Attached files
| file | filename |
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| 8-K - FORM 8-K - TRANSCONTINENTAL REALTY INVESTORS INC | d81193e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
||
FOR IMMEDIATE RELEASE |
Contact: | |
| Transcontinental Realty Investors, Inc. | ||
| Investor Relations | ||
| (800) 400-6407 | ||
| investor.relations@primeasset.com |
Transcontinental Realty Investors, Inc. Reports Fourth Quarter and Full Year 2010 Results
Dallas (April 1, 2011) — 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, 2010. The Company reported net loss applicable to common shares of $68.3 million or
$8.42 per diluted earnings per share, as compared to a net loss applicable to common shares of
$80.7 million or $9.94 per diluted earnings per share for the same period ended 2009.
Net loss applicable to common shares for the three months ended December 31, 2010 was $27.9 million
or $3.43 per share, as compared to a net loss applicable to common shares of $26.0 million or $3.20
per share. The Company took impairment on notes receivable and real estate of $24.5 million in the
fourth quarter of 2010, compared to $14.0 million for the same period ended 2009.
Rental and other property revenues were $129.9 million for the twelve months ended December 31,
2010. This represents a decrease of $1.0 million, as compared to the prior year revenues of $130.9
million. This change, by segment, is an increase in the apartment portfolio of $3.3 million, an
increase in the other portfolio of $1.5 million, offset by a decrease in the commercial portfolio
of $5.7 million and a decrease in the land portfolio of $0.1 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. 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 $74.0 million for the twelve months ended December 31, 2010. This
represents an increase of $0.4 million as compared to the prior year operating expenses of $73.6
million. This change, by segment, is an increase in the land portfolio of $1.3 million offset by a
decrease in the apartment portfolio of $0.9 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 the 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 $26.8 million for the twelve months ended December 31,
2010. This represents an increase of $1.7 million, as compared to the prior year expense of $25.1
million. The majority of this increase is due to the newly developed apartment communities.
General and administrative expenses were $8.5 million for the twelve months ended December 31,
2010. This represents a decrease of $2.6 million as compared to the prior year expenses of $11.1
million. This change is due to a reduction in administrative expenses and cost reimbursements to
our Advisor, in addition to reductions in professional services.
The current year provision on impairment of notes receivable, investment in real estate
partnerships, and real estate assets was $24.5 million. This was a decrease of $18.0 million as
compared to the prior year expense of $42.5 million. In the current year, impairment was recorded
as an additional loss in the
investment portfolio of $1.9 in commercial properties we currently hold, $18.3 million in land we
sold subsequent to year end and $4.3 million in impairment on notes receivable. 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 $8.4 million for the twelve months ended December 31, 2010. This represents an
increase of $4.8 million as compared to the prior year income of $3.6 million. The increase was due
to revenue received from a consulting agreement and an incentive fee from the management company.
Mortgage and loan interest expense was $62.7 million for the twelve months ended December 31, 2010.
This represents an increase of $1.6 million, as compared to the prior year expense of $61.1
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, a decrease in the land portfolio of $4.3
million and an increase in the other portfolio of $2.1 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 1,227.53 acres of land in 13
separate transactions for an aggregate sales price of $23.1 million, receiving $8,984 in cash and
recorded a loss of $15.1 million. The average sales price was $18,823 per acre.
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, 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.transconrealty-invest.com
TRANSCONTINENTAL 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 per share | ||||||||||||
| amounts) | ||||||||||||
Revenues: |
||||||||||||
Rental and other property revenues (including $2,248 and $3,115
and $2,754 for the year ended 2010 and
2009 and 2008 respectively from affiliates and related parties) |
$ | 129,862 | $ | 130,855 | $ | 117,623 | ||||||
Expenses: |
||||||||||||
Property operating expenses (including $1,684 and $2,033 and
$1,855 for year ended 2010 and 2009 and
2008 respectively from affiliates and related parties) |
73,974 | 73,602 | 73,298 | |||||||||
Depreciation and amortization |
26,769 | 25,085 | 18,921 | |||||||||
General and administrative (including $3,065 and $4,315 and
$5,355 for the year ended 2010 and 2009
and 2008 respectively from affiliates and related parties) |
8,481 | 11,063 | 10,349 | |||||||||
Provision on impairment of notes receivable and real estate assets |
24,502 | 42,513 | 7,417 | |||||||||
Advisory fee to affiliate |
11,919 | 11,903 | 12,064 | |||||||||
Total operating expenses |
145,645 | 164,166 | 122,049 | |||||||||
Operating loss |
(15,783 | ) | (33,311 | ) | (4,426 | ) | ||||||
Other income (expense): |
||||||||||||
Interest income (including $4,406 and $4,142 and $1,152 for the
year ended 2010 and 2009 and 2008
respectively from affiliates and related parties) |
5,187 | 5,407 | 3,227 | |||||||||
Other income |
8,406 | 3,631 | 3,904 | |||||||||
Mortgage and loan interest (including $3,345 and $2,566 and
$2,729 for the year ended 2010 and 2009
and 2008 respectively from affiliates and related parties) |
(62,737 | ) | (61,054 | ) | (63,412 | ) | ||||||
Earnings from unconsolidated subsidiaries and investees |
(958 | ) | (451 | ) | (1,096 | ) | ||||||
Litigation Settlement |
— | 356 | — | |||||||||
Total other expenses |
(50,102 | ) | (52,111 | ) | (57,377 | ) | ||||||
Loss before gain on land sales, non-controlling interest, and tax |
(65,885 | ) | (85,422 | ) | (61,803 | ) | ||||||
Gain (loss) on land sales |
(15,155 | ) | 6,296 | 4,798 | ||||||||
Loss from continuing operations before tax |
(81,040 | ) | (79,126 | ) | (57,005 | ) | ||||||
Income tax benefit |
4,911 | 156 | 33,441 | |||||||||
Net loss from continuing operations |
(76,129 | ) | (78,970 | ) | (23,564 | ) | ||||||
Discontinued operations: |
||||||||||||
Income (loss) from discontinued operations |
3,113 | (3,971 | ) | (15,676 | ) | |||||||
Gain on sale of real estate from discontinued operations |
10,781 | 3,524 | 104,411 | |||||||||
Income tax expense from discontinued operations |
(4,863 | ) | (156 | ) | (33,616 | ) | ||||||
Net income (loss) from discontinued operations |
9,031 | (603 | ) | 55,119 | ||||||||
Net income (loss) |
(67,098 | ) | (79,573 | ) | 31,555 | |||||||
Net (income) loss attributable to non-controlling interest |
(98 | ) | (125 | ) | 654 | |||||||
Net income (loss) attributable to Transcontinental Realty
Investors, Inc. |
(67,196 | ) | (79,698 | ) | 32,209 | |||||||
Preferred dividend requirement |
(1,073 | ) | (1,023 | ) | (975 | ) | ||||||
Net income (loss) applicable to common shares |
$ | (68,269 | ) | $ | (80,721 | ) | $ | 31,234 | ||||
Earnings per share — basic |
||||||||||||
Loss from continuing operations |
$ | (9.53 | ) | $ | (9.87 | ) | $ | (2.95 | ) | |||
Income (loss) from discontinued operations |
1.11 | (0.07 | ) | 6.82 | ||||||||
Net income (loss) applicable to common shares |
$ | (8.42 | ) | $ | (9.94 | ) | $ | 3.87 | ||||
Earnings per share — diluted |
||||||||||||
Loss from continuing operations |
$ | (9.53 | ) | $ | (9.87 | ) | $ | (2.95 | ) | |||
Income (loss) from discontinued operations |
1.11 | (0.07 | ) | 6.82 | ||||||||
Net income (loss) applicable to common shares |
$ | (8.42 | ) | $ | (9.94 | ) | $ | 3.87 | ||||
Weighted average common share used in computing earnings per share |
8,113,575 | 8,113,669 | 8,086,640 | |||||||||
Weighted average common share used in computing diluted earnings
per share |
8,113,575 | 8,113,669 | 8,086,640 | |||||||||
Amounts attributable to Transcontinental Realty Investors, Inc. |
||||||||||||
Loss from continuing operations |
$ | (76,129 | ) | $ | (78,970 | ) | $ | (23,564 | ) | |||
Income (loss) from discontinued operations |
9,031 | (603 | ) | 55,119 | ||||||||
Net income (loss) |
$ | (67,098 | ) | $ | (79,573 | ) | $ | 31,555 | ||||
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (dollars in thousands, except share and | ||||||||
| par value amounts) | ||||||||
Assets |
||||||||
Real estate, at cost |
$ | 1,074,635 | $ | 1,520,043 | ||||
Real estate
held for sale at cost, net of depreciation ($0 and $1,252 for 2010 and 2009) |
— | 5,147 | ||||||
Real estate
subject to sales contracts at cost, net of depreciation ($58,579 for
2010 and $13,985 for
2009) |
232,495 | 59,048 | ||||||
Less accumulated depreciation |
(94,016 | ) | (137,054 | ) | ||||
Total real estate |
1,213,114 | 1,447,184 | ||||||
Notes and interest receivable |
||||||||
Performing (including $66,011 in 2010 and $40,587 in 2009 from affiliates and related parties) |
71,766 | 48,051 | ||||||
Less allowance for estimated losses |
(4,741 | ) | (2,804 | ) | ||||
Total notes and interest receivable |
67,025 | 45,247 | ||||||
Cash and cash equivalents |
11,259 | 5,665 | ||||||
Investments
in unconsolidated subsidiaries and investees |
8,146 | 9,358 | ||||||
Other assets |
85,217 | 100,833 | ||||||
Total assets |
$ | 1,384,761 | $ | 1,608,287 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Liabilities: |
||||||||
Notes and interest payable |
$ | 831,322 | $ | 1,121,737 | ||||
Notes related to assets held for sale |
— | 5,002 | ||||||
Notes related to subject to sales contracts |
190,693 | 61,886 | ||||||
Affiliate payables |
47,261 | 50,163 | ||||||
Deferred revenue (from sales to related parties) |
89,132 | 60,678 | ||||||
Accounts
payable and other liabilities (including $1,486 in 2010 and $163 in 2009 from affiliates
and related parties) |
49,196 | 63,405 | ||||||
| 1,207,604 | 1,362,871 | |||||||
Shareholders’ equity: |
||||||||
Preferred Stock Series C: $.01 par value, authorized 10,000,000 shares, issued and outstanding
30,000 shares in 2010 and 2009 respectively (liquidation preference
$100 per share). Series D: $.01
par value, authorized, issued and outstanding 100,000 shares in 2010 and 2009 respectively |
1 | 1 | ||||||
Common Stock, $.01 par value, authorized 10,000,000 shares; issued 8,113,669 and outstanding
8,113,469 and 8,113,669 for 2010 and 2009 |
81 | 81 | ||||||
Treasury stock at cost; 200 and 0 shares in 2010 and 2009 |
(2 | ) | — | |||||
Paid-in capital |
261,072 | 262,118 | ||||||
Retained earnings |
(101,914 | ) | (34,718 | ) | ||||
Accumulated other comprehensive income |
— | — | ||||||
Total Transcontinental Realty Investors, Inc. shareholders’ equity |
159,238 | 227,482 | ||||||
Non-controlling interest |
17,919 | 17,934 | ||||||
Total equity |
177,157 | 245,416 | ||||||
Total liabilities and equity |
$ | 1,384,761 | $ | 1,608,287 | ||||
Contacts
Transcontinental Realty Investors, Inc.
Investor Relations, 800-400-6407
investor.relations@primeasset.com
Investor Relations, 800-400-6407
investor.relations@primeasset.com