Transcontinental Realty Investors, Inc. Reports Earnings for Q2 2020

DALLAS–(BUSINESS WIRE)–Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended June 30, 2020. For the three months ended June 30, 2020, The Company reported a net loss applicable to common shares of $4.2 million or $0.48 per diluted share, compared to a net loss applicable to common shares of $6.3 million or $0.73 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 on the Company’s results of operations or cash flows during the three months ended June 30, 2020.

  • The Company collected approximately 97% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 98% from office tenants.
  • The Company did not grant any abatements or significant deferments of rents.
  • Occupancy at its non-lease up properties remains stable at 87% at June 30, 2020 in comparison to 89% at June 30, 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 and other property revenues were $11.9 million for the three months ended June 30, 2020 and 2019. For the quarter ended June 30, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.

Property operating expenses decreased to $5.8 million for the three months ended June 30, 2020 from $7.3 million for the same period in 2019. The decrease of $1.5 million in property operating expenses was primarily due to a reduction in property taxes and maintenance costs.

General and administrative expense decreased to $1.4 million for the three months ended June 30, 2020 from $2.2 million for the same period in 2019. The decrease of $0.8 million in general and administrative expenses was primarily due to a reduction in professional fees.

Interest income decreased to $4.2 million for the three months ended June 30, 2020 from $4.9 million for the same period in 2019. The decrease of $0.7 million in interest income was due to a decrease in notes receivable from related parties.

Other income increased to $1.5 million for the three months ended June 30, 2020, compared to $0.7 million for the same period in 2019. The increase in other income was primarily due to an increase in tax incentive finance proceeds.

Foreign currency transaction was a loss of $5.6 million for the three months ended June 30, 2020 as compared to a loss of $2.3 million for the same period in 2019. The increase is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Loss from unconsolidated investments was $0.7 million for the three months ended June 30, 2020, compared to a loss of $0.2 million for the same period in 2019. The increase in loss from unconsolidated investments during the quarter was primarily due to an increase in depreciation and amortization expense related to the VAA Joint Venture.

Gain on land sales was $5.3 million for the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. In the current period the Company sold approximately 25.9 acres of land for an aggregate sales price of $6.6 million which resulted in a gain of $5.3 million. For the same period in 2019, the Company sold approximately 41.6 acres of land for an aggregate sales price of $7.6 million which resulted in a gain of $2.1 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
(Unaudited)
 

For the Three Months Ended

June 30,

For the Six Months Ended June

30,

2020

2019

2020

2019

(dollars in thousands, except per share amounts)
Revenues:
Rental and other property revenues (including $280 and $203 for the three months and $456 and $413 for the six months ended 2020 and 2019, respectively, from related parties)

$ 11,947

$ 11,840

$ 23,865

$ 23,769

 
Expenses:
Property operating expenses (including $254 and $246 for the three months ended and $496 and $504 for the six months ended 2020 and 2019, respectively, from related parties)

5,810

7,322

12,119

13,319

Depreciation and amortization

3,418

3,439

6,812

6,548

General and administrative (including $711 and $919 for the three months ended and $1,766 and $2,420 for the six months ended 2020 and 2019, respectively, from related parties)

1,405

2,211

3,926

4,539

Franchise taxes and other expenses

1,494

Net income fee to related party

112

90

198

190

Advisory fee to related party

2,051

2,158

4,146

3,806

Total operating expenses

12,796

15,220

28,695

28,402

Net operating (loss)

(849)

(3,380)

(4,830)

(4,633)

 
Other income (expenses):
Interest income (including $4,088 and $4,585 for the three months ended and $7,503 and $8,897 for the six months ended 2020 and 2019, respectively, from related parties)

4,227

4,878

8,754

9,436

Other income

1,484

688

2,319

4,580

Mortgage and loan interest (including $369 and $513 for the three months ended and $813 and $1,003 for the six months ended 2020 and 2019, respectively, from related parties)

(7,741)

(7,646)

(15,708)

(15,605)

Foreign currency transaction gain (loss)

(5,599)

(2,325)

2,244

(8,143)

Equity loss from VAA

(735)

(236)

(1,111)

(1,291)

Losses from other unconsolidated investees

7

2

6

(5)

Total other income (expenses)

(8,357)

(4,639)

(3,496)

(11,028)

Income (loss) before gain on land sales, non-controlling interest, and taxes

(9,206)

(8,019)

(8,326)

(15,661)

Loss on sale of income producing properties

(80)

(80)

Gain on land sales

5,339

2,133

9,477

4,349

Net income (loss) before taxes

(3,867)

(5,966)

1,151

(11,392)

State income tax expense

(49)

(296)

Net income (loss)

(3,916)

(5,966)

855

(11,392)

Net (income) attributable to non-controlling interest

(242)

(379)

(400)

(562)

Net income (loss) attributable to Transcontinental Realty Investors, Inc.

(4,158)

(6,345)

455

(11,954)

Net income (loss) applicable to common shares

$ (4,158)

$ (6,345)

$ 455

$ (11,954)

 
(Loss) earnings per share – basic
Net income (loss)

$ (0.45)

$ (0.68)

$ 0.10

$ (1.31)

Net income (loss) applicable to common shares

$ (0.48)

$ (0.73)

$ 0.05

$ (1.37)

 
(Loss) earnings per share – diluted
Net income (loss)

$ (0.45)

$ (0.68)

$ 0.10

$ (1.31)

Net income (loss) applicable to common shares

$ (0.48)

$ (0.73)

$ 0.05

$ (1.37)

 
Weighted average common shares used in computing earnings per share

8,717,767

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

8,717,767

Amounts attributable to Transcontinental Realty Investors, Inc.
Net income (loss)

$ (3,916)

$ (5,966)

$ 855

$ (11,392)

Net income (loss) applicable to Transcontinental Realty, Investors, Inc.

$ (4,158)

$ (6,345)

$ 455

$ (11,954)

 
 
 
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2020 December 31, 2019
(Unaudited) (Audited)
(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost

$ 484,639

$ 469,997

Real estate subject to sales contracts at cost

6,307

7,966

Less accumulated depreciation

(96,002)

(90,173)

Total real estate

394,944

387,790

 
Notes and interest receivable (including $68,170 in 2020 and $57,817 in 2019 from related parties)

135,664

120,986

Cash and cash equivalents

42,250

51,179

Restricted cash

30,114

32,082

Investment in VAA

52,773

59,148

Investment in other unconsolidated investees

22,638

22,632

Receivable from related parties

128,617

141,541

Other assets

57,167

50,560

Total assets

$ 864,167

$ 865,918

 
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable

$ 255,884

$ 246,546

Bonds and bond interest payable

218,216

229,722

Deferred revenue (including $10,367 in 2020 and $9,468 2019 to related parties)

10,367

9,468

Accounts payable and other liabilities (including $934 in 2020 and $935 in 2019 to related parties)

24,778

26,115

Total liabilities

509,245

511,851

 
Shareholders’ equity:
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2020 and 2019; outstanding 8,717,767 shares in 2020 and 2019

87

87

Treasury stock at cost, 200 shares in 2020 and 2019

(2)

(2)

Paid-in capital

257,853

257,853

Retained earnings

75,120

74,665

Total Transcontinental Realty Investors, Inc. shareholders’ equity

333,058

332,603

Non-controlling interest

21,864

21,464

Total shareholders’ equity

354,922

354,067

Total liabilities and shareholders’ equity

$ 864,167

$ 865,918

 
 
 

 

Contacts

Transcontinental Realty Investors, Inc.

Investor Relations

Daniel Moos (469) 522-4200

[email protected]

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