HMG/COURTLAND PROPERTIES,
INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
YEARS ENDED
DECEMBER 31, 2012 and 2011
1. DESCRIPTION OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Business and Consolidation
. The
consolidated financial statements include the accounts of HMG/Courtland Properties, Inc. (“we” or the "Company")
and entities in which the Company owns a majority voting interest or controlling financial interest. The Company was organized
in 1972 and (excluding its 95% owned subsidiary Courtland Investments, Inc., which files a separate tax return) qualifies for taxation
as a real estate investment trust ("REIT") under the Internal Revenue Code. The Company’s business is the ownership
and management of income-producing commercial properties and its management considers other investments if such investments offer
growth or profit potential. The Company’s recurring operating revenue comes from food and beverage operations, marina dockage
operations, commercial property rental operations and spa operations.
All material transactions and balances
with consolidated and unconsolidated entities have been eliminated in consolidation or as required under the equity method.
The Company's consolidated subsidiaries
are described below:
Courtland Investments, Inc. (“CII”).
A 95% owned corporation in which the Company holds a 95% non-voting interest and Masscap Investments Company, Inc. ("Masscap")
which holds a 5% voting interest in CII. The Company and Masscap have had a continuing arrangement with regard to the ongoing operations
of CII, which provides the Company with complete authority over all decision making relating to the business, operations and financing
of CII consistent with the Company’s status as a real estate investment trust. Masscap is a wholly-owned subsidiary of Transco
Realty Trust which is a 47% shareholder of the Company. CII files a separate tax return and its operations are not part of the
REIT tax return.
Courtland Bayshore Rawbar, LLC (“CBSRB”).
This limited liability company is wholly owned by CII. CBSRB owns a 50% interest in Bayshore Rawbar, LLC (“BSRB”) which
operates the Monty’s restaurant in Coconut Grove, Florida. The other 50% owner of BSRB is The Christoph Family Trust (“CFT”),
an unrelated entity.
HMG Bayshore, LLC (“HMGBS”).
This limited liability company owns a 50% interest in the real property and marina operations of Bayshore Landing, LLC (“BSL”).
HMGBS and the CFT formed BSL for the purposes of acquiring and operating the Monty’s property in Coconut Grove, Florida.
260 River Corp (“260”).
This wholly owned corporation of the Company owns an approximate 70% interest in a vacant commercially zoned building located on
5.4 acres in Montpelier, Vermont. Development of this property is being considered.
Courtland Houston, Inc. (“CHI”)
.
This corporation is 80% owned by CII and 20% owned by its sole employee. CHI engages in consulting services and commercial leasing
activities in Texas.
South Bayshore Associates (“SBA”)
.
This is a 75% company owned joint venture with its sole asset being a receivable from the Company's 47% shareholder, Transco Realty
Trust.
Baleen Associates, Inc. (“Baleen”).
This corporation is wholly owned by CII and its sole asset is a 50% interest in a partnership which operates an executive suite
rental business in Coconut Grove, Florida.
Preparation of Financial Statements
.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes
. The Company’s
95%-owned subsidiary, CII, files a separate income tax return and its operations are not included in the REIT’s income tax
return. The Company accounts for income taxes in accordance with ASC Topic 740, “Accounting for Income Taxes” (“ASC
Topic 740”). This requires a Company to use the asset and liability method of accounting for income taxes. Under this method,
deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing
assets and liabilities. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. Deferred taxes only pertain to CII. The Company (excluding CII) qualifies as a real estate investment
trust and distributes its taxable ordinary income to stockholders in conformity with requirements of the Internal Revenue Code
and is not required to report deferred items due to its ability to distribute all taxable income. In addition, net operating losses
can be carried forward to reduce future taxable income but cannot be carried back. Distributed capital gains on sales of real estate
as they relate to REIT activities are not subject to taxes; however, undistributed capital gains are taxed as capital gains. State
income taxes are not significant.
The Company follows the provisions
of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in
income taxes recognized in an enterprise’s financial statements in accordance with ASC Topic 740, and prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. This topic also provides guidance on de-recognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition.
Based on our evaluation, we have concluded
that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements. Our evaluation
was performed for the tax years ended December 31, 2012 and 2011. The Company’s federal income tax returns since 2009 are
subject to examination by the Internal Revenue Service, generally for a period of three years after the returns were filed.
We may from time to time be assessed interest
or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial
results. In the event we have received an assessment for interest and/or penalties, it has been classified in the consolidated
financial statements as selling, general and administrative expense.
Depreciation and Amortization
. Depreciation
of properties held for investment is computed using the straight-line method over the estimated useful lives of the properties,
which range up to 39.5 years. Deferred mortgage and leasing costs are amortized over the shorter of the respective term of the
related indebtedness or life of the asset. Depreciation and amortization expense for the years ended December 31, 2012 and 2011
was approximately $679,000 and $826,000, respectively. The Monty’s marina is being depreciated on a straight-line basis over
its estimated useful life of 15 years.
Fair Value of Financial Instruments.
The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards
as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company
uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable
inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable
and the last unobservable, that may be used to measure fair value which are the following:
• Level
1 – Quoted prices in active markets for identical assets or liabilities.
• Level
2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.
• Level 3 – Inputs include
management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date.
The inputs are unobservable in the market and significant to the instrument’s valuation.
An investment’s categorization within
the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The carrying value of financial instruments
including other receivables, notes and advances due from related parties, accounts payable and accrued expenses and mortgages and
notes payable approximate their fair values at December 31, 2012 and 2011, due to their relatively short terms or variable interest
rates.
Cash equivalents are classified within
Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations,
or alternative pricing sources with reasonable levels of transparency. Other investments which are measured by investees at net
asset value per share or its equivalent are also classified within Level 2. The fair value of the interest rate swap contract payable
is based on the value provided by the issuing bank on a monthly basis (Level 2).
The valuation of other investments not
included above requires significant judgment by the Company’s management due to the absence of quoted market values, inherent
lack of liquidity and long-term nature of such assets and have been classified within Level 3. Such investments are valued initially
based upon transaction price. Valuations are reviewed periodically utilizing available market data and additional factors to determine
if the carrying value of these investments should be adjusted. In determining valuation adjustments, emphasis is placed on market
participants’ assumptions and market-based information over entity-specific information.
Marketable Securities
. The entire
marketable securities portfolio is classified as trading consistent with the Company's overall investment objectives and activities.
Accordingly, all unrealized gains and losses on the Company's marketable securities investment portfolio are included in the consolidated
statements of comprehensive income.
Gross gains and losses on the sale of marketable
securities are based on the first-in first-out method of determining cost.
Marketable securities from time to time
are pledged as collateral pursuant to broker margin requirements. At December 31, 2012 and 2011 there were no margin balances
outstanding.
Notes and other receivables.
Management
periodically performs a review of amounts due on its notes and other receivable balances to determine if they are impaired based
on factors affecting the collectability of those balances. Management's estimates of collectability of these receivables requires
management to exercise significant judgment about the timing, frequency and severity of collection losses, if any, and the underlying
value of collateral, which may affect recoverability of such receivables. As of December 31, 2012 and 2011 the Company had an allowance
for bad debt of $250,000 and $150,000, respectively. This is related to one tenant at the Monty’s property.
Equity investments.
Investments
in which the Company does not have a majority voting or financial controlling interest but has the ability to exercise influence
are accounted for under the equity method of accounting, even though the Company may have a majority interest in profits and losses.
The Company follows ASC Topic 323-30 in accounting for its investments in limited partnerships. This guidance requires the use
of the equity method for limited partnership investments of more than 3 to 5 percent.
The Company has no voting or financial
controlling interests in its other investments which include entities that invest venture capital funds in growth oriented enterprises.
These other investments are carried at cost less adjustments for other than temporary declines in value.
Comprehensive Income (Loss)
. The
Company reports comprehensive income (loss) in its consolidated statements of comprehensive income. Comprehensive income (loss)
is the change in equity from transactions and other events from nonowner sources. Comprehensive income (loss) includes net income
(loss) and other comprehensive income (loss). For the years ended December 31, 2012 and 2011 comprehensive gain (loss) consisted
of unrealized gain (loss) from interest rate swap contract of $5,000 and ($257,000), respectively.
Income (loss) per common share
.
Net income (loss) per common share (basic and diluted) is based on the net loss divided by the weighted average number of common
shares outstanding during each year. Diluted net loss per share includes the dilutive effect of options to acquire common stock.
Common shares outstanding include issued shares less shares held in treasury. There were 102,100 stock options outstanding in 2012
and 2011, which were not included in the diluted earnings per share computation as their effect would have been anti-dilutive.
Gain on sales of properties
. Gain
on sales of properties is recognized when the minimum investment requirements have been met by the purchaser and title passes to
the purchaser. There were no sales of property in 2012 and 2011.
Cash and cash Equivalents
. For purposes
of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of
three months or less to be cash and cash equivalents.
Concentration of Credit Risk
. Financial
instruments that potentially subject the Company to concentration of credit risk are cash and cash equivalent deposits in excess
of federally insured limits, marketable securities, other receivables and notes and mortgages receivable. From time to time the
Company may have bank deposits in excess of federally insured limits. The Company evaluates these excess deposits and transfers
amounts to brokerage accounts and other banks to mitigate this exposure.
The Company maintains cash and equivalents
in bank accounts which at times, may exceed federally-insured limits. The Company has not experienced any losses in such accounts
and believes that it is not exposed to any significant credit risk on cash. The federally insured limit for time deposits is presently
$250,000, and unlimited for certain qualifying and participating non-interest bearing transaction accounts through December 31,
2012, however, effective January 1, 2013, the Federal Deposit Insurance Company discontinued the additional unlimited coverage.
Interest rate swap contract.
The Company may or may not use interest
rate swap contracts to reduce interest rate risk.
Interest rate swap contracts designated
and qualifying as cash flow hedges are reported at fair value. The gain or loss on the effective portion of the hedge initially
is included as a component of other comprehensive income and is subsequently reclassified into earnings when interest on the related
debt is paid, or upon partial or full settlement of the contract.
Inventories.
Inventories consist
primarily of food and beverage and are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis.
Goodwill.
The Company’s goodwill balance as
of December 31, 2012 and 2011 relates entirely to its 2004 acquisition of 50% of the Monty’s restaurant, marina and office
rental facility located in Miami, Florida.
Goodwill is recorded at its carrying value and
is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of
goodwill might not be recoverable. The Company elected an annual goodwill impairment testing date of December 31.
As allowed by
GAAP, in 2012 our goodwill impairment analysis consisted of assessing certain qualitative factors to determine whether it is more
likely than not that the fair value of the reporting entity is lower than its carrying value. Our last year’s analysis supported
no goodwill impairment and the financial performance of the reporting entity has improved since then and there are no negative
indications that future profitability may be impaired. Therefore we have concluded that there is no goodwill impairment for the
year ended December 31, 2012.
Other intangible assets:
Deferred loan costs are amortized on a straight
line basis over the life of the loan. This method approximates the effective interest rate method.
Non controlling Interest
. Non controlling
interest represents the noncontrolling or minority partners' proportionate share of the equity of the Company's majority owned
subsidiaries. A summary for the years ended December 31, 2012 and 2011 is as follows:
|
|
2012
|
|
|
2011
|
|
Non controlling interest balance at beginning of year
|
|
$
|
2,818,000
|
|
|
$
|
3,387,000
|
|
Non controlling partners’ interest in operating gains (losses) of consolidated subsidiaries
|
|
|
94,000
|
|
|
|
(211,000
|
)
|
Net (distributions to) contributions from non controlling partners
|
|
|
—
|
|
|
|
(102,000
|
)
|
Unrealized loss on interest rate swap agreement
|
|
|
5,000
|
|
|
|
(256,000
|
)
|
Non controlling interest balance at end of year
|
|
$
|
2,917,000
|
|
|
$
|
2,818,000
|
|
Revenue recognition
. The Company is the
lessor of various real estate properties. All of the lease agreements are classified as operating leases and accordingly all rental
revenue is recognized as earned based upon total fixed cash flow over the initial term of the lease, using the straight line method.
Percentage rents, if applicable, are based upon tenant sales levels for a specified period and are recognized on the accrual basis,
based on the lessee’s sales. Reimbursed expenses for real estate taxes, common area maintenance, utilities and insurance
are recognized in the period in which the expenses are incurred, based upon the provisions of the tenant’s lease. In addition
to base rent, the Company may receive participation rent consisting of a portion of the tenant’s operating surplus, as defined
in the lease agreement. Participation rent is due at the end of each lease year and recognized if and when earned.
Revenues earned from restaurant and spa
operations are realized in cash or cash equivalents with an insignificant amount of customer receivables. We record revenues from
recurring food and beverage sales upon sale. Marina revenues are earned in accordance with dockage rental agreements. We
report our sales net of sales tax and service charges.
Impairment of long-lived assets
.
The Company periodically reviews the carrying value of its properties and long-lived assets in relation to historical results,
current business conditions and trends to identify potential situations in which the carrying value of assets may not be recoverable.
If such reviews indicate that the carrying value of such assets may not be recoverable, the Company would estimate the undiscounted
sum of the expected future cash flows of such assets or analyze the fair value of the asset, to determine if such sum or fair value
is less than the carrying value of such assets to ascertain if a permanent impairment exists. If a permanent impairment exists,
the Company would determine the fair value by using quoted market prices, if available, for such assets, or if quoted market prices
are not available, the Company would discount the expected future cash flows of such assets and would adjust the carrying value
of the asset to fair value. There were no impairment of long-lived assets in 2012 and 2011.
Share-based compensation.
The Company accounts for share-based compensation
in accordance with ASC Topic 718 “Share-Based Payments”. The Company has used the Black-Scholes option pricing model
to estimate the fair value of stock options on the dates of grant.
Recent accounting pronouncements
.
In July 2012, the FASB issued ASU 2012-02
–
Testing Indefinite-Lived Intangible Assets for Impairment
(“ASU 2012-02”) in order to reduce the cost
and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those
assets for impairment and to improve consistency in impairment testing guidance. The new guidance allows an entity the option to
make a qualitative assessment about the likelihood that an indefinite-lived intangible asset is impaired to determine whether it
should perform a quantitative impairment test. ASU 2012-02 is effective for the Company beginning January 1, 2013, and earlier
adoption is permitted. The Company does not expect the adoption of the guidance to have a material impact on its consolidated financial
statements.
2. INVESTMENT PROPERTIES
The components of the Company’s investment
properties and the related accumulated depreciation information follow:
|
|
December 31, 2012
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
Restaurant, marina & retail mall:
|
|
|
|
|
|
|
|
|
|
|
|
|
Monty’s restaurant and retail mall (Coconut Grove, FL) - building & improvements (1)
|
|
$
|
7,336,068
|
|
|
$
|
1,748,967
|
|
|
$
|
5,587,101
|
|
Monty’s restaurant and retail mall (Coconut Grove, FL) - furniture, fixtures and equipment (1)
|
|
|
2,058,316
|
|
|
|
1,556,302
|
|
|
|
502,014
|
|
Monty’s marina - 132 slips and improvements (1)
|
|
|
3,578,940
|
|
|
|
1,845,636
|
|
|
|
1,733,304
|
|
|
|
|
12,973,324
|
|
|
|
5,150,905
|
|
|
|
7,822,419
|
|
Office
building and other commercial property:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
Office - (Coconut Grove, FL) – Building
|
|
|
652,198
|
|
|
|
262,826
|
|
|
|
398,372
|
|
Corporate Office – (Coconut Grove, FL) – Land
|
|
|
325,000
|
|
|
|
—
|
|
|
|
325,000
|
|
Other (Montpelier, Vermont) – Buildings
|
|
|
52,000
|
|
|
|
52,000
|
|
|
|
—
|
|
Other (Montpelier, Vermont) - Land and improvements (5.4 acres)
|
|
|
111,689
|
|
|
|
—
|
|
|
|
111,689
|
|
|
|
|
1,140,887
|
|
|
|
314,826
|
|
|
|
826,061
|
|
Totals
|
|
$
|
14,114,211
|
|
|
$
|
5,465,731
|
|
|
$
|
8,648,480
|
|
(1) The Monty’s property is subject
to a ground lease with the City of Miami, Florida expiring in 2035. Lease payments due under the lease consist of percentage rent
ranging from 8% to 15% of gross revenues from various components of the property.
|
|
December 31, 2011
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Net
|
|
Restaurant, marina & retail mall:
|
|
|
|
|
|
|
|
|
|
|
|
|
Monty’s restaurant and retail mall (Coconut Grove, FL) - building & improvements
|
|
$
|
7,052,051
|
|
|
$
|
1,476,559
|
|
|
$
|
5,575,492
|
|
Monty’s restaurant and retail mall (Coconut Grove, FL) - furniture, fixtures and equipment
|
|
|
1,991,381
|
|
|
|
1,427,889
|
|
|
|
563,492
|
|
Monty’s retail mail – construction in progress
|
|
|
75,804
|
|
|
|
—
|
|
|
|
75,804
|
|
Monty’s marina - 132 slips and improvements
|
|
|
3,500,962
|
|
|
|
1,611,370
|
|
|
|
1,889,592
|
|
|
|
|
12,620,198
|
|
|
|
4,515,818
|
|
|
|
8,104,380
|
|
Office building and other commercial property:
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Office - (Coconut Grove, FL) – Building
|
|
|
652,197
|
|
|
|
246,669
|
|
|
|
405,528
|
|
Corporate Office – (Coconut Grove, FL) – Land
|
|
|
325,000
|
|
|
|
—
|
|
|
|
325,000
|
|
Other (Montpelier, Vermont) – Buildings
|
|
|
52,000
|
|
|
|
52,000
|
|
|
|
—
|
|
Other (Montpelier, Vermont) - Land and improvements (5.4 acres)
|
|
|
111,689
|
|
|
|
—
|
|
|
|
111,689
|
|
Hopkinton, Rhode Island
|
|
|
27,689
|
|
|
|
—
|
|
|
|
27,689
|
|
|
|
|
1,168,575
|
|
|
|
298,669
|
|
|
|
869,906
|
|
Totals
|
|
$
|
13,788,773
|
|
|
$
|
4,814,487
|
|
|
$
|
8,974,286
|
|
3. MONTY’S RESTAURANT, MARINA AND
OFFICE/RETAIL PROPERTY, COCONUT GROVE, FLORIDA
The Company owns a 50% equity interest
in two entities, Bayshore Landing, LLC (“Landing”) and Bayshore Rawbar, LLC (“Rawbar”), (collectively,
“Bayshore”) which own and operate a restaurant, office/retail and marina property located in Coconut Grove (Miami),
Florida known as Monty’s (“Monty’s”). The other 50% owner of Bayshore is The Christoph Family Trust (“CFT”).
Members of CFT are experienced real estate and marina operators. The Monty’s property is subject to a ground lease with the
City of Miami, Florida which expires on May 31, 2035. Under the lease, Bayshore pays percentage rents ranging from 8% to 15% of
gross revenues from various components of the project. Total rent paid, including sales tax, for the years ended December 31, 2012
and 2011 was approximately $901,000 and $886,000, respectively.
The Monty’s property consists of
a two story building with approximately 40,000 rentable square feet and approximately 3.7 acres of submerged land with a 132-boat
slip marina. It includes a 16,000 square foot indoor-outdoor raw bar restaurant and 24,000 square feet of office/retail space of
which approximately 15,000 square feet were leased to tenants operating boating and marina related businesses as of December 31,
2012.
The excess of capitalized cost assigned
to specific assets over the 2004 purchase price of Monty’s was recorded as goodwill. Since goodwill is an indefinite-lived
intangible asset it is reviewed for impairment at each reporting period or whenever an event occurs or circumstances change that
would more likely than not reduce fair value below carrying amount. Goodwill is carried at historical cost if its estimated fair
value is greater than its carrying amounts. However, if its estimated fair value is less than the carrying amount, goodwill is
reduced to its estimated fair value through an impairment charge to the consolidated statements of comprehensive income. For the
years ended December 31, 2012 and 2011 the Company did not recognize a loss from goodwill impairment.
Since the acquisition in August 2004, improvements
totaling approximately $6.8 million have been made to the Monty’s property, net of disposals. These improvements primarily
consisted of the expansion of the restaurant to provide an indoor area, improvements to the office/retail space which includes
approximately 24,000 square feet leased or available for lease as of December 31, 2012 and parking lot and landscaping improvement
to the property.
The Monty’s property is encumbered
by a mortgage loan which is collateralized by substantially all of the property and equipment of Bayshore including the lease with
the City of Miami. The loan is guaranteed by the members of Bayshore as well as a personal guarantee from the trustee of one of
the members. As of December 31, 2012 and 2011 the outstanding balance of the loan was $8.2 million and $8.5 million, respectively.
In March 2011the terms of this loan were amended and restated and the principal balance was paid down by approximately $1.6 million
to $8.8 million. The modified loan calls for equal monthly installments of approximately $82,000 including principal and interest.
Interest is calculated at the one month LIBOR Rate (.27% at December 31, 2012) plus 2.45%. The note is due, with a balloon payment,
on August 19, 2020. The note includes certain covenants regarding income. As of December 31, 2012, Bayshore is in compliance with
the covenants. Bayshore paid a fixed fee of $198,400 per the terms of the amended swap agreement to pay down the balance to that
of the amended note.
Summarized combined statements of income
for Landing and Rawbar for the years ended December 31, 2012 and 2011 are presented below (Note: the Company’s ownership
percentage in these operations is 50%):
Summarized combined statements of income Bayshore Landing, LLC and Bayshore Rawbar, LLC
|
|
For the year ended December 31, 2012
|
|
|
For the year ended December 31, 2011
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Food and Beverage Sales
|
|
$
|
6,179,000
|
|
|
$
|
5,857,000
|
|
Marina dockage and related
|
|
|
1,100,000
|
|
|
|
1,064,000
|
|
Retail/mall rental and related
|
|
|
663,000
|
|
|
|
630,000
|
|
Total Revenues
|
|
|
7,942,000
|
|
|
|
7,551,000
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Cost of food and beverage sold
|
|
|
1,770,000
|
|
|
|
1,682,000
|
|
Labor and related costs
|
|
|
1,232,000
|
|
|
|
1,123,000
|
|
Entertainers
|
|
|
200,000
|
|
|
|
194,000
|
|
Other food and beverage related costs
|
|
|
535,000
|
|
|
|
553,000
|
|
Other operating costs (including bad debts)
|
|
|
562,000
|
|
|
|
498,000
|
|
Repairs and maintenance
|
|
|
411,000
|
|
|
|
340,000
|
|
Insurance
|
|
|
497,000
|
|
|
|
561,000
|
|
Utilities
|
|
|
238,000
|
|
|
|
260,000
|
|
Rent
|
|
|
901,000
|
|
|
|
886,000
|
|
Interest expense, net of interest income
|
|
|
645,000
|
|
|
|
691,000
|
|
Depreciation
|
|
|
663,000
|
|
|
|
810,000
|
|
Realized loss on interest rate swap
|
|
|
—
|
|
|
|
198,000
|
|
Total Expenses
|
|
|
7,654,000
|
|
|
|
7,796,000
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
288,000
|
|
|
$
|
(245,000
|
)
|
(a) Reference is made to
Note 1. Description
of Business and Summary of Significant Accounting Policies
4. INVESTMENTS IN MARKETABLE SECURITIES
Investments in marketable securities consist
primarily of large capital corporate equity and debt securities in varying industries or issued by government agencies with readily
determinable fair values (see table below). These securities are stated at market value, as determined by the most recently traded
price of each security at the balance sheet date. Consistent with the Company's overall current investment objectives and activities
its entire marketable securities portfolio is classified as trading. Accordingly all unrealized gains and losses on this portfolio
are recorded in income. For the years ended December 31, 2012 and 2011 net unrealized gain (loss) on trading securities was approximately
$86,000 and ($189,000), respectively.
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
Cost
|
|
|
|
Fair
|
|
|
|
Unrealized
|
|
|
|
Cost
|
|
|
|
Fair
|
|
|
|
Unrealized
|
|
Description
|
|
|
Basis
|
|
|
|
Value
|
|
|
|
Gain (loss)
|
|
|
|
Basis
|
|
|
|
Value
|
|
|
|
Gain (loss)
|
|
Real Estate Investment Trusts
|
|
$
|
174,000
|
|
|
$
|
122,000
|
|
|
$
|
(52,000
|
)
|
|
$
|
231,000
|
|
|
$
|
154,000
|
|
|
$
|
(77,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds
|
|
|
760,000
|
|
|
|
817,000
|
|
|
|
57,000
|
|
|
|
418,000
|
|
|
|
457,000
|
|
|
|
39,000
|
|
Other Equity Securities
|
|
|
570,000
|
|
|
|
557,000
|
|
|
|
(13,000
|
)
|
|
|
532,000
|
|
|
|
523,000
|
|
|
|
(9,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Equity Securities
|
|
|
1,504,000
|
|
|
|
1,496,000
|
|
|
|
(8,000
|
)
|
|
|
1,181,000
|
|
|
|
1,134,000
|
|
|
|
(47,000
|
)
|
Debt Securities
|
|
|
621,000
|
|
|
|
662,000
|
|
|
|
41,000
|
|
|
|
889,000
|
|
|
|
885,000
|
|
|
|
(4,000
|
)
|
Total
|
|
$
|
2,125,000
|
|
|
$
|
2,158,000
|
|
|
$
|
33,000
|
|
|
$
|
2,070,000
|
|
|
$
|
2,019,000
|
|
|
$
|
(51,000
|
)
|
As of December 31, 2012, debt securities
are scheduled to mature as follows:
|
|
Cost
|
|
|
Fair Value
|
|
2013 – 2017
|
|
$
|
25,000
|
|
|
$
|
26,000
|
|
2018 – 2022
|
|
|
235,000
|
|
|
|
256,000
|
|
2023 – thereafter
|
|
|
361,000
|
|
|
|
380,000
|
|
|
|
$
|
621,000
|
|
|
$
|
662,000
|
|
Net gain from investments in marketable
securities for the years ended December 31, 2012 and 2011 is summarized below:
Description
|
|
2012
|
|
|
2011
|
|
Net realized gain from sales of marketable securities
|
|
$
|
35,000
|
|
|
$
|
130,000
|
|
Net unrealized gain (loss) from marketable securities
|
|
|
86,000
|
|
|
|
(189,000
|
)
|
Total net gain (loss) from investments in marketable securities
|
|
$
|
121,000
|
|
|
$
|
(59,000
|
)
|
Net realized gain from sales of marketable
securities consisted of approximately $152,000 of gains net of $117,000 of losses for the year ended December 31, 2012. The comparable
amounts in fiscal year 2011 were gains of approximately $212,000 and losses of $82,000.
Consistent with the Company’s overall
current investment objectives and activities the entire marketable securities portfolio is classified as trading (as defined by
U.S. generally accepted accounting principles). Unrealized gains or loss of marketable securities on hand are recorded in income.
Investment gains and losses on marketable
securities may fluctuate significantly from period to period in the future and could have a significant impact on the Company's
net earnings. However, the amount of investment gains or losses on marketable securities for any given period has no predictive
value and variations in amount from period to period have no practical analytical value.
Investments in marketable securities give
rise to exposure resulting from the volatility of capital markets. The Company attempts to mitigate its risk by diversifying its
marketable securities portfolio.
5. OTHER INVESTMENTS
The Company’s other investments consist
primarily of nominal equity interests in various privately-held entities, including limited partnerships whose purpose is to invest
venture capital funds in growth-oriented enterprises. The Company does not have significant influence over any investee and the
Company’s investment represents less than 3% of the investee’s ownership. None of these investments meet the criteria
of accounting under the equity method and accordingly are carried at cost less distributions and other than temporary unrealized
losses.
The Company’s portfolio of other
investments consists of approximately 30 individual investments primarily in limited partnerships with varying investment objectives
and focus. Management has categorized these investments by investment focus: technology and communications, diversified businesses/distressed
debt, real estate related, stock and debt funds.
As of December 31, 2012 and 2011 other
investments had an aggregate carrying value of $3.6 million and $3.7 million, respectively. The Company has committed to fund approximately
an additional $975,000 as required by agreements with the investees. The carrying value of these investments is equal to contributions
less distributions and other than temporary loss valuation adjustments. During each of the years ended December 31, 2012 and 2011
the Company made contributions of approximately $244,000, and received distributions from these investments of $662,000 and $211,000,
respectively.
The Company’s other investments are
summarized below.
|
|
Carrying values as of December 31,
|
|
Investment Focus
|
|
2012
|
|
|
2011
|
|
Venture capital funds – technology and communications
|
|
$
|
514,000
|
|
|
$
|
478,000
|
|
Venture capital funds – diversified businesses
|
|
|
1,337,000
|
|
|
|
1,444,000
|
|
Real estate and related
|
|
|
1,453,000
|
|
|
|
1,523,000
|
|
Other
|
|
|
300,000
|
|
|
|
300,000
|
|
Totals
|
|
$
|
3,604,000
|
|
|
$
|
3,745,000
|
|
The Company regularly reviews the underlying
assets in its investment portfolio for events, including but not limited to bankruptcies, closures and declines in estimated fair
value, that may indicate the investment has suffered other-than-temporary decline in value. When a decline is deemed other-than-temporary,
an investment loss is recognized.
Net income from other investments is
summarized below (excluding other than temporary impairment loss):
|
|
2012
|
|
|
2011
|
|
Income from investment in 49% owned affiliate (a)
|
|
$
|
57,000
|
|
|
$
|
41,000
|
|
Real estate and related (b)
|
|
|
223,000
|
|
|
|
—
|
|
Venture capital funds – diversified businesses (c)
|
|
|
121,000
|
|
|
|
27,000
|
|
Other
|
|
|
—
|
|
|
|
1,000
|
|
Total net income from other investments
|
|
$
|
401,000
|
|
|
$
|
69,000
|
|
(a)
This gain represents income from the Company’s 49% owned affiliate, T.G.I.F. Texas,
Inc. (“TGIF”). The decrease in income is due to decrease net income of TGIF as a result of lower investment income.
In 2012 and 2011 TGIF declared and paid a cash dividend, the Company’s portion of which was approximately $196,000 and $168,000,
respectively. These dividends were recorded as reduction in the investment carrying value as required under the equity method
of accounting for investments.
(b) The gain in 2012 consists primarily
of one cash distribution from an investment in real estate partnership which distributed proceeds from sales of its real estate.
(c) The gain in 2012 consists of cash
distributions from various investments in partnerships owning diversified businesses which made cash distributions from the sale
or refinancing of operating companies in 2012. The gain in 2011 consists of cash distributions from an investment in one partnership
owning diversified businesses which made cash distributions from the sale or refinancing of operating companies in 2011.
Other than temporary impairment losses
from other investments
For the years ended December 31, 2012 and
2011 approximately $28,000 and $87,000, respectively, of valuation losses from other than temporary impairment losses from other
investments were recorded. In 2012 this primarily consisted of an increased valuation loss of $28,000 from an investment in a private
partnership which operates and leases executive suites in Miami, Florida. The Company has funded $120,000 to date and the losses
incurred were associated with the start up costs of the venture. In 2011 this primarily consisted of a valuation loss of $84,000
from the same investment.
|
|
2012
|
|
|
2011
|
|
Real estate and related
|
|
$
|
(28,000
|
)
|
|
$
|
(84,000
|
)
|
Other
|
|
|
—
|
|
|
|
(3,000
|
)
|
Total other than temporary impairment loss from other investments
|
|
$
|
(28,000
|
)
|
|
$
|
(87,000
|
)
|
Net gain or loss from other investments
may fluctuate significantly from period to period in the future and could have a significant impact on the Company's net earnings.
However, the amount of investment gain or loss from other investments for any given period has no predictive value and variations
in amount from period to period have no practical analytical value.
The following tables present gross unrealized
losses and fair values for those investments that were in an unrealized loss
position as of December 31, 2012 and December
31, 2011, aggregated by investment category and the length of time that investments have been in a continuous loss position:
|
|
As of December 31, 2012
|
|
|
|
Less than 12 Months
|
|
|
Greater than 12 Months
|
|
|
Total
|
|
Investment Description
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
Partnerships owning investments in technology related industries
|
|
$
|
11,000
|
|
|
$
|
(10,000
|
)
|
|
$
|
374,000
|
|
|
$
|
(69,000
|
)
|
|
$
|
384,000
|
|
|
$
|
(79,000
|
)
|
Partnerships owning diversified businesses
|
|
|
—
|
|
|
|
—
|
|
|
|
241,000
|
|
|
|
(5,000
|
)
|
|
|
241,000
|
|
|
|
(5,000
|
)
|
Partnerships owning real estate and related investments
|
|
|
—
|
|
|
|
—
|
|
|
|
231,000
|
|
|
|
(49,000
|
)
|
|
|
231,000
|
|
|
|
(49,000
|
)
|
Total
|
|
$
|
11,000
|
|
|
$
|
(10,000
|
)
|
|
$
|
846,000
|
|
|
$
|
(123,000
|
)
|
|
$
|
856,000
|
|
|
$
|
(133,000
|
)
|
|
|
As of December 31, 2011
|
|
|
|
Less than 12 Months
|
|
|
Greater than 12 Months
|
|
|
Total
|
|
Investment Description
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
|
Fair Value
|
|
|
Unrealized Loss
|
|
Partnerships owning investments in technology related industries
|
|
$
|
327,000
|
|
|
$
|
(20,000
|
)
|
|
$
|
47,000
|
|
|
$
|
(39,000
|
)
|
|
$
|
374,000
|
|
|
$
|
(59,000
|
)
|
Partnerships owning diversified businesses
|
|
|
—
|
|
|
|
—
|
|
|
|
228,000
|
|
|
|
(61,000
|
)
|
|
|
228,000
|
|
|
|
(61,000
|
)
|
Partnerships owning real estate and related investments
|
|
|
—
|
|
|
|
—
|
|
|
|
256,000
|
|
|
|
(56,000
|
)
|
|
|
256,000
|
|
|
|
(56,000
|
)
|
Total
|
|
$
|
327,000
|
|
|
$
|
(20,000
|
)
|
|
$
|
531,000
|
|
|
$
|
(156,000
|
)
|
|
$
|
858,000
|
|
|
$
|
(176,000
|
)
|
6. INTEREST RATE SWAP CONTRACT
The Company is exposed to interest rate
risk on its Bayshore bank loan. In 2004, in order to minimize the effect of changes in interest rates, Bayshore entered into an
interest rate swap contract under which it agrees to pay an amount equal to a specified rate of 7.57% times a notional principal
approximating the outstanding loan balance, and to receive in return an amount equal to the one-month LIBOR Rate (.21% at December
31, 2012) plus 2.45%. The Company designated this interest rate swap contract as a cash flow hedge. As of December 31, 2012 and
2011, the fair value of the cash flow hedge was a loss of $1,965,000 and $1,975,000, respectively, which has been recorded as other
comprehensive loss and will be reclassified to interest expense over the life of the swap contract.
In conjunction with the March 2011 Bayshore
bank loan amendment and restatement, the interest rate swap agreement to manage their exposure to interest rate fluctuation through
the entire term of the mortgage was also amended. Bayshore paid a fixed fee of $198,400 for partial settlement per the terms of
the amended swap agreement. The effect of the swap agreement remains the same which is to provide a fixed interest rate of 7.57%.
The following tables present the required
disclosures in accordance with ASC Topic 815-10:
Fair Values of Derivative Instruments:
|
|
|
|
|
Liability Derivative
|
|
|
December 31, 2012
|
|
December 31, 2011
|
|
|
Balance
Sheet Location
|
|
Fair
Value
|
|
Balance
Sheet Location
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
Liabilities
|
|
$
|
1,965,000
|
|
|
Liabilities
|
|
$
|
1,975,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives designated as hedging instruments
|
|
|
|
$
|
1,965,000
|
|
|
|
|
$
|
1,975,000
|
|
The Effect of Derivative Instruments on the
Statements of Comprehensive Income for the Years Ended December 31, 2012 and 2011:
|
|
Amount of Gain or (Loss)
|
|
|
|
Recognized in OCI on
|
|
|
|
Derivative
|
|
Derivatives in ASC Topic 815 Cash Flow Hedging Relationships
|
|
(Effective Portion)
|
|
|
|
|
|
|
|
|
|
|
For the year ended
|
|
|
For the year ended
|
|
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contracts
|
|
$
|
5,000
|
|
|
$
|
(256,500
|
)
|
Total
|
|
$
|
5,000
|
|
|
$
|
(256,500
|
)
|
7. FAIR VALUE INSTRUMENTS
In accordance with ASC Topic 820, the Company
measures cash and equivalents, marketable debt and equity securities and interest rate swap contract at fair value on a recurring
basis. Other investments and goodwill are measured at fair value on a nonrecurring basis.
The following are the major categories
of assets and liabilities measured at fair value on a recurring basis during the year ended December 31, 2012 and 2011, using quoted
prices in active markets for identical assets (Level 1) and significant other observable inputs (Level 2). For the year ended December
31, 2012 and 2011, there were no major assets or liabilities measured at fair value on a recurring basis which uses significant
unobservable inputs (Level 3):
|
|
Fair value measurement at reporting date using
|
|
|
Total
December 31,
|
|
Quoted Prices
in Active Markets for
Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable
Inputs
|
Description
|
|
2012
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,000
|
|
|
|
—
|
|
|
$
|
54,000
|
|
|
|
—
|
|
Money market mutual funds
|
|
|
783,000
|
|
|
$
|
783,000
|
|
|
|
—
|
|
|
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
662,000
|
|
|
|
—
|
|
|
|
662,000
|
|
|
|
—
|
|
Marketable equity securities
|
|
|
1,497,000
|
|
|
|
1,497,000
|
|
|
|
—
|
|
|
|
—
|
|
Total assets
|
|
$
|
2,996,000
|
|
|
$
|
2,280,000
|
|
|
$
|
716,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
1,965,000
|
|
|
|
—
|
|
|
|
1,965,000
|
|
|
|
—
|
|
Total liabilities
|
|
$
|
1,965,000
|
|
|
|
—
|
|
|
$
|
1,965,000
|
|
|
|
—
|
|
|
|
Fair value measurement at reporting date using
|
|
|
Total
December 31,
|
|
Quoted Prices in Active
Markets for Identical Assets
|
|
Significant Other Observable Inputs
|
|
Significant Unobservable Inputs
|
Description
|
|
2011
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
|
Time deposits
|
|
$
|
54,000
|
|
|
|
—
|
|
|
$
|
54,000
|
|
|
|
—
|
|
Money market mutual funds
|
|
|
1,537,000
|
|
|
$
|
1,537,000
|
|
|
|
—
|
|
|
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities
|
|
|
885,000
|
|
|
|
—
|
|
|
|
885,000
|
|
|
|
—
|
|
Marketable equity securities
|
|
|
1,134,000
|
|
|
|
1,134,000
|
|
|
|
—
|
|
|
|
—
|
|
Total assets
|
|
$
|
3,610,000
|
|
|
$
|
2,671,000
|
|
|
$
|
939,000
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swap contract
|
|
|
1,975,000
|
|
|
|
—
|
|
|
|
1,975,000
|
|
|
|
—
|
|
Total liabilities
|
|
$
|
1,975,000
|
|
|
|
—
|
|
|
$
|
1,975,000
|
|
|
|
—
|
|
Carrying amount is the estimated fair value
for corporate debt securities and time deposits based on a market-based approach using observable (Level 2) inputs such as prices
of similar assets in active markets. The fair value of the interest rate swap contract payable is based on the value provided by
the issuing bank on a monthly basis.
The following are the major categories
of assets and liabilities measured at fair value on a nonrecurring basis during the years ended December 31, 2012 and 2011. This
category includes other investments and goodwill which are measured using significant other observable inputs (Level 2) and significant
unobservable inputs (Level 3):
|
|
Fair value measurement at reporting date using
|
|
|
|
|
Total December 31,
|
|
Quoted Prices in Active Markets
for Identical Assets
|
|
Significant Other
Observable Inputs
|
|
Significant
Unobservable Inputs
|
|
Total losses for year ended
|
Description
|
|
2012
|
|
(Level 1)
|
|
(Level 2) (a)
|
|
(Level 3) (b)
|
|
12/31/2012
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
Technology & Communication
|
|
$
|
514,000
|
|
|
$
|
—
|
|
|
$
|
514,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Diversified businesses
|
|
|
1,337,000
|
|
|
|
—
|
|
|
|
1,337,000
|
|
|
|
—
|
|
|
|
—
|
|
Real estate and related
|
|
|
1,453,000
|
|
|
|
—
|
|
|
|
500,000
|
|
|
|
953,000
|
|
|
|
28,000
|
|
Other
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
$
|
3,604,000
|
|
|
$
|
—
|
|
|
$
|
2,351,000
|
|
|
$
|
1,253,000
|
|
|
$
|
28,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,628,000
|
|
|
|
|
|
|
|
|
|
|
|
5,628,000
|
|
|
|
—
|
|
Total assets
|
|
$
|
9,232,000
|
|
|
$
|
—
|
|
|
$
|
2,351,000
|
|
|
$
|
6,881,000
|
|
|
$
|
28,000
|
|
|
|
Fair value measurement at reporting date using
|
|
|
|
|
Total December 31,
|
|
Quoted Prices in Active Markets
for Identical Assets
|
|
Significant Other
Observable Inputs
|
|
Significant
Unobservable Inputs
|
|
Total losses for year ended
|
Description
|
|
2011
|
|
(Level 1)
|
|
(Level 2) (a)
|
|
(Level 3) (b)
|
|
12/31/2011
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Other investments by investment focus:
|
|
|
|
|
|
Technology & Communication
|
|
$
|
478,000
|
|
|
$
|
—
|
|
|
$
|
478,000
|
|
|
$
|
—
|
|
|
$
|
2,000
|
|
Diversified businesses
|
|
|
1,445,000
|
|
|
|
—
|
|
|
|
1,445,000
|
|
|
|
—
|
|
|
|
—
|
|
Real estate and related
|
|
|
1,523,000
|
|
|
|
—
|
|
|
|
542,000
|
|
|
|
981,000
|
|
|
|
84,000
|
|
Other
|
|
|
300,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
$
|
3,746,000
|
|
|
$
|
—
|
|
|
$
|
2,465,000
|
|
|
$
|
1,281,000
|
|
|
$
|
86,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill (Bayshore)
|
|
|
5,628,000
|
|
|
|
|
|
|
|
|
|
|
|
5,628,000
|
|
|
|
—
|
|
Total assets
|
|
$
|
9,374,000
|
|
|
$
|
—
|
|
|
$
|
2,465,000
|
|
|
$
|
6,909,000
|
|
|
$
|
86,000
|
|
|
(a)
|
Other investments measured at fair value on a non-recurring basis include investments in certain entities that calculate net
asset value per share (or its equivalent such as member units or an ownership interest in partners’ capital to which a proportionate
share of net assets is attributed, “NAV”). This class primarily consists of private equity funds that have varying
investment focus. These investments can never be redeemed with the funds. Instead, the nature of the investments in this class
is that distributions are received through the liquidation of the underlying assets of the fund. If these investments were held
it is estimated that the underlying assets of the fund would be liquidated over 5 to 10 years. As of December 31, 2012, it is probable
that all of the investments in this class will be sold at an amount different from the NAV of the Company’s ownership interest
in partners’ capital. Therefore, the fair values of the investments in this class have been estimated using recent observable
information such as audited financial statements and/or statements of partners’ capital obtained directly from investees
on a quarterly or other regular basis. During the year ended December 31, 2012, the Company made contributions totaling $244,000
in this type of investment. These contributions include one new investment in a medical technology related company for $51,000
which was fully funded in January 2012 and follow on contributions totaling $176,000 towards funding commitments in various other
existing investments. As of December 31, 2012, the amount of the Company’s unfunded commitments related to the aforementioned
investments is approximately $871,000.
|
|
(b)
|
Other investments above which are measured on a nonrecurring basis using Level 3 unobservable inputs consist of investments
primarily in commercial real estate in Florida through private partnerships and two investments in the stock of private banks in
Florida and Texas. The Company does not know when it will have the ability to redeem the investments and has categorized them as
a Level 3 fair value measurement. The Level 3 real estate and related investments of approximately $953,000 include one investment
in a commercial building located near the Company’s offices purchased in 2005 with a carrying value as of December 31, 2012
of $724,000. These investments are measured using primarily inputs provided by the managing member of the partnerships with whom
the Company has done similar transactions in the past and is well known to management. The fair values of these real estate investments
have been estimated using the net asset value of the Company’s ownership interest in partners’ capital. The investments
in private bank stocks include a private bank and trust located in Coral Gables, Florida in the amount of $250,000 made in 2009,
and a $50,000 investment in a bank located in El Campo, Texas made in 2010. The fair values of these bank stock investments have
been estimated using the cost method less distributions received and other than temporary impairments. This investment is valued
using inputs provided by the management of the banks.
|
The following table includes
a roll-forward of the investments classified within level 3 of the fair value hierarchy for the year ended December 31, 2012:
|
|
Level 3 Investments:
|
Balance at January 1, 2012
|
|
$
|
1,281,000
|
|
Additional investment in limited partnership
|
|
|
—
|
|
Other than temporary impairment loss
|
|
|
(28,000
|
)
|
Transfers from Level 2
|
|
|
—
|
|
Balance at December 31, 2012
|
|
$
|
1,253,000
|
|
Goodwill is valued as described in our
summary of significant accounting policies. No impairment loss was recognized for the years ended December 31, 2011 and 2012.
8. INVESTMENT IN AFFILIATE
Investment in affiliate consists of CII’s
49% equity interest in T.G. I.F. Texas, Inc. (“T.G.I.F.”). T.G.I.F. is a Texas Corporation which holds promissory notes
receivable from its shareholders, including CII and Maurice Wiener, the Chairman of the Company and T.G.I.F. Reference is made
to Note 12 for discussion on notes payable by CII to T.G. I.F. This investment is recorded under the equity method of accounting.
For the years ended December 31, 2012 and 2011, income from investment in affiliate amounted to approximately $57,000 and $41,000,
respectively and is included in net income from other investments in the consolidated statements of comprehensive income. In December
2012 and 2011 T.G.I.F. declared and paid a cash dividend of $.07 and $.06 per share, respectively. CII’s dividend amount
received was approximately $196,000 and $168,000 in 2012 and 2011, respectively. This dividend is recorded as a reduction in the
carrying amount of CII investment in T.G.I.F. as required under the equity method of accounting.
9. LOANS, NOTES AND OTHER RECEIVABLES
|
|
As of December 31,
|
Description
|
|
2012
|
|
2011
|
Promissory note and accrued interest due from individual (a)
|
|
$
|
208,000
|
|
|
$
|
205,000
|
|
Rent due from Bayshore tenant, net of bad debt allowance (b)
|
|
|
206,000
|
|
|
|
259,000
|
|
Other
|
|
|
88,000
|
|
|
|
105,000
|
|
Total loans, notes and other receivables
|
|
$
|
502,000
|
|
|
$
|
569,000
|
|
(a) In December 2007 the Company loaned
$400,000 to a local real estate developer who is well known to the Company and which loan is secured by numerous real estate
interests. In 2010 $197,000 of principal payments were received. The loan calls for interest only payments at an annual rate
of 9% with all principal due on March 30, 2013 (as extended).
(b) Rent due from Bayshore tenants are primarily from one marina tenant.
As of December 31, 2012 and 2011 an allowance for bad debt of $250,000 and $150,000, respectively,
has been recorded for this tenant. This tenant’s lease was amended in December 2010 and the number of slips rented to
this tenant was significantly reduced. The tenant is current on all payments due under amended lease.
10. NOTES AND ADVANCES DUE FROM AND
TRANSACTIONS WITH RELATED PARTIES
The Company has an agreement (the "Agreement")
with HMGA, Inc. (formerly HMG Advisory Corp.) (the "Adviser") for its services as investment adviser and administrator
of the Company's affairs. All officers of the Company who are officers of the Adviser are compensated solely by the Adviser for
their services.
The Adviser is majority owned by Mr. Wiener,
the Company’s Chairman, with the remaining shares owned by certain individuals including Mr. Rothstein. The officers and
directors of the Adviser are as follows: Maurice Wiener, Chairman of the Board and Chief Executive Officer; Larry Rothstein, President,
Treasurer, Secretary and Director; and Carlos Camarotti, Vice President - Finance and Assistant Secretary.
Under the terms of the Agreement, the Adviser
serves as the Company's investment adviser and, under the supervision of the directors of the Company, administers the day-to-day
operations of the Company. All officers of the Company, who are officers of the Adviser are compensated solely by the Adviser for
their services. The Agreement is renewable annually upon the approval of a majority of the directors of the Company who are not
affiliated with the Adviser and a majority of the Company's shareholders. The contract may be terminated at any time on 120 days
written notice by the Adviser or upon 60 days written notice by a majority of the unaffiliated directors of the Company or the
holders of a majority of the Company's outstanding shares.
In 2012 the shareholders approved the renewal
and amendment of the Advisory Agreement between the Company and the Adviser for a term commencing January 1, 2013, and expiring
December 31, 2013.
For the years ended December 31, 2012 and
2011, the Company and its subsidiaries incurred Adviser fees of approximately $1,056,000 and $1,020,000, respectively, of which
$1,020,000 represented regular compensation for 2012 and 2011. In 2012 Advisor fees include $36,000 in incentive fee compensation.
There was no incentive compensation for 2011.
At December 31, 2012 and 2011, the Company
had amounts due from the Adviser and subsidiaries of approximately $397,000. The amount due from the Adviser and subsidiaries bears
interest at prime plus 1% and is due on demand.
The Adviser leases its executive offices
from CII pursuant to a lease agreement. This lease agreement calls for base rent of $48,000 per year payable in equal monthly installments.
Additionally, the Adviser is responsible for all utilities, certain maintenance, and security expenses relating to the leased premises.
The lease term is five years, expiring in November 2014.
In August 2004 HMG Advisory Bayshore, Inc.
("HMGABS") (a wholly owned subsidiary of the Adviser) was formed for the purposes of overseeing the Monty’s restaurant
operations acquired in August 2004. For the years ended December 31, 2012 and 2011 HMGABS received $25,000 in management fees from
the Monty’s restaurant.
The Company, through its 75% owned joint
venture South Bayshore Associates ("SBA"), has a note receivable from Transco (a 42% shareholder of the Company) of $300,000.
This note bears interest at the prime rate and is due on demand.
Mr. Wiener is an 18% shareholder and the
chairman and director of T.G.I.F. Texas, Inc., a 49% owned affiliate of CII (See Note 8). As of December 31, 2012 and 2011, T.G.I.F.
had amounts due from CII in the amount of approximately $2,815,000 and $3,180,000, respectively. These amounts are due on demand
and bear interest at the prime rate. All interest due has been paid.
T.G.I.F. also owns 10,000 shares of the
Company’s common stock it purchased at market value in 1996.
As of December 31, 2012 and 2011 T.G.I.F.
had amounts due from Mr. Wiener in the amount of approximately $707,000. These amounts bear interest at the prime rate and principal
and interest are due on demand. All interest due has been paid.
Mr. Wiener received consulting and director’s
fees from T.G.I.F totaling $22,000 for each of the years ended December 31, 2012 and 2011.
11. OTHER ASSETS
The Company’s other assets consisted
of the following as of December 31, 2012 and 2011:
Description
|
|
2012
|
|
2011
|
Deferred loan costs, net of accumulated amortization
|
|
$
|
112,000
|
|
|
$
|
121,000
|
|
Prepaid expenses and other assets
|
|
|
285,000
|
|
|
|
333,000
|
|
Food/beverage & spa inventory
|
|
|
94,000
|
|
|
|
65,000
|
|
Utility deposits
|
|
|
119,000
|
|
|
|
106,000
|
|
Deferred leasing costs
|
|
|
34,000
|
|
|
|
28,000
|
|
Total other assets
|
|
$
|
644,000
|
|
|
$
|
653,000
|
|
12. MORTGAGES AND NOTES PAYABLES
|
|
December 31,
|
|
|
2012
|
|
2011
|
Collateralized by Investment Properties (Note 2)
|
|
|
|
|
|
|
|
|
|
Monty’s restaurant, marina and retail rental space:
|
|
|
|
|
Mortgage loan payable with interest 7.57% after taking into effect interest rate swap; principal and interest payable in equal monthly payments of approximately $82,000 per month with balloon payment due on maturity on August 19, 2020, as amended March 15, 2011 (a).
|
|
$
|
8,190,000
|
|
|
$
|
8,532,000
|
|
|
|
|
|
|
|
|
|
|
Other (unsecured) (Note 8):
|
|
|
|
|
|
|
|
|
Note payable to affiliate:
|
|
|
|
|
|
|
|
|
Note payable is to affiliate T.G.I.F., interest at prime (3.25% at 12/31/12) payable monthly. Principal outstanding is due on demand.
|
|
|
2,815,000
|
|
|
|
3,181,000
|
|
Totals
|
|
$
|
11,005,000
|
|
|
$
|
11,713,000
|
|
|
(a)
|
On March, 11 2011 this loan was amended and restated to approximately $8.8 million. The loan balance as of December 31, 2012
is approximately $8.2 million. The loan is payable in monthly installments of approximately $82,000 including principal and interest.
Interest remains at the same terms calculated at one-month LIBOR rate (.21% at December 31, 2012) plus 2.45%. The loan is unconditionally
guaranteed by the Company and CFT, as well as a personal guarantee from a Trustee of CFT. The loan includes certain covenants
including debt service coverage. The Company is in compliance with all debt covenants as of December 31, 2012. See Note 6 for discussion
of interest rate swap agreement related to this loan.
|
A summary of scheduled principal repayments
or reductions for all types of notes and mortgages payable is as follows:
Year ending December 31,
|
|
Amount
|
2013
|
|
$
|
3,185,000
|
|
2014
|
|
|
401,000
|
|
2015
|
|
|
430,000
|
|
2016
|
|
|
430,000
|
|
2017
|
|
|
430,000
|
|
2018 and thereafter
|
|
|
6,129,000
|
|
Total
|
|
$
|
11,005,000
|
|
13. LEASE COMMITMENTS
The Company’s 50% owned subsidiary
(Landing), as lessee, leases land and submerged lands on which it operates the Monty’s property under a lease with the city
of Miami which expires on May 31, 2035. Under the lease, the Company pays percentage rents ranging from 8% to 15% of gross revenues
from various components of the property’s operations. Total rent paid, to the city of Miami (including sales tax) for the
years ended December 31, 2012 and 2011 was approximately $901,000 and $886,000, respectively.
14. INCOME TAXES
The Company (excluding CII) qualifies as
a real estate investment trust and distributes its taxable ordinary income to stockholders in conformity with requirements of the
Internal Revenue Code and is not required to report deferred items due to its ability to distribute all taxable income. In addition,
net operating losses can be carried forward to reduce future taxable income but cannot be carried back. Distributed capital gains
on sales of real estate as they relate to REIT activities are not subject to taxes; however, undistributed capital gains may be
subject to corporate tax.
The Company’s 95%-owned subsidiary,
CII, files a separate income tax return and its operations are not included in the REIT’s income tax return.
The Company accounts for income
taxes in accordance with ASC Topic 740, "Accounting for Income Taxes". ASC Topic 740 requires a Company to use the asset
and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax bases of existing assets and liabilities. The effect on deferred income taxes
of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred taxes only pertain to
CII. As a result of timing differences associated with the carrying value of other investments and depreciable assets and the future
benefit of a net operating loss, the Company has recorded a net deferred tax asset as of December 31, 2012 and 2011 of $698,000
and $632,000, respectively. A valuation allowance against deferred tax asset has not been established as it is more likely than
not, based on the Company’s previous history, that these assets will be realized.
As of December 31, 2012 the Company
(excluding CII) has an estimated net operating loss carryover of approximately $5.1 million of which expires as follows:
NOL
|
|
|
Expiration Year
|
$
|
571,000
|
|
|
|
2025
|
|
|
786,000
|
|
|
|
2026
|
|
|
500,000
|
|
|
|
2027
|
|
|
422,000
|
|
|
|
2028
|
|
|
754,000
|
|
|
|
2029
|
|
|
576,000
|
|
|
|
2030
|
|
|
1,083,000
|
|
|
|
2031
|
|
|
198,000
|
|
|
|
2032
|
|
$
|
4,890,000
|
|
|
|
Total
|
|
As of December 31, 2012 CII has
an estimated net operating loss carryover (NOL) of approximately $1.3 million which expires as follows:
NOL
|
|
|
Expiration Year
|
|
$
|
44,000
|
|
|
|
2018
|
|
|
386,000
|
|
|
|
2022
|
|
|
14,000
|
|
|
|
2024
|
|
|
13,000
|
|
|
|
2026
|
|
|
81,000
|
|
|
|
2028
|
|
|
141,000
|
|
|
|
2029
|
|
|
356,000
|
|
|
|
2030
|
|
|
40,000
|
|
|
|
2031
|
|
|
197,000
|
|
|
|
2032
|
|
$
|
1,272,000
|
|
|
|
Total
|
|
The components of income before income
taxes and the effect of adjustments to tax computed at the federal statutory rate for the years ended December 31, 2012 and 2011
were as follows:
|
|
2012
|
|
2011
|
Loss before income taxes
|
|
$
|
(60,000
|
)
|
|
$
|
(1,093,000
|
)
|
Computed tax at federal statutory rate of 34%
|
|
$
|
(20,000
|
)
|
|
$
|
(372,000
|
)
|
State taxes at 5.5%
|
|
|
(4,000
|
)
|
|
|
(60,000
|
)
|
REIT related adjustments
|
|
|
(21,000
|
)
|
|
|
401,000
|
|
Unrealized loss (gain) from marketable securities for book not tax
|
|
|
(31,000
|
)
|
|
|
52,000
|
|
Other items, net
|
|
|
10,000
|
|
|
|
(173,000
|
)
|
Benefit from income taxes
|
|
$
|
(66,000
|
)
|
|
$
|
(152,000
|
)
|
The REIT related adjustments represent
the difference between estimated taxes on undistributed income and/or capital gains and book taxes computed on the REIT’s
income before income taxes.
The benefit from income
taxes in the consolidated statements of comprehensive income consists of the following:
Year ended December 31,
|
|
2012
|
|
|
2011
|
|
Current:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
—
|
|
|
|
—
|
|
State
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(60,000
|
)
|
|
$
|
(137,000
|
)
|
State
|
|
|
(6,000
|
)
|
|
|
(15,000
|
)
|
|
|
|
(66,000
|
)
|
|
|
(152,000
|
)
|
Total
|
|
$
|
(66,000
|
)
|
|
$
|
(152,000
|
)
|
As of December 31, 2012 and 2011, the components
of the deferred tax assets and liabilities are as follows:
|
|
As of December 31, 2012
|
|
|
As of December 31, 2011
|
|
|
Deferred tax
|
|
|
Deferred tax
|
|
|
Assets
|
|
Liabilities
|
|
|
Assets
|
|
Liabilities
|
Net operating loss carry forward
|
|
$
|
471,000
|
|
|
|
|
|
|
$
|
411,000
|
|
|
|
|
|
Excess of book basis of 49% owned corporation over tax basis
|
|
|
|
|
|
$
|
418,000
|
|
|
|
|
|
|
$
|
470,000
|
|
Excess of tax basis over book basis of assets associated
with real estate interests held for sale
|
|
|
286,000
|
|
|
|
|
|
|
|
278,000
|
|
|
|
|
|
Unrealized gain on marketable securities
|
|
|
|
|
|
|
32,000
|
|
|
|
|
|
|
|
1,000
|
|
Excess of tax basis over book basis of other investments
|
|
|
508,000
|
|
|
|
117,000
|
|
|
|
484,000
|
|
|
|
70,000
|
|
Totals
|
|
$
|
1,265,000
|
|
|
$
|
567,000
|
|
|
$
|
1,173,000
|
|
|
$
|
541,000
|
|
15. STOCK-BASED COMPENSATION
The Company’s 2011 Stock Option Plan
provides for the grant of options to purchase up to 120,000 shares of the Company’s common stock to the officers and directors
of the Company.
There were no options granted, exercised
or forfeited during the year ended December 31, 2012.
On March 23, 2011 options were granted
to all officers and directors to purchase an aggregate of 102,100 common shares at no less than 100% of the fair market value at
the date of grant. These options were issued after approval of the Plan by shareholders on August 25, 2011. These options were
vested when issued, except for some of the stock options granted to the President and CEO which vest in 2012 and 2013. Options
are not transferable and expire on August 25, 2016 or upon termination of employment, except to a limited extent in the event of
retirement, disability or death of the grantee. Stock options issued to the CEO have an exercise price of 110% of the fair market
value at the date of grant. The average exercise price of the options granted in 2011 was $4.99 per share. The Company’s
stock price on the date of grant was $4.80 per share.
The Company’s policy is to record
stock compensation expense in accordance with ASC Topic 505-50, "Equity-Based Payments to Non-Employees". Options granted
during 2011 were valued at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model
was developed for use in estimating the fair value of traded options, which have some vesting restrictions and are not transferable.
The per share weighted average fair value of stock options granted during the nine months in 2011 was $.63 and was determined using
the following assumptions: expected price volatility 16.25%, risk-free interest rate ranging between .11% and .47%, zero expected
dividend yield and five years expected life of options. The expected term of options granted is based on historical experience
with past option holders, and represents the period of time that options granted are expected to be outstanding. The Company’s
stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions
can materially affect the fair value estimate. It is management’s opinion that the existing models do not necessarily provide
a reliable single measure of the fair value of its stock options.
The Company’s non-employee stock
compensation expense based on the fair value at the date of grant for stock options was approximately $12,000 and $53,000 for the
years ended December 31, 2012 and 2011, respectively, and is included in the results of operations in the condensed consolidated
financial statements.
As of December 31, 2012, there was approximately
$5,000 of total unrecognized non-employee stock compensation expense related to unvested stock options under the Plan. This expense
is expected to be recognized over the vesting periods ending August 25, 2013.
A summary of the status of the Company’s
stock option plan as of December 31, 2012 and December 31, 2011, and changes during the periods ending on those dates are presented
below:
|
|
As of December 31, 2012
|
|
As of December 31, 2011
|
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Shares
|
|
Weighted Average Exercise Price
|
Outstanding at the beginning of the period
|
|
|
102,100
|
|
|
$
|
4.99
|
|
|
|
102,100
|
|
|
$
|
8.83
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
102,100
|
|
|
$
|
4.99
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Expired
|
|
|
—
|
|
|
|
—
|
|
|
|
(102,100
|
)
|
|
$
|
8.83
|
|
Forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding at the end of the period
|
|
|
102,100
|
|
|
$
|
4.99
|
|
|
|
102,100
|
|
|
$
|
4.99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at period-end
|
|
|
102,100
|
|
|
$
|
4.99
|
|
|
|
102,100
|
|
|
$
|
4.99
|
|
Weighted average fair value of options granted during the period
|
|
|
—
|
|
|
|
—
|
|
|
|
102,100
|
|
|
$
|
.64
|
|
Aggregate intrinsic value of outstanding and exercisable options at the end of the period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
16. OPERATING LEASES AS LESSOR
Bayshore, as lessor, leases various office
and dock space under non-cancelable operating leases that expire at various dates through 2022. Annual minimum lease payments due
from leases to non-combined, third party tenants under non-cancelable operating leases are included in the table below.
These leases are classified as operating
leases and generally require the tenant to pay all costs associated with the property. Minimum annual rentals on non-cancelable
leases in effect at December 31, 2012, are as follows:
Year ending December 31,
|
|
|
Amount
|
|
2013
|
|
|
$
|
522,000
|
|
2014
|
|
|
|
518,000
|
|
2015
|
|
|
|
469,000
|
|
2016
|
|
|
|
374,000
|
|
2017
|
|
|
|
320,000
|
|
2018 and subsequent years
|
|
|
|
583,000
|
|
Total
|
|
|
$
|
2,786,000
|
|
17.
DISCONTINUED OPERATIONS AND REAL ESTATE INTERESTS HELD FOR SALE
On February 25, 2013 the Company completed
the sale of its interests in Grove Isle Associates LLLP, Grove Isle Yacht Club Associates, Grove Isle Investments Inc. and CII
Yacht Club, Inc., which represent interests in the Grove Isle hotel, club, tennis courts and marina (collectively, the “Grove
Isle Property”) to Grove Isle Yacht & Tennis, LLC, a Florida limited liability company and an unrelated entity (“the
Purchaser”), pursuant to a purchase agreement entered into on the same day. The purchase price was $24.4 million, consisting
of $23.4 million in cash and a $1 million promissory note due from the Purchaser. Approximately $2.7 million of the proceeds were
used to pay off the existing mortgage on the Grove Isle Property.
The Company’s interest in Grove Spa,
LLC was not sold as part of the transaction described above, however the Purchaser has an option to purchase our 50% interest in
the spa for $100,000, and accordingly this interest is classified as held for sale.
We have classified the results of operations
for the real estate interests discussed above into discontinued operations in the accompanying consolidated financial statements
of operations.
|
|
For the years ended December 31,
|
|
|
2012
|
|
2011
|
Revenues:
|
|
|
|
|
Rental and related revenue
|
|
$
|
1,139,000
|
|
|
$
|
1,204,000
|
|
Marina revenue
|
|
|
557,000
|
|
|
|
556,000
|
|
Spa revenue
|
|
|
430,000
|
|
|
|
535,000
|
|
Other
|
|
|
—
|
|
|
|
31,000
|
|
Total revenue
|
|
|
2,126,000
|
|
|
|
2,326,000
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Rental operating expenses
|
|
|
4,000
|
|
|
|
49,000
|
|
Marina expenses
|
|
|
495,000
|
|
|
|
519,000
|
|
Spa expenses
|
|
|
392,000
|
|
|
|
538,000
|
|
Interest expense
|
|
|
124,000
|
|
|
|
97,000
|
|
Depreciation, amortization and other expenses
|
|
|
277,000
|
|
|
|
458,000
|
|
Total expenses
|
|
|
1,292,000
|
|
|
|
1,661,000
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations
|
|
$
|
834,000
|
|
|
$
|
665,000
|
|
The major classes of assets and
liabilities associated with the real estate interest held for sale as of December 31, 2012 and 2011 were as follows:
|
|
December 31, 2012
|
|
December 31, 2011
|
Grove Isle land, hotel, club building and marina
|
|
$
|
1,801,000
|
|
|
$
|
1,870,000
|
|
Grove Isle spa building, improvements, furniture, fixtures and equipment (before 50% noncontrolling interest)
|
|
|
1,434,000
|
|
|
|
1,577,000
|
|
Other assets
|
|
|
172,000
|
|
|
|
177,000
|
|
Assets associated with real estate interest held for sale
|
|
$
|
3,407,000
|
|
|
$
|
3,624,000
|
|
|
|
|
|
|
|
|
|
|
Mortgage note payable
|
|
$
|
2,696,000
|
|
|
$
|
2,819,000
|
|
Accrued and other liabilities
|
|
|
23,000
|
|
|
|
97,000
|
|
Obligations associated with real estate interest held for sale
|
|
$
|
2,719,000
|
|
|
$
|
2,916,000
|
|