Transcontinental Realty Investors, Inc. Reports Third Quarter 2015 Results

Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, reported results of operations for the third quarter ended September 30, 2015. TCI announced today that the Company reported net loss applicable to common shares of approximately ($6.8) million, including $0.9 million in gains on the sale of land and $0.7 million in gains on sale of income producing properties, or ($0.79) per diluted earnings per share, for the three months ended September 30, 2015, as compared to a net loss applicable to common shares of ($2.6) million or ($0.29) per diluted earnings per share for the same period ended 2014.

For the nine months ending September 30, 2015, a net loss applicable to common shares of ($7.0) million or ($0.81) per diluted earnings per share was reported, as compared to a net income applicable to common shares of $3.8 million or $0.45 per diluted earnings per share for the same period ended 2014.

"During the three months ended September 30, 2015, we acquired two income-producing properties. The Company remains highly focused on expanding our multifamily portfolio and enhancing the underlying value of our commercial assets. At the same time, we continue to seek out unique opportunities to secure strategic sales and/or the development of various parcels of land. We also strive aggressively in obtaining improvements associated with operating performance in terms of revenue growth and expense control. We remain significantly focused by paying close attention to all details of our business throughout our organization," said Daniel J. Moos, the Company’s President and CEO. "Most assuredly, we will continue to be very aware as to the overall economic climate and remain vigilant in our ability to rapidly adjust our business strategies accordingly."

Rental and other property revenues were $27.5 million for the three months ended September 30, 2015. This represents an increase of $9.0 million, as compared to the prior period revenues of $18.5 million. This change, by segment, is an increase in the apartment portfolio of $5.5 million, and an increase in the commercial portfolio of $3.5 million. Within the apartment portfolio there was an increase of $4.8 million in the acquired property portfolio and an increase of $0.7 million in the same property portfolio. Our apartment portfolio continues to thrive in the current economic conditions with occupancies averaging approximately 95%. We have been able to surpass expectations due to the high-quality product offered, the strength of our management team and our commitment to our tenants. Within the commercial portfolio there was an increase of $1.8 million in the acquired property portfolio and increase of $1.7 million in the same store properties. We are continuing to market our properties aggressively to attract new tenants and strive for continuous improvement of our properties to maintain our existing tenants.

Property operating expenses were $14.2 million for the three months ended September 30, 2015. This represents an increase of $4.1 million, as compared to the prior period operating expenses of $10.1 million. This change, by segment, is an increase in the apartment portfolio of $2.5 million, and an increase in the commercial portfolio of $1.6 million. Within the apartment portfolio there was an increase of $2.0 million in the acquired properties portfolio and an increase of $0.5 million in the same property portfolio. Within the commercial portfolio there was an increase of $1.5 million in the acquired properties portfolio and an increase of $0.1 million in the same store properties.

Depreciation and amortization expenses were $6.5 million for the three months ended September 30, 2015. This represents an increase of $2.1 million as compared to prior period depreciation of $4.4 million. The majority of this change is in the apartment portfolio related to an increase in the acquired properties portfolio.

Mortgage and loan interest expense, including deferred borrowing costs amortization, was $12.0 million for the three months ended September 30, 2015. This represents an increase of $4.0 million, as compared to the prior period expense of $8.0 million. This change by segment is an increase in the other portfolio of $2.4 million, and an increase in the apartment portfolio of $0.95 million. Within the other portfolio, the majority of this increase is due to the securing of a new loan in the current period, which was utilized to drive the acquisition and development activities of the Company. The increase in the apartment portfolio is the result of the addition of income producing properties offset by mortgage refinances to lower interest rates.

Interest income was $2.5 million for the three months ended September 30, 2015. This represents a decrease of $0.6 million, as compared to the prior year income of $3.1 million and is due to lower note receivable balances over the period.

Gain on land sales increased for the three months ended September 30, 2015, as compared to the prior period. In the current period we sold 155.16 acres of land in two transactions for a sales price of $2.9 million and recorded a gain of $1.0 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 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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