3.	INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At September 30, 2012, the Company held investments in various individual limited liability companies (the “Apartment LLCs”) with institutional investors that own four apartment communities, including three communities located in Atlanta, Georgia and one community located in Washington, D.C. The Company has a 25% to 35% equity interest in these Apartment LLCs.

The Company accounts for its investments in the Apartment LLCs using the equity method of accounting. At September 30, 2012 and December 31, 2011, the Company’s investment in the 35% owned Apartment LLCs totaled $5,040 and $7,344, respectively, excluding the credit investments discussed below. The excess of the Company’s investment over its equity in the underlying net assets of the Apartment LLC holding the Washington, D.C. community was approximately $2,853 at September 30, 2012. The excess investment related to this Apartment LLC is being amortized as a reduction to earnings on a straight-line basis over the lives of the related assets. The Company’s investment in the 25% owned Apartment LLCs at September 30, 2012 and December 31, 2011 reflects a credit investment of $16,192 and $15,945, respectively. These credit balances resulted from distribution of financing proceeds in excess of the Company’s historical cost upon the formation of the Apartment LLCs and are reflected in consolidated liabilities on the Company’s consolidated balance sheet. The operating results of the Company include its allocable share of net income from the investments in the Apartment LLCs. The Company provides property and asset management services to the Apartment LLCs for which it earns fees.

A summary of financial information for the Apartment LLCs in the aggregate is as follows:


Apartment LLCs - Balance Sheet Data	September 30, 2012				December 31, 2011
Real estate assets, net of accumulated depreciation of $36,633 and $32,780 at September 30, 2012 and December 31, 2011, respectively		$	214,407			$	217,443
Assets held for sale, net			-				28,846
Cash and other			4,965				6,526

Total assets		$	219,372			$	252,815

Mortgage notes payable		$	177,723			$	206,495
Other liabilities			1,928				2,737

Total liabilities			179,651				209,232
Members’ equity			39,721				43,583

Total liabilities and members’ equity		$	219,372			$	252,815

Company’s equity investment in Apartment LLCs (1)		$	(11,152	)		$	(8,601	)

(1)

At September 30, 2012 and December 31, 2011, the Company’s equity investment includes its credit investments of $16,192 and $15,945, respectively, discussed above.


	Three months ended					Nine months ended
	September 30,					September 30,
Apartment LLCs - Income Statement Data	2012		2011			2012		2011
Revenues
Rental	$	6,226	$	5,932		$	18,421	$	17,543
Other property revenues		476		474			1,411		1,382

Total revenues		6,702		6,406			19,832		18,925

Expenses
Property operating and maintenance		2,651		2,586			7,733		7,380
Depreciation and amortization		1,368		1,488			4,400		4,441
Interest		2,278		2,583			6,903		7,664

Total expenses		6,297		6,657			19,036		19,485

Net loss from continuing operations		405		(251	)		796		(560	)
Gain (loss) from discontinued operations		-		(28	)		21,607		(127	)

Net income (loss)	$	405	$	(279	)	$	22,403	$	(687	)

Company’s share of net income in Apartment LLCs	$	475	$	235		$	7,416	$	790

In February 2012, one of the 35% owned Apartment LLCs sold an apartment community located in Atlanta, Georgia. The net cash proceeds from the sale of approximately $50,500 were used to retire the Apartment LLCs outstanding mortgage note payable of $29,272 and to make distributions to its members. The results of operations and the gain on sale of the apartment community from this Apartment LLC are included in discontinued operations for all periods presented in the financial data listed above. The Company’s equity in income of unconsolidated entities for the nine months ended September 30, 2012 includes a net gain of approximately $6,055 resulting from this transaction.

At September 30, 2012, mortgage notes payable included four mortgage notes. The first $51,000 mortgage note bears interest at 3.50%, requires monthly interest only payments and matures in 2019. The second and third mortgage notes total $85,724, bear interest at 5.63%, require interest only payments and mature in 2017. The fourth mortgage note totals $41,000, bears interest at 5.71%, requires interest only payments, and matures in January 2018 with a one-year automatic extension at a variable interest rate.