000
|
||||
Commercial and residential land under development, South Lake Tahoe, California (held within Tahoe Stateline Venture, LLC)
|
28,908,219
|
23,094,481
|
||||
Commercial and residential land under development, South Lake Tahoe, California (held within Zalanta Resort at the Village, LLC)
|
27,187,361
|
12,794,261
|
||||
Residential land under development, South Lake Tahoe, California (held within Zalanta Resort at the Village- Phase II, LLC)
|
3,173,640
|
—
|
||||
Office condominium complex, Oakdale, California (held within East G, LLC) – obtained via foreclosure in 2016 and one unit transferred from held for investment in 2016
|
756,125
|
—
|
||||
$
|
73,581,787
|
$
|
100,191,166
|
|
September 30,
2016
|
December 31,
2015
|
|||||
Commercial buildings, Roseville, California – one building sold in February 2016
|
$
|
515,253
|
$
|
701,897
|
|||
Undeveloped, residential land, Marysville, California
|
403,200
|
403,200
|
|||||
Undeveloped land, Auburn, California (formerly part of golf course owned by DarkHorse Golf Club, LLC)
|
103,198
|
103,198
|
|||||
75 improved, residential lots, Auburn, California (previously held within Baldwin Ranch Subdivision, LLC) – transferred to held for sale in 2016
|
—
|
3,878,544
|
|||||
One improved residential lot, West Sacramento, California
|
58,560
|
58,560
|
|||||
Undeveloped, residential land, Coolidge, Arizona
|
1,017,600
|
1,017,600
|
|||||
Golf course, Auburn, California (held within Lone Star Golf, Inc.) – transferred to held for sale in 2016
|
—
|
1,941,245
|
|||||
Office condominium complex (15 units), Roseville, California
|
3,466,096
|
3,558,386
|
|||||
61 condominium units, Lakewood, Washington (held within Phillips Road, LLC) – transferred to held for sale in 2016
|
—
|
4,219,657
|
|||||
1/7th interest in single family home, Lincoln City, Oregon
|
93,647
|
93,647
|
|||||
12 condominium and 3 commercial units, Tacoma, Washington (held within Broadway & Commerce, LLC)
|
2,323,903
|
2,360,237
|
|||||
6 improved residential lots, Coeur D'Alene, Idaho
|
316,800
|
316,800
|
|||||
Retail Complex, South Lake Tahoe, California (held within Tahoe Stateline Venture, LLC)
|
16,962,247
|
23,122,714
|
|||||
Marina and yacht club with 179 boat slips, Isleton, California (held within Brannan Island, LLC)
|
2,569,576
|
2,600,360
|
|||||
Unimproved, residential and commercial land, Bethel Island, California (held within Sandmound Marina, LLC)
|
2,334,773
|
2,334,773
|
|||||
Marina with 52 boat slips and campground, Bethel Island, California (held within Sandmound Marina, LLC)
|
1,478,401
|
1,478,727
|
|||||
Assisted living facility, Bensalem, Pennsylvania
|
5,672,065
|
5,402,376
|
|||||
Office condominium unit, Oakdale, California – transferred to held for sale in 2016
|
—
|
55,325
|
|||||
$
|
37,315,319
|
$
|
53,647,246
|
September 30,
2016
|
September 30,
2015
|
||||||
Balance, beginning of period
|
$
|
153,838,412
|
$
|
163,016,805
|
|||
Real estate acquired through foreclosure, net of specific loan loss allowance
|
700,800
|
—
|
|||||
Investments in real estate properties
|
20,839,072
|
17,818,304
|
|||||
Amortization of deferred finance costs capitalized into construction project
|
69,526
|
155,510
|
|||||
Sales of real estate properties
|
(60,442,232
|
)
|
(19,500,491
|
)
|
|||
Impairment losses on real estate properties
|
(3,204,221
|
)
|
(1,256,434
|
)
|
|||
Depreciation of properties held for investment
|
(904,251
|
)
|
(1,647,181
|
)
|
|||
Balance, end of period
|
$
|
110,897,106
|
$
|
158,586,513
|
|
Net Sales Proceeds
|
Gain
|
||||
Light industrial building, Paso Robles, California
|
$
|
6,023,679
|
$
|
4,557,979
|
||
Commercial building in building complex, Roseville, California
|
455,132
|
280,836
|
||||
169 condominium units and 160 unit renovated and unoccupied apartment building, Miami, Florida (held within TOTB Miami, LLC)*
|
74,072,951
|
19,292,364
|
||||
61 condominium units, Lakewood, Washington (held within Phillips Road, LLC)
|
4,996,714
|
813,328
|
||||
2 improved, residential lots, Auburn, California (held within Zalanta Resort at the Village, LLC)
|
186,353
|
89,675
|
||||
$
|
85,734,829
|
$
|
25,034,182
|
|||
* $32,881,000 of proceeds were used to pay off debt securing the properties and $7,934,000 was distributed to the non-controlling interest.
|
|
Net Sales Proceeds
|
Gain
|
||||
Retail complex, Greeley, Colorado (held within 720 University, LLC)*
|
$
|
20,318,559
|
$
|
8,642,156
|
||
Industrial building, Sunnyvale, California (held within Wolfe Central, LLC)
|
8,284,081
|
4,920,957
|
||||
Commercial buildings, Sacramento, California
|
5,153,713
|
1,262,745
|
||||
Retail buildings, San Jose, California
|
1,108,820
|
52,820
|
||||
$
|
34,865,173
|
$
|
14,878,678
|
|||
* $9,771,000 of proceeds were used to pay off debt securing the property and $2,479,000 was distributed to the non-controlling interest.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||
Funds from Operations
|
||||||||||||
Net income attributable to common stockholders
|
$
|
15,732,661
|
$
|
384,321
|
$
|
25,585,656
|
$
|
15,296,817
|
||||
Adjustments:
|
||||||||||||
Depreciation and amortization of real estate
|
298,207
|
|
519,979
|
937,884
|
1,680,625
|
|||||||
Depreciation allocated to non-controlling interests
|
—
|
(26,566
|
)
|
|||||||||
Impairment of depreciable real estate
|
1,094,071
|
—
|
1,094,071
|
(86,401
|
)
|
|||||||
Gain on sales of depreciable real estate, net
|
(20,105,692
|
)
|
—
|
(24,944,507
|
)
|
(13,715,734
|
)
|
|||||
Gains on sale of depreciable real estate allocated to non-controlling interest
|
3,715,709
|
—
|
3,715,709
|
2,479,268
|
||||||||
Adjustments for unconsolidated ventures
|
(45,804
|
)
|
(44,605
|
)
|
(46,113
|
)
|
(45,483
|
)
|
||||
FFO attributable to common stockholders
|
$
|
689,152
|
$
|
833,129
|
$
|
6,342,700
|
$
|
5,609,092
|
||||
Basic and diluted FFO per common share
|
$
|
0.07
|
$
|
0.08
|
$
|
0.62
|
$
|
0.52
|
||||
Adjusted Funds from Operations
|
||||||||||||
FFO attributable to common stockholders
|
$
|
689,152
|
$
|
833,129
|
$
|
6,342,700
|
$
|
5,609,092
|
||||
Adjustments:
|
||||||||||||
Non-cash items:
|
||||||||||||
(Recovery of) provision for loan losses
|
(38,966
|
)
|
44,316
|
347,029
|
472,359
|
|||||||
Amortization of deferred financing costs
|
168,856
|
96,749
|
413,612
|
266,862
|
||||||||
Depreciation of other assets
|
6,898
|
6,199
|
20,141
|
31,511
|
||||||||
Impairment of other real estate
|
—
|
—
|
2,110,150
|
1,256,434
|
||||||||
Accretion of discount on loan to interest income
|
—
|
—
|
—
|
(536,818
|
)
|
|||||||
Straight-line rental adjustments
|
(12,251
|
)
|
(23,140
|
)
|
(53,332
|
)
|
(22,383
|
)
|
||||
Deferred income tax benefit
|
(260,848
|
)
|
—
|
(7,629,683
|
)
|
—
|
||||||
Less:
|
||||||||||||
Gain on sales of other real estate, net
|
(89,675
|
)
|
—
|
(89,675
|
)
|
(1,315,566
|
)
|
|||||
AFFO attributable to common stockholders
|
$
|
463,166
|
$
|
957,253
|
$
|
1,460,942
|
$
|
5,761,491
|
||||
Note: FFO for the three and nine months ended September 30, 2016 includes an income tax benefit in the amount of $260,848 and $7,629,683, respectively, which as previously described, is due to our decision to convert ZRV into a taxable REIT subsidiary; a transaction we do not expect will be recurring. FFO for the nine months ended September 30, 2015 includes the one-time collection of past due interest related to one impaired loan that the Company foreclosed on during 2014 of approximately $1,723,000.
|
||||||||||||
· | prevailing economic conditions; |
· | our historical loss experience; |
· | the types and dollar amounts of loans in the portfolio; |
· | borrowers' financial condition and adverse situations that may affect the borrowers' ability to pay; |
· | evaluation of industry trends; |
· | review and evaluation of loans identified as having loss potential; and |
· | estimated net realizable value or fair value of the underlying collateral. |
•
|
fund future loan investments;
|
||
•
|
to improve and maintain real estate properties;
|
||
•
|
to repay principal and interest on our borrowings;
|
||
•
|
to pay our expenses, including compensation to our Manager;
|
||
•
|
to pay U.S. federal, state, and local taxes of our TRSs;
|
||
•
|
to distribute a minimum of 90% of our REIT taxable income and to make investments in a manner that enables us to maintain our qualification as a REIT; and
|
||
•
|
to make tax payments associated with undistributed capital gains.
|
•
|
the use of our cash and cash equivalent balances of $10,703,000 as of September 30, 2016;
|
||
•
|
cash generated from operating activities, including interest income from our loan portfolio and income generated from our real estate properties;
|
||
•
|
proceeds from the sales of real estate properties;
|
||
•
|
proceeds from our existing and new revolving lines of credit;
|
||
•
|
proceeds from the construction loan obtained for the ZRV construction project; and
|
||
•
|
proceeds from potential future offerings of our equity securities.
|
Nine Months Ended September 30,
|
||||||
2016
|
2015
|
|||||
Net cash (used in) provided by operating activities
|
$
|
(1,578,896
|
)
|
$
|
5,726,118
|
|
Net cash provided by investing activities
|
61,319,101
|
9,916,226
|
||||
Net cash used in financing activities
|
(50,293,416
|
)
|
(10,348,203
|
)
|
September 30, 2016
|
|||||||||
Variable Rate Loans tied to
3 Mo. Libor
|
Variable Rate Loans tied to Prime Rate
|
Total
|
|||||||
Aggregate Principal Balance of Debt
|
$
|
—
|
$
|
12,364,914
|
$
|
12,364,914
|
|||
Effect of 100 basis point increase in 3 Mo. Libor
|
$
|
—
|
$
|
—
|
$
|
—
|
|||
Effect of one percent increase in the Prime Rate
|
—
|
123,649
|
123,649
|
||||||
Totals
|
$
|
—
|
$
|
123,649
|
$
|
123,649
|
|||
* 3.1
|
Articles of Amendment and Restatement of Owens Realty Mortgage, Inc., dated January 23, 2013, and related Certificate of Correction dated September 17, 2013, incorporated herein by reference to the Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 16, 2015
|
|
* 3.2
|
Bylaws of Owens Realty Mortgage, Inc., incorporated herein by reference to Annex C to Proxy Statement/Prospectus on Form S-4 which was filed with the SEC on February 13, 2013
|
|
* 3.3
|
Articles Supplementary, dated November 13, 2014, relating to the election to be subject to Subtitle 8 of Title 3 of the Maryland General Corporation Law, incorporated by reference to exhibit 3.1 of the current report on Form 8-K filed with the SEC on November 13, 2013
|
|
* 4.1
|
Form of Common Stock Certificate, incorporated herein by reference to exhibit 4.1 to Proxy Statement/Prospectus on Form S-4 which was filed with the SEC on January 25, 2013
|
|
* 10.1
|
Construction Loan Agreement and Exhibits, dated as of August 3, 2016, between Zalanta Resort at the Village, LLC, Zalanta Resort at the Village – Phase II, LLC and Western Alliance Bank, together with related Secured Promissory Note, Construction Deed of Trust, Deed of Trust, Security Agreement, Omnibus Assignment of Agreements, Environmental Indemnity, Completion Guaranty and Repayment Guaranty, incorporated by reference to exhibits 10.1 through 10.9 of the current report on Form 8-K filed with the SEC on August 8, 2016
|
|
** 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
|
Certification of CEO and CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
* 99.1
|
Land and Entitlement Purchase Agreement, dated as of September 22, 2016, among Tahoe Stateline Ventures, LLC and Jianping Pan, Kawana Holdings, LLC, incorporated by reference to exhibit 99.1 of the current report on Form 8-K filed with the SEC on September 27, 2016
|
***101.INS
|
XBRL Instance Document
|
|
***101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
***101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
***101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
***101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
***101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
*Previously filed.
|
||
** Filed herewith.
|
||
***This exhibit is being furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
|
OWENS REALTY MORTGAGE, INC.
|
|||
Dated: November 8, 2016
|
By:
|
/s/ Bryan H. Draper |
|
Bryan H. Draper, Chief Executive Officer and President
|
|||
(Principal Executive Officer)
|
|||
Dated: November 8, 2016
|
By:
|
/s/ Melina A. Platt |
|
Melina A. Platt, Chief Financial Officer and Treasurer
|
|||
(Principal Financial and Accounting Officer)
|
1. | I have reviewed this quarterly report on Form 10-Q of Owens Realty Mortgage, Inc. (the "Registrant"); |
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 made 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 statements 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 (the Registrant's fourth fiscal quarter in the case of an annual report) 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 internal control over financial reporting, to the Registrant's auditors and the 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. |
1. | I have reviewed this quarterly report on Form 10-Q of Owens Realty Mortgage, Inc. (the "Registrant"); |
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 made 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 statements 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 (the Registrant's fourth fiscal quarter in the case of an annual report) 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 internal control over financial reporting, to the Registrant's auditors and the 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. |
Document And Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Owens Realty Mortgage, Inc. | |
Entity Central Index Key | 0001556364 | |
Trading Symbol | orm | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 10,247,477 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Loans, allowance for losses | $ 1,741,955 | $ 1,842,446 |
Other assets, accumulated depreciation and amortization | 318,013 | 275,277 |
Deferred financing costs, accumulated amortization | 305,007 | 323,325 |
Real estate held for investment, accumulated depreciation | $ 2,870,054 | $ 2,915,596 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, share authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 11,198,119 | 11,198,119 |
Common stock, shares outstanding (in shares) | 10,247,477 | 10,247,477 |
Treasury stock, shares (in shares) | 950,642 | 950,642 |
Consolidated Statements of Income (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Revenues: | ||||
Interest income on loans | $ 2,256,816 | $ 1,372,739 | $ 6,495,836 | $ 6,697,476 |
Rental and other income from real estate properties | 2,191,357 | 2,996,873 | 6,782,758 | 9,983,138 |
Income from investment in limited liability company | 45,804 | 44,605 | 133,114 | 130,483 |
Total revenues | 4,493,977 | 4,414,217 | 13,411,708 | 16,811,097 |
Expenses: | ||||
Management fees to Manager | 808,247 | 513,292 | 2,398,911 | 1,410,293 |
Servicing fees to Manager | 73,477 | 46,663 | 218,083 | 128,208 |
General and administrative expense | 338,696 | 292,531 | 1,242,040 | 951,579 |
Rental and other expenses on real estate properties | 2,045,722 | 2,070,680 | 5,885,029 | 6,420,490 |
Depreciation and amortization | 305,105 | 526,178 | 958,025 | 1,712,136 |
Interest expense | 960,861 | 354,163 | 2,649,616 | 1,413,109 |
Bad debt expense from uncollectible rent | 150,402 | 150,537 | ||
(Recovery of) provision for loan losses | (38,966) | 44,316 | 347,029 | 472,359 |
Impairment losses on real estate properties | 1,094,071 | 0 | 3,204,221 | 1,256,434 |
Total expenses | 5,587,213 | 3,998,225 | 16,902,954 | 13,915,145 |
Operating (loss) income | (1,093,236) | 415,992 | (3,491,246) | 2,895,952 |
Gain on sales of real estate, net | 20,195,367 | 25,034,182 | 15,031,299 | |
Net income before income tax benefit | 19,102,131 | 415,992 | 21,542,936 | 17,927,251 |
Income tax benefit | 260,848 | 7,629,683 | ||
Net income | 19,362,979 | 415,992 | 29,172,619 | 17,927,251 |
Less: Net income attributable to non-controlling interests | (3,630,318) | (31,671) | (3,586,963) | (2,630,434) |
Net income attributable to common stockholders | $ 15,732,661 | $ 384,321 | $ 25,585,656 | $ 15,296,817 |
Per common share data: | ||||
Basic and diluted earnings per common share (in dollars per share) | $ 1.54 | $ 0.04 | $ 2.50 | $ 1.43 |
Basic and diluted weighted average number of common shares outstanding (in shares) | 10,247,477 | 10,538,735 | 10,247,477 | 10,690,736 |
Dividends declared per share of common stock (in dollars per share) | $ 0.08 | $ 0.08 | $ 0.24 | $ 0.33 |
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Retained Earnings [Member] |
Parent [Member] |
Noncontrolling Interest [Member] |
Total |
---|---|---|---|---|---|---|---|
Balances (in shares) at Dec. 31, 2014 | 11,198,119 | (430,118) | |||||
Balances at Dec. 31, 2014 | $ 111,981 | $ 182,437,522 | $ (5,349,156) | $ 7,371,511 | $ 184,571,858 | $ 4,174,753 | $ 188,746,611 |
Net income | 15,296,817 | 15,296,817 | 2,630,434 | 17,927,251 | |||
Dividends declared | (3,524,619) | (3,524,619) | (3,524,619) | ||||
Purchase of treasury stock (in shares) | (360,263) | ||||||
Purchase of treasury stock | $ (5,252,848) | (5,252,848) | (5,252,848) | ||||
Contribution from non-controlling interest | 279,184 | 279,184 | |||||
Distributions to non-controlling interests | (2,483,791) | (2,483,791) | |||||
Balances (in shares) at Sep. 30, 2015 | 11,198,119 | (790,381) | |||||
Balances at Sep. 30, 2015 | $ 111,981 | 182,437,522 | $ (10,602,004) | 19,143,709 | 191,091,208 | 4,600,580 | 195,691,788 |
Purchase of treasury stock | 5,252,848 | 5,252,848 | 5,252,848 | ||||
Contribution from non-controlling interest | 279,184 | 279,184 | |||||
Balances (in shares) at Dec. 31, 2014 | 11,198,119 | (430,118) | |||||
Balances at Dec. 31, 2014 | $ 111,981 | 182,437,522 | $ (5,349,156) | 7,371,511 | 184,571,858 | 4,174,753 | 188,746,611 |
Balances (in shares) at Dec. 31, 2015 | 11,198,119 | (950,642) | |||||
Balances at Dec. 31, 2015 | $ 111,981 | 182,437,522 | $ (12,852,058) | 25,282,553 | 194,979,998 | 4,528,849 | 199,508,847 |
Net income | 25,585,656 | 25,585,656 | 3,586,963 | 29,172,619 | |||
Dividends declared | (2,459,394) | (2,459,394) | (2,459,394) | ||||
Purchase of treasury stock (in shares) | |||||||
Purchase of treasury stock | |||||||
Contribution from non-controlling interest | 44,207 | 44,207 | |||||
Distributions to non-controlling interests | (8,127,335) | (8,127,335) | |||||
Balances (in shares) at Sep. 30, 2016 | 11,198,119 | (950,642) | |||||
Balances at Sep. 30, 2016 | $ 111,981 | 182,437,522 | $ (12,852,058) | 48,408,815 | 218,106,260 | 32,684 | 218,138,944 |
Purchase of treasury stock | |||||||
Contribution from non-controlling interest | $ 44,207 | $ 44,207 |
Note 1 - Organization |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | NOTE 1 – ORGANIZATION Owens Realty Mortgage, Inc. (the “Company”) was incorporated on August 9, 2012, under the laws of the State of Maryland. The Company is authorized to issue 50,000,000 shares of its $0.01 par value common stock (“Common Stock”). In addition, the Company is authorized to issue 5,000,000 shares of preferred stock at $0.01 par value per share. The Company was created to effect the merger (the “Merger”) of Owens Mortgage Investment Fund, a California Limited Partnership (“OMIF”) with and into the Company as described in the Registration Statement on Form S-4, as amended, of the Company, declared effective on February 12, 2013 (File No. 333-184392). The Merger was part of a plan to reorganize the business operations of OMIF so that it could elect to qualify as a real estate investment trust for Federal income tax purposes. The Merger was approved by OMIF limited partners on April 16, 2013 and was completed on May 20, 2013. The Company has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the Company’s taxable year ended December 31, 2012. As a REIT, the Company is permitted to deduct distributions made to its stockholders, allowing its operating income represented by such distributions to avoid taxation at the entity level and to be taxed generally only at the stockholder level. The Company currently intends to distribute substantially all of its REIT taxable income, excluding net capital gains. As a REIT, however, the Company is subject to separate, corporate-level tax, including potential 100% penalty taxes under various circumstances, as well as certain state and local taxes. In addition, the Company’s taxable REIT subsidiaries are subject to full corporate income tax. Furthermore, the Company’s ability to continue to qualify as a REIT will depend upon its continuing satisfaction of various requirements, such as those related to the diversity of its stock ownership, the nature of its assets, the sources of its income and the distributions to its stockholders, including a requirement that the Company distribute to its stockholders at least 90% of its REIT taxable income on an annual basis (determined without regard to the dividends paid deduction and by excluding net capital gain). |
Note 2 - Summary of Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In the opinion of the management of the Company, the accompanying unaudited financial statements contain all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information included therein. Certain information and footnote disclosures presented in the annual consolidated financial statements are not included in these interim financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Form 10-K of ORM for the year ended December 31, 2015 filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the operating results to be expected for the full year ending December 31, 2016. The Company evaluates subsequent events up to the date it files its Form 10-Q with the SEC. Basis of Presentation Princip les of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned taxable REIT subsidiaries (“TRSs”) and its majority- and wholly-owned limited liability companies. The Company is in the business of providing mortgage lending services and manages its business as one operating segment. Due to foreclosure activity, the Company also owns and manages real estate assets. Certain reclassifications, not affecting previously reported net income or total stockholders’ equity, have been made to the previously issued consolidated financial statement balances to conform to the current period presentation. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 periods. Such estimates are inherently imprecise and actual results could differ significantly from such estimates. Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments”, or ASU 2016-13. The amendments in ASU-2016-13 eliminate the probable and incurred credit loss recognition threshold in current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. This standard is effective for interim and annual reporting beginning after December 15, 2019, with early adoption permitted for interim and annual reporting beginning after December 15, 2018. The Company is currently evaluating the impact that ASU 2016-13 may have on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323) – Simplifying the Transition to the Equity Method of Accounting”, or ASU 2016-07. To simplify the accounting for equity method investments, the amendments in ASU 2016-07 eliminate the requirement in Topic 323 that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. This standard is effective for interim and annual reporting beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-07 may have on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)” or ASU 2016-02. ASU 2016-02 amends existing guidance related to leases, primarily by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under the current accounting guidance. This standard is effective for interim and annual reporting beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-02 may have on its consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update 2016-01, “Financial Instruments- Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”, or ASU 2016-1. ASU 2016-01 amends existing guidance related to the disclosure, presentation, recognition and measurement of financial assets and financial liabilities. This accounting standard primarily amends the accounting for certain equity investments, fair value disclosures and presentation of financial assets and financial liabilities. This standard is effective for interim and annual reporting beginning after December 15, 2017, with certain aspects available for early adoption. The Company is currently evaluating the impact that ASU 2016-01 may have on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. ASU 2014-09 broadly amends the accounting guidance for revenue recognition. ASU 2014-09 is effective for the first interim or annual period beginning after December 15, 2017, and is to be applied prospectively. Early adoption is not permitted. The Company is currently evaluating the impact that ASU 2014-09 may have on its consolidated financial statements. Recently Adopted Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update 2015-03, “Interest - Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs,” or ASU 2015-03. ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15 which clarified that the SEC would not object to entities continuing to report debt issuance costs on line of credit arrangements as assets. The recognition and measurement guidance for debt issuance costs are not affected by these ASUs. The Company adopted these ASUs retrospectively during the quarter ended March 31, 2016 and elected to continue to report its deferred financing costs on lines of credit as assets, as allowed by the clarifying guidance issued in ASU 2015-15. Adoption of these standards resulted in net debt issuance costs (deferred financing costs) on the Company’s debt (other than lines of credit) being presented as a direct offset to the applicable debt on the balance sheet. Thus, both deferred financing costs and notes and loans payable on real estate on the accompanying consolidated balance sheets were decreased by $522,000 and $658,000 as of September 30, 2016 and December 31, 2015, respectively. Significant Accounting Policies The significant accounting policies used in the preparation of these interim consolidated financial statements are disclosed in the Company’s consolidated financial statements for the year ended December 31, 2015 included in its 2015 annual report on Form 10-K. There have been no significant changes to those significant accounting policies other than the adoption of ASU 2015-03 as discussed above. |
Note 3 - Loans and Allowance for Loan Losses |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Credit Losses [Text Block] | NOTE 3 – LOANS AND ALLOWANCE FOR LOAN LOSSES Loans are generally stated at the principal amount outstanding. Advances under the terms of a loan to pay property taxes, insurance, legal and other costs are generally capitalized and reported as interest and other receivables. The Company’s portfolio consists primarily of real estate loans generally collateralized by first, second and third deeds of trust. Interest income on loans is accrued by the simple interest method. A loan is generally placed on nonaccrual status when the loan becomes greater than ninety days delinquent in monthly payments and/or when full payment of principal and interest is not expected. When a loan is classified as nonaccrual, interest accruals discontinue and all past due interest is included in the recorded investment in the impaired loan that is measured as described below. Interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. Cash receipts on nonaccrual loans are used to reduce any outstanding accrued interest, and then are recorded as interest income, except when such payments are specifically designated as principal reduction or when management does not believe the Company’s investment in the loan is fully recoverable. The Company does not incur origination costs and does not earn or collect origination fees from borrowers as OFG is entitled to all such fees (see Note 9). Loans and the related accrued interest and advances are analyzed by management on a periodic basis for ultimate recovery. The allowance for loan losses is management’s estimate of probable credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance sheet date. The allowance is established through a provision for loan losses which is charged to expense. Additions to the allowance are expected to maintain the adequacy of the total allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the allowance. Cash received on previously charged off amounts is recorded as a recovery to the allowance. The overall allowance consists of two primary components: specific reserves related to impaired loans that are individually evaluated for impairment and general reserves for inherent losses related to loans that are not considered impaired and are collectively evaluated for impairment. Regardless of a loan type, a loan is considered impaired when, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the original agreement. All loans determined to be impaired are individually evaluated for impairment. When a loan is considered impaired, management estimates impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, management may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. A loan is collateral dependent if the repayment of the loan is expected to be provided solely by the underlying collateral. These valuations are generally updated during the fourth quarter but may be updated during interim periods if deemed appropriate by management. A restructuring of a debt constitutes a troubled debt restructuring (“TDR”) if the Company for economic or legal reasons related to the debtor's financial difficulties grants a concession to the debtor that it would not otherwise consider. Restructured loans typically present an elevated level of credit risk as the borrowers are not able to perform according to the original contractual terms. Loans that are reported as TDR’s are considered impaired and measured for impairment as described above. The determination of the general reserve for loans that are not considered impaired and are collectively evaluated for impairment is based on estimates made by management, to include, but not limited to, consideration of historical losses by portfolio segment, internal asset classifications, and qualitative factors to include economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole. The Company maintains a separate allowance for each portfolio segment (loan type). These portfolio segments include commercial real estate, residential real estate and land loans. The allowance for loan losses attributable to each portfolio segment, which includes both impaired loans that are individually evaluated for impairment and loans that are not considered impaired and are collectively evaluated for impairment, is combined to determine the Company’s overall allowance, which is included on the consolidated balance sheet. The allowance for loans that are not considered impaired consists of reserve factors that are based on management’s assessment of the following for each portfolio segment: (1) inherent credit risk, (2) historical losses, and (3) other qualitative factors. These reserve factors are inherently subjective and are driven by the repayment risk associated with each portfolio segment described below. Land Loans Commercial and Residential Real Estate Loans Management monitors the credit quality of the Company’s loan portfolio on an ongoing basis using certain credit quality indicators including a loan’s delinquency status and internal asset classification. A loan is considered classified when it meets the definition of impaired as described above. The following tables show the changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2016 and 2015 and the allocation of the allowance for loan losses and loans as of September 30, 2016 and December 31, 2015 by portfolio segment and by impairment methodology:
The following tables show an aging analysis of the loan portfolio by the time monthly payments are past due as of September 30, 2016 and December 31, 2015:
All of the loans that are 90 or more days past due as listed above are on non-accrual status as of September 30, 2016 and December 31, 2015. The above table as of September 30, 2016 does not include past maturity loans that were current in making monthly interest payments and in the process of being extended, paid off or refinanced of approximately $5,016,000. The following tables show information related to impaired loans as of and for the three and nine months ended September 30, 2016:
The following tables show information related to impaired loans as of December 31, 2015 and for the three and nine months ended September 30, 2015:
The recorded investment balances presented in the above tables include amounts advanced in addition to principal on impaired loans (such as property taxes, insurance and legal charges) that are reimbursable by borrowers and are included in interest and other receivables in the accompanying consolidated balance sheets. Interest income recognized on a cash basis for impaired loans approximates the interest income recognized as reflected in the tables above. Troubled Debt Restructurings The Company has allocated approximately $0 and $486,000 of specific reserves on loans totaling approximately $6,698,000 and $9,208,000 (recorded investments before allowance for loan losses) to borrowers whose loan terms had been modified in troubled debt restructurings as of September 30, 2016 and December 31, 2015, respectively. The Company has not committed to lend additional amounts to any of these borrowers. No loans were modified as troubled debt restructurings during the three and nine months ended September 30, 2016 and 2015, nor were there loans modified as troubled debt restructurings within the previous twelve months for which there was a payment default during the three and nine months ended September 30, 2016 and 2015. |
Note 4 - Investment in Limited Liability Company |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | NOTE 4 – INVESTMENT IN LIMITED LIABILITY COMPANY During 2008, the Company entered into an operating agreement (the “Operating Agreement”) of 1850 De La Cruz LLC, a California limited liability company (“1850”), with Nanook Ventures LLC (“Nanook”), an unrelated party. The purpose of the joint venture is to own and operate certain industrial land and buildings located in Santa Clara, California. At the time of closing in July 2008, the two properties were separately contributed to two new limited liability companies, Nanook Ventures One LLC and Nanook Ventures Two LLC that are wholly owned by 1850. The Company and Nanook are the Members of 1850 and NV Manager, LLC is the manager. The Company received distributions from 1850 of $0 and $87,000 during the three and nine months ended September 30, 2016, respectively, and $0 and $85,000 during the three and nine months ended September 30, 2015, respectively. The net income to the Company from its investment in 1850 De La Cruz was approximately $46,000 and $45,000 during the three months ended September 30, 2016 and 2015, respectively, and $133,000 and $130,000 during the nine months ended September 30, 2016 and 2015, respectively. |
Note 5 - Real Estate Held for Sale |
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Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Owned [Text Block] | NOTE 5 - REAL ESTATE HELD FOR SALE Real estate properties held for sale as of September 30, 2016 and December 31, 2015 consist of properties acquired through foreclosure classified by property type as follows:
Transfers There were no transfers of property between “Held for Investment” and “Held for Sale” during the three months ended September 30, 2016, other than the transfer of $6,066,000 of land basis discussed further in the “Sales” section below. During the nine months ended September 30, 2016, the Company transferred four properties with book values totaling approximately $10,052,000 (one land, one office unit, one golf course and one condominium) from “Held for Investment” to “Held for Sale” as the properties were listed for sale and sales were expected within a one year period. During the three months ended September 30, 2015, the Company transferred four properties (one residential, one industrial, one marina and one storage) from “Held for Investment” to “Held for Sale” as the properties were listed for sale and sales were expected within a one year period. During the nine months ended September 30, 2015, the Company transferred one golf course property from “Held for Sale” to “Held for Investment” as the property was no longer listed for sale and a sale was not expected within a one year period. As a result of this transfer, the Company recorded approximately $79,000 of depreciation expense that would have previously been recorded had the property been continuously classified as “Held for Investment”. Impairment Losses During the three and nine months ended September 30, 2016, the Company recorded an impairment loss of approximately $1,094,000 on the medical office condominium complex located in Gilbert, Arizona related to an agreement signed by the Company to sell the property at a price that is less than the book value. In addition, during the nine months ended September 30, 2016, the Company recorded an impairment loss of approximately $2,110,000 on the unimproved residential and commercial land located in Gypsum, Colorado due to a reduction in the net fair market value estimated by management and a decrease in the listing price of the property. During the nine months ended September 30, 2015, the Company recorded impairment losses of approximately $1,256,000 on the unimproved residential and commercial land located in Gypsum, Colorado due to a reduction in the net fair market value estimated by management and a decrease in the listing price of the property. Sales During the three months ended September 30, 2016, the Company sold four real estate properties (two residential properties and two improved, residential lots in a 75 lot development) for aggregate net sales proceeds of approximately $79,256,000, resulting in gain on sales of real estate totaling approximately $20,195,000 ($16,479,000 to the Company after approximately $3,716,000 gain attributable to non-controlling interest). During the nine months ended September 30, 2016, the Company sold six properties for aggregate net sales proceeds of approximately $85,735,000, resulting in gain on sales of real estate totaling approximately $25,034,000 ($21,318,000 to the Company after approximately $3,716,000 gain attributable to non-controlling interest). There were no sales during the three months ended September 30, 2015. During the nine months ended September 30, 2015, the Company sold four real estate properties for aggregate net sales proceeds of approximately $34,865,000, resulting in gain on sales of real estate totaling approximately $14,879,000. In addition, the Company recognized gain of approximately $152,000 during the nine months ended September 30, 2015 that had previously been deferred related to the sale of a real estate property in 2012. The gain on the sale of this property was being accounted for under the installment method. In September, 2016, Tahoe Stateline Venture, LLC, a California limited liability company ("TSV") that is wholly-owned by the Company, entered into a Land and Entitlement Purchase Agreement, (the "Purchase Agreement") with Jianping Pan, Kawana Holdings LLC and/or its nominee (the "Buyer"). Pursuant to the Purchase Agreement, TSV has agreed to sell to Buyer the approximately 8.0 acres of land and entitlements, including related parking and garage structures, owned by TSV in South Lake Tahoe, California, commonly known as The Chateau at the Village as further described in the Purchase Agreement (the "Property") for a total of $42.5 million, net of seller's credit which includes sales commissions (the "Purchase Price"). The closing (the "Closing") of the transaction is subject to a number of conditions including among others: the Buyer's satisfactory completion of due diligence and the approval prior to Closing by the responsible agency for the City of South Lake Tahoe, California of a tentative map (the "Map") that is acceptable to both TSV and Buyer. The Closing of the transaction is expected to occur on the earlier of March 31, 2017 or within seven business days after approval of the Map by the responsible agency, but there can be no assurance if or when the sale of the TSV Property will be consummated. Buyer has paid an initial deposit into escrow of $500,000. An additional $12.5 million is to be deposited into escrow by Buyer on or before November 18, 2016 and paid to TSV along with the deposit at the Closing, provided that from this cash amount TSV will credit the Buyer $3,000,000 for expenses. The additional $32.5 million of Purchase Price to be paid at Closing will be seller financing in the form of a note (the "Note") to TSV from Buyer secured by a Deed of Trust on the Property and bearing interest at 0.75% per annum. All principal and interest on the Note will be due on the earlier of March 31, 2017 or six months from the date of the Closing. As a result of the execution of the Purchase Agreement, the Company transferred approximately $6,066,000 of land basis from the first phase retail property (currently held for investment) to the second phase land being sold with this transaction. The basis of the property being sold is approximately $28,908,000 as of September 30, 2016. Foreclosure Activity There were no foreclosures during the three months ended September 30, 2016. During the nine months ended September 30, 2016, the Company foreclosed on one loan secured by an office property located in Oakdale, California with a principal balance of approximately $1,079,000 and obtained the property via the trustee’s sale. In addition, accrued interest and advances made on the loan (for items such as legal fees and delinquent property taxes) in the total amount of approximately $70,000 were capitalized to the basis of the property. It was determined that the fair value of the property was lower than the Company’s investment in the loan and a specific loan allowance was previously established of approximately $495,000. This amount was then recorded as a charge-off against the allowance for loan losses at the time of foreclosure, after a reduction of the previously established allowance in the amount of approximately $48,000 as a result of an updated appraisal obtained (net charge-off of $448,000). The property, along with a unit in the building purchased by the Company in 2015, was contributed into a new taxable REIT subsidiary, East G, LLC, in June 2016. The property is classified as held for sale as a sale is expected to be completed within a one year period. There were no foreclosures during the three and nine months ended September 30, 2015. |
Note 6 - Real Estate Held for Investment |
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Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Held for Investment Disclosure [Text Block] | NOTE 6 - REAL ESTATE HELD FOR INVESTMENT Real estate held for investment as of September 30, 2016 and December 31, 2015 consists of properties acquired through foreclosure classified by property type as follows:
The balances of land and the major classes of depreciable property for real estate held for investment as of September 30, 2016 and December 31, 2015 are as follows:
It is the Company’s intent to sell its real estate properties held for investment, but expected sales of these properties are not probable to occur within the next year. Depreciation expense was approximately $286,000 and $505,000 for the three months ended September 30, 2016 and 2015, respectively, and $904,000 and $1,647,000 for the nine months ended September 30, 2016 and 2015, respectively. Certain of the Company’s real estate properties held for sale and investment are leased to tenants under noncancellable leases with remaining terms ranging from one to eight years. Certain of the leases require the tenant to pay all or some operating expenses of the properties. The future minimum rental income from noncancellable operating leases due within the five years subsequent to September 30, 2016 and thereafter is as follows:
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Note 7 - Lines of Credit Payable |
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Debt Disclosure [Text Block] | NOTE 7 – LINES OF CREDIT PAYABLE The Company borrows funds under the revolving California Bank & Trust (“CB&T”) line of credit and the now extinguished revolving Opus Bank (“Opus”) line of credit (collectively, the “Funding Agreements”). As of September 30, 2016 and December 31, 2015, the outstanding balances and total commitments under the Funding Agreements consisted of the following:
CB&T Line of Credit In February 2014, the Company entered into a Credit Agreement and Advance Formula Agreement and related agreements with CB&T as the lender (the “CB&T Credit Facility”).The agreements were amended and restated in April 2015 to add First Bank as an additional lender and to increase the maximum borrowings available (total commitment) under the facility to the lesser of a $30,000,000 maximum or the amount determined pursuant to a borrowing base calculation described in the Advance Formula Agreement. Pursuant to the First Amendment to Amended and Restated Credit Agreement and Loan Documents dated March 1, 2016 (the “First Amendment”), the maximum commitment of the lenders under the facility has been increased from $30,000,000 to $50,000,000, such maximum commitment can be increased (on request of the Company and with the permission of the lenders) in the future to up to $75,000,000, and borrowings under the CB&T Credit Facility now mature on March 1, 2018. Such borrowings bear interest payable monthly at the prime rate of interest established by CB&T from time-to-time plus one quarter percent (.25%) per annum (3.75% at September 30, 2016). Upon a default such interest rate increases by 2.00%. The original CB&T Credit Facility required the payment of an origination fee of $100,000 and other issuance costs totaling $177,000 that were capitalized to deferred financing costs and were being amortized to interest expense using the straight-line method through the maturity date of the CB&T Credit Facility (fully amortized as of September 30, 2016). The First Amendment required the payment of an origination fee and other costs totaling $255,000 that was capitalized to deferred financing costs and is being amortized to interest expense using the straight-line method through the new maturity date. The Company is also subject to certain ongoing administrative fees and expenses. Interest expense on the CB&T Credit Facility was approximately $307,000 and $70,000 during the three months ended September 30, 2016 and 2015, respectively (including $32,000 and $36,000, respectively, in amortization of deferred financing costs) and $799,000 and $297,000 during the nine months ended September 30, 2016 and 2015, respectively (including $98,000 and $90,000, respectively, in amortization of deferred financing costs). Borrowings are secured by certain assets of the Company. These collateral assets will include the grant to the lenders of first-priority deeds of trust on certain real property assets and trust deeds of the Company to be identified by the parties from time-to-time and all personal property of the Company, which collateral includes the assets described in the Security Agreement and in other customary collateral agreements that will be entered into by the parties from time-to-time. As of September 30, 2016, the carrying amount and classification of loans securing the CB&T Credit Facility were as follows:
The CB&T Credit Facility agreements contain financial covenants which are customary for a loan of this type. Management is not aware of any breach of these covenants as of September 30, 2016. Opus Bank Line of Credit In April 2014, the Company entered into a Secured Revolving Credit Loan Agreement (the “Opus Credit Agreement”) and related agreements with Opus as the lender (the “Opus Credit Facility”). The Company repaid the Opus Credit Facility in full in September 2016 and the facility has terminated. Advances under the Opus Credit Facility were available by Opus until April 1, 2016, and borrowings were secured by certain of the Company’s assets. Commencing October 1, 2014, and on each successive six month anniversary during the term (the “Rate Change Date”), the rate of interest on all borrowings under the Opus Credit Facility was reset to the Six Month LIBOR rate of interest as reported on such Rate Change Date plus four percent (4.0%) per annum but in no event lower than 4.5% per annum. Commencing on May 1, 2016, in addition to the required interest payments, the Company was required to make mandatory monthly principal payments. All amounts under the Opus Credit Facility were to be repaid not later than April 1, 2017. The Opus Credit Facility required the payment of an origination fee of $100,000 and other issuance costs totaling $231,000 that were capitalized as deferred financing costs and were being amortized to interest expense using the straight-line method through the maturity date. The Company was also subject to certain ongoing administrative fees and expenses. Interest expense on the Opus Credit Facility was approximately $130,000 and $19,000 during the three months ended September 30, 2016 and 2015, respectively (including $64,000 and $19,000, respectively, in amortization of deferred financing costs) and $364,000 and $58,000 during the nine months ended September 30, 2016 and 2015, respectively (including $103,000 and $58,000, respectively, in amortization of deferred financing costs). The amount of unamortized deferred financing costs expensed immediately on termination of the Opus Credit Facility was approximately $45,000 for the three and nine months ended September 30, 2016. |
Note 8 - Notes and Loans Payable on Real Estate |
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Mortgage Notes Payable Disclosure [Text Block] | NOTE 8 - NOTES AND LOANS PAYABLE ON REAL ESTATE The Company had the following notes and loans payable outstanding as of September 30, 2016 and December 31, 2015:
The following table shows maturities by year on these notes and loans payable as of September 30, 2016:
Tahoe Stateline Venture, LLC Notes Payable The Company obtained these obligations as a result of the foreclosure or purchase of nine parcels by Tahoe Stateline Venture, LLC (“TSV”) in 2013 and 2012. The Company paid approximately $93,000 and $91,000 of interest on the notes during the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015, there was approximately $48,000 and $18,000, respectively, in accrued but unpaid interest on these notes. The interest incurred has been capitalized to the basis of the land under development. The Company repaid the TSV Note #2 in the amount of $500,000 during the three months ended September 30, 2016. TOTB North, LLC Construction Loan Payable In June 2014, TOTB North, LLC (“TOTB North”) entered into a Construction Loan Agreement (the “Loan Agreement”) and related documents with Bank of the Ozarks (“Ozarks”) as the lender providing TOTB North with a loan (the “North Loan”) of up to $21,304,000 to renovate and improve the vacant and unimproved “North” apartment building held in TOTB North (the “Project”). The North Loan was secured by a first mortgage lien on the North building and all improvements and certain other assets, and was cross-defaulted and cross-collateralized with the TOTB Miami, LLC Loan Payable described below. The initial maturity date (the “Maturity Date”) of the North Loan was June 12, 2017, which could be extended at the option of TOTB North for two additional one year periods, subject to certain conditions. All outstanding borrowings under the North Loan bore interest equal to the floating daily Three Month LIBOR rate of interest plus four percent (4.0%) per annum (the “Note Rate”), with a Note Rate not lower than four and one-half percent (4.5%) per annum. During 2014, TOTB North paid customary closing fees, disbursements and expenses, including an origination fee to Ozarks, which totaled $622,000. The majority of these costs were paid out of the loan proceeds and capitalized to deferred financing costs and were being amortized to the Project using the straight-line method through the Maturity Date. During the three and nine months ended September 30, 2016, approximately $0 and $36,000, respectively, of deferred financing costs was amortized and capitalized to the Project and $35,000 and $102,000, respectively, was expensed. During the three and nine months ended September 30, 2015, approximately $52,000 and $156,000, respectively, of deferred financing costs was amortized and capitalized to the Project. During the three months ended September 30, 2016 and 2015, approximately $204,000 and $91,000, respectively, of interest was incurred of which $0 and $91,000, respectively, was capitalized to the Project. During the nine months ended September 30, 2016 and 2015, approximately $626,000 and $133,000, respectively, of interest was incurred of which $134,000 and $133,000, respectively, was capitalized to the Project. The North Loan was repaid in full with the sale of the TOTB property in September 2016. Net debt issuance costs outstanding on the North Loan of approximately $156,000 were written off at the time of sale and reflected in the net gain on sale of the property. TOTB Miami, LLC Loan Payable In November 2014, TOTB Miami, LLC (“TOTB”) entered into another loan agreement (the “TOTB Loan Agreement”) and related documents with Ozarks providing TOTB a loan (the “TOTB Miami Loan”) of $13,000,000 secured by a first mortgage lien on the 154 leased condominium units owned in the Pointe building and the related parcel and all improvements as well as certain other assets. As a condition of providing the TOTB Miami Loan, Ozarks required that the TOTB Miami Loan and the North Loan be cross-collateralized and cross-defaulted, that excess proceeds from any sale of the North property be used to reduce or pay off the TOTB Miami Loan and that excess proceeds from any sale of the TOTB property be used to pay off the North Loan. The initial maturity date (the “Maturity Date”) of the TOTB Miami Loan was November 16, 2017, and the Maturity Date could be extended at the option of TOTB for two additional one year periods if a number of conditions were met. All outstanding borrowings under the TOTB Miami Loan bore interest equal to the floating daily Three Month LIBOR rate of interest plus four percent (4.0%) per annum (the “Note Rate”), with a Note Rate not lower than four and one-quarter percent (4.25%) per annum. TOTB was obligated to pay customary closing fees, disbursements and expenses, including an origination fee to the Lender, which totaled approximately $323,000. The majority of these costs were paid out of the loan proceeds and capitalized to deferred financing costs and were being amortized to interest expense using the effective interest method through the Maturity Date. During the three months ended September 30, 2016 and 2015, approximately $155,000 and $166,000, respectively, of interest expense was incurred (including approximately $29,000 and $33,000, respectively, of deferred financing costs amortized to interest expense). During the nine months ended September 30, 2016 and 2015, approximately, $505,000 and $497,000, respectively, of interest expense was incurred (including approximately $84,000 and $92,000, respectively, of deferred financing costs amortized to interest expense). The TOTB Miami Loan was repaid in full with the sale of the TOTB property in September 2016. Net debt issuance costs outstanding on the TOTB Miami Loan of approximately $98,000 were written off the time of sale and reflected in the net gain on sale of the property. Tahoe Stateline Venture, LLC Loan Payable In December 2014, Tahoe Stateline Ventures, LLC (“TSV”) entered into a Credit Agreement (the “Credit Agreement”) and related documents with RaboBank, N.A. as the lender (“Lender”) providing TSV with a loan (the “TSV Loan”) of up to $14,500,000. TSV borrowed $10,445,000 at the first closing under the TSV Loan and an additional $3,830,000 was borrowed in September 2015. The maturity date of the TSV Loan is January 1, 2021 (the “Maturity Date”). All outstanding borrowings under the TSV Loan documents bear interest initially at a rate of 3.47% per annum (the “Long Term Adjustable Rate”), provided that on January 1, 2018 the Long Term Adjustable Rate will be reset to Lender’s then current market rate for three year fixed rate loans from comparable commercial real estate secured transactions, as determined by Lender in its sole discretion. Upon a default under the TSV Loan documents, the interest rate on the outstanding principal balance increases by an additional five percent (5.00%) per annum and the rate on any other outstanding obligations thereunder increases to ten percent (10.00%) per annum. Prepayments under the TSV Loan documents are subject to certain prepayment fees; provided that during the 90 day period immediately prior to January 1, 2018, and the 90 day period immediately prior to the Maturity Date, TSV may prepay the entire unpaid balance of the Loan in full, without any Prepayment Fee or penalty. During the term of the TSV Loan, TSV will make equal combined payments of principal and accrued interest on the first day of each month in an amount calculated to fully amortize the original principal amount over a period of 300 months, subject to certain adjustments and the balance of the TSV Loan is due on the Maturity Date. The Credit Agreement required the payment of a closing fee of $108,750 and certain administrative fees totaling approximately $218,000. The TSV Loan documents contain financial covenants which are customary for loans of this type . Management is not aware of any breach of these covenants as of September 30, 2016. Zalanta Construction Loan Payable In August 2016, Zalanta Resort at the Village, LLC (“ZRV”) and Zalanta Resort at the Village - Phase II, LLC (“ZRV II” and, together with ZRV, the “Borrowers”) entered into a Construction Loan Agreement (the “Loan Agreement”) and related documents with Western Alliance Bank as the lender (“Lender”) providing the Borrowers with a loan (the “ZRV Loan”) of up to $31,000,000, subject to the terms and conditions of the ZRV Loan documents, for the purpose of financing the construction of a new mixed-use retail and residential condominium building (the “Project”) on land (the “Premises”) owned by ZRV in South Lake Tahoe. Borrowings under the ZRV Loan documents are only for payment or reimbursement of approved Project costs and such borrowings are subject to customary conditions for loans of this type. The borrowings under the ZRV Loan may not exceed the lesser of (i) 60% of the value of the Project, determined on an “as is” basis; or (ii) 65% of the Borrowers’ total costs of the Project, to be calculated in accordance with the Loan Agreement. All outstanding borrowings under the ZRV Loan will bear interest at the Wall Street Journal Prime Rate plus 1.50% (calculated on a floating daily basis) (the “Note Rate”), but in no event will the Note Rate be lower than the floor rate of five percent (5.0%) per annum. The Note Rate as of September 30, 2016 was 5.0%. Upon a default under the Loan Agreement, the Note Rate increases by an additional five percent (5.0%) per annum. Interest only payments are payable monthly from an established interest reserve. In addition, on the last day of the calendar quarter in which a Certificate of Occupancy is obtained with respect to completion of the first condominium in the Project, and continuing on the last day of each calendar quarter thereafter during the term of the ZRV Loan, Borrowers are required to repay $6 million of principal (the “Curtailment Requirement”). The balance of the ZRV Loan is due on August 3, 2018. Borrowings are secured by: (i) a first mortgage lien on the Premises and certain additional property (the “Additional Premises”) held by ZRV II and all improvements, amenities and appurtenances to the Premises and the Additional Premises, (ii) an assignment of all personal property, sales contracts, rents, leases, and ground leases associated with the Premises, and (iii) all design, development, service, management, leasing and construction contracts associated with the Premises. In addition, ZRV has established a deposit account with Lender of $3,000,000 to be held as additional collateral for the ZRV Loan. The ZRV Loan documents contain provisions that allow for the sale of individual condominiums in the Project during the term of the ZRV Loan, and the removal of those units from the collateral base, in exchange for payment of proceeds of the sales to Lender. Any such payment of sales proceeds to Lender will be applied to reduce the principal balance of the ZRV Loan and will reduce the quarterly Curtailment Requirement. The Loan Agreement required the payment of an origination fee of $310,000 and other issuance costs totaling approximately $400,000. The majority of these costs were paid out of the loan proceeds and capitalized to deferred financing costs and are being amortized to the Project using the straight-line method through the maturity date. During the three and nine months ended September 30, 2016, approximately $33,000 of deferred financing costs was amortized to the Project. During the three and nine months ended September 30, 2016, approximately $72,000 of interest was incurred which was capitalized to the Project. The ZRV Loan documents contain financial covenants which are customary for loans of this type . Management is not aware of any breach of these covenants as of September 30, 2016. |
Note 9 - Transactions with Affiliates |
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Notes to Financial Statements | |
Related Party Transactions Disclosure [Text Block] | NOTE 9 - TRANSACTIONS WITH AFFILIATES In consideration of the management services rendered to the Company pursuant to the management agreement between the Company and OFG (the “Management Agreement”), OFG is entitled to receive from the Company a management fee payable monthly, subject to a maximum of 2.75% per annum of the average unpaid balance of the Company’s loans. All of the Company’s loans are serviced by OFG, in consideration for which OFG receives a monthly fee, which, when added to all other fees paid in connection with the servicing of a particular loan, does not exceed the lesser of the customary, competitive fee paid in the community where the loan is placed for the provision of such mortgage services on that type of loan, or up to 0.25% per annum of the unpaid principal balance of the loans. OFG, at its sole discretion may, on a monthly basis, adjust the management and servicing fees as long as they do not exceed the allowable limits calculated on an annual basis. Even though the fees for a month may exceed 1 /12 of the maximum limits, at the end of the calendar year the sum of the fees collected for each of the 12 months must be equal to or less than the stated limits. Management fees amounted to approximately $808,000 and $513,000 for the three months ended September 30, 2016 and 2015, respectively, and $2,399,000 and $1,410,000 for the nine months ended September 30, 2016 and 2015, respectively, and are included in the accompanying consolidated statements of income. Servicing fees amounted to approximately $73,000 and $47,000 for the three months ended September 30, 2016 and 2015, respectively, and $218,000 and $128,000 for the nine months ended September 30, 2016 and 2015, respectively, and are included in the accompanying consolidated statements of income. As of September 30, 2016 and December 31, 2015, the Company owed management and servicing fees to OFG in the amount of approximately $284,000 and $267,000, respectively. In determining the management fees to pay to OFG, OFG may consider a number of factors, including current market yields, delinquency experience, un-invested cash and real estate activities. During the three and nine months ended September 30, 2016 and 2015, OFG elected to take the maximum compensation that it is able to take pursuant to the Management Agreement and will likely continue to take the maximum compensation for the foreseeable future. Pursuant to the charter, OFG receives all late payment charges from borrowers on loans owned by the Company. The amounts paid to or collected by OFG for such charges totaled approximately $2,000 and $0 for the three months ended September 30, 2016 and 2015, respectively, and $8,000 and $17,000 for the nine months ended September 30, 2016 and 2015, respectively. In addition, the Company remits other miscellaneous fees to OFG, which are collected from loan payments, loan payoffs or advances from loan principal (i.e. funding, demand and partial release fees). The amounts paid to or collected by OFG for such fees totaled approximately $5,000 and $2,000, respectively, during the three months ended September 30, 2016 and 2015 and $14,000 and $6,000, respectively, during the nine months ended September 30, 2016 and 2015, respectively. OFG originates all loans the Company invests in and receives loan origination and extension fees from borrowers. During the three and nine months ended September 30, 2016, OFG earned approximately $120,000 and $1,372,000, respectively, on loans originated or extended of approximately $5,140,000 and $59,305,000, respectively. During the three and nine months ended September 30, 2015, OFG earned approximately $289,000 and $1,001,000, respectively, on loans originated or extended of approximately $11,982,000 and $42,034,000, respectively. OFG is reimbursed by the Company for the actual cost of goods, services and materials used for or by the Company and paid by OFG and the salary and related salary expense of OFG’s non-management and non-supervisory personnel performing services for the Company which could be performed by independent parties (subject to certain limitations in the Management Agreement). The total amounts reimbursed to OFG by the Company for such services were $113,000 and $130,000 during the three months ended September 30, 2016 and 2015, respectively, and $332,000 and $394,000 during the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016 and December 31, 2015, there was $38,000 and $142,000 payable to OFG for such services. The Company also reimbursed certain of OFG’s officers for allowed expenses in the total amount of $0 and $1,000 during the nine months ended September 30, 2016 and 2015, respectively. The Company paid Investor’s Yield, Inc. (a wholly owned subsidiary of OFG) approximately $3,000 and $7,000 during the nine months ended September 30, 2016 and 2015, respectively, in fees primarily related to certain foreclosure proceedings on Company loans. During the nine months ended September 30, 2015, the Company purchased OFG’s full interest in a loan secured by an industrial property located in San Ramon, California with a principal balance of $1,499,000 at face value. |
Note 10 - Stockholders' Equity |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 10 – STOCKHOLDERS’ EQUITY Dividends On March 18, 2016, the board of directors declared a $0.08 dividend on our shares of Common Stock to holders of record as of March 31, 2016. The dividend was paid on April 14, 2016 and totaled $819,798. On June 20, 2016, the board of directors declared a $0.08 dividend on our shares of Common Stock to holders of record as of June 30, 2016. The dividend was paid on July 14, 2016 and totaled $819,798. On September 15, 2016, the board of directors declared a $0.08 dividend on our shares of Common Stock to holders of record as of September 30, 2016. The dividend was paid on October 14, 2016 and totaled $819,798. As of September 30, 2016, the Company had net capital gains from the sales of real estate properties in 2016 totaling approximately $21,189,000. It is the intention of management to retain substantially all net capital gains within the Company and not distribute them as is permitted for a REIT. However, the retained net capital gains will be taxable to shareholders and will require the Company to make a tax payment to the U.S Treasury Department on behalf of shareholders at the highest corporate tax rate (currently 35%), which are to be reflected as tax payments on shareholders’ tax returns. Such payments will be recorded as dividends in the Company’s financial statements in the fourth quarter of 2016. Stock Repurchase Programs On May 27, 2015, the Board of Directors authorized a Rule 10b5-1 stock repurchase plan (the “2015 Repurchase Plan”) under which the Company was able to purchase up to $7.5 million of its Common Stock. Under the 2015 Repurchase Plan, repurchases were funded from available working capital, and repurchased shares were returned to the status of authorized but unissued shares of Common Stock. The 2015 Repurchase Plan permitted repurchases commencing June 27, 2015 through its expiration in May 2016. During the quarter ended September 30, 2015, the Company repurchased 360,263 shares of its common stock under this plan for a total of approximately $5,253,000 (including commissions) and an average cost of $14.58 per share. During the year ended December 31, 2015, the Company repurchased 520,524 shares of its Common Stock under this plan for a total cost of approximately $7,503,000 (including commissions) and an average cost of $14.41 per share. No further purchases were made pursuant to this plan. On December 11, 2015, the Board of Directors authorized a new Rule 10b5-1 stock repurchase plan (the “2016 Repurchase Plan”) under which the Company may purchase up to $7.5 million of its Common Stock. Under the 2016 Repurchase Plan, repurchases will be funded from available working capital, and the repurchased shares will return to the status of authorized but unissued shares of Common Stock. The 2016 Repurchase Plan provides for stock repurchases to commence on April 1, 2016 and is subject to certain price, volume and timing constraints specified in the brokerage agreement. There is no guarantee as to the exact number of shares that will be repurchased by the Company. The 2016 Repurchase Plan is set to expire on March 31, 2017, although the Company may terminate the Repurchase Plan at any time. No shares had been repurchased under this new plan as of September 30, 2016. |
Note 11 - Restricted Cash |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Contingencies Disclosure [Text Block] | NOTE 11 – RESTRICTED CASH Contingency Reserves In accordance with the charter, the Company is required to maintain cash, cash equivalents and marketable securities as contingency reserves in an aggregate amount of 1-1/2% of Capital as defined in the charter. Although the Manager believes the contingency reserves are adequate, it could become necessary for the Company to sell or otherwise liquidate certain of its investments or other assets to cover such contingencies on terms which might not be favorable to the Company, which could lead to unanticipated losses upon sale of such assets. The contingency reserves required per the charter as of September 30, 2016 and December 31, 2015 were approximately $4,074,000 and $3,809,000, respectively, and are reported as part of restricted cash in the accompanying consolidated balance sheets. The $6,500,000 and $7,000,000, respectively, required to be held in non-interest bearing accounts as of September 30, 2016 and December 31, 2015 pursuant to certain of the Company’s debt agreements satisfy this contingency reserve requirement. Escrow Deposits Restricted cash includes deposits held in third party escrow accounts to fund construction costs and replacement reserves and to pay property taxes and insurance on Company real estate in the amounts of approximately $0 and $225,000 as of September 30, 2016 and December 31, 2015, respectively. |
Note 12 - Income Taxes |
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Income Tax Disclosure [Text Block] | NOTE 1 2 - INCOME TAXES The Company operates in such a manner as to qualify as a REIT, under the provisions of the Code; therefore, applicable REIT taxable income is included in the taxable income of its shareholders, to the extent distributed by the Company. To maintain REIT status for federal income tax purposes, the Company is generally required to distribute at least 90% of its REIT taxable income to its shareholders as well as comply, generally, with certain other qualification requirements as defined under the Code. As a REIT, the Company is not subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year. Taxable income from non-REIT activities managed through the Company's taxable REIT subsidiaries (“TRSs”) (Lone Star Golf, Inc., Zalanta Resort at the Village, LLC and East G, LLC) is subject to federal, state and local income taxes. The Company did not record a provision for current income taxes related to Lone Star for the nine months ended September 30, 2016 and the years ended December 31, 2015 and 2014 as it was in a net loss position. In addition, deferred taxes related to temporary differences in book and taxable income, as well as net operating losses of Lone Star, were not significant and the deferred taxes would likely not be realizable due to Lone Star’s loss history. In June 2016, the Company converted Zalanta Resort at the Village, LLC (“ZRV”) into a TRS and contributed two additional real estate assets into ZRV. These properties included 75 improved, residential lots previously held within Baldwin Ranch Subdivision, LLC and a medical office condominium complex previously held within AMFU, LLC. The conversion of ZRV into a TRS and contribution of the additional real estate assets resulted in the Company recording a deferred tax asset and income tax benefit in the amount of approximately $7,630,000 primarily due to a $20,513,000 aggregate difference between the book and tax basis of the subject real estate assets as of September 30, 2016. In addition, in June 2016, the Company established a new entity, East G, LLC (“East G”) and contributed an office property that was obtained via foreclosure of a loan in May 2016 into this new entity along with a unit in the same building that had been purchased in December 2015. The Company then converted East G into a TRS. Deferred taxes related to temporary differences in book and taxable income were not significant and the deferred taxes would likely not be realizable due to expected future operating losses from the property. The components of the income tax benefit as it relates to the Company’s taxable income (loss) from domestic TRSs during the three and nine months ended September 30, 2016 were as follows:
A reconciliation of the income tax benefit (provision) based upon the statutory tax rates to the effective rates of our taxable REIT subsidiaries is as follows for the three and nine months ended September 30, 2016:
Significant components of the Company’s deferred tax assets (liabilities) are as follows as of September 30, 2016:
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Note 13 - Fair Value |
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Fair Value Disclosures [Text Block] | NOTE 13 – FAIR VALUE The Company discloses fair value of its financial and nonfinancial assets and liabilities pursuant to ASC 820 – Fair Value Measurements and Disclosures . ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair value is defined in ASC 820 as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 3 inputs include unobservable inputs that are used when there is little, if any, market activity for the asset or liability measured at fair value. In certain cases, the inputs used to measure fair value fall into different levels of the fair value hierarchy. In such cases, the level in which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input requires judgment and considers factors specific to the asset or liability being measured. Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. The following is a description of the Company’s valuation methodologies used to measure and disclose the fair values of its financial and nonfinancial assets and liabilities on a nonrecurring basis. There were no assets or liabilities measured at fair value on a recurring basis. Impaired Loans The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan may be considered impaired and a specific allowance for loan losses is established. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Once a loan is identified as impaired, management measures impairment in accordance with ASC 310-10-35. The fair value of impaired loans is estimated by either an observable market price (if available) or the fair value of the underlying collateral, if collateral dependent. The fair value of the loan’s collateral is determined by third party appraisals (by licensed appraisers), broker price opinions, comparable property sales or other indications of value. Those impaired loans not requiring an allowance represent loans for which the fair value of the collateral exceed the recorded investments in such loans. At September 30, 2016 and December 31, 2015, all impaired loans were evaluated based on the fair value of the collateral by obtaining third party appraisals that valued the collateral primarily by utilizing an income or market approach or some combination of the two. In accordance with ASC 820, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. Because appraisals used by management generally include significant unobservable inputs and market data, the Company records the impaired loan as nonrecurring Level 3. Unobservable market data included in appraisals often includes adjustments to comparable property sales for such items as location, size and quality to estimate fair values using a sales comparison approach. Unobservable market data also includes cash flow assumptions and capitalization rates used to estimate fair values under an income approach. Real Estate Held for Sale and Investment Real estate held for sale and investment include properties acquired through foreclosure of the related loans. When property is acquired, any excess of the Company’s recorded investment in the loan and accrued interest income over the estimated fair market value of the property, net of estimated selling costs, is charged against the allowance for loan losses. Subsequently, real estate properties held for sale are carried at the lower of carrying value or fair value less costs to sell. The Company periodically compares the carrying value of real estate held for investment to expected future cash flows as determined by internally or third party generated valuations (including third party appraisals that primarily utilize an income or market approach or some combination of the two) for the purpose of assessing the recoverability of the recorded amounts. If the carrying value exceeds future undiscounted cash flows, the assets are reduced to fair value. The fair value of real estate held for sale and investment is estimated using appraisals in a manner similar to that of collateral dependent impaired loans described above which generally results in a Level 3 classification in the fair value hierarchy, however as of September 30, 2016 one property was measured using Level 2 observable inputs because the Company had received a purchase offer from a prospective buyer. That purchase offer was observable and was the most significant input the Company used to estimate the property’s fair value as of September 30, 2016. The following table presents information about the Company’s assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015:
The recovery of loan losses based on the fair value of loan collateral less estimated selling costs for the impaired loans above totaled approximately $0 and $(64,000) during the three months ended September 30, 2016 and 2015, respectively, and $(38,000) and $(70,000) during the nine months ended September 30, 2016 and 2015, respectively. Impairment losses were recorded on real estate properties in the amounts of approximately $1,094,000 and $0 during the three months ended September 30, 2016 and 2015, respectively, and $3,204,000 and $1,256,000 during the nine months ended September 30, 2016 and 2015, respectively. There were no liabilities measured at fair value on a non-recurring basis at September 30, 2016 and December 31, 2015. The following table presents quantitative information about Level 3 fair value measurements for assets measured at fair value on a non-recurring basis at September 30, 2016 and December 31, 2015: September 30, 201 6
December 31, 201 5
Where only one percentage is presented in the above table there was only one unobservable input of that type for one loan or property. Adjustments to comparable sales included items such as market conditions, location, size, condition, access/frontage and intended use. A weighted average of an unobservable input is presented in the table above only to the extent there was multiple impaired loans or real estate properties within that class measured at fair value on a nonrecurring basis. The approximate carrying amounts and estimated fair values of financial instruments at September 30, 2016 and December 31, 2015 are as follows:
The following methods and assumptions were used by the Company in estimating the fair value of each class of financial instruments: Cash, cash equivalents and restricted cash: Loans, net: Investment in limited liability company : The fair value of the Company’s investment in limited liability company is estimated based on an appraisal obtained and is classified as Level 3 because the appraisal itself and/or adjustments thereto include unobservable data similar to the unobservable data discussed in the disclosures related to assets measured at fair value on a nonrecurring basis. Lines of credit payable: Notes and loans payable: |
Note 14 - Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 14 - COMMITMENTS AND CONTINGENCIES Contractual Obligations The Company has entered into various contracts for design, architectural, engineering, foundation work and construction for the development of the land owned by ZRV. The aggregate amount of these contracts totaled approximately $32,835,000 of which approximately $18,903,000 had been incurred as of September 30, 2016 in addition to other capitalized costs related to the construction project of $3,293,000 (total of $22,196,000). Management expects that all costs for this project will be paid from cash reserves or the recently obtained construction loan. It is possible that additional change orders will be submitted and construction costs may be higher than expected. The Company has entered into various contracts for design, architectural and engineering for the development of the land owned by ZRV II. The aggregate amount of these contracts totaled approximately $1,044,000 of which approximately $700,000 had been incurred as of September 30, 2016 in addition to other capitalized costs related to the project of $172,000 (total of $872,000). Management expects that all costs for this phase of the project will be paid from cash reserves and/or advances from the CB&T Credit Facility. It is possible that additional change orders will be submitted and costs may be higher than expected. As of September 30, 2016, the Company has commitments to advance additional funds to borrowers of construction, rehabilitation and other loans in the total amount of approximately $20,362,000 (including approximately $2,738,000 in interest reserves). Legal Proceedings The Company is involved in various legal actions arising in the normal course of business. In the opinion of management, such matters will not have a material effect upon the financial position of the Company. |
Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Princip les of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned taxable REIT subsidiaries (“TRSs”) and its majority- and wholly-owned limited liability companies. The Company is in the business of providing mortgage lending services and manages its business as one operating segment. Due to foreclosure activity, the Company also owns and manages real estate assets. Certain reclassifications, not affecting previously reported net income or total stockholders’ equity, have been made to the previously issued consolidated financial statement balances to conform to the current period presentation. |
Use of Estimates, Policy [Policy Text Block] | Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make 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 periods. Such estimates are inherently imprecise and actual results could differ significantly from such estimates. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently Issued Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update 2016-13, “Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments”, or ASU 2016-13. The amendments in ASU-2016-13 eliminate the probable and incurred credit loss recognition threshold in current GAAP and, instead, reflect an entity’s current estimate of all expected credit losses. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. This standard is effective for interim and annual reporting beginning after December 15, 2019, with early adoption permitted for interim and annual reporting beginning after December 15, 2018. The Company is currently evaluating the impact that ASU 2016-13 may have on its consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323) – Simplifying the Transition to the Equity Method of Accounting”, or ASU 2016-07. To simplify the accounting for equity method investments, the amendments in ASU 2016-07 eliminate the requirement in Topic 323 that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. This standard is effective for interim and annual reporting beginning after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-07 may have on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)” or ASU 2016-02. ASU 2016-02 amends existing guidance related to leases, primarily by requiring the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under the current accounting guidance. This standard is effective for interim and annual reporting beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that ASU 2016-02 may have on its consolidated financial statements. In January 2016, the FASB issued Accounting Standards Update 2016-01, “Financial Instruments- Overall (Subtopic 825-10) – Recognition and Measurement of Financial Assets and Financial Liabilities”, or ASU 2016-1. ASU 2016-01 amends existing guidance related to the disclosure, presentation, recognition and measurement of financial assets and financial liabilities. This accounting standard primarily amends the accounting for certain equity investments, fair value disclosures and presentation of financial assets and financial liabilities. This standard is effective for interim and annual reporting beginning after December 15, 2017, with certain aspects available for early adoption. The Company is currently evaluating the impact that ASU 2016-01 may have on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606),” or ASU 2014-09. ASU 2014-09 broadly amends the accounting guidance for revenue recognition. ASU 2014-09 is effective for the first interim or annual period beginning after December 15, 2017, and is to be applied prospectively. Early adoption is not permitted. The Company is currently evaluating the impact that ASU 2014-09 may have on its consolidated financial statements. Recently Adopted Accounting Pronouncements In April 2015, the FASB issued Accounting Standards Update 2015-03, “Interest - Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs,” or ASU 2015-03. ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15 which clarified that the SEC would not object to entities continuing to report debt issuance costs on line of credit arrangements as assets. The recognition and measurement guidance for debt issuance costs are not affected by these ASUs. The Company adopted these ASUs retrospectively during the quarter ended March 31, 2016 and elected to continue to report its deferred financing costs on lines of credit as assets, as allowed by the clarifying guidance issued in ASU 2015-15. Adoption of these standards resulted in net debt issuance costs (deferred financing costs) on the Company’s debt (other than lines of credit) being presented as a direct offset to the applicable debt on the balance sheet. Thus, both deferred financing costs and notes and loans payable on real estate on the accompanying consolidated balance sheets were decreased by $522,000 and $658,000 as of September 30, 2016 and December 31, 2015, respectively. |
Note 3 - Loans and Allowance for Loan Losses (Tables) |
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Allowance for Credit Losses on Financing Receivables [Table Text Block] |
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Past Due Financing Receivables [Table Text Block] |
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Impaired Financing Receivables [Table Text Block] |
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Note 5 - Real Estate Held for Sale (Tables) |
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Properties Acquired Through Foreclosure [Table Text Block] |
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Note 6 - Real Estate Held for Investment (Tables) |
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Schedule of Real Estate Properties [Table Text Block] |
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Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block] |
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Note 7 - Lines of Credit Payable (Tables) |
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Schedule of Line of Credit Facilities [Table Text Block] |
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Schedule of Financial Instruments Owned and Pledged as Collateral [Table Text Block] |
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Note 8 - Notes and Loans Payable on Real Estate (Tables) |
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Schedule of Debt [Table Text Block] |
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Schedule of Maturities of Long-term Debt [Table Text Block] |
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Note 12 - Income Taxes (Tables) |
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Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
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Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
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Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
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Note 13 - Fair Value (Tables) |
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Fair Value Measurements, Nonrecurring [Table Text Block] |
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Fair Value Inputs, Assets, Quantitative Information [Table Text Block] |
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Fair Value, by Balance Sheet Grouping [Table Text Block] |
|
Note 1 - Organization (Details Textual) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Common Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Potential Percentage Penalty Tax | 100.00% | |
REIT Minimum Percent Distribution of Taxable Income | 90.00% |
Note 2 - Summary of Significant Accounting Policies (Details Textual) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Number of Operating Segments | 1 | |
Debt Issuance Costs, Net | $ 521,525 | $ 658,194 |
Note 4 - Investment in Limited Liability Company (Details Textual) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jul. 31, 2008 |
|
1850 [Member] | |||||
Number of Real Estate Properties | 2 | ||||
Number of Companies | 2 | ||||
Proceeds from Equity Method Investment, Dividends or Distributions | $ 0 | $ 0 | $ 87,000 | $ 85,000 | |
Income (Loss) from Equity Method Investments | 46,000 | 45,000 | 133,000 | 130,000 | |
Proceeds from Equity Method Investment, Dividends or Distributions | 87,000 | 85,000 | |||
Income (Loss) from Equity Method Investments | $ 45,804 | $ 44,605 | $ 133,114 | $ 130,483 |
Note 5 - Real Estate Held for Sale - Properties Acquired Through Foreclosure (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Improved and Unimproved Land [Member] | ||
Real Estate Held-for-sale | $ 67,135,384 | $ 42,071,143 |
Residential [Member] | ||
Real Estate Held-for-sale | 51,942,601 | |
Office Building [Member] | ||
Real Estate Held-for-sale | 4,494,465 | 4,716,487 |
Industrial Property [Member] | ||
Real Estate Held-for-sale | 1,460,935 | |
Golf Course [Member] | ||
Real Estate Held-for-sale | 1,951,938 | |
Real Estate Held-for-sale | $ 73,581,787 | $ 100,191,166 |
Note 6 - Real Estate Held for Investment (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Minimum [Member] | ||||
Remaining Term on Lease | 1 year | |||
Maximum [Member] | ||||
Remaining Term on Lease | 8 years | |||
Depreciation | $ 286,000 | $ 505,000 | $ 904,000 | $ 1,647,000 |
Note 6 - Real Estate Held for Investment - Real Estate Held for Investment (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Retail Site [Member] | ||
Real estate held for investment | $ 16,962,247 | $ 23,122,714 |
Improved and Unimproved Land [Member] | ||
Real estate held for investment | 4,234,131 | 8,112,676 |
Residential [Member] | ||
Real estate held for investment | 2,417,550 | 6,673,540 |
Assisted Care Facility [Member] | ||
Real estate held for investment | 5,672,065 | 5,402,376 |
Office Building [Member] | ||
Real estate held for investment | 3,981,349 | 4,315,608 |
Marinas [Member] | ||
Real estate held for investment | 4,047,977 | 4,079,087 |
Golf Course [Member] | ||
Real estate held for investment | 1,941,245 | |
Real estate held for investment | 37,315,319 | 53,647,246 |
Land and land improvements | 11,420,690 | 23,443,676 |
Buildings and improvements | 28,764,683 | 33,119,166 |
Less: Accumulated depreciation | $ (2,870,054) | $ (2,915,596) |
Note 6 - Real Estate Held for Investment - Future Minimum Rental Income from Noncancellable Operating Leases (Details) |
Sep. 30, 2016
USD ($)
|
---|---|
2017 | $ 2,444,094 |
2018 | 2,192,574 |
2019 | 1,739,781 |
2020 | 770,129 |
2021 | 499,403 |
Thereafter (through 2024) | 1,094,910 |
Total | $ 8,740,891 |
Note 7 - Lines of Credit Payable - Credit Facilities (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
CB and T [Member] | ||
Lines of credit payable | $ 8,289,500 | |
Lines of credit, commitment | 31,120,097 | 22,574,753 |
Opus Credit Facility [Member] | ||
Lines of credit payable | 12,626,000 | |
Lines of credit, commitment | 12,626,000 | |
Lines of credit payable | 20,915,500 | |
Lines of credit, commitment | $ 31,120,097 | $ 35,200,753 |
Note 7 - Lines of Credit Payable - Loans Securing Credit Facility (Details) - CB and T [Member] |
Sep. 30, 2016
USD ($)
|
---|---|
Commercial Loan [Member] | |
Carrying amount of loans securing CB&T Facility | $ 40,298,303 |
Residential Real Estate [Member] | |
Carrying amount of loans securing CB&T Facility | 5,265,493 |
Carrying amount of loans securing CB&T Facility | $ 45,563,796 |
Note 8 - Notes and Loans Payable on Real Estate - Notes and Loans Payable Maturities (Details) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
2017 | $ 15,653,905 | |
2018 | 402,705 | |
2019 | 416,904 | |
2020 | 431,603 | |
2021 | 12,090,674 | |
Thereafter | ||
Total | $ 28,995,791 | $ 46,117,038 |
Note 11 - Restricted Cash (Details Textual) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Contingency Reserves [Member] | Minimum [Member] | ||
Restricted Cash and Cash Equivalents | $ 6,500,000 | $ 7,000,000 |
Contingency Reserves [Member] | ||
Restricted Cash and Cash Equivalents | $ 4,074,000 | 3,809,000 |
Contingency Reserves as a Percent of Capital | 1.50% | |
Restricted Cash and Cash Equivalents | $ 6,500,000 | 7,225,371 |
Escrow Deposit | $ 0 | $ 225,000 |
Note 12 - Income Taxes (Details Textual) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015 |
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015 |
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
Jun. 30, 2016 |
|
Lone Star Golf, Inc., Zalanta Resort and East G, LLC [Member] | |||||||
Current Income Tax Expense (Benefit) | $ 0 | $ 0 | $ 0 | ||||
Zalanta [Member] | |||||||
Number of Real Estate Properties Sold | 2 | ||||||
Baldwin Ranch Subdivision, LLC [Member] | |||||||
Number of Real Estate Properties | 75 | ||||||
To Maintain REIT Status for Federal Income Tax Purposes [Member] | |||||||
Minimum Percentage of Taxable Income to be Distributed to Stockholders | 90.00% | ||||||
Threshold to not be Subject to Federal Corporate Income Tax [Member] | |||||||
Minimum Percentage of Taxable Income to be Distributed to Stockholders | 100.00% | ||||||
Number of Real Estate Properties Sold | 4 | 0 | 6 | 4 | |||
Deferred Tax Assets, Net | $ 7,630,000 | $ 7,630,000 | |||||
Deferred Tax Assets, Real Estate, Difference Between Book Value and Tax Basis | $ 20,513,000 | $ 20,513,000 |
Note 12 - Income Taxes - Income Tax Benefit (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Deferred (expense) benefit | $ (193,509) | $ 6,242,655 | ||
Deferred (expense) benefit | 454,357 | 1,387,028 | ||
Deferred (expense) benefit | 260,848 | 7,629,683 | ||
Income tax (expense) benefit | (193,509) | 6,242,655 | ||
Income tax (expense) benefit | 454,357 | 1,387,028 | ||
Income tax (expense) benefit | $ 260,848 | $ 7,629,683 |
Note 12 - Income Taxes - Reconciliation of Income Tax Benefit (Provision) (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Tax expense (benefit) at Federal statutory rate | ||||
State income tax expense (benefit), net of federal effect | ||||
Real estate basis differences | 238,163 | 8,161,775 | ||
Net operating losses | 142,661 | 142,661 | ||
Change in valuation allowance | (119,976) | (674,753) | ||
Income tax benefit | $ 260,848 | $ 7,629,683 |
Note 12 - Income Taxes - Deferred Tax Assets (Liabilities) (Details) |
Sep. 30, 2016
USD ($)
|
---|---|
Real estate basis differences | $ 8,161,775 |
Net operating losses | 142,661 |
Total deferred tax assets | 8,304,436 |
Valuation allowance | (674,753) |
Net deferred tax assets | $ 7,629,683 |
Note 13 - Fair Value (Details Textual) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Excluding Loan Loss Reversal Foreclosed Loan [Member] | |||||
Allowance for Loan and Lease Losses, Adjustments, Other | $ 0 | $ (64,000) | $ (38,000) | $ (70,000) | |
Assets, Fair Value Disclosure, Recurring | 0 | 0 | |||
Liabilities, Fair Value Disclosure, Recurring | 0 | 0 | |||
Liabilities, Fair Value Disclosure, Nonrecurring | 0 | 0 | $ 0 | ||
Allowance for Loan and Lease Losses, Adjustments, Other | 38,966 | (44,316) | (347,029) | (472,359) | |
Impairment of Real Estate | $ 1,094,071 | $ 0 | $ 3,204,221 | $ 1,256,434 |
Note 14 - Commitments and Contingencies (Details Textual) |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Zalanta [Member] | |
Contractual Obligation | $ 32,835,000 |
Contractual Obligation Incurred | 18,903,000 |
Other Construction Costs | 3,293,000 |
Construction Costs Incurred and Other Costs | 22,196,000 |
Zalanta II [Member] | |
Contractual Obligation | 1,044,000 |
Contractual Obligation Incurred | 700,000 |
Other Construction Costs | 172,000 |
Construction Costs Incurred and Other Costs | 872,000 |
Interest Reserves [Member] | |
Contractual Obligation | 2,738,000 |
Contractual Obligation | $ 20,362,000 |
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