INVESTMENT IN UNCONSOLIDATED JOINT VENTURES AND INVESTEES

9 Months Ended

Sep. 30, 2014

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 (owning together with subsidiaries 81% of TCI’s Common Stock) and is considered as an unconsolidated joint venture.

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

	Percentage ownership as of
	September 30, 2014			September 30, 2013
American Realty Investors, Inc.(1)		1.00	%		1.99	%
(1) Unconsolidated investment in parent company owning 140,000 shares of ARL Common Stock

 Our interest in the common stock of ARL in the amount of 1.00% 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.

The Company acquired 135,000 shares of ARL Series K preferred stock on May 7, 2013.  It was pledged as collateral on a $5.0 million promissory note relating to the Amoco Building settlement agreement.  This note has been paid in full and the stock was released.  The par value per share was $2 and the liquidation preference was $22 per share.  It was convertible to common stock at a rate of 5 to 1.  The Series K preferred stock was cancelled May 7, 2014.

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

As of September 30,	2014			2013
Real estate, net of accumulated depreciation	$	15,087		$	44,306
Notes receivable		67,419			44,328
Other assets		128,587			135,883
Notes payable		(52,036	)		(60,237	)
Other liabilities		(92,664	)		(93,483	)
Shareholders' equity		(66,393	)		(70,797	)
For the Nine Months Ended September 30,		2014			2013
Rents and interest and other income	$	9,785		$	9,450
Depreciation		(204	)		(220	)
Operating expenses		(4,340	)		(6,420	)
Gain on land sales		-			611
Interest expense		(5,287	)		(4,773	)
Loss from continuing operations		(46	)		(1,352	)
Loss from discontinued operations		-			(15	)
Net loss	$	(46	)	$	(1,367	)
Company's proportionate share of loss (1)	$	(0.46	)	$	(27	)
(1) Loss represents continued and discontinued operations