Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended September 30, 2020. For the three months ended September 30, 2020, the Company reported a net income applicable to common shares of $7.7 million or $0.88 per diluted share, compared to a net loss applicable to common shares of $7.8 million or $0.89 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant impact on the Company’s results of operations or cash flows during the three months ended September 30, 2020.

  • The Company collected approximately 96% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 97% from office tenants.
  • The Company did not grant any abatements or significant deferments of rents.
  • Occupancy remains stable at 91% at September 30, 2020 and 2019.
  • The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.
  • Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.

The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

Financial Results

Rental revenues were $11.5 million for the three months ended September 30, 2020, compared to $11.4 million for the three months ended September 30, 2019. For 2020, we generated revenues of $7.8 million and $3.7 million from our commercial and multifamily segments respectively.

Net operating (loss) was ($1.5) million for the three months ended September 30, 2020, compared to $0.4 million for the same period in 2019. The $1.9 million increase in net operating loss is primarily due to the placement in service of two new multifamily apartment communities in 2020. Operating expense of new properties generally exceed their rental revenues during initial lease-up.

Interest income was $4.3 million for three months ended September 30, 2020, compared to $5.2 million for the same period in 2019. The decrease of $0.9 million in interest income was primarily due to collection on notes receivable in 2020.

Interest expense was to $6.3 million for the three months ended September 30, 2020, compared to $8.0 million for the same period in 2019. The $1.7 million decrease in interest expense was primarily due to the refinancing of the mortgage note payable on Browning Place in 2019.

Loss on foreign currency transactions was a loss of $1.5 million for the three months ended September 30, 2020 as compared to $5.2 million for the same period in 2019. The decrease is foreign currency loss was due a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Gain on sale or write-down of assets increased $7.2 million for the three months ended September 30, 2020, compared the same period in 2019. The increase is primarily due to the sale Bridgeview Plaza for $5.3 million, resulting in a gain of $4.8 million in 2020, and the sale of Farnham Park Apartments for $13.3 million, resulting in a gain of $2.7 million.

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 (dollars in thousands, except per share amounts) (Unaudited)   For the Three Months EndedSeptember 30, For the Nine Months EndedSeptember 30,

2020

2019

2020

2019

Revenues: Rental revenues (including $262 and $212 for the three months and $673 and $527 for the nine months ended 2020 and 2019, respectively, from related parties)

$

11,453

 

$

11,407

 

$

34,461

 

$

34,352

 

Other income

 

706

 

 

1,990

 

 

3,885

 

 

7,394

 

Total revenues

 

12,159

 

 

13,397

 

 

38,346

 

 

41,746

 

Expenses: Property operating expenses (including $254 and $237 for the three months ended and $750 and $741 for the nine months ended 2020 and 2019, respectively, from related parties)

 

6,388

 

 

5,403

 

 

18,507

 

 

18,722

 

Depreciation and amortization

 

3,526

 

 

3,416

 

 

10,338

 

 

9,964

 

General and administrative (including $1,017 and $935 for the three months ended and $2,783 and $3,355 for the nine months ended 2020 and 2019, respectively, from related parties)

 

1,643

 

 

1,929

 

 

7,063

 

 

6,468

 

Advisory fee to related party

 

2,139

 

 

2,200

 

 

6,483

 

 

6,196

 

Total operating expenses

 

13,696

 

 

12,948

 

 

42,391

 

 

41,350

 

Net operating (loss) income

 

(1,537

)

 

449

 

 

(4,045

)

 

396

 

  Interest income (including $3,752 and $4,618 for the three months ended and $11,255 and $13,483 for the nine months ended 2020 and 2019, respectively, from related parties)

 

4,348

 

 

5,232

 

 

13,102

 

 

14,668

 

Interest expense (including $380 and $514 for the three months ended and $1,193 and $1,517 for the nine months ended 2020 and 2019, respectively, from related parties)

 

(6,291

)

 

(8,037

)

 

(21,999

)

 

(23,642

)

(Loss) gain on foreign currency transaction

 

(1,470

)

 

(5,153

)

 

774

 

 

(13,296

)

Loss on extinguishment of debt

 

-

 

 

(5,219

)

 

-

 

 

(5,219

)

Income (losses) from unconsolidated joint ventures

 

365

 

 

(178

)

 

(740

)

 

(1,474

)

Gain on sales or write-down of assets

 

12,328

 

 

5,140

 

 

21,802

 

 

9,409

 

Income tax expense

 

(50

)

 

-

 

 

(346

)

 

-

 

Net income (loss)

 

7,693

 

 

(7,766

)

 

8,548

 

 

(19,158

)

Net income attributable to non-controlling interest

 

-

 

 

(21

)

 

(400

)

 

(583

)

Net income (loss) attributable to common shares

$

7,693

 

$

(7,787

)

$

8,148

 

$

(19,741

)

  Earnings (loss) per share - attributable to common shares Basic and diluted

$

0.88

 

$

(0.89

)

$

0.93

 

$

(2.26

)

Weighted-average number of common shares outstanding: Basic and diluted

 

8,717,767

 

 

8,717,767

 

 

8,717,767

 

 

8,717,767

 

    TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share and par value amounts) (Unaudited)   September 30, 2020 December 31, 2019

Assets

Real estate, net

$

380,715

 

$

387,790

 

Notes receivable (including $66.287 in 2020 and $57,817 in 2019 from related parties)

 

123,854

 

 

112,357

 

Cash and cash equivalents

 

32,967

 

 

51,179

 

Restricted cash

 

28,030

 

 

32,082

 

Investment in unconsolidated joint ventures

 

71,171

 

 

81,780

 

Receivable from related parties

 

140,050

 

 

141,541

 

Other assets

 

68,558

 

 

59,189

 

Total assets

$

845,345

 

$

865,918

 

 

Liabilities and Equity

Liabilities: Mortgages and notes payable

$

242,300

 

$

245,773

 

Bonds payable

 

203,192

 

 

223,265

 

Accounts payable and other liabilities (including $937 in 2020 and $935 in 2019 to related parties)

 

24,642

 

 

26,115

 

Accrued interest payable

 

3,281

 

 

7,230

 

Deferred revenue

 

9,315

 

 

9,468

 

Total liabilities

 

482,730

 

 

511,851

 

  Equity Shareholders' Equity: Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares at September 30, 2020 and December 31, 2019.

 

87

 

 

87

 

Treasury stock at cost, 200 shares in 2020 and 2019

 

(2

)

 

(2

)

Paid-in capital

 

257,853

 

 

257,853

 

Retained earnings

 

82,813

 

 

74,665

 

Total shareholders' equity

 

340,751

 

 

332,603

 

Non-controlling interest

 

21,864

 

 

21,464

 

Total equity

 

362,615

 

 

354,067

 

Total liabilities and equity

$

845,345

 

$

865,918

 

   

 

Transcontinental Realty Investors, Inc. Investor Relations Erik Johnson (469) 522-4200 investor.relations@transconrealty-invest.com

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