Note 4 — Real estate assets held for disposition
On May 2, 2012, the Company acquired the lender’s interest of Wells Fargo Bank, N.A., as Trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2005-C6, in a promissory note dated August 11, 2005 in the face amount of $5,200,000 (the “Haute Harwin Note”). The Haute Harwin Note is secured by a Deed of Trust and Security Agreement together with other customary security instruments covering a commercial retail shopping center consisting or approximately 38,813 rentable square feet and located at 6959 Harwin Drive, Houston, Texas (the “Harwin Property”).
The assets secured by the lenders interest were subject to a receivership order dated August 5, 2011 by the 164th Judicial District Court of Harris County, Texas. The Company paid $3,215,237 cash for the lender’s interest acquired.
The Haute Harwin Note was posted for foreclosure in Harris County, Texas and on August 7, 2012, the Company acquired fee simple title to the Harwin Property. The receivership order has terminated and the case giving rise to the receivership order has been dismissed.
On July 23, 2012 the Company’s board of directors approved a sale of the Company’s interest in the Harwin Property to Hartman XIX for $3,272,000 cash.
On August 7, 2012, the Company foreclosed on its investment in the Haute Harwin Note and converted its ownership in the Harwin Property to fee simple. The Harwin Property is recorded on the consolidated balance sheets as real estate assets held for disposition, and the related operations are presented as discontinued operations on the consolidated statements of operations, consistent with the board of director’s resolution to sell the property.
On October 23, 2012 the Company’s board of directors reviewed the independent appraisal reflecting an “As Is” fair value of $3.4 million. Based on the independent appraisal the board of directors amended its offer to sell the Harwin Property to increase the asking price to $3.4 million. The board of directors of Harwin XIX accepted the price modification.
Effective March 28, 2013, the Company sold the Harwin Property to Hartman XIX pursuant to the terms agreed upon and approved by both the boards of directors of the Company and of Hartman XIX. The Company sold the Harwin Property for $3,400,000 cash. The Company recognized a $174,043 gain on the sale.
Income (loss) from discontinued operations is comprised as follows:
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| Years ended December 31, | |||
|
|
| 2013 |
| 2012 |
| Total property revenues | $ | 65,115 | $ | 113,948 |
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|
|
|
|
|
| Property operating expenses |
| 53,745 |
| 60,227 |
| Real estate taxes and insurance |
| 18,772 |
| 80,974 |
| Depreciation & amortization |
| - |
| - |
| Total property and other expenses |
| 72,517 |
| 141,201 |
| Gain on sale of property |
| 174,043 |
| - |
| Income (loss) from discontinued operations | $ | 166,641 | $ | (27,253) |