American Realty Investors, Inc. (NYSE:ARL), 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. ARL
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 twelve months ended December 31, 2018, we reported a net
income applicable to common shares of $172.8 million or $10.81 per
diluted earnings per share compared to a net loss applicable to
common shares of $9.5 million or ($0.61) per diluted earnings 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 $5.2
million compared to the prior year revenues of $126.2 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 $59.6 million for the year
ended December 31, 2018. This represents a decrease of $4.5
million, compared to prior year operating expenses of $64.1
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 $22.7 million for
the year ended December 31, 2018. This represents a decrease of
$3.0 million compared to prior year depreciation of $25.7 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 $12.7 million for the
year ended December 31, 2018. This represents an increase of $5.0
million compared to the prior year expenses of $7.7 million. The
increase in general and administrative expenses was due primarily
to an increase in fees associated with finalizing the formation of
VAA as well as general legal, professional and regulatory fees.
Other income (expense)
Interest income was $21.6 million for the year ending December
31, 2018 compared to $18.9 million for the year ended December 31,
2017, an increase of $2.7 million. This increase was primarily
due to an increase in the notes receivable principal balance.
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 $16.7 million for the year ended
December 31, 2017.
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 the Mercer Crossing Project recognized in 2018.
Other income was $28.9 million and $4.1 million for the years
ended December 31, 2018 and 2017, respectively. The increase of
$24.8 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 insurance proceeds of approximately $7.6 million
received subsequent to the sale of Mahogany Run Golf Course located
in St. Thomas.
Gain on disposition of 50% interest in VAA was $154.1 million
for the year ended December 31, 2018 as a result of the
contribution of fifty-two properties to the joint venture VAA
(Refer to Note 2 “Investment in VAA”).
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
For the Years Ended December 31, 2018
2017 2016 (dollars in thousands, except per share
amounts) Revenues: Rental and other property revenues
(including $144, $839 and $708 for the year ended 2018, 2017 and
2016, respectively, from related parties) $ 120,956 $ 126,221 $
119,663
Expenses: Property operating expenses
(including $254, $959 and $900 for the year ended 2018, 2017 and
2016, respectively, from related parties) 59,587 64,091 62,950
Depreciation and amortization 22,670 25,679 23,785 General and
administrative (including $1,267, $3,225 and $4,053 for the year
ended 2018, 2017 and 2016, respectively, from related parties)
12,708 7,691 7,119 Net income fee to related party 631 250 257
Advisory fee to related party 11,475 11,082
10,918 Total operating expenses 107,071
108,793 105,029 Net operating
income 13,885 17,428 14,634
Other income (expenses):
Interest income (including $5,406, $16,298 and $18,864 for the year
ended 2018, 2017 and 2016, respectively, from related parties)
21,645 18,941 20,453 Other income 28,993 4,082 2,091 Mortgage and
loan interest (including $2,240, $6,695 and $5,300 for the year
ended 2018, 2017 and 2016, respectively, from related parties)
(66,063 ) (66,171 ) (59,362 ) Loss on the sale of investments -
(331 ) - Foreign currency transaction gain (loss) 12,399 (4,536 ) -
Equity earnings from VAA 44 - - Earnings from unconsolidated
subsidiaries and investees 1,469 309
493 Total other expenses (1,513 )
(47,706 ) (36,325 )
Income (loss) before gain on disposition
of 50% interest in VAA, gain on land sales, non-controlling
interest, and taxes
12,372 (30,278 ) (21,691 ) Gain on disposition of 50% interest in
VAA 154,126 - - Gain on sale of income-producing properties -
16,698 16,207 Gain on land sales 17,404 4,884
3,121 Net income (loss) from continuing
operations before taxes 183,902 (8,696 ) (2,363 ) Income tax
expense (1,210 ) (180 ) (46 ) Net income
(loss) from continuing operations 182,692 (8,876 ) (2,409 )
Discontinued operations: Net loss from discontinued operations - -
(2 ) Gain on sale of real estate from discontinued operations - - -
Income tax expense from discontinued operations -
- 1 Net income from discontinued
operations - - (1 ) Net income
(loss) 182,692 (8,876 ) (2,410 ) Net (income) loss attributable to
non-controlling interest (8,993 ) 445
(322 ) Net income (loss) attributable to American Realty Investors,
Inc. 173,699 (8,431 ) (2,732 ) Preferred dividend requirement
(901 ) (1,105 ) (1,101 ) Net income (loss)
applicable to common shares $ 172,798 $ (9,536 ) $ (3,833 )
Earnings per share - basic Net income (loss) from continuing
operations $ 10.81 $ (0.61 ) $ (0.25 )
Earnings
per share - diluted Net income (loss) from continuing
operations $ 10.81 $ (0.61 ) $ (0.25 ) Weighted
average common shares used in computing earnings per share
15,982,528 15,514,360 15,514,360 Weighted average common shares
used in computing diluted earnings per share 15,982,528 15,514,360
15,514,360
Amounts attributable to American Realty
Investors, Inc. Net income (loss) from continuing operations $
173,699 $ (8,431 ) $ (2,731 ) Net loss from discontinued operations
- - (1 ) Net income (loss)
applicable to American Realty Investors, Inc. $ 173,699 $
(8,431 ) $ (2,732 )
AMERICAN
REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS
December 31, December 31, 2018
2017 (dollars in thousands, except share and par
value amounts) Assets Real estate, at cost $ 455,993 $
1,117,429 Real estate subject to sales contracts at cost 3,149
48,234 Less accumulated depreciation (78,099 )
(177,546 ) Total real estate 381,043 988,117 Notes and
interest receivable (including $105,803 in 2018 and $99,410 in 2017
from related parties) 140,327 127,865 Less allowance for estimated
losses (including $14,269 in 2018 and 2017 from related parties)
(14,269 ) (15,770 ) Total notes and interest
receivable 126,058 112,095 Cash and cash equivalents 36,428
33,778 Restricted cash 70,187 54,760 Investment in VAA 68,399 -
Investment in other unconsolidated investees 7,602 6,396 Receivable
from related party 70,377 38,311 Other assets 66,055
63,263 Total assets $ 826,149 $ 1,296,720
Liabilities and Shareholders’ Equity
Liabilities: Notes and interest payable $ 286,968 $ 898,750 Notes
related to real estate held for sale - 376 Notes related to real
estate subject to sales contracts - 1,957 Bond and interest payable
158,574 113,049 Deferred revenue (including $37,416 in 2018 and
$56,887 in 2017 to related parties) 33,904 77,332 Accounts payable
and other liabilities (including $107 in 2018 and $11,893 in 2017
to related parties) 25,576 39,373 Total
liabilities 505,022 1,130,837 Shareholders’ equity:
Preferred stock, Series A: $2.00 par value, authorized 15,000,000
shares, issued and outstanding 614 and 2,000,614 shares in 2018 and
2017 (liquidation preference $10 per share), including 1,800,000
shares held by ARL and TCI in 2018 and 900,000 shares held by ARL
in 2017. 5 2,205 Common stock, $0.01 par value, 100,000,000 shares
authorized; 16,412,861 shares issued and 15,997,076 outstanding as
of 2018 and 15,930,145 shares issued and 15,514,360 outstanding as
of 2017, including 140,000 shares held by TCI (consolidated) in
2018 and 2017. 164 159 Treasury stock at cost; 415,785 shares in
2018 and 2017, and 140,000 shares held by TCI (consolidated) as of
2018 and 2017. (6,395 ) (6,395 ) Paid-in capital 84,885 110,138
Retained earnings 179,666 5,967 Total
American Realty Investors, Inc. shareholders' equity 258,325
112,074 Non-controlling interest 62,802 53,809
Total shareholders' equity 321,127
165,883 Total liabilities and shareholders' equity $ 826,149
$ 1,296,720
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version on businesswire.com: https://www.businesswire.com/news/home/20190401005961/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher (800)
400-6407investor.relations@americanrealtyinvest.com
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