Transcontinental Realty Investors, Inc. (NYSE: TCI), a
Dallas-based real estate investment company is reporting its
Results of Operations for 2018. In November 2018, the Company
created a new subsidiary Victory Abode Apartments, LLC (“VAA”) and
contributed 52 multi-family projects that it owned and operated to
VAA. TCI subsequently sold a 50% interest to a third party and
recorded a $154 million gain.
The Company believes that both the completion of the joint
venture creating Victory Abode Apartments and the issuance of the
Series B Bonds in the Israeli Bond Market has positioned the
company along the strategic lines that it previously indicated. The
Company has created a dynamic platform to continue its expansion in
the multifamily sector. The ongoing plan is to continue to develop
and acquire apartments in the geographic markets where demand
exceeds supply.
Beginning November 19, 2018, TCI began reflecting its ownership
of VAA on the Balance Sheet as an investment and its share of the
Revenues, Operating Expenses, Depreciation, Amortization and
Interest as “Earning from VAA”. The comparative financial
statements and the information below reflect approximately 46 weeks
of operations for the properties contributed to VAA in 2018 in
their traditional categories as compared to a full 52 weeks for
2017
For the year ended December 31, 2018, we reported net income
applicable to common shares of $180.1 million or $20.71 per share
compared to a net loss applicable to common shares of $16.7 million
or ($1.92) per share for the year ended December 31, 2017.
Revenues
Rental and other property revenues were $121.0 million for the
year ended December 31, 2018. This represents a decrease of $4.2
million, as compared to the prior year revenues of $125.2 million.
The decrease is primarily due to the contribution of fifty-two
properties to the joint venture VAA on November 19, 2018.
Expenses
Property operating expenses were $59.4 million for the year
ended December 31, 2018. This represents a decrease of $3.7
million, compared to the prior year operating expenses of $63.1
million. The decrease is primarily due to the contribution of
fifty-two properties to the joint venture VAA on November 19,
2018.
Depreciation and amortization expenses were $22.8 million for
the year ended December 31, 2018. This represents a decrease of
$2.8 million compared to prior year depreciation of $25.6 million.
The decrease is primarily due to the contribution of fifty-two
properties to the joint venture VAA on November 19, 2018.
General and administrative expenses were $11.4 million for the
year ended December 31, 2018. This represents an increase of $5.1
million compared to the prior year expenses of $6.3 million. The
increase in general and administrative expenses was due primarily
to an increase in fees paid associated with finalizing the
formation of VAA as well as and general and professional fees.
Other income (expense)
Interest income was $15.8 million for the year ending December
31, 2018 compared to $13.9 million for the year ended December 31,
2017 for an increase of $1.9 million. This increase was
primarily due to an increase of $2.7 million in interest on
receivable owed from our Advisors, offset by a decrease of $0.8 in
interest on notes receivable from other related parties.
Mortgage and loan interest expense was $58.9 million for the
year ended December 31, 2018. This represents a decrease of $1.0
million compared to the prior year expense of $59.9 million. The
decrease is primarily due to the contribution of fifty-two
properties to the joint venture VAA on November 19, 2018.
No gain on sales of income producing properties was recognized
during the year ended December 31, 2018. Gain on sale of
income-producing properties was $9.8 million for the year ended
December 31, 2017, attributable to the recognition of deferred
gain.
Gain on land sales was $17.4 million and $4.9 million for the
years ended December 31, 2018 and 2017, respectively. The increase
of approximately $12.5 million was primarily due to sales of land
at Mercer Crossing recognized in 2018.
Other income was $28.2 million and $0.6 million for the years
ended December 31, 2018 and 2017, respectively. The increase of
$27.6 million was primarily due to a $17.6 million gain recognized
in September 2018 for deferred income associated with the sale of
assets, as well as income of approximately $7.6 million from
insurance proceeds on Mahogany Run Golf Course.
Gain from the sale of 50% ownership in VAA was $154.1 million
for the year ended December 31, 2018. There was no such gain in
prior years.
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 apartments, office
buildings, 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.
TRANSCONTINENTAL
REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS For the Years Ended December 31,
2018 2017 2016 (dollars in thousands,
except per share amounts) Revenues: Rental and other
property revenues (including $767, $839 and $708 for the years
ended 2018, 2017 and 2016, respectively, from related parties) $
120,955 $ 125,233 $ 118,471
Expenses: Property
operating expenses (including $943, $929 and $865 for the years
ended 2018, 2017 and 2016, respectively, from related parties)
59,420 63,056 61,918 Depreciation and amortization 22,761 25,558
23,683 General and administrative (including $4,578, $3,120 and
$3,574 for the years ended 2018, 2017 and 2016, respectively, from
related parties) 11,359 6,269 5,476 Net income fee to related party
631 250 257 Advisory fee to related party 10,663
9,995 9,490 Total operating expenses
104,834 105,128 100,824
Net operating income 16,121 20,105 17,647
Other income
(expenses): Interest income (including $13,132, $11,485 and
$13,348 for the years ended 2018, 2017 and 2016, respectively, from
related parties) 15,793 13,862 14,670 Other income 28,150 625 1,816
Mortgage and loan interest (including $423, $1,174 and $568 for the
year ended 2018, 2017 and 2016, respectively, from related parties)
(58,872 ) (59,944 ) (53,088 ) Foreign currency transaction gain
(loss) 12,399 (4,536 ) - Earnings from VAA 44 - - Earnings (losses)
from other unconsolidated investees 1,085 26
(26 ) Total other expenses (1,401 )
(49,967 ) (36,628 ) Income (loss) before gain on disposition
of 50% interest in VAA, gain on land sales, non-controlling
interest, and taxes 14,720 (29,862 ) (18,981 ) Gain on
disposition of 50% interest in VAA 154,126 - - Gain on sale of
income producing properties - 9,842 16,207 Gain on land sales
17,404 4,884 3,121 Net
income (loss) from continuing operations before taxes 186,250
(15,136 ) 347 Income tax expense - current (1,210 ) (180 ) (24 )
Income tax expense - deferred (2,000 ) -
- Net income (loss) from continuing operations
183,040 (15,316 ) 323 Discontinued operations: Net income (loss)
from discontinued operations - - (2 ) Income tax benefit (expense)
from discontinued operations - -
1 Net income (loss) from discontinued operations -
- (1 ) Net income (loss) 183,040
(15,316 ) 322 Net (income) attributable to non-controlling interest
(1,590 ) (499 ) (285 ) Net income (loss)
attributable to Transcontinental Realty Investors, Inc. 181,450
(15,815 ) 37 Preferred dividend requirement (900 )
(900 ) (900 ) Net income (loss) applicable to common shares
$ 180,550 $ (16,715 ) $ (863 )
Earnings per share
- basic Net income (loss) from continuing
operations $ 20.71 $ (1.92 ) $ (0.10 ) Net income (loss)
applicable to common shares $ 20.71 $ (1.92 ) $ (0.10 )
Earnings per share - diluted Net
income (loss) from continuing operations $ 20.71 $ (1.92 ) $
(0.10 ) Net income (loss) applicable to common shares $ 20.71
$ (1.92 ) $ (0.10 ) Weighted average common shares
used in computing earnings per share 8,717,767 8,717,767 8,717,767
Weighted average common shares used in computing diluted earnings
per share 8,717,767 8,717,767 8,717,767
Amounts attributable to
Transcontinental Realty Investors, Inc. Net income (loss) from
continuing operations $ 181,450 $ (15,815 ) $ 38 Net income from
discontinued operations - - (1 )
Net income (loss) applicable to Transcontinental Realty, Investors,
Inc. $ 181,450 $ (15,815 ) $ 37
TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED
BALANCE SHEETS December 31, 2018
2017 (dollars in thousands, except share and par
value amounts) Assets Real estate, at cost $ 461,718 $
1,112,721 Real estate subject to sales contracts at cost 2,014
45,739 Less accumulated depreciation (79,228 )
(178,590 )
Total real estate
384,504 979,870 Notes and interest receivable (including
$51,945 in 2018 and $45,155 in 2017 from related parties) 83,541
70,166 Cash and cash equivalents 36,358 33,563 Restricted cash
70,207 54,779 Investment in joint venture 68,399 - Investment in
other unconsolidated investees 22,172 2,472 Receivable from related
party 133,642 111,665 Other assets 63,557
60,907 Total assets $ 862,380 $ 1,313,422
Liabilities and Shareholders’ Equity Liabilities:
Notes and interest payable $ 277,237 $ 892,149 Notes related to
real estate held for sale - 376 Notes related to real estate
subject to sales contracts - 1,957 Bonds and bond interest payable
158,574 113,047 Deferred revenue (including $21,034 in 2018 and
$40,574 in 2017 to related parties) 17,522 60,949 Deferred tax
liability 2,000 - Accounts payable and other liabilities (including
$3 in 2018 and $7,236 in 2017 to related parties) 26,646
36,683 Total liabilities 481,979 1,105,161
Shareholders’ equity: Preferred Stock, Series D: $0.01 par
value, authorized 100,000 shares; issued 100,000 shares in 2018 and
2017; outstanding 0 shares in 2018 and 100,000 shares in 2017
(liquidation preference $100 per share) - 1 Common stock, $0.01 par
value, authorized 10,000,000 shares; issued 8,717,967 shares in
2018 and 2017; outstanding 8,717,767 shares in 2018 and 2017 87 87
Treasury stock at cost, 200 shares in 2018 and 2017 (2 ) (2 )
Paid-in capital 258,050 268,949 Retained earnings (deficit)
101,585 (79,865 ) Total Transcontinental Realty
Investors, Inc. shareholders' equity 359,720 189,170
Non-controlling interest 20,681 19,091
Total shareholders' equity 380,401 208,261
Total liabilities and shareholders' equity $ 862,380
$ 1,313,422
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version on businesswire.com: https://www.businesswire.com/news/home/20190401005962/en/
Transcontinental Realty Investors, Inc.Investor
RelationsGene Bertcher (800)
400-6407investor.relations@transconrealty-invest.com
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