Note 7 - Real Estate Owned (REO), Held as Investment, Net

6 Months Ended

Jun. 30, 2011

Real Estate Disclosure [Text Block]

NOTE 7 – REAL ESTATE OWNED (REO), HELD AS INVESTMENT, NET

For REO, held as investment, the activity and changes in the impairment reserves are summarized in the following table for the six months ended June 30 ($ in thousands).

	Net Realizable Value						Accumulated Depreciation
	2011			2010			2011			2010
Balance, beginning of year	$	115,411		$	102,833		$	1,807		$	507
Acquisitions		17,187			31,108			—			—
Dispositions		(8,247	)		—			(40	)		—
Improvements/betterments		189			1,391			—			—
Designated REO, held for sale		—			—			—			—
Changes in net realizable values		157			—			—			—
Depreciation		(831	)		(617	)		831			617
Balance, June 30	$	123,866		$	134,715		$	2,598		$	1,124

REO, held as investment, summarized by property type is presented in the following table ($ in thousands).

	June 30,		December 31,
	2011		2010
Number of properties		17		13
Property type
Single family	$	11,613	$	9,399
Multi-family		90,942		86,813
Commercial		16,281		14,170
Land		5,030		5,029
Total REO, held as investment, net	$	123,866	$	115,411

At June 30, 2011, the partnership was holding three properties classified as Land until such time as the distressed market improves. Three Single family residences with a carrying value of $7,907,000 were under construction and/or rehabilitation.  At December 31, 2010, three properties with a carrying value of $7,537,000 were under construction and/or rehabilitation.

The results of operations for rental properties in REO, held as investment are presented in the following table for the three and six months ended June 30 ($ in thousands).

	Three months ended June 30,					Six months ended June 30,
	2011		2010			2011		2010
Number of properties		11		6			11		6
Rental income	$	1,804	$	1,512		$	3,601	$	2,496
Operating expenses
Property taxes		274		232			510		406
Management, administration and insurance		528		379			838		572
Utilities, maintenance and other		332		918			658		1,098
Advertising and promotions		9		4			18		15
Total operating expenses		1,143		1,533			2,024		2,091
Net operating income		661		(21	)		1,577		405
Depreciation		436		269			831		615
Rental operations, net(1)	$	225	$	(290	)	$	746	$	(210	)

(1) Interest expense on the mortgages securing the rental property was $452,000 and $202,000 for the three months ended June 30, 2011 and 2010, respectively, and $792,000 and $202,000 for the six months ended June 30, 2011 and 2010, respectively.

In the second quarter of 2011, the partnership acquired properties at two locations through foreclosure.

- Condominium units (3) in an eight unit building in San Francisco, California.  The recorded investment was approximately $1,362,000.  Two of the units are subject to separate mortgages with an aggregate amount owed of $830,000, each with variable interest rates, currently between 2.8% and 3.9%.

- Condominium units (32) in a 81 unit complex, in Hayward, California. The recorded investment was approximately $5,000,000. An independent management firm has been engaged to oversee rental operations of the units.

In the first quarter of 2011, the partnership acquired three properties through foreclosure.

- Multi-family complex in Santa Clara, California (The Element, LLC). The  recorded investment was approximately $8,130,000. The property was subject to an interest-only mortgage loan with a balance at acquisition of approximately $6,800,000 and an interest rate of 6.25%. In June 2011, the Element, LLC was sold for $8,800,000.

- Condominium units (9) in a 37 unit complex, in Yuba City, California (Lincoln Village LLC). The recorded investment was approximately $495,000. An independent management firm has been engaged to oversee rental operations of the units.

- Recreation property (45.7 acres) in Pine Grove, California (Pine Acres LLC). The recorded investment was approximately $2,200,000. An independent management firm has been engaged to oversee rental operations of the units.