Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following
provisions:
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf
by the undersigned, hereunto duly authorized.
Dated: April 2,
2019
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TRANSCONTINENTAL REALTY INVESTORS, INC.
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By:
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/s/ Gene S. Bertcher
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Gene
S. Bertcher
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Executive Vice President and
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Chief Financial Officer
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Exhibit 99.1
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NEWS RELEASE
FOR IMMEDIATE RELEASE
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Contact:
Transcontinental
Realty Investors,
Inc. Investor
Relations
Gene
Bertcher
(800)
400-6407
investor.relations@transconrealty-invest.com
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Transcontinental Realty Investors, Inc. reports
full year results for 2018
DALLAS (April 1, 2019) --
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
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TRANSCONTINENTAL
REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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For the Years Ended December 31,
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2018
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2017
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2016
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(dollars in thousands,
except per share amounts)
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Revenues:
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Rental and other property revenues (including $767, $839 and
$708 for the year ended 2018, 2017 and 2016, respectively, from related parties)
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$
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120,955
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$
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125,233
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$
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118,471
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Expenses:
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Property operating expenses (including $943, $929 and $865 for
the year ended 2018, 2017 and 2016, respectively, from related parties)
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59,420
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63,056
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61,918
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Depreciation and amortization
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22,761
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25,558
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23,683
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General and administrative (including $4,578, $3,120 and $3,574 for the year ended 2018,
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2017 and 2016, respectively, from related parties)
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11,359
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6,269
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5,476
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Net income fee to related party
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631
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250
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257
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Advisory fee to related party
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10,663
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9,995
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9,490
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Total operating expenses
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104,834
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105,128
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100,824
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Net operating income
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16,121
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20,105
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17,647
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Other income (expenses):
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Interest income (including $13,132, $11,485 and $13,348 for the year ended 2018, 2017 and 2016, respectively, from related parties)
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15,793
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13,862
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14,670
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Other income
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28,150
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625
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1,816
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Mortgage and loan interest (including $423, $1,174 and $568 for the year ended 2018,
2017 and 2016, respectively, from related parties)
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(58,872
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(59,944
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(53,088
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Foreign currency transaction gain (loss)
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12,399
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(4,536
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—
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Equity earnings from VAA
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44
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—
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—
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Earnings (losses) from unconsolidated subsidiaries
and investees
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1,085
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26
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(26)
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Total other expenses
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(1,401
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(49,967
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(36,628
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Income (loss) before gain on disposition of 50% interest in VAA, gain on land sales, non-
controlling interest, and taxes
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14,720
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(29,862
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(18,981
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Gain on disposition of 50% interest in VAA
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154,126
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—
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—
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Gain on sale of income-producing properties
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—
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9,842
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16,207
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Gain on land sales
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17,404
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4,884
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3,121
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Net income (loss) from continuing operations before taxes
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186,250
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(15,136
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347
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Income tax expense - current
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(1,210
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(180
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(24
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Income tax expense - deferred
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(2,000
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—
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—
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Net income (loss) from continuing operations
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183,040
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(15,316
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323
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Discontinued operations:
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Net income (loss) from discontinued operations
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—
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—
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(2)
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Income tax benefit (expense) from discontinued
operations
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—
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—
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1
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Net income (loss) from discontinued operations
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—
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—
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(1)
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Net income (loss)
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183,040
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(15,316
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(8,876)
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322
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Net (income) attributable to non-controlling interest
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(1,590
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(499
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(285
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Net income (loss) attributable to Transcontinental Realty Investors,
Inc.
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181,450
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(15,815
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37
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Preferred dividend requirement
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(900
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(900
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(900
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Net income (loss) applicable to common shares
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$
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180,550
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$
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(16,715
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(9,536)
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$
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(863
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Earnings per share - basic:
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Net income (loss) from continuing operations
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$
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20.71
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$
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(1.92
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$
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(0.10
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Net income
(loss)
applicable to common shares
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$
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20.71
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$
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(1.92
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$
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(0.10
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Earnings per share - diluted:
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Net income (loss) from continuing operations
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$
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20.71
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$
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(1.92
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$
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(0.10
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Net income (loss) applicable to common shares
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$
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20.71
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$
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(1.92
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$
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(0.10
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Weighted average common shares used in computing earnings per share
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8,717,767
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8,717,767
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8,717,767
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Weighted average common shares used in computing diluted earnings per share
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8,717,767
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8,717,767
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8,717,767
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Amounts attributable to Transcontinental Realty Investors, Inc.
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Net income (loss) from continuing operations
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$
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181,450
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$
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(15,815
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$
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38
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Net loss from discontinued operations
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—
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—
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(1
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Net income (loss) applicable to
Transcontinental Realty Investors, Inc.
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$
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181,450
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$
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(15,815
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$
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37
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