Attached files
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| 8-K - FORM 8-K - AMERICAN REALTY INVESTORS INC | d81190e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
||
FOR IMMEDIATE RELEASE
|
Contact: | |
| American Realty Investors, Inc. | ||
| Investor Relations | ||
| (800) 400-6407 | ||
| investor.relations@primeasset.com |
American Realty Investors, Inc. Reports Fourth Quarter and Full Year 2010 Results
Dallas (April 1, 2011) — American Realty Investors, Inc. (NYSE:ARL), a Dallas-based
real estate investment company, today reported results of operations for the fourth
quarter ended December 31, 2010. The Company reported net loss
applicable to common shares of $97.2 million or $8.48 per share, as compared to a net loss applicable to
common shares of $72.6 million or $6.31 per share for the same period ended 2009.
Net loss for the three months ended December 31, 2010 was $60.7 million or $5.35
per share, as compared to a net loss applicable to common shares of $26.3 million or
$2.28 per share. The Company took impairment on notes receivable and real estate of
$61.3 million in the fourth quarter of 2010, compared to $14.0 million for the same
period ended 2009.
Rental and other property revenues were $157.0 million for the twelve months ended
December 31, 2010. This represents a decrease of $4.8 million, as compared to the prior
period revenues of $161.9 million. This change, by segment, is a decrease in the
commercial portfolio of $7.2 million, a decrease in the hotel portfolio of $2.6 million
and a decrease in the land portfolio of $1.0 million, offset by an increase in the
apartment portfolio of $3.3 million and an increase in the other portfolio of $2.7
million. The commercial and hotel portfolios saw an increase in vacancy, which we
attribute to the current state of the economy with some commercial tenants struggling
to stay afloat and make their rental payments in the commercial properties along with
decreased stays from travelers in the hotel portfolio. We have been successful in our
efforts to develop new apartment communities along with operating and leasing our
existing apartments. We continue to market our properties aggressively to attract new
tenants and strive for continuous improvement of our properties in order to maintain
our existing tenants.
Property operating expenses were $96.3 million for the twelve months ended
December 31, 2010. This represents an increase of $1.3 million, as compared to the
prior period operating expenses of $95.0 million. This change, by segment, is an
increase in our land portfolio of $3.6 million, offset by a decrease in our apartment
portfolio of $0.8 million, a decrease in our commercial properties of $0.1 million and
a decrease in our hotels of $1.4 million. We have been working hard to decrease our
overall operating expenses while maintaining the same level of product and services and
have been successful in doing so. The increase within the land portfolio was primarily
due to an adjustment in 2009 to correct over accrual of 2008 real estate property
taxes, resulting in recording lower operating expenses in prior period. In the current
period, we incurred additional real estate tax penalties and interest that we did not
incur in the prior period.
Depreciation and amortization expense was $28.9 million for the twelve months
ended December 31, 2010. This represents an increase of $2.4 million, as compared to the
prior period depreciation expense of $26.5 million. The majority of this increase is
due to the newly developed apartment communities.
Provision for allowance on notes receivable and impairment was $61.3 million for
the twelve months ended December 31, 2010. The provision on impairment of notes
receivable, investment in real estate partnerships, and real estate assets increased by
$16.7 million, as compared $44.6 million in the prior year period. Impairment was
recorded as an additional loss in the real estate portfolio of $1.9 million in
commercial properties we currently hold, $7.8 million for hotels that we currently
hold, $47.6 million in land we currently hold and $4.0 million allowance for doubtful
receivables. Management, at the time of the sale or during the reorganization process
in the fourth quarter, reviewed the properties that were considered “subject to sales
contract” and impairment was taken to the extent the basis of the property exceeded the
current value.
Other income was $9.5 million for the twelve months ended December 31, 2010. This represents
an increase of $5.3 million, as compared to the prior period other income of $4.2 million. The
increase was due to revenue received from a consulting agreement and an incentive fee from the
management company.
Interest income was $8.4 million for the twelve months ended December 31, 2010. This
represents a decrease of $1.3 million as compared to the prior period interest income of $9.7
million. The decrease is due to fewer payments received on our notes receivables from Unified
Housing Foundation, an affiliated entity. The receivables are surplus cash flow notes. The entity
is required to pay on the notes when they generate surplus cash flow, thus interest income is
recorded when received. Less surplus cash flow was generated in the current year, as compared to
the prior year.
Mortgage and loan interest expense was $79.1 million for the twelve months ended December 31,
2010. This represents an increase of $0.6 million as compared to the prior period interest expense
of $78.5 million. This change, by segment, is an increase in the apartment portfolio of $3.5
million, an increase in the commercial portfolio of $0.3 million, an increase in the other
portfolio of $1.4 million, offset by a decrease in the land portfolio of $4.6 million. Within the
apartment portfolio, the same apartment portfolio increased $1.7 million and the developed
properties increased $1.8 million due to properties in the lease-up phase. Once an apartment is
completed, the interest expense is no longer capitalized. The land portfolio decrease was due to
land sales.
Gain
on land sales decreased in the current year. This decrease is in part due to the overall
economic environment, which, among other issues, has resulted in the tightening of the credit
markets, causing an inability of potential buyers to obtain financing. Thus, we have found it
difficult to complete land transactions. In the current year, we sold 1,243.88 acres of land in 17
separate transactions for an aggregate sales price of $31.0 million, receiving $8,984 in cash and
recorded a loss of $10.1 million. The average sales price was $20,701 per acre.
Discontinued operations relates to properties that were either sold or held for sale as of the
year ended December 31, 2010. Included in discontinued operations are a total of 15 and 10
properties as of 2010 and 2009, respectively. Properties sold in 2010 that were held in 2009 have
been reclassified to discontinued operations for 2009. In 2010, we sold 13 apartment complexes,
one commercial building and transferred our limited partnership interest in a consolidated entity
that owned an apartment complex.
About American Realty Investors, Inc.
American 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,
hotels, 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.amrealtytrust.com.
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended December 31, | ||||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (dollars in thousands, except share and par value | ||||||||||||
| amounts) | ||||||||||||
Revenues: |
||||||||||||
Rental and
other property revenues (including $2,595 and $2,582 and $3,691 for
2010 and 2009 and 2008 respectively from affiliates and related parties) |
$ | 157,030 | $ | 161,863 | $ | 150,645 | ||||||
Expenses: |
||||||||||||
Property
operating expenses (including $2,480 and $2,942 and $3,101 for
2010 and 2009 and 2008 respectively from affiliates and related parties) |
96,317 | 95.002 | 102,068 | |||||||||
Depreciation
and amortization |
28,907 | 26,473 | 21,537 | |||||||||
General and
administrative (including $4,517 and $5,867 and $8,344 for 2010
and 2009 and 2008 respectively from affiliates and related parties) |
12,640 | 14,690 | 16,854 | |||||||||
Provision on impairment of notes receivable and real estate assets |
61,311 | 44,578 | 7,417 | |||||||||
Advisory fee to affiliate |
15,770 | 15,683 | 15,940 | |||||||||
Total operating expenses |
214,945 | 196,426 | 163,816 | |||||||||
Operating loss |
(57,915 | ) | (34,563 | ) | (13,171 | ) | ||||||
Other income (expense): |
||||||||||||
Interest income (including $4,664 and $5,648 and $8,061 for 2010 and 2009 and
2008 respectively from affiliates and related parties) |
8,425 | 9,701 | 10,876 | |||||||||
Other income |
9,460 | 4,169 | 5,200 | |||||||||
Mortgage and
loan interest (including $3,374 and $2,595 and $2,729 for 2010
and 2009 and 2008 respectively from affiliates and related parties) |
(79,066 | ) | (78,532 | ) | (81,001 | ) | ||||||
Earnings from unconsolidated subsidiaries and investees |
(200 | ) | 35 | (968 | ) | |||||||
Gain (loss) on foreign currency translation |
222 | 292 | (517 | ) | ||||||||
Involuntary conversion |
— | — | — | |||||||||
Litigation settlement |
— | (1,458 | ) | (870 | ) | |||||||
Total other expenses |
(61,159 | ) | (65,793 | ) | (67,280 | ) | ||||||
Loss before gain on land sales, non-controlling interest, and taxes |
(119,074 | ) | (100,356 | ) | (80,451 | ) | ||||||
Gain (loss) on land sales |
(10,103 | ) | 11,605 | 5,584 | ||||||||
Loss from continuing operations before tax |
(129,177 | ) | (88,751 | ) | (74,867 | ) | ||||||
Income tax benefit |
8,456 | 2,132 | 35,575 | |||||||||
Net loss
from continuing operations |
(120,721 | ) | (86,619 | ) | (39,292 | ) | ||||||
Discontinued
operations: |
||||||||||||
Income (loss) from discontinued operations |
3,042 | (4,014 | ) | (17,632 | ) | |||||||
Gain on sale of real estate from discontinued operations |
19,306 | 10,106 | 119,572 | |||||||||
Income tax expense from discontinued operations |
(7,822 | ) | (2,132 | ) | (35,679 | ) | ||||||
Net income from discontinued operations |
14,526 | 3,960 | 66,261 | |||||||||
Net income (loss) |
(106,195 | ) | (82,659 | ) | 26,969 | |||||||
Net income
(loss) attributable to non-controlling interests |
11,448 | 12,518 | (4,335 | ) | ||||||||
Net income
(loss) attributable to American Realty Investors, Inc. |
(94,747 | ) | (70,141 | ) | 22,634 | |||||||
Preferred dividend requirement |
(2,488 | ) | (2,488 | ) | (2,487 | ) | ||||||
Net income (loss) applicable to common shares |
$ | (97,235 | ) | $ | (72,629 | ) | $ | 20,147 | ||||
Earnings
per share - basic |
||||||||||||
Loss from continuing operations |
$ | (9.75 | ) | $ | (6.65 | ) | $ | (4.13 | ) | |||
Discontinued operations |
1.27 | 0.34 | 5.93 | |||||||||
Net income (loss) applicable to common shares |
$ | (8.48 | ) | $ | (6.31 | ) | $ | 1.80 | ||||
Earnings
per share - diluted |
||||||||||||
Loss from continuing operations |
$ | (9.75 | ) | $ | (6.65 | ) | $ | (4.13 | ) | |||
Discontinued operations |
1.27 | 0.34 | 5.93 | |||||||||
Net income (loss) applicable to common shares |
$ | (8.48 | ) | $ | (6.31 | ) | $ | 1.80 | ||||
Weighted average common share used in computing earnings per share |
11,463,084 | 11,514,038 | 11,165,805 | |||||||||
Weighted average common share used in computing diluted earnings per share |
11,463,084 | 11,514,038 | 11,165,805 | |||||||||
Amounts
attributable to American Realty Investors, Inc. |
||||||||||||
Loss from continuing operations |
$ | (120,721 | ) | $ | (86,619 | ) | $ | (39,292 | ) | |||
Income from discontinued operations |
14,526 | 3,960 | 66,261 | |||||||||
Net income (loss) |
$ | (106,195 | ) | $ | (82,659 | ) | $ | 26,969 | ||||
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
| December 31, | December 3l, | |||||||
| 2010 | 2009 | |||||||
| (dollars in thousands, except share and | ||||||||
| par value amounts) | ||||||||
Assets |
||||||||
Real estate, at cost |
$ | 1,170,214 | $ | 1,718,837 | ||||
Real estate
held for sale at cost, net of depreciation ($0 for 2010 and $1,252 for 2009) |
— | 5,147 | ||||||
Real estate subject to sales contracts at cost, net of depreciation ($75,639 for 2010 and $13,985 for 2009) |
295,921 | 53,341 | ||||||
Less accumulated depreciation |
(133,550 | ) | (195,804 | ) | ||||
Total real estate |
1,332,585 | 1,581,521 | ||||||
Notes and interest receivable |
||||||||
Performing(including
$89,982 in 2010 and $80,870 in 2009 from affiliates and related parties) |
99,839 | 91,872 | ||||||
Non- performing |
3,123 | 3,108 | ||||||
Less allowance for estimated losses |
(14,348 | ) | (11,836 | ) | ||||
Total notes and interest receivable |
88,614 | 83,144 | ||||||
Cash and cash equivalents |
12,649 | 4,887 | ||||||
Investments
in unconsolidated subsidiaries and investees |
12,491 | 13,149 | ||||||
Other assets
(including $164 in 2010 and $175 in 2009 from affiliates and related parties) |
110,936 | 123,353 | ||||||
Total assets |
$ | 1,557,275 | $ | 1,806,054 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Liabilities: |
||||||||
Notes and interest payable |
$ | 913,134 | $ | 1,327,188 | ||||
Notes related to assets held-for-sale |
— | 5,002 | ||||||
Notes related to assets subject to sales contracts |
315,547 | 61,886 | ||||||
Stock-secured notes payable |
23,100 | 24,853 | ||||||
Affiliate payables |
12,219 | 20,574 | ||||||
Deferred
revenue (including $100,212 in 2010 and $62,337 in 2009 from sales to related parties) |
104,534 | 70,083 | ||||||
Accounts payable and other liabilities (including $1,558 in 2010 and $199 in 2009 to affiliates and
related parties) |
88,506 | 85,119 | ||||||
| 1,457,040 | 1,594,705 | |||||||
Shareholders’ equity: |
||||||||
Preferred stock, $2.00 par value, authorized 15,000,000 shares, issued and outstanding Series A.
3,389,546 shares in 2010 and 3,390,913 in 2009 (liquidation
preference $33,895), including 900,000 shares
in 2010 and 2009 held by subsidiaries |
4,979 | 4,979 | ||||||
Common
stock, $.01 par value, authorized 100,000,000 shares, issued 11,874,138, and outstanding
11,466,853 and 11,514,038 shares in 2010 and in 2009 |
114 | 114 | ||||||
Treasury stock at cost, 407,285 and 360, 100 shares in 2010 and 2009 and 276,972 shares held by TCI
(consolidated) as of 2010 and 2009 |
(6,333 | ) | (5,954 | ) | ||||
Paid-in capital |
88,620 | 91,081 | ||||||
Retained earnings |
(47,776 | ) | 46,971 | |||||
Accumulated other comprehensive income (loss) |
(786 | ) | 2,186 | |||||
Total American Realty Investors, Inc. shareholders’ equity |
38,818 | 139,377 | ||||||
Non-controlling interest |
61,417 | 71,972 | ||||||
Total equity |
100,235 | 211,349 | ||||||
Total liabilities and equity |
$ | 1,557,275 | $ | 1,806,054 | ||||
Contact:
American Realty Investors, Inc.
Investor Relations, (800) 400-6407
investor.relations@primeasset.com
American Realty Investors, Inc.
Investor Relations, (800) 400-6407
investor.relations@primeasset.com