DALLAS–(BUSINESS WIRE)–Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real
estate investment company, today reported results of operations for the
first quarter ended March 31, 2019.
In November 2018 the Company created a new subsidiary Victory Abode
Apartments, LLC (“VAA”) and contributed 52 multi-family projects that it
owned and operated to VAA. TCI subsequently sold a 50% interest to a
third party and recorded a $154 million gain. Beginning November 19,
2018, TCI began reflecting its ownership of VAA on the Balance Sheet as
an investment and its share of the Revenues, Operating Expenses,
Depreciation, Amortization and Interest as “Earning from VAA”. The
Statement of Operations for the three months ended March 31, 2018 and
the information thereon reflect the operations for the properties
contributed to VAA on a consolidated basis.
The Company believes that the completion of the joint venture creating
Victory Abode Apartments has positioned the company with a dynamic
platform to continue its expansion in the multifamily sector. The
ongoing plan is to continue to develop and acquire apartments in the
geographic markets where demand exceeds supply.
For the three months ended March 31, 2019, we reported a net loss
applicable to common shares of $5.6 million or ($0.64) per diluted loss
per share compared to a net loss applicable to common shares of $0.5
million or ($0.05) per diluted loss per share for the same period ended
2018.
Revenues
Rental and other property revenues were $11.9 million for the three
months ended March 31, 2019, compared to $31.1 million for the same
period in 2018. The $19.2 million decrease is primarily due to a
decrease in the amount of multifamily residential apartment buildings
currently in our portfolio of nine as compared to 53 multifamily
residential apartment buildings for the same period a year ago as a
result of the deconsolidation of 49 residential apartment properties
that were sold into the VAA Joint Venture during the fourth quarter of
2018. As the assets are now treated as unconsolidated investments, our
share of rental revenues is part of income from unconsolidated
investments in the current period and are no longer treated as rental
income.
Expense
Property operating expenses decreased by $8.5 million to $6.0 million
for the three months ended March 31, 2019 as compared to $14.5 million
for the same period in 2018. The decrease in property operating expenses
is primarily due to the deconsolidation of 49 residential apartment
properties that were sold into the VAA Joint Venture during the fourth
quarter of 2018 which resulted in a decrease in salary and related
payroll expenses of $1.7 million, real estate taxes of approximately
$3.0 million and general property operating and maintenance expenses of
$3.8 million.
Depreciation and amortization decreased by $3.3 million to $3.1
million during the three months ended March 31, 2019 as compared to $6.4
million for the three months ended March 31, 2018. This decrease is
primarily due to the deconsolidation of the residential apartments in
connection with our previous sale and contribution of our interests to
the VAA Joint Venture.
General and administrative expense was $2.3 million for the three months
ended March 31, 2019, compared to $2.2 million for the same period in
2018. The increase of $0.1 million in general and administrative
expenses is the result of increases in advisory and management fees of
approximately $0.4 million and professional and finance fees of $0.3
million offset by a decrease in accounting, tax and other general
administrative fees of $0.6 million.
Other income (expense)
Interest income was $4.6 million for the three months ended March 31,
2019, compared to $3.9 million for the same period in 2018. The increase
of $0.7 million was due to an increase of $1.3 million in interest on
receivable owed from our Advisors, offset by a decrease of $0.8 in
interest on notes receivable from other related parties.
Other income was $3.9 million for the three months ended March 31, 2019,
compared to $1.8 million for the same period in 2018. The increase is
primarily the result of a $3.6 million gain recognized for deferred
income associated with the sale of land during the quarter just ended
held by IOR to third parties.
Mortgage and loan interest expense was $7.9 million for the three months
ended March 31, 2019 as compared to $14.1 million for the same period
in 2018. The decrease of $6.2 million is due to the deconsolidation of
residential apartment properties into the VAA Joint Venture which were
encumbered by mortgage debt.
Foreign currency transaction was a loss of $5.8 million for the three
months ended March 31, 2019 as compared to a gain of $1.8 million for
the same period in 2018. During the first quarter just ended, we paid
$10.4 million in principal and $5.8 million in interests payments to our
bonds denominated in Israel Shekels.
Loss from unconsolidated investments was $1.1 million for the three
months ended March 31, 2019 as compared to earnings of $11 thousand for
the three months ended March 31, 2018. The loss from unconsolidated
investments during the first quarter just ended was driven primarily
from our share in the losses reported by the VAA Joint Venture.
Gain on land sales was $2.2 for the three months ended March 31, 2019,
compared to $1.3 million for the same period in 2018. In the current
period we sold approximately 22.3 acres of land for a sales price of
$8.7 million which resulted in a gain of $2.2 million. For the same
period in 2018, we sold 112.2 acres of land for a sales price of $7.2
million and recorded a total gain of $1.3 million.
About Transcontinental Realty Investors, Inc.
Transcontinental Realty Investors, Inc., a Dallas-based real estate
investment company, holds a diverse portfolio of equity real estate
located across the U.S., including apartments, office buildings,
shopping centers, and developed and undeveloped land. The Company
invests in real estate through direct ownership, leases and partnerships
and invests in mortgage loans on real estate. For more information,
visit the Company’s website at www.transconrealty-invest.com.
| TRANSCONTINENTAL REALTY INVESTORS, INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (unaudited) | ||||||||||
| For the Three Months Ended March 31, | ||||||||||
| 2019 | 2018 | |||||||||
| (dollars in thousands, except per share amounts) | ||||||||||
| Revenues: | ||||||||||
|
Rental and other property revenues (including $113 and $208 for the three months ended 2019 and 2018, respectively, from related parties) |
$ | 11,929 | $ | 31,082 | ||||||
| Expenses: | ||||||||||
|
Property operating expenses (including $257 and $227 for the three months ended 2019 and 2018, respectively, from related parties) |
5,997 | 14,455 | ||||||||
| Depreciation and amortization | 3,109 | 6,446 | ||||||||
|
General and administrative (including $1,500 and $1,093 for the three months ended 2019 and 2018, respectively, from related parties) |
2,328 | 2,192 | ||||||||
| Net income fee to related party | 100 | 53 | ||||||||
| Advisory fee to related party | 1,648 | 2,748 | ||||||||
| Total operating expenses | 13,182 | 25,894 | ||||||||
| Net operating (loss) income | (1,253 | ) | 5,188 | |||||||
| Other income (expenses): | ||||||||||
|
Interest income (including $4,285 and $3,236 for the three months ended 2019 and 2018, respectively, from related parties) |
4,558 | 3,876 | ||||||||
| Other income | 3,892 | 1,826 | ||||||||
|
Mortgage and loan interest (including $490 and $318 for the three months ended 2019 and 2018, respectively, from related parties) |
(7,959 | ) | (14,093 | ) | ||||||
| Foreign currency transaction (loss) gain | (5,818 | ) | 1,756 | |||||||
| Equity loss from VAA | (1,055 | ) | – | |||||||
| (Losses) earnings from other unconsolidated investees | (7 | ) | 11 | |||||||
| Total other expenses | (6,389 | ) | (6,624 | ) | ||||||
| Loss before gain on land sales, non-controlling interest, and taxes | (7,642 | ) | (1,436 | ) | ||||||
| Gain on land sales | 2,216 | 1,335 | ||||||||
| Net loss from continuing operations before taxes | (5,426 | ) | (101 | ) | ||||||
| Net loss from continuing operations | (5,426 | ) | (101 | ) | ||||||
| Net loss | (5,426 | ) | (101 | ) | ||||||
| Net (income) attributable to non-controlling interest | (183 | ) | (132 | ) | ||||||
| Net loss attributable to Transcontinental Realty Investors, Inc. | (5,609 | ) | (233 | ) | ||||||
| Preferred dividend requirement | – | (222 | ) | |||||||
| Net loss applicable to common shares | $ | (5,609 | ) | $ | (455 | ) | ||||
| Earnings per share – basic | ||||||||||
| Net loss from continuing operations | $ | (0.64 | ) | $ | (0.05 | ) | ||||
| Net loss applicable to common shares | $ | (0.64 | ) | $ | (0.05 | ) | ||||
| Earnings per share – diluted | ||||||||||
| Net loss from continuing operations | $ | (0.64 | ) | $ | (0.05 | ) | ||||
| Net loss applicable to common shares | $ | (0.64 | ) | $ | (0.05 | ) | ||||
| Weighted average common shares used in computing earnings per share | 8,717,767 | 8,717,767 | ||||||||
|
Weighted average common shares used in computing diluted earnings per share |
8,717,767 | 8,717,767 | ||||||||
| Amounts attributable to Transcontinental Realty Investors, Inc. | ||||||||||
| Net loss from continuing operations | $ | (5,609 | ) | $ | (233 | ) | ||||
| Net loss applicable to Transcontinental Realty, Investors, Inc. | $ | (5,609 | ) | $ | (233 | ) | ||||
| TRANSCONTINENTAL REALTY INVESTORS, INC. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| March 31, | December 31, | |||||||||
| 2019 | 2018 | |||||||||
| (unaudited) | (audited) | |||||||||
| (dollars in thousands, except share and par value amounts) | ||||||||||
| Assets | ||||||||||
| Real estate, at cost | $ | 452,761 | $ | 461,718 | ||||||
| Real estate subject to sales contracts at cost | 4,325 | 2,014 | ||||||||
| Real estate held for sale at cost, net of depreciation | 14,737 | – | ||||||||
| Less accumulated depreciation | (81,885 | ) | (79,228 | ) | ||||||
| Total real estate | 389,938 | 384,504 | ||||||||
|
Notes and interest receivable (including $48,646 in 2019 and $51,945 in 2018 from related parties) |
82,469 | 83,541 | ||||||||
| Cash and cash equivalents | 28,156 | 36,358 | ||||||||
| Restricted cash | 51,983 | 70,207 | ||||||||
| Investment in VAA | 67,229 | 68,399 | ||||||||
| Investment in other unconsolidated investees | 22,164 | 22,172 | ||||||||
| Receivable from related party | 143,437 | 133,642 | ||||||||
| Other assets | 67,238 | 63,557 | ||||||||
| Total assets | $ | 852,614 | $ | 862,380 | ||||||
| Liabilities and Shareholders’ Equity | ||||||||||
| Liabilities: | ||||||||||
| Notes and interest payable | $ | 283,934 | $ | 277,237 | ||||||
| Bonds and bond interest payable | 151,465 | 158,574 | ||||||||
|
Deferred revenue (including $13,977 in 2019 and $17,522 in 2018 to related parties) |
13,977 | 17,522 | ||||||||
| Deferred tax liability | 2,000 | 2,000 | ||||||||
|
Accounts payable and other liabilities (including $6 in 2019 and $3 in 2018 to related parties) |
26,330 | 26,646 | ||||||||
| Total liabilities | 477,706 | 481,979 | ||||||||
| Shareholders’ equity: | ||||||||||
|
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2019 and 2018; outstanding 8,717,767 shares in 2019 and 2018 |
87 | 87 | ||||||||
| Treasury stock at cost, 200 shares in 2019 and 2018 | (2 | ) | (2 | ) | ||||||
| Paid-in capital | 257,983 | 258,050 | ||||||||
| Retained earnings | 95,976 | 101,585 | ||||||||
| Total Transcontinental Realty Investors, Inc. shareholders’ equity | 354,044 | 359,720 | ||||||||
| Non-controlling interest | 20,864 | 20,681 | ||||||||
| Total shareholders’ equity | 374,908 | 380,401 | ||||||||
| Total liabilities and shareholders’ equity | $ | 852,614 | $ | 862,380 | ||||||
Contacts
Transcontinental Realty Investors, Inc.
Investor Relations
Gene
Bertcher (800) 400-6407
[email protected]
