Attached files
| file | filename |
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| 8-K - FORM 8-K - TRANSCONTINENTAL REALTY INVESTORS INC | d84215e8vk.htm |
NEWS RELEASE |
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FOR IMMEDIATE RELEASE
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Contact: | |
| Transcontinental Realty Investors, Inc. | ||
| Investors Relations | ||
| (800) 400-6407 | ||
| investor.relations@pillarincome.com |
Transcontinental Realty Investors, Inc. Reports Second Quarter 2011 Results
DALLAS (August 15, 2011) — Transcontinental Realty Investors, Inc. (NYSE: TCl), a
Dallas-based real estate investment company, today reported results of operations for the second
quarter ended June 30, 2011. TCI announced today that the Company reported, for the three months
ended June 30, 2011, a net loss applicable to common shares of $41.1 million or $4.88 per
diluted earnings per share, as compared to a net loss applicable to common shares of $20.7
million or $2.54 per diluted earnings per share for the same period ended 2010.
Rental and other property revenues were $31.8 million for the three months ended June 30, 2011.
This represents an increase of $1.2 million, as compared to the prior period revenues of $30.6
million. The change, by segment, is an increase in the commercial portfolio of $0.5 million and an
increase in the apartment portfolio of $0.7 million. Within the apartment portfolio, the developed
apartments had an increase of $0.3 million and the same properties had an increase of $0.4
million. Our apartment portfolio has continued to thrive with the addition of several newly
developed properties and continuous improvements within our existing portfolio, which has led to
the rental growth in the second quarter. The commercial portfolio received a lease buyout fee in
the second quarter of 2011, which led to the increase in comparison to the prior year.
Property operating expenses were $16.2 million for the three months ended June 30, 2011. This
represents a decrease of $1.9 million, as compared to the prior period operating expenses of $18.1
million. This change, by segment, is a decrease in the commercial portfolio of $0.5 million, a
decrease in the apartment portfolio of $0.6 million, and a decrease in the land and other
portfolios of $0.7 million. Property management, in both the residential and commercial
portfolios, has been diligent in reducing overall costs and unnecessary repair and maintenance
expenses without compromising the quality of services provided. We have reduced the number of land
development projects that are in progress, thereby reducing expenses from the year prior.
Mortgage and loan interest was $14.6 million for the three months ended June 30, 2011. This
represents a decrease of $1.1 million, as compared to the prior period interest expense of $15.7
million. This change, by segment, is a decrease in the commercial portfolio of $0.9 million, a
decrease in the apartment portfolio of $0.3 million, a decrease in the land portfolio of $0.5
million, offset by an increase in the other portfolio of $0.6 million. The decrease in the
apartment portfolio is primarily due to loans refinanced in 2010 at a lower interest rate, offset
by the addition of several newly developed residential properties. The commercial portfolio has
also had various loans restructured with reduced interest rates. The land portfolio had several
land parcels sold during the past year and have satisfied their debt obligations, thereby reducing
the interest expense.
Provision for impairment was $25.4 million for the three months ended June 30, 2011. Impairment
was recorded as an additional loss of $4.4 million in the commercial properties we currently hold
and $21.0 million in land parcels that we currently hold. The majority of the impairment losses
were taken on the properties that are treated as “subject to sales contract” where, subsequent to
sale to a related party under common control, negotiations have occurred for property ownership
transfers to the lender and estimated current property values are lower than our current basis.
Gain on land sales increased for the three months ended June 30, 2011 as compared to the prior
period. In the current period we sold 566.81 acres of land in 15 separate transactions for an
aggregate sales price of $40.1 million and recorded a loss of $1.7 million. We also recognized
a deferred gain of $3.0 million in the current period from a sale in prior years. In the prior
period, we sold 23.56 acres of land in two separate transactions for an aggregate sales price of
$17.6 million and recorded a loss of $5.6 million.
Included in discontinued operations are a total of four and 17 income-producing properties for
2011 and 2010, respectively. Properties sold in 2011 have been reclassified to discontinued
operations for current and prior year reporting periods. As a result of these sales, we
recognized losses on the sale of real estate from discontinued operations of $6.9 million and
$139,000 for the three months ending June 30, 2011 and 2010, respectively.
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.
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (dollars in thousands, except share and per share amounts) | ||||||||||||||||
Revenues: |
||||||||||||||||
Rental and other property revenues (including $358 and $908 for the three months and $730
and $1,766 for the six months ended 2011 and 2010 respectively from affiliates and related parties) |
$ | 31,785 | $ | 30,589 | $ | 61,439 | $ | 61,287 | ||||||||
Expenses: |
||||||||||||||||
Property operating expenses (including $403 and $429 for the three months and $675 and $884
for the six months ended 2011 and 2010 respectively from affiliates and related parties) |
16,200 | 18,129 | 32,675 | 35,338 | ||||||||||||
Depreciation and amortization |
5,970 | 6,353 | 12,032 | 12,214 | ||||||||||||
General and administrative (including $906 and $786 for the three months and $1,748 and $1,677
for the six months ended 2011 and 2010 respectively from affiliates and related parties) |
2,588 | 1,793 | 4,730 | 3,619 | ||||||||||||
Provision on impairment of notes receivable and real estate assets |
25,444 | — | 31,503 | — | ||||||||||||
Advisory fee to affiliate |
2,626 | 2,962 | 5,246 | 6,058 | ||||||||||||
Total operating expenses |
52,828 | 29,237 | 86,186 | 57,229 | ||||||||||||
Operating income (loss) |
(21,043 | ) | 1,352 | (24,747 | ) | 4,058 | ||||||||||
Other income (expense): |
||||||||||||||||
Interest income (including $700 and $567 for the three months and $1,051 and $1,220 for the
six months ended 2011 and 2010 respectively from affiliates and related parties) |
704 | 832 | 1,130 | 1,691 | ||||||||||||
Other income |
100 | 249 | 1,314 | 914 | ||||||||||||
Mortgage and loan interest (including $1,269 and $883 for the three months and $1,567 and $1,721 for the six months ended 2011 and 2010 respectively from affiliates and related
parties) |
(14,611 | ) | (15,663 | ) | (28,035 | ) | (30,377 | ) | ||||||||
Earnings from unconsolidated subsidiaries and investees |
117 | (50 | ) | 57 | (112 | ) | ||||||||||
Total other expenses |
(13,690 | ) | (14,632 | ) | (25,534 | ) | (27,884 | ) | ||||||||
Loss before gain on land sales, non-controlling interest, and tax |
(34,733 | ) | (13,280 | ) | (50,281 | ) | (23,826 | ) | ||||||||
Gain (loss) on land sales |
1,285 | (5,640 | ) | 2,081 | (5,634 | ) | ||||||||||
Loss from continuing operations before tax |
(33,448 | ) | (18,920 | ) | (48,200 | ) | (29,460 | ) | ||||||||
Income tax benefit |
2,584 | 554 | 1,637 | 431 | ||||||||||||
Net loss from continuing operations |
(30,864 | ) | (18,366 | ) | (46,563 | ) | (29,029 | ) | ||||||||
Discontinued operations: |
||||||||||||||||
Loss from discontinued operations |
(469 | ) | (1,444 | ) | (1,440 | ) | (956 | ) | ||||||||
Loss on sale of real estate from discontinued operations |
(6,914 | ) | (139 | ) | (3,238 | ) | (139 | ) | ||||||||
Income tax expense from discontinued operations |
(2,584 | ) | (554 | ) | (1,637 | ) | (383 | ) | ||||||||
Net loss from discontinued operations |
(9,967 | ) | (2,137 | ) | (6,315 | ) | (1,478 | ) | ||||||||
Net loss |
(40,831 | ) | (20,503 | ) | (52,878 | ) | (30,507 | ) | ||||||||
Net (income) loss attributable to non-controlling interest |
46 | 113 | 130 | (160 | ) | |||||||||||
Net loss attributable to Transcontinental Realty Investors, Inc. |
(40,785 | ) | (20,390 | ) | (52,748 | ) | (30,667 | ) | ||||||||
Preferred dividend requirement |
(277 | ) | (264 | ) | (551 | ) | (527 | ) | ||||||||
Net loss applicable to common shares |
$ | (41,062 | ) | $ | (20,654 | ) | $ | (53,299 | ) | $ | (31,194 | ) | ||||
Earnings per share — basic |
||||||||||||||||
Loss from continuing operations |
$ | (3.70 | ) | $ | (2.28 | ) | $ | (5.64 | ) | $ | (3.66 | ) | ||||
Loss from discontinued operations |
(1.18 | ) | (0.26 | ) | (0.76 | ) | (0.18 | ) | ||||||||
Net loss applicable to common shares |
$ | (4.88 | ) | $ | (2.54 | ) | $ | (6.40 | ) | $ | (3.84 | ) | ||||
Earnings per share — diluted |
||||||||||||||||
Loss from continuing operations |
$ | (3.70 | ) | $ | (2.28 | ) | $ | (5.64 | ) | $ | (3.66 | ) | ||||
Loss from discontinued operations |
(1,18 | ) | (0.26 | ) | (0.76 | ) | (0.18 | ) | ||||||||
Net loss applicable to common shares |
$ | (4.88 | ) | $ | (2.54 | ) | $ | (6.40 | ) | $ | (3.84 | ) | ||||
Weighted average common share used in computing earnings per share |
8,413,469 | 8,113,669 | 8,327,281 | 8,113,669 | ||||||||||||
Weighted average common share used in computing diluted earnings per share |
8,413,469 | 8,113,669 | 8,327,281 | 8,113,669 | ||||||||||||
Amounts attributable to Transcontinental Realty Investors, Inc. |
||||||||||||||||
Loss from continuing operations |
$ | (30,818 | ) | $ | (18,253 | ) | $ | (46,433 | ) | $ | (29,189 | ) | ||||
Loss from discontinued operations |
(9,967 | ) | (2,137 | ) | (6,315 | ) | (1,478 | ) | ||||||||
Net loss |
$ | (40,785 | ) | $ | (20,390 | ) | $ | (52,748 | ) | $ | (30,667 | ) | ||||
The accompanying notes are an integral part of these consolidated financial statements.
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
CONSOLIDATED BALANCE SHEETS
(unaudited)
| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (dollars in thousands, except share and | ||||||||
| par value amounts) | ||||||||
Assets |
||||||||
Real estate, at cost |
$ | 1,048,466 | $ | 1,074,635 | ||||
Real estate subject to sales contracts at cost, net of depreciation ($54,940 for 2011 and $58,579 for 2010) |
131,270 | 232,495 | ||||||
Less accumulated depreciation |
(107,516 | ) | (94,016 | ) | ||||
Total real estate |
1,072,220 | 1,213,114 | ||||||
Notes and interest receivable |
||||||||
Performing (including $58,246 in 2011 and $66,011 in 2010 from affiliates and related
parties) |
60,614 | 71,766 | ||||||
Less allowance for estimated losses (including $2,097 in 2011 and $3,061 in 2010 from
affiliates and related parties) |
(3,777 | ) | (4,741 | ) | ||||
Total notes and interest receivable |
56,837 | 67,025 | ||||||
Cash and cash equivalents |
7,067 | 11,259 | ||||||
Investments in unconsolidated subsidiaries and investees |
7,441 | 8,146 | ||||||
Other assets |
70,510 | 85,217 | ||||||
Total assets |
$ | 1,214,075 | $ | 1,384,761 | ||||
Liabilities and Shareholders’ Equity |
||||||||
Liabilities: |
||||||||
Notes and interest payable |
$ | 800,362 | $ | 831,322 | ||||
Notes related to subject to sales contracts |
125,083 | 190,693 | ||||||
Affiliate payables |
33,885 | 47,261 | ||||||
Deferred gain (from sales to related parties) |
80,709 | 82,841 | ||||||
Accounts payable and other liabilities (including $1,680 in 2011 and $1,466 in 2010 from
affiliates and related parties) |
40,514 | 49,196 | ||||||
| 1,080,553 | 1,201,313 | |||||||
Shareholders’ equity: |
||||||||
Preferred stock, Series C: $.01 par value, authorized 10,000,000 shares, issued and
outstanding 30,000 shares in 2011 and 2010 respectively (liquidation preference $100 per share).
Series D: $.01 par value, authorized, issued and outstanding 100,000 shares in 2011 and 2010
respectively |
1 | 1 | ||||||
Common stock, $.01 par value, authorized 10,000,000 shares; issued 8,413,669 and 8,113,669 for
2011 and 2010 and outstanding 8,413,469 and 8,113,469 for 2011 and 2010 |
84 | 81 | ||||||
Treasury stock at cost; 200 shares in 2011 and 2010 |
(2 | ) | (2 | ) | ||||
Paid-in capital |
274,405 | 271,682 | ||||||
Retained earnings |
(154,662 | ) | (101,914 | ) | ||||
Total Transcontinental Realty Investors, Inc. shareholders’ equity |
119,826 | 169,848 | ||||||
Non-controlling interest |
13,696 | 13,600 | ||||||
Total equity |
133,522 | 183,448 | ||||||
Total liabilities and equity |
$ | 1,214,075 | $ | 1,384,761 | ||||
The accompanying notes are an integral part of these consolidated financial statements.