Real Estate Owned (REO)

9 Months Ended

Sep. 30, 2019

Real Estate [Abstract]

Real Estate Owned (REO)

NOTE 5 – REAL ESTATE OWNED (REO)

The REO end of period balances were approximately $3,943,000 and $4,153,000 at September 30, 2019 and December 31, 2018, respectively.

There were no REO transactions during the three and nine months ended September 30, 2019. The valuation reserve on a property in Marin County (approximately 13 acres zoned for residential development) was increased by $210,000 as the sale of the property closed on October 11, 2019, the net proceeds for which approximated $270,300.

The partnership held the remaining three unsold properties, with a carrying value of approximately $3,673,000 which approximated the net realizable value, at September 30, 2019:

• In San Francisco County, 3 residential units in a condominium complex, which are being marketed to low-income buyers pursuant to listing approved by the City of San Francisco.

• In Fresno County, a partially completed home subdivision, which is currently in escrow to sell, which has been extended to December 31, 2019.

• In Stanislaus County, approximately 14 acres zoned commercial which is currently being marketed by a broker.

The following transactions closed during the nine months ended September 30, 2018:

• Six units in a condominium complex in Los Angeles County were sold with a gain of approximately $113,000, which resulted in a decrease in REO by approximately $1,928,000.

• A commercial office property in Contra Cost County was sold at approximately its carrying value after taking into account a previously recorded valuation reserve.

REO, net is comprised of the following components for the three and nine months ended September 30, 2019 and 2018.

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
Holding costs, net of other income	$	23		$	(45	)	$	(39	)	$	(189	)
Gains/(losses) on sales		—			—			—			113
Valuation adjustment		(210	)		(48	)		(210	)		(48	)
REO, net	$	(187	)	$	(93	)	$	(249	)	$	(124	)

Rental operations were substantially wound down, and all residential rental units had been made vacant in preparation for sale in all periods presented. As such, there were no rental operations during the three and nine months ended September 30, 2018 and 2019.

REO is recorded at fair value at acquisition, and subsequently adjusted to the lower of the recorded cost or fair value.