INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES

6 Months Ended

Jun. 30, 2013

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES

INVESTMENT IN UNCONSOLIDATED JOINT-VENTURES AND INVESTEES

NOTE 4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES

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

Investments in unconsolidated joint ventures and investees consist of the following:

	Percentage ownership as of
	June 30, 2013			June 30, 2012
American Realty Investors, Inc.1		1.99	%		2.03	%

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1 Unconsolidated Investment in Parent Company

 Our interest in the common stock of ARL in the amount of 1.99% is 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 Company’s proportionate share of earnings or losses.

On May 6, 2013 TCI acquired 135,000 shares of ARL Series K Preferred stock for $270,000.  It was pledge to Petra CRE CDO and used as collateral on a $5,000,000 promissory note relating to the Amoco Building settlement agreement.  The par value per share is $2 and the liquidation preference is $22 per share.  It is convertible to common stock at a rate of 5 to 1. 

The following is a summary of the financial position and results of operations from our unconsolidated parent (dollars in thousands):

As of June 30,	2013			2012
Real estate, net of accumulated depreciation	$	44,886		$	45,829
Notes receivable		44,544			23,486
Other assets		132,221			150,771
Notes payable		(61,410	)		(60,055	)
Other liabilities		(87,474	)		(84,593	)
Shareholders' equity/partners' capital		(72,767	)		(75,438	)
For the Six Months Ended June 30,		2013			2012
Revenue	$	6,948		$	3,706
Depreciation		(152	)		(126	)
Operating expenses		(3,776	)		(2,423	)
Gain (loss) on land sales		12			(1,444	)
Loss on sale of investment		-			(361	)
Interest expense		(2,922	)		(2,472	)
Income (loss) from continuing operations		110			(3,120	)
Income (loss) from discontinued operations		(15	)		2,731
Net Income (loss)	$	95		$	(389	)
Company's proportionate share of earnings	$	2		$	(8	)