Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real
estate investment company, today reported results of operations for the
third quarter ended September 30, 2013. TCI announced today that the
Company reported net loss applicable to common shares of $6.2 million or
$0.74 per diluted earnings per share, as compared to a net loss
applicable to common shares of $0.5 million or $0.07 per diluted
earnings per share for the same period ended 2012.
The Company continues to fortify its portfolio and streamline its
operational activity, while at the same time maintaining its commitment
to creating value. As market conditions improve, we continue to pursue
selective opportunities.
The apartment portfolio continues to be fairly robust and we are seeing
encouraging signs within our commercial portfolio, as new tenant
activity is improving. At the same time there is growing, though modest,
indications of renewed interest in land sales.
Rental and other property revenues were $26.6 million for the three
months ended September 30, 2013. This represents a decrease of $0.3
million, as compared to the prior period revenues of $26.9 million. Our
apartment portfolio increased by $0.9 million, our commercial portfolio
decreased by $1.3 million and we saw a small increase of $0.1 million in
our land portfolio. Within the apartment portfolio, the increase is due
primarily to increased rent revenues and stabilized mid-90’s occupancy
throughout the portfolio. Within our commercial portfolio, the same
properties decreased by $1.3 million related to some larger square-foot
tenants down-sizing or moving out. Although we have had a decrease in
rental revenue related to these vacancies, we have secured several new
leases that are in the build-out process or have recently moved in and
we expect to see our commercial portfolio revenue increase in the near
future. Within the land and other portfolio, the increase is due to oil
and gas royalties.
General and administrative expenses were $1.5 million for the three
months ended September 30, 2013. This represents an increase of $0.5
million, as compared to the prior period expenses of $1.0 million. The
majority of the increase is related to professional services and an
increase in our cost reimbursements due to our Advisor.
Interest income was $2.1 million for the three months ended September
30, 2013. This represents an increase of $1.1 million, as compared to
the prior period interest income of $1.0 million. This increase was due
to an agreement made on January 1, 2013, where the Company extended the
maturity on the surplus cash flow notes receivable from UHF for an
additional term of five years in exchange for the early termination of
the preferred interest rate. The original notes gave a five-year period
of preferred interest rate at 5.25%, before returning to the original
note rate of 12.0%.
Mortgage and loan interest was $8.9 million for the three months ended
September 30, 2013. This represents a decrease of $1.3 million, as
compared to the prior period interest expense of $10.2 million. This
change, by segment, is a decrease in the apartment portfolio of $0.9
million, a decrease in the commercial portfolio of $0.1 million and a
decrease in the other portfolio of $0.3 million. Within the apartment
portfolio, the majority of the decrease relates to the same apartment
portfolio due to the refinances closed with long-term, low interest
rates. The other portfolio decreased primarily due to the reduction of
the related party obligation, resulting in less interest expense owed in
the current period.
Litigation settlement expense was $2.7 million for the three months
ended September 30, 2013. The settlement expenses relate to guarantor
settlements on various land parcels that were foreclosed upon in prior
years. In order to avoid future litigation and legal expenses, we
settled and are making payment plans on the agreed upon deficiencies.
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 office buildings, apartments,
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.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(unaudited)
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For the Three Months Ended
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For the Nine Months Ended
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September 30,
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September 30,
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2013
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2012
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2013
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2012
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(dollars in thousands, except per share amounts)
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Revenues:
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Rental and other property revenues (including $165 and $164 for the
three months and $497 and $499 for the nine months ended 2013 and
2012, respectively, from related parties)
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$
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26,616
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$
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26,915
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$
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78,901
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$
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79,136
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Expenses:
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Property operating expenses (including $196 and $225 for the three
months and $602 and $735 for the nine months ended 2013 and 2012,
respectively, from related parties)
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13,198
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13,343
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37,535
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38,254
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Depreciation and amortization
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5,275
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4,965
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15,525
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14,871
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General and administrative (including $721 and $547 for the three
months and $2,264 and $1,796 for the nine months ended 2013 and
2012, respectively, from related parties)
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1,545
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968
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4,990
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4,176
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Provision on impairment of notes receivable and real estate assets
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214
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-
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214
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-
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Advisory fee to related party
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2,168
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2,198
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6,377
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6,719
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Total operating expenses
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22,400
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21,474
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64,641
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64,020
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Net operating income
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4,216
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5,441
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14,260
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15,116
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Other income (expenses):
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Interest income (including $2,168 and $1,092 for the three months
and $6,456 and $8,107 for the nine months ended 2013 and 2012,
respectively, from related parties)
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2,131
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1,031
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6,427
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8,129
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Other income and expenses (including $0 and $1,500 for the three
months and $0 and $4,500 for the nine months ended 2013 and 2012,
respectively, from related parties)
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77
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1,218
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257
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4,529
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Mortgage and loan interest (including $397 and $714 for the three
months and $1,323 and $2,193 for the nine months ended 2013 and
2012, respectively, from related parties)
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(8,873
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)
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(10,198
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)
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(28,110
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)
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(32,586
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)
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Deferred borrowing costs amortization
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(90
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)
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552
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(3,468
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)
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(2,299
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Loan charges and prepayment penalties
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-
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(35
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(7,208
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(6,197
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)
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Loss on the sale of investments
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(275
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-
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(283
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(118
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Earnings (losses) from unconsolidated joint ventures and investees
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(30
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5
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(28
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(58
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Litigation settlement
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(2,739
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(130
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(2,727
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(135
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Total other expenses
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(9,799
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(7,557
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(35,140
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(28,735
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Net loss before gain on land sales, non-controlling interest, and
taxes
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(5,583
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(2,116
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(20,880
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(13,619
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Gain (loss) on land sales
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-
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2,913
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(48
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8,074
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Net income (loss) from continuing operations before taxes
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(5,583
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797
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(20,928
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(5,545
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Income tax benefit (expense)
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(95
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(356
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8,476
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1,279
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Net income (loss) from continuing operations
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(5,678
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441
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(12,452
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(4,266
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Discontinued operations:
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Net loss from discontinued operations
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(398
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(1,098
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(174
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(1,518
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Gain on sale of real estate from discontinued operations
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127
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82
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24,392
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5,173
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Income tax benefit (expense) from discontinued operations
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95
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356
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(8,476
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(1,279
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Net income (loss) from discontinued operations
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(176
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(660
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15,742
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2,376
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Net income (loss)
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(5,854
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(219
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)
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3,290
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(1,890
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Net income attributable to non-controlling interest
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(97
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(43
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(323
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(297
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Net income (loss) attributable to Transcontinental Realty Investors,
Inc.
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(5,951
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(262
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2,967
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(2,187
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Preferred dividend requirement
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(279
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(277
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(830
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(831
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Net income (loss) applicable to common shares
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$
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(6,230
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$
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(539
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$
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2,137
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$
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(3,018
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Earnings per share - basic
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Net income (loss) from continuing operations
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$
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(0.72
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$
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0.01
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$
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(1.62
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$
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(0.64
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Net income (loss) from discontinued operations
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(0.02
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(0.08
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1.87
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0.28
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Net income (loss) applicable to common shares
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$
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(0.74
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$
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(0.07
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$
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0.25
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$
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(0.36
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Earnings per share - diluted
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Net income (loss) from continuing operations
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$
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(0.72
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$
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0.01
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$
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(1.62
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$
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(0.64
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)
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Net income (loss) from discontinued operations
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(0.02
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)
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(0.08
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)
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1.87
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0.28
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Net income (loss) applicable to common shares
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$
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(0.74
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)
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$
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(0.07
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)
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$
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0.25
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$
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(0.36
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)
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Weighted average common shares used in computing earnings per share
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8,413,469
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8,413,469
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8,413,469
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8,413,469
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Weighted average common shares used in computing diluted earnings
per share
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8,413,469
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8,413,469
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8,413,469
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8,413,469
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Amounts attributable to Transcontinental Realty Investors, Inc.
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Net income (loss) from continuing operations
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$
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(5,775
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)
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$
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398
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$
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(12,775
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)
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$
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(4,563
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)
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Net income (loss) from discontinued operations
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(176
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)
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(660
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)
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15,742
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2,376
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Net income (loss)
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$
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(5,951
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)
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$
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(262
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)
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$
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2,967
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$
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(2,187
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)
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TRANSCONTINENTAL REALTY INVESTORS, INC.
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CONSOLIDATED BALANCE SHEETS
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(unaudited)
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September 30,
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December 31,
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2013
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2012
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(dollars in thousands, except share and par value amounts)
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Assets
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Real estate, at cost
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$
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942,013
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$
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978,781
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Real estate held for sale at cost, net of depreciation ($151 for
2013 and $4,658 for 2012)
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-
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18,077
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Real estate subject to sales contracts at cost, net of depreciation
($1,861 for 2013 and $16,412 for 2012)
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41,549
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45,706
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Less accumulated depreciation
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(149,085
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)
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(145,614
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)
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Total real estate
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834,477
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896,950
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Notes and interest receivable:
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Performing (including $59,444 in 2013 and $58,008 in 2012 from
related parties)
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62,522
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60,637
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Non-performing
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685
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|
723
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Less allowance for doubtful accounts (including $2,097 in 2013 and
2012 from related parties)
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(2,395
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)
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(2,262
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)
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Total notes and interest receivable
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60,812
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59,098
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Cash and cash equivalents
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9,076
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|
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16,620
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Related party receivables
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3,856
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|
-
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Investments in unconsolidated joint ventures and investees
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5,508
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|
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5,439
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Other assets
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57,517
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|
|
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67,237
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Total assets
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$
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971,246
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$
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1,045,344
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Liabilities and Shareholders’ Equity
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Liabilities:
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Notes and interest payable
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$
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712,745
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$
|
730,931
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|
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Notes related to real estate held for sale
|
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2,466
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|
|
|
18,915
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|
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Notes related to real estate subject to sales contracts
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|
|
|
28,068
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|
|
|
55,976
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|
|
Stock-secured notes payable
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|
|
|
2,195
|
|
|
|
2,221
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|
|
Related party payables
|
|
|
|
-
|
|
|
|
10,057
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|
|
Deferred gain (from sales to related parties)
|
|
|
|
53,096
|
|
|
|
53,096
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|
|
Accounts payable and other liabilities (including $4,783 in 2013 and
$4,282 in 2012 to related parties)
|
|
|
|
37,047
|
|
|
|
41,019
|
|
|
Total liabilities
|
|
|
|
835,617
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|
|
|
912,215
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|
|
|
|
|
|
|
|
|
Shareholders’ equity:
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|
|
|
|
|
|
Preferred stock, Series C: $0.01 par value, authorized 10,000,000
shares, issued and outstanding 30,000 shares in 2013 and 2012
(liquidation preference $100 per share). Series D: $0.01 par value,
authorized, issued and outstanding 100,000 shares in 2013 and 2012
(liquidation preference $100 per share)
|
|
|
|
1
|
|
|
|
1
|
|
|
Common stock, $0.01 par value, authorized 10,000,000 shares, issued
8,413,669 shares in 2013 and 2012 and outstanding 8,413,469 shares
in 2013 and 2012
|
|
|
|
84
|
|
|
|
84
|
|
|
Treasury stock at cost, 200 shares in 2013 and 2012
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Paid-in capital
|
|
|
|
271,998
|
|
|
|
272,774
|
|
|
Retained earnings
|
|
|
|
(153,592
|
)
|
|
|
(156,559
|
)
|
|
Total Transcontinental Realty Investors, Inc. shareholders' equity
|
|
|
|
118,489
|
|
|
|
116,298
|
|
|
Non-controlling interest
|
|
|
|
17,140
|
|
|
|
16,831
|
|
|
Total shareholders' equity
|
|
|
|
135,629
|
|
|
|
133,129
|
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
971,246
|
|
|
$
|
1,045,344
|
|
Copyright Business Wire 2013