Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real
estate investment company, today reported results of operations for the
fourth quarter ended December 31, 2013. For the three months ended
December 31, 2013, the Company reported net income applicable to common
shares of $55.3 million or $6.57 per share, as compared to a net loss
applicable to common shares of $6.4 million or $0.76 per share for the
same period ended 2012.
For the twelve months ended December 31, 2013, we reported net income
applicable to common shares of $57.4 million or $6.82 per diluted
earnings per share, as compared to a net loss applicable to common
shares of $9.4 million or $1.12 per diluted earnings per share for the
same period ended 2012.
The current year net income applicable to common shares of $57.4 million
includes $17.2 million of depreciation expense, $11.3 million of
provisions on the impairment of notes receivable and real estate assets,
$20.3 million of litigation settlement expense and gains on the sale of
real estate holdings of $96.3 million.
The Company’s commitment to first stabilizing, then enhancing value to
our real estate portfolios has proven successful evidenced by our
improved results of our operations. During the current year, we have
realized the benefits of streamlined operations and the completion of
several high-value asset sales thus improving cash flows on our existing
portfolio.
Our apartment portfolio continues to excel in the current economic
conditions with occupancies averaging over 95% and increasing rental
rates. We have been able to surpass expectations due to the high-quality
product offered, strength of our management team and our commitment to
our tenants.
Our commercial portfolio expects to continue to improve as the Company
has been diligent in our actions to re-lease vacant space and has been
successful in attracting high-quality tenants and expects to see the
benefits of those new leases over the next twelve months. We continue to
work aggressively to attract new tenants and strive for continuous
improvement of our properties in order to maintain our existing tenants.
In the current period, rental and other property revenues increased
within the apartment portfolio by $3.5 million due primarily to
increased rental rates and occupancy. Within the commercial portfolio
the same properties decreased by $3.9 million related to some larger
square-foot tenants down-sizing or moving out and first year lease
specials for new tenants. The Company expects the apartment and
commercial portfolios to continue to improve and expects future growth
in excess of the current period results.
Interest income was $13.8 million for the twelve months ended December
31, 2013 as compared to the prior period interest income of $11.7
million, due to an agreement made on January 1, 2013, whereby the
Company extended the maturity on the surplus cash flow notes receivable
from Unified Housing Foundation, Inc. for an additional term of five
years in exchange for an early termination of the preferred interest
rate.
Other income was $7.9 million for the twelve months ended December 31,
2013 due to the Mercer/Travelers land note payoff. Per the terms of the
agreement, the note was paid off at a discounted rate and $7.5 million
was recognized as a gain.
Mortgage and loan interest expense decreased by $4.6 million, as
compared to the prior year expense primarily due to interest rate
savings on refinances for our apartment portfolio. The current year
refinances resulted in annual interest rate savings of $3.7 million.
Litigation settlement expense relates to guarantor settlements on
various real estate assets 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 equity ownership and partnerships
nationwide. 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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For the Years Ended December 31,
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2013
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2012
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2011
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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 $670, $587 and $223
for the year ended 2013, 2012 and 2011, respectively, from related
parties)
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$
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86,237
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$
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86,615
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$
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77,935
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Expenses:
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Property operating expenses (including $766, $957 and $972 for the
year ended 2013, 2012 and 2011, respectively, from related parties)
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40,948
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42,329
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41,984
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Depreciation
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17,174
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16,141
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13,967
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General and administrative (including $2,765, $2,427 and $3,088 for
the year ended 2013, 2012 and 2011, respectively, from related
parties)
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6,323
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5,090
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8,971
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Provision on impairment of notes receivable and real estate assets
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11,320
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2,330
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35,039
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Net income fee to related party
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4,089
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180
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54
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Advisory fee to related party
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8,494
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8,915
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9,958
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Total operating expenses
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88,348
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74,985
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109,973
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Operating income (loss)
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(2,111
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)
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11,630
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(32,038
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)
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Other income (expense):
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Interest income (including $13,823, $11,677 and $5,275 for the year
ended 2013, 2012 and 2011, respectively, from related parties)
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13,790
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11,725
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5,720
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Other income (including $0, $6,000 and $0 for the year ended 2013,
2012 and 2011, respectively, from related parties)
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7,862
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6,303
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2,441
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Mortgage and loan interest (including $1,761, $3,153 and $2,176 for
the year ended 2013, 2012 and 2011, respectively, from related
parties)
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(31,637
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)
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(36,243
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)
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(36,221
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Deferred borrowing costs amortization
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(2,588
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)
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(637
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)
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(1,560
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)
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Loan charges and prepayment penalties
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(5,219
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)
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(3,574
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)
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(439
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)
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Gain (loss) on the sale of investments
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(283
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)
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125
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(514
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Earnings from unconsolidated joint ventures and investees
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(172
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)
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(66
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)
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242
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Litigation settlement
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(20,313
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)
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(173
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(225
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Total other expenses
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(38,560
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)
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(22,540
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)
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(30,556
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)
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Loss before gain (loss) on land sales, non-controlling interest, and
taxes
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(40,671
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)
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(10,910
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)
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(62,594
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Gain (loss) on land sales
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(1,073
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)
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6,935
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17,011
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Loss from continuing operations before tax
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(41,744
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)
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(3,975
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)
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(45,583
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Income tax benefit (expense)
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40,485
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(1,445
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)
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(357
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)
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Net loss from continuing operations
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(1,259
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)
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(5,420
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)
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(45,940
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Discontinued operations:
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Loss from discontinued operations
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(3,915
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)
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(9,346
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(19,320
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Gain on sale of real estate from discontinued operations
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97,405
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5,217
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18,300
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Income tax benefit (expense) from discontinued operations
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(32,722
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)
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1,445
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357
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Net income (loss) from discontinued operations
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60,768
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(2,684
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)
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(663
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)
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Net income (loss)
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59,509
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(8,104
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(46,603
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Net (income) loss attributable to non-controlling interest
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(979
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)
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(220
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)
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282
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Net income (loss) attributable to Transcontinental Realty Investors,
Inc.
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58,530
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(8,324
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)
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(46,321
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Preferred dividend requirement
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(1,110
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)
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(1,112
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)
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(1,110
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)
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Net income (loss) applicable to common shares
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$
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57,420
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$
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(9,436
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)
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$
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(47,431
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)
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Earnings per share - basic
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Loss from continuing operations
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$
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(0.40
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)
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$
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(0.80
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)
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$
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(5.59
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Income (loss) from discontinued operations
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7.22
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(0.32
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)
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(0.08
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)
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Net income (loss) applicable to common shares
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$
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6.82
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$
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(1.12
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)
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$
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(5.67
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Earnings per share - diluted
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Loss from continuing operations
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$
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(0.40
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)
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$
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(0.80
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)
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$
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(5.59
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Income (loss) from discontinued operations
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7.22
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(0.32
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)
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(0.08
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)
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Net income (loss) applicable to common shares
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$
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6.82
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$
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(1.12
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)
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$
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(5.67
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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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8,370,729
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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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8,370,729
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Amounts attributable to Transcontinental Realty Investors, Inc.
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Loss from continuing operations
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$
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(2,238
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)
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$
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(5,640
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)
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$
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(45,658
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)
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Income (loss) from discontinued operations
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60,768
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(2,684
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)
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(663
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)
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Net income (loss)
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$
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58,530
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$
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(8,324
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)
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$
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(46,321
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)
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|
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TRANSCONTINENTAL REALTY INVESTORS, INC.
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CONSOLIDATED BALANCE SHEETS
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December 31,
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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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777,974
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$
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978,781
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Real estate held for sale at cost, net of depreciation ($2,390 in
2013 and $4,658 in 2012)
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16,427
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18,077
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Real estate subject to sales contracts at cost, net of depreciation
($1,949 in 2013 and $16,412 in 2012)
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29,353
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45,706
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Less accumulated depreciation
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(127,952
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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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695,802
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896,950
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Notes and interest receivable
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Performing (including $66,431 in 2013 and $58,007 in 2012 from
related parties)
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69,626
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60,637
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Non-Performing
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|
543
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|
723
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Less allowance for estimated losses (including $2,097 in 2013 and
2012, respectively, from related parties)
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(2,262
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)
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|
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(2,262
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)
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Total notes and interest receivable
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67,907
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59,098
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Cash and cash equivalents
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16,086
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13,001
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Restricted cash
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31,799
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33,983
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Investments in unconsolidated subsidiaries and investees
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1,697
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|
|
|
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5,439
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Receivable from related party
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|
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52,380
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|
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|
-
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Other assets
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32,000
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|
|
|
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36,873
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Total assets
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$
|
897,671
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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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562,734
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$
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733,152
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Notes related to assets held for sale
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|
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17,100
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|
|
|
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18,915
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Notes related to subject to sales contracts
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|
|
|
23,011
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|
|
|
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55,976
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Payable to related party
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|
|
|
|
-
|
|
|
|
|
10,057
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Deferred revenue (from sales to related parties)
|
|
|
|
|
53,096
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|
|
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53,096
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Accounts payable and other liabilities (including $4,697 in 2013 and
$4,282 in 2012 from related parties)
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50,160
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|
|
|
|
41,019
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|
|
|
|
|
|
|
706,101
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|
|
|
|
912,215
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Shareholders’ equity:
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Preferred Stock, authorized 10,000,000 shares, Series C: $.01 par
value, authorized, issued and outstanding 30,000 shares in 2013 and
2012, respectively, (liquidation preference $100 per share). Series
D: $0.01 par value, authorized, issued and outstanding 100,000
shares in 2013 and 2012, respectively
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|
|
|
1
|
|
|
|
|
1
|
|
|
Common Stock, $.01 par value, authorized 10,000,000 shares; issued
8,413,669 in 2013 and 2012, respectively, and outstanding 8,413,469
in 2013 and 2012, respectively
|
|
|
|
|
84
|
|
|
|
|
84
|
|
|
Treasury stock at cost; 200 shares in 2013 and 2012
|
|
|
|
|
(2
|
)
|
|
|
|
(2
|
)
|
|
Paid-in capital
|
|
|
|
|
271,720
|
|
|
|
|
272,774
|
|
|
Retained earnings
|
|
|
|
|
(98,029
|
)
|
|
|
|
(156,559
|
)
|
|
Total Transcontinental Realty Investors, Inc. shareholders' equity
|
|
|
|
|
173,774
|
|
|
|
|
116,298
|
|
|
Non-controlling interest
|
|
|
|
|
17,796
|
|
|
|
|
16,831
|
|
|
Total equity
|
|
|
|
|
191,570
|
|
|
|
|
133,129
|
|
|
Total liabilities and equity
|
|
|
|
$
|
897,671
|
|
|
|
$
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1,045,344
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