Highlight of Business Operations:The Trust is a partner in unconsolidated ventures which own and operate in the aggregate four properties. The Trusts share of earnings (loss) in all of its unconsolidated joint ventures, including a joint venture engaged in purchasing loans that ceased investment activities in November 2011, was $20,000 and $60,000 for the three months ended June 30, 2012 and 2011, respectively, and $(95,000) and $195,000 for the nine months ended June 30, 2012 and 2011, respectively. The Trusts equity in these unconsolidated ventures totaled $3,914,000 and $4,247,000 at June 30, 2012 and September 30, 2011, respectively.
During the nine months ended June 30, 2011, the Trust sold available-for-sale debt securities for $3,417,000 which had a basis of $2,925,000 determined using specific cost. Accordingly, the Trust recognized a gain of $492,000 from these sales.
We are a real estate investment trust, also known as a REIT. We originate and hold for investment senior mortgage loans secured by commercial and multi-family properties in the United States. Historically, our primary source of revenue has been interest income, and to a lesser extent, loan fee income generated on the origination and extension of loans, rental revenue from real properties and investment income. We believe that during the nine months ended June 30, 2012, loan origination activities decreased from the corresponding prior year period due to competitive pricing pressure. Beginning in the quarter ended March 31, 2012, we expanded our activities by acquiring for investment, with venture partners, multi-family residential properties. As a result of the expansion of our activities and the acquisition in the most recent two quarters of multi-family residential properties, we expect that rental revenues, real estate operating expenses, interest expense, depreciation and cash flow from operations will increase in the future.
Interest on real estate loans. The decrease is attributable to the following factors: (i) $518,000 is due to a $17.5 million decrease in the average balance of earning loans outstanding; (ii) $213,000 is due to the inclusion in the three months ended June 30, 2011 of cash basis income received primarily from non-performing loans and interest income from purchase money mortgages that were subsequently paid off; and (iii) $83,000 is due to the decline, as a result of competitive pricing pressure, in the weighted average interest rate from 12.05% to 11.65%.
Interest on real estate loans. The decrease is attributable to the following factors: (i) $878,000 is due to the inclusion, during the nine months ended June 30, 2011, of cash basis income received primarily on non-performing loans and purchase money mortgages that were subsequently paid off; and (ii) $183,000 is due to the decline, as a result of competitive pricing pressure, in the weighted average interest rate from 12.18% to 11.75%. Partially offsetting the decrease by approximately $959,000 was the increase of $11.3 million in the average balance of earning loans outstanding. While originations were lower in the current nine months than in the corresponding period in the prior fiscal year, the timing of the payoffs of loans caused the average balance to increase.
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