INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

9 Months Ended

Sep. 30, 2011

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

NOTE 4. INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND INVESTEES

Investments in unconsolidated subsidiaries, jointly owned companies and other investees in which we have a 20% to 50% interest or otherwise exercise significant influence are carried at cost, adjusted for the Company’s proportionate share of their undistributed earnings or losses, via the equity method of accounting. ARL is our parent company and is considered as an unconsolidated subsidiary.

Investments accounted for via the equity method consists of the following:

	Percentage Ownership
	at September 30, 2011			at September 30, 2010
American Realty Investors, Inc.(1)		2.07	%		2.47	%
Garden Centura, L.P.(2)		5.00	%		5.00	%

__________________________

(1)	Unconsolidated subsidiary
(2)	Other investees

 Our interest in the common stock of ARL and our partnership interest in Garden Centura, L.P., in the amount of 2.07% and 5.0%, respectively, are accounted for under the equity method because we exercise significant influence over the operations and financial activities. Accordingly, the investments are carried at cost, adjusted for the companies’ proportionate share of earnings or losses. The following is a summary of the financial position and results of operations from our unconsolidated subsidiaries and investees (dollars in thousands):

For the Nine Months Ended September 30, 2011	Unconsolidated Subsidiaries			Other Investees			Total
Real estate, net of accumulated depreciation	$	155,462		$	72,622		$	228,084
Notes receivable		23,239			-			23,239
Other assets		192,185			4,755			196,940
Notes payable		(168,746	)		(47,578	)		(216,324	)
Other liabilities		(121,964	)		(2,543	)		(124,507	)
Shareholders' equity/partners capital		(80,176	)		(27,256	)		(107,432	)
Revenue	$	11,356		$	5,465		$	16,821
Depreciation		(640	)		(2,352	)		(2,992	)
Operating expenses		(1,459	)		(2,944	)		(4,403	)
Gain on land sales		23,465			-			23,465
Gain on sale of investment		91			-			91
Interest expense		(7,902	)		(1,745	)		(9,647	)
Gain (loss) from continuing operations	$	24,911		$	(1,576	)	$	23,335
Income from discontinued operations		9,699			-			9,699
Net income (loss)	$	34,610		$	(1,576	)	$	33,034
Company's proportionate share of earnings	$	473		$	(79	)	$	394

For the Nine Months Ended September 30, 2010	Unconsolidated Subsidiaries			Other Investees			Total
Real estate, net of accumulated depreciation	$	243,090		$	75,240		$	318,330
Notes Receivable		45,032			-			45,032
Other assets		163,231			6,213			169,444
Notes payable		(231,901	)		(48,366	)		(280,267	)
Other liabilities		(120,424	)		(2,408	)		(122,832	)
Shareholders equity/partners capital		(99,028	)		(30,679	)		(129,707	)
Rents and interest and other income	$	24,277		$	5,992		$	30,269
Depreciation		(1,933	)		(2,324	)		(4,257	)
Operating expenses		(22,706	)		(2,906	)		(25,612	)
Gain on land sales		1,519			-			1,519
Interest expense		(12,635	)		(2,706	)		(15,341	)
Loss from continuing operations		(11,478	)		(1,944	)		(13,422	)
Income from discontinued operations		8,206			-			8,206
Net loss	$	(3,272	)	$	(1,944	)	$	(5,216	)
Company's proportionate share of earnings	$	(81	)	$	(97	)	$	(178	)