American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real
estate investment company, today reported results of operations for
the first quarter ended March 31, 2017. For the three months ended
March 31, 2017, we reported a net loss applicable to common shares
of $6.0 million or ($0.39) per diluted loss per share compared to a
net loss applicable to common shares of $3.7 million or ($0.24) per
diluted loss per share for the same period ended 2016. Included in
the net loss from operations is non-cash expenses of depreciation
and amortization of $6.3 million and $5.8 million for the three
months ended March 31, 2017 and 2016 respectively.
The growth in revenue and corresponding improvement in Net
Operating Income for the three months ended March 31, 2017
demonstrates the viability of our business strategy. Management
will continue its plan for growth from its operating properties and
expects to reinvest in areas that will complement this growth;
further management will maintain strong attention to all details of
its operations including appropriate expense controls.
Our ability to take advantage of lower-interest rate mortgages
available has reduced our monthly obligations and increased cash
flow within our multifamily portfolio.
Revenues
Rental and other property revenues were $31.8 million for the
three months ended March 31, 2017. This represents an increase of
$2.6 million compared to the prior period revenues of $29.2
million. This change, by segment, is an increase in the apartment
portfolio of $1.3 million, and an increase in the commercial
portfolio of $1.3 million. The increase in our apartment portfolio
was mainly due to the acquisition of new properties. Our apartment
portfolio continues to thrive in the current economic conditions
with occupancies averaging over 95%. 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. We are
continuing to market our properties aggressively to attract new
tenants and strive for continuous improvement of our properties in
order to maintain our existing tenants.
Expense
Property operating expenses were $16.3 million for the three
months ended March 31, 2017. This represents an increase of $1.1
million compared to the prior period operating expenses of $15.2
million. This change, by segment, is an increase in the apartment
portfolio of $1.4 million, which was consistent with the
acquisition of new properties. In addition, there was a decrease of
$0.2 million in property operating expenses for the commercial
portfolio.
Depreciation and amortization expense was $6.3 million for the
three months ended March 31, 2017. This represents an increase of
$0.5 million compared to the prior period expense of $5.8 million.
This change by segment is an increase of $0.5 million in the
apartment portfolio.
Advisory fees decreased less than $0.1 million for the three
months ended March 31, 2017 compared to the prior period. Advisory
fees are computed based on a gross asset fee of 0.0625% per month
(0.75% per annum) of the weighted average of the gross asset
value.
Other income (expense)
Mortgage and loan interest expense was $16.8 million for the
three months ended March 31, 2017. This represents an increase of
$2.6 million compared to the prior period expense of $14.2 million.
The change by segment is an increase in the other portfolio of $1.7
million and an increase in the apartment portfolio of $0.6 million.
Within the other portfolio, the increase was primarily due to $1.3
million of interest expense related to the Israeli bond sale, which
closed in the first quarter of 2017. In addition, we secured a new
mezzanine debt obligation in the third quarter of 2016. The
increase within the apartment portfolio is primarily due to loan
charges and prepayment penalties for the refinancing of two
mortgage loans at lower interest rates.
Gain on land sales decreased for the three months ended March
31, 2017 compared to the prior period. During the first quarter of
2017, we sold 2.49 acres of land for a sales price of $1.1 million
and recorded a gain of $0.4 million. During the first quarter of
2016, we sold 40.88 acres of land for a sales price of $4.2 million
and recorded a gain of $1.7 million.
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,
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. The
Company also holds mortgage receivables. For more information,
visit the Company’s website at www.americanrealtyinvest.com.
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the Three Months Ended March 31,
2017 2016 (dollars in
thousands, except per share amounts) Revenues: Rental
and other property revenues (including $190 and $173 for the three
months ended 2017 and 2016, respectively, from related parties) $
31,822 $ 29,205
Expenses: Property operating expenses
(including $237 and $210 for the three months ended 2017 and 2016,
respectively, from related parties) 16,265 15,216 Depreciation and
amortization 6,330 5,830 General and administrative (including $962
and $918 for the three months ended 2017 and 2016, respectively,
from related parties) 2,031 2,025 Net income fee to related party
60 72 Advisory fee to related party 2,659
2,738
Total operating expenses
27,345 25,881 Net operating income
4,477 3,324
Other income (expenses): Interest income
(including $4,476 and $4,528 for the three months ended 2017 and
2016, respectively, from related parties) 4,792 5,291 Other income
1,443 298 Mortgage and loan interest (including $1,511 and $1,092
for the three months ended 2017 and 2016, respectively, from
related parties) (16,796 ) (14,214 ) Foreign currency transaction
loss (323 ) - Earnings from unconsolidated subsidiaries and
investees 55 155 Total other expenses
(10,829 ) (8,470 ) Loss before gain on land sales,
non-controlling interest, and taxes (6,352 ) (5,146 ) Loss on sale
of income producing properties - (244 ) Gain on land sales
445 1,652 Net loss from continuing operations
before taxes (5,907 ) (3,738 ) Income tax benefit -
1 Net loss from continuing operations (5,907 ) (3,737
) Discontinued operations: Net income from discontinued operations
- 3 Income tax expense from discontinued operations -
(1 ) Net income from discontinued operations -
2 Net loss (5,907 ) (3,735 ) Net income attributable
to non-controlling interest 193 530 Net
loss attributable to American Realty Investors, Inc. (5,714 )
(3,205 ) Preferred dividend requirement (275 ) (497 )
Net loss applicable to common shares $ (5,989 ) $ (3,702 )
Earnings per share - basic Net loss from continuing
operations $ (0.39 ) $ (0.24 )
Earnings per share -
diluted Net loss from continuing operations $ (0.39 ) $ (0.24 )
Weighted average common shares used in computing earnings
per share 15,514,360 15,514,360 Weighted average common shares used
in computing diluted earnings per share 15,514,360 15,514,360
Amounts attributable to American Realty Investors,
Inc. Net loss from continuing operations $ (5,714 ) $ (3,207 )
Net income from discontinued operations - 2
Net loss applicable to American Realty Investors, Inc. $
(5,714 ) $ (3,205 )
AMERICAN REALTY INVESTORS,
INC. CONSOLIDATED BALANCE SHEETS March
31, December 31, 2017
2016 (dollars in thousands, except share and par
value amounts) Assets Real estate, at cost $ 1,035,008 $
1,017,684 Real estate subject to sales contracts at cost 48,323
48,919 Less accumulated depreciation (171,607 )
(165,597 ) Total real estate 911,724 901,006 Notes and interest
receivable: Performing (including $121,173 in 2017 and $125,799 in
2016 from related parties) 138,733 143,601 Less allowance for
estimated losses (including $15,537 in 2017 and 2016 from related
parties) (17,037 ) (17,037 ) Total notes and interest
receivable 121,696 126,564 Cash and cash equivalents 55,284 17,522
Restricted cash 31,259 38,399 Investments in unconsolidated joint
ventures and investees 6,141 6,087 Receivable from related party
22,064 24,672 Other assets 65,557 60,659
Total assets $ 1,213,725 $ 1,174,909
Liabilities and Shareholders’ Equity Liabilities: Notes and
interest payable $ 830,742 $ 845,107 Notes related to real estate
held for sale 376 376 Notes related to real estate subject to sales
contracts 4,177 5,612 Bond and interest payable 71,975 - Deferred
revenue (including $70,945 in 2017 and $70,935 in 2016 to related
parties) 91,390 91,380 Accounts payable and other liabilities
(including $10,793 in 2017 and $10,854 in 2016 to related parties)
45,183 56,303 Total liabilities
1,043,843 998,778 Shareholders’ equity: Preferred stock,
Series A: $2.00 par value, authorized 15,000,000 shares, issued and
outstanding 2,000,614 shares in 2017 and 2016 (liquidation
preference $10 per share), including 900,000 shares in 2017 and
2016 held by ARL. 2,205 2,205 Common stock, $0.01 par value,
authorized 100,000,000 shares; issued 15,930,145 shares and
outstanding 15,514,360 in 2017 and 2016, including 140,000 shares
held by TCI (consolidated) in 2017 and 2016. 159 159 Treasury stock
at cost; 415,785 shares in 2017 and 2016, and 140,000 shares held
by TCI (consolidated) as of 2017 and 2016 (6,395 ) (6,395 ) Paid-in
capital 111,168 111,510 Retained earnings 8,684
14,398 Total American Realty Investors, Inc.
shareholders' equity 115,821 121,877 Non-controlling interest
54,061 54,254 Total shareholders'
equity 169,882 176,131 Total
liabilities and shareholders' equity $ 1,213,725 $ 1,174,909
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version on businesswire.com: http://www.businesswire.com/news/home/20170517006311/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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