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, 2019.
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. The Company
subsequently sold a 50% interest to a third party and recorded a
$154 million gain. Beginning November 19, 2018, the Company 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
Statement of Operations for the three months ended March 31, 2018
and the information thereon reflect the operations for the
properties contributed to VAA on a consolidated basis.
The Company believes that the completion of the joint venture
creating Victory Abode Apartments has positioned the company with 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.
For the three months ended March 31, 2019, we reported a net
loss applicable to common shares of $6.1 million or ($0.38) per
diluted loss per share compared to a net loss applicable to common
shares of $0.9 million or ($0.06) per diluted loss per share for
the same period ended 2018.
Revenues
Rental and other property revenues were $11.9 million for the
three months ended March 31, 2019, compared to $31.1 million for
the same period in 2018. The $19.2 million decrease is primarily
due to a decrease in the amount of multifamily residential
apartment buildings currently in our portfolio of nine as compared
to 53 multifamily residential apartment buildings for the same
period a year ago as a result of the deconsolidation of 49
residential apartment properties that were sold into the VAA Joint
Venture during the fourth quarter of 2018. As the assets are now
treated as unconsolidated investments, our share of rental revenues
is part of income from unconsolidated investments in the current
period and are no longer treated as rental income.
Expense
Property operating expenses decreased by $8.4 million to $6.0
million for the three months ended March 31, 2019 as compared to
$14.4 million for the same period in 2018. The decrease in property
operating expenses is primarily due to the deconsolidation of 49
residential apartment properties that were sold into the VAA Joint
Venture during the fourth quarter of 2018 which resulted in a
decrease in salary and related payroll expenses of $1.7 million,
real estate taxes of approximately $3.0 million and general
property operating and maintenance expenses of $3.7 million.
Depreciation and amortization decreased by $3.3 million
to $3.1 million during the three months
ended March 31, 2019 as compared to $6.4
million for the three months ended March 31, 2018.
This decrease is primarily due to the deconsolidation of the
residential apartments in connection with our previous sale and
contribution of our interests to the VAA Joint Venture.
General and administrative expense was $2.6 million for the
three months ended March 31, 2019, compared to $2.3 million for the
same period in 2018. The increase of $0.3 million in general and
administrative expenses is the result of increases in advisory and
management fees of approximately $0.4 million and professional and
finance fees of $0.3 million offset by a decrease in accounting,
tax and other general administrative fees of $0.6 million.
Other income (expense)
Interest income was $6.2 million for the three months ended
March 31, 2019, compared to $5.1 million for the same period in
2018. The increase of $1.1 million was due to an increase of
$1.3 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.
Other income was $3.7 million for the three months ended March
31, 2019, compared to $1.9 million for the same period in 2018. The
increase is primarily the result of a $3.6 million gain recognized
for deferred income associated with the sale of land during the
quarter just ended to third parties.
Mortgage and loan interest expense was $9.9
million for the three months ended March 31,
2019 as compared to $15.7 million for the same
period in 2018. The decrease of $5.8 million is due to the
deconsolidation of residential apartment properties into the VAA
Joint Venture which were encumbered by mortgage debt.
Foreign currency transaction was a loss of $5.8 million for
the three months ended March 31, 2019 as compared to a gain of $1.8
million for the same period in 2018. During the first quarter just
ended, we paid $10.4 million in principal and $5.8 million in
interests payments to our bonds denominated in Israel Shekels.
Loss from unconsolidated investments was $1.0 million for the
three months ended March 31, 2019 as compared to earnings of $320
thousand for the three months ended March 31, 2018. The loss from
unconsolidated investments during the first quarter just ended was
driven primarily from our share in the losses reported by the VAA
Joint Venture.
Gain on land sales was $2.2 for the three months ended March 31,
2019, compared to $1.3 million for the same period in 2018. In the
current period, we sold approximately 22.3 acres of land for a
sales price of $8.7 million, which resulted in a gain of $2.2
million. For the same period in 2018, we sold 112.2 acres of land
for a sales price of $7.2 million and recognized a gain of $1.3
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, 2019 2018
Revenues: Rental and other property revenues
(including $113 and $208 for the three months ended 2019 and 2018,
respectively, from related parties) $ 11,929 $ 31,083
Expenses: Property operating expenses (including $257 and
$227 for the three months ended 2019 and 2018, respectively, from
related parties) 5,997 14,424 Depreciation and amortization 3,109
6,391 General and administrative (including $1,597 and $1,140 for
the three months ended 2019 and 2018, respectively, from related
parties) 2,605 2,341 Net income fee to related party 100 53
Advisory fee to related party 1,853 2,956
Total operating expenses 13,664 26,165
Net operating (loss) income (1,735 ) 4,918
Other income
(expenses): Interest income (including $5,881 and $4,426 for
the three months ended 2019 and 2018, respectively, from related
parties) 6,153 5,109 Other income 3,667 1,901 Mortgage and loan
interest (including $2,307 and $1,799 for the three months ended
2019 and 2018, respectively, from related parties) (9,968 ) (15,724
) Foreign currency transaction (loss) gain (5,818 ) 1,756 Equity
loss from VAA (1,055 ) - Earnings from unconsolidated subsidiaries
and investees 58 320 Total other
expenses (6,963 ) (6,638 ) Loss before gain on land
sales, non-controlling interest, and taxes (8,698 ) (1,720 ) Gain
on land sales 2,216 1,335 Net loss from
continuing operations before taxes (6,482 ) (385 )
Net loss from continuing operations (6,482 ) (385 ) Net loss (6,482
) (385 ) Net loss (income) attributable to non-controlling interest
335 (275 ) Net loss attributable to American
Realty Investors, Inc. (6,147 ) (660 ) Preferred dividend
requirement - (225 ) Net loss applicable to
common shares $ (6,147 ) $ (885 )
Earnings per share - basic
Net loss from continuing operations $ (0.38 ) $ (0.06 )
Earnings per share - diluted Net loss from continuing
operations $ (0.38 ) $ (0.06 ) Weighted average common
shares used in computing earnings per share 15,997,076 15,938,077
Weighted average common shares used in computing diluted earnings
per share 15,997,076 15,938,077
Amounts attributable to
American Realty Investors, Inc. Net loss from continuing
operations $ (6,147 ) $ (660 ) Net loss applicable to American
Realty Investors, Inc. $ (6,147 ) $ (660 )
AMERICAN REALTY INVESTORS, INC. CONSOLIDATED BALANCE
SHEETS March 31,
December 31, 2019 2018
(unaudited) (audited)
(dollars in thousands, except share
and par value amounts) Assets Real estate, at cost $
449,007 $ 455,993 Real estate subject to sales contracts at cost
3,488 3,149 Real estate held for sale at cost, net of depreciation
14,737 - Less accumulated depreciation (80,755 )
(78,099 ) Total real estate 386,477 381,043 Notes and
interest receivable (including $102,031 in 2019 and $105,803 in
2018 from related parties) 138,731 140,327 Less allowance for
estimated losses (including $14,269 in 2019 and 2018 from related
parties) (14,269 ) (14,269 ) Total notes and interest
receivable 124,462 126,058 Cash and cash equivalents 28,163
36,428 Restricted cash 52,964 70,187 Investment in VAA 67,229
68,399 Investment in other unconsolidated investees 7,660 7,602
Receivable from related party 78,348 70,377 Other assets
69,510 66,055 Total assets $ 814,813 $
826,149
Liabilities and Shareholders’ Equity
Liabilities: Notes and interest payable $ 293,473 $ 286,968 Bond
and interest payable 151,465 158,574 Deferred revenue (including
$30,359 in 2019 and $33,904 in 2018 to related parties) 30,359
33,904 Accounts payable and other liabilities (including $10,212 in
2019 and $9,984 in 2018 to related parties) 24,938
25,576 Total liabilities 500,235 505,022
Shareholders’ equity: Preferred stock, Series A: $2.00 par value,
authorized 15,000,000 shares, issued 1,800,614 and outstanding 614
in 2019 and 2018 (liquidation preference $10 per share), including
1,800,000 shares held by ARL and its subsidiaries in 2019 and 2018.
5 5
Common stock, $0.01 par value, 100,000,000
shares authorized; 16,412,861 shares issued and 15,997,076
outstanding as of 2019 and 2018, including 140,000 shares held by
TCI (consolidated) in 2019 and 2018.
164 164 Treasury stock at cost; 415,785 shares in 2019 and 2018,
and 140,000 shares held by TCI (consolidated) as of 2019 and 2018.
(6,395 ) (6,395 ) Paid-in capital 84,818 84,885 Retained earnings
173,519 179,666 Total American Realty
Investors, Inc. shareholders' equity 252,111 258,325
Non-controlling interest 62,467 62,802
Total shareholders' equity 314,578 321,127
Total liabilities and shareholders' equity $ 814,813
$ 826,149
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version on businesswire.com: https://www.businesswire.com/news/home/20190515005931/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher (800)
400-6407investor.relations@americanrealtyinvest.com
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