3.	INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

Apartment LLCs

At December 31, 2012, the Company held investments in two 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% and 35% equity interest in these Apartment LLCs.

The Company accounts for its investments in the Apartment LLCs using the equity method of accounting. At December 31, 2012 and 2011, the Company’s investment in the 35% owned Apartment LLCs totaled $4,533 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 these Apartment LLCs was approximately $2,830 at December 31, 2012. The excess investment related to these Apartment LLCs 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 December 31, 2012 and 2011 reflects a credit investment of $16,297 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:


	December 31,
Apartment LLCs - Balance Sheet Data	2012			2011
Real estate assets, net of accumulated depreciation of $38,332 and $32,780 at December 31, 2012 and 2011, respectively	$	212,877		$	217,443
Assets held for sale, net		-			28,846
Cash and other		5,103			6,526

Total assets	$	217,980		$	252,815

Mortgage notes payable	$	177,723		$	206,495
Other liabilities		2,588			2,737

Total liabilities		180,311			209,232
Members’ equity		37,669			43,583

Total liabilities and members’ equity	$	217,980		$	252,815

Company’s equity investment in Apartment LLCs (1)	$	(11,764	)	$	(8,601	)

(1)	At December 31, 2012 and 2011, the Company’s equity investment includes its credit investments of $16,297 and $15,945, respectively, discussed above.


	Year ended December 31,
Apartment LLCs - Income Statement Data	2012		2011			2010
Revenues
Rental	$	24,659	$	23,504		$	22,444
Other property revenues		1,844		1,823			1,718

Total revenues		26,503		25,327			24,162

Expenses
Property operating and maintenance		10,541		9,896			9,945
Depreciation and amortization		5,768		5,934			5,836
Interest		9,181		10,247			10,247

Total expenses		25,490		26,077			26,028

Net loss from continuing operations		1,013		(750	)		(1,866	)
Gain (loss) from discontinued operations		21,667		(151	)		(254	)

Net income (loss)	$	22,680	$	(901	)	$	(2,120	)

Company’s share of net income in Apartment LLCs	$	7,995	$	1,001		$	635

In February 2012, a 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 year ended December 31, 2012 includes a net gain of $6,055 resulting from this transaction.

At December 31, 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.

Condominium LLCs

In periods prior to September 2010, the Company and its partner held an approximate pro-rata 49% interest in a limited partnership (the “Mixed-Use LP”) that was constructing a mixed-use development, consisting of the Atlanta Condominium Project and Class A office space, sponsored by two additional independent investors. Prior to September 2010, the Company accounted for its investment in the Mixed-Use LP using the equity method of accounting.

In September 2010, the Atlanta Condominium Project and associated liabilities (including construction indebtedness) were conveyed to a majority owned subsidiary of the Company in full redemption of the subsidiary’s equity investment in the Mixed-Use LP. The net condominium assets and associated construction indebtedness were distributed at their fair values. As part of the transaction, a separate wholly owned subsidiary of the Company acquired the lenders’ interest in the construction indebtedness of the Atlanta Condominium Project and a related land entity (which owned related land and infrastructure that was previously impaired in 2009) for aggregate consideration of $49,793, effectively extinguishing the indebtedness. As a result of this distribution, equity in income of unconsolidated real estate entities includes a gain of $23,596, net of transaction expenses and income taxes, related to the construction indebtedness, partially offset by an impairment loss of $5,492 related to the condominium assets. The Company also recognized a debt extinguishment gain of $2,845 on the related debt retirement associated with the related land entity. Subsequent to the purchase of the construction indebtedness, and in exchange for the release of the guarantors of the indebtedness, the Company acquired the remaining noncontrolling interest in the majority owned subsidiary that owned the community and the related land entity. As a result of these transactions, the Company wholly owned and consolidated the Atlanta Condominium Project for financial reporting purposes as of September 2010.

A summary of results of operations for the Mixed-Use LP through September 2010 was as follows:


Mixed-Use LP - Income Statement Data	Period ended September 24, 2010
Revenues	$	90
Expenses		(1,648	)
Gain on distribution of assets / liabilities at fair value		20,049

Net income	$	18,491

Company’s share of net income in Mixed-Use LP	$	18,104