DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2014

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 8. DISCONTINUED OPERATIONS

We apply the provisions of ASC Topic 360 “Property, Plant and Equipment”. ASC Topic 360 requires that long-lived assets that are to be disposed of by sale be measured at the lesser of (1) book value or (2) fair value less cost to sell. In addition, it requires that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions.

   Discontinued operations relates to properties that were either sold or held for sale as of the period ended September 30, 2014.   Included in discontinued operations are a total of five and 20 properties for 2014 and 2013, respectively. Properties sold in 2014 have been reclassified to discontinued operations for current and prior year reporting periods.  In 2014, we sold one apartment complex (Pecan Pointe), two commercial properties (1010 Common and Sesame Square) and have two apartment complexes held for sale (Blue Ridge and Sunset Lodge).  In 2013, we sold 11 apartment complexes (Dorado Ranch, Huntington Ridge, Laguna Vista, Legends of El Paso, Mariposa Villas, Paramount Terrace, River Oaks, Savoy of Garland, Stonebridge at City Park, Verandas at City View and Vistas of Pinnacle Park) and four commercial properties (225 Baronne, Amoco, Ergon and Eton Square).  The gain on sale of the properties is also included in discontinued operations for those years.  The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2014			2013			2014			2013
Revenues:
Rental and other property revenues	$	1,416		$	7,945		$	5,328		$	27,405
		1,416			7,945			5,328			27,405
Expenses:
Property operating expenses		326			3,729			2,201			12,238
Depreciation		155			1,251			664			4,300
General and administrative		65			254			378			788
Total operating expenses		546			5,234			3,243			17,326
Other income (expense):
Other income		(36	)		5			(522	)		35
Mortgage and loan interest		(351	)		(1,598	)		(1,431	)		(6,622	)
Deferred borrowing costs amortization		(6	)		(17	)		(336	)		(1,032	)
Loan charges and prepayment penalties		-						-			(3,245	)
Earnings from unconsolidated subsidiaries and investees		-			-			-			20
Litigation settlement		-			(80	)		(250	)		(170	)
Total other expenses		(393	)		(1,690	)		(2,539	)		(11,014	)
Gain (loss) from discontinued operations before gain on sale of real estate and tax		477			1,021			(454	)		(935	)
Gain on sale of real estate from discontinued operations		1,770			127			14,826			24,392
Income tax expense		(786	)		(402	)		(5,030	)		(8,210	)
Income from discontinued operations	$	1,461		$	746		$	9,342		$	15,247

Our application of ASC Topic 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2014 as income from discontinued operations. This does not have an impact on net income available to common shareholders and only impacts the presentation of these properties within the Consolidated Statements of Operations.