American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real
estate investment company, is reporting its Results of Operations
for the quarter ended March 31, 2020. The Company’s primary real
estate holdings consist of Transcontinental Realty Investors, Inc.
(NYSE: TCI). Being that The Company’s operational activities are
virtually limited to the ownership of TCI, this quarterly report
will primarily discuss the operational activity of TCI. For the
three months ended March 31, 2020, The Company reported a net
income applicable to common shares of $2.9 million or $0.18 per
diluted share, compared to a net loss applicable to common shares
of $6.1 million or $0.38 per diluted share for the same period in
2019. This was driven by the overall strategic direction of both
investing and expanding the core multi-family portfolio. In
particular, as certain new multifamily development projects are
completed, in which the Company has made significant new
investments, it is expected that net income will again be
positively impacted throughout the remainder of 2020. All new
multifamily real estate projects within TCI’s future pipeline are
progressing in various stages of development. Of significant note,
the Company experienced a one-time expense as a requirement to pay
Franchise Tax due to the Joint Venture Victory Abode Apartments
(VAA). The Company does not anticipate this expense to reoccur in
future periods.
With the current Coronavirus presenting a concern; we remain
confident the underlying need for quality multi-family housing will
remain strong. The Company bases this observation on occupancy
trends across its portfolio. For the quarter ending March 31, 2020,
same store occupancy was at 93.9% compared to 94.3% for the same
period one year ago. To date, TCI’s existing portfolio has seen a
significant increase in value. For FYE 2019, same store aggregate
appraised value of TCI’s holdings was approximately $244.4 million.
Whereas for FYE 2020, same store aggregate appraised value of TCI’s
holdings was $298.7 million. This represents a $54.3 million or 22%
increase in overall asset value year over year.
The Company believes that both the development of new projects
and the historically low interest rate environment 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.
Revenues
Rental and other property revenues were $11.9 million for the
three months ended March 31, 2020, and 2019. For the quarter ended
March 31, 2020, the Company generated revenues of $7.9 million and
$4.0 million from its commercial and residential segments,
respectively.
Expenses
Property operating expenses increased by $0.3 million to $6.3
million for the three months ended March 31, 2020 as compared to
$6.0 million for the same period in 2019. The increase in property
operating expenses is due to an increase in real estate taxes of
approximately $0.5 million offset by an overall decrease in general
property operating and maintenance expenses of $0.2 million.
Depreciation and amortization increased by $0.30 million to $3.4
million during the three months ended March 31, 2020 as compared to
$3.1 million for the three months ended March 31, 2019. The
increase in depreciation is due to an increase in our ownership of
residential apartments to ten from nine for the same period a year
ago which resulted in an increase in depreciation of $0.9 million
from $0.7 million a year ago.
General and administrative expense was $2.8 million for the
three months ended March 31, 2020, compared to $2.5 million for the
same period in 2019. The increase of $0.3 million in general and
administrative expenses was primarily due to increases professional
fees of $0.1 million and legal fees of $0.3 million.
Franchise taxes and other expenses was $1.5 million for the
three months ended March 31, 2020, compared to $0.125 million for
the same period in 2019. The increase of $1.4 million in franchise
taxes and other expenses was primarily due to increases in
franchise taxes of $1.0 million.
Other income (expense)
Interest income was $5.8 million for the three months ended
March 31, 2020, compared to $6.2 million for the same period in
2019. The decrease of $0.4 million was due to a decrease in
interest of $0.4 on notes receivable from other related
parties.
Other income decreased by $2.5 million to $1.2 million for the
three months ended March 31, 2020, compared to $3.7 million for the
same period in 2019. For the quarter ended March 31, 2020, the
Company received property tax refunds of approximately $0.2
million, and recorded miscellaneous income of approximately $1.0
million. For the same period a year ago, the Company recognized
$3.6 million gain associated with the sale of land by IOR to third
parties.
Mortgage and loan interest expense was $9.6 million for the
three months ended March 31, 2020, compared to $10.0 million for
the same period in 2019.
Foreign currency transaction was a gain of $7.8 million for the
three months ended March 31, 2020 as compared to a loss of $5.8
million for the same period in 2019. The unrealized gain was the
result of the strengthening of the U.S. Dollar against the Israel
Shekels due to perceived liquidity issues in Israel most likely as
a result of the global pandemic outbreak. During the first quarter
just ended, we paid $11.6 million in Series A bond principal and
$7.3 million in interests payments to our Series A, B, and C bonds
denominated in Israel Shekels.
Loss from unconsolidated investments was a net $0.26 million for
the three months ended March 31, 2020 as compared to a net loss of
$1.0 million for the three months ended March 31, 2019. 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 of $0.376 million.
Gain on land sales was $4.1 for the three months ended March 31,
2020, compared to $2.2 million for the same period in 2019. In the
current period we sold approximately 18.7 acres of land for a sales
price of $5.7 million which resulted in a gain of $4.1 million. For
the same period in 2019, 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.
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,
2020
2019
(dollars in thousands, except
per share amounts)
Revenues: Rental and other property revenues (including $221
and $113 for the three months ended 2020 and 2019, respectively,
from related parties)
$
11,918
$
11,929
Expenses: Property operating expenses (including $242
and $257 for the three months ended 2020 and 2019, respectively,
from related parties)
6,310
5,997
Depreciation and amortization
3,394
3,109
General and administrative (including $1,133 and $1,597 for the
three months ended 2020 and 2019, respectively, from related
parties)
2,795
2,480
Franchise taxes and other expenses
1,496
125
Net income fee to related party
86
100
Advisory fee to related party
2,287
1,853
Total operating expenses
16,368
13,664
Net operating loss
(4,450)
(1,735)
Other income (expenses): Interest income (including $5,031
and $5,881 for the three months ended 2020 and 2019, respectively,
from related parties)
5,754
6,153
Other income
1,212
3,667
Mortgage and loan interest (including $1,915 and $2,307 for the
three months ended 2020 and 2019, respectively, from related
parties)
(9,602)
(9,968)
Foreign currency transaction (loss) gain
7,843
(5,818)
Equity loss from VAA
(376)
(1,055)
Earnings from unconsolidated subsidiaries and investees
116
58
Total other income (expenses)
4,947
(6,963)
Income (loss) before gain on land sales, non-controlling interest,
and taxes
497
(8,698)
Gain on land sales
4,138
2,216
Net income (loss) from continuing operations before taxes
4,635
(6,482)
State income tax expense
(247)
-
Net income (loss) from continuing operations
4,388
(6,482)
Net income (loss)
4,388
(6,482)
Net (income) loss attributable to non-controlling interest
(1,442)
335
Net income (loss) attributable to American Realty Investors, Inc.
2,946
(6,147)
Net income (loss) applicable to common shares
$
2,946
$
(6,147)
(Loss) earnings per share - basic Net income (loss) from
continuing operations
$
0.27
$
(0.41)
Net income (loss) applicable to common shares
$
0.18
$
(0.38)
(Loss) earnings per share - diluted Net income (loss)
from continuing operations
$
0.27
$
(0.41)
Net income (loss) applicable to common shares
$
0.18
$
(0.38)
Weighted average common shares used in computing earnings
per share
15,997,076
15,997,076
Weighted average common shares used in computing diluted earnings
per share
15,997,076
15,997,076
Amounts attributable to American Realty Investors,
Inc. Net income (loss) from continuing operations
$
4,388
$
(6,482)
Net income (loss) applicable to American Realty Investors, Inc.
$
2,946
$
(6,147)
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS March 31, 2020
December 31, 2019 (Unaudited) (Audited)
(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost
$
482,834
$
469,997
Real estate subject to sales contracts at cost
6,887
7,966
Less accumulated depreciation
(93,144)
(90,173)
Total real estate
396,577
387,790
Notes and interest receivable (including $106,148 in 2020
and $105,524 in 2019 from related parties)
170,918
169,299
Less allowance for estimated losses (including $12,557 and $13,099
in 2020 and 2019 from related parties)
(12,557)
(13,099)
Total notes and interest receivable
158,361
156,200
Cash and cash equivalents
39,946
51,228
Restricted cash
28,158
32,083
Investment in VAA
53,508
59,148
Investment in other unconsolidated investees
8,623
8,507
Receivable from related party
78,779
85,996
Other assets
51,119
49,689
Total assets
$
815,071
$
830,641
Liabilities and Shareholders’
Equity
Liabilities: Notes and interest payable
$
260,969
$
254,873
Bond and interest payable
207,832
229,722
Deferred revenue (including $24,762 in 2020 and 2019 to related
parties)
24,762
24,762
Accounts payable and other liabilities (including $12,069 in 2020
and $11,817 in 2019 to related parties)
20,604
24,768
Total liabilities
514,167
534,125
Shareholders’ equity: Preferred stock, Series A: $2.00 par value,
authorized 15,000,000 shares, issued 614 and outstanding 1,800,614
in 2020 and 2019 (liquidation preference $10 per share), including
1,800,000 shares held by ARL and its subsidiaries in 2020 and 2019.
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 2020 and
2019, including 140,000 shares held by TCI (consolidated) in 2020
and 2019.
164
164
Treasury stock at cost; 415,785 shares in 2020 and 2019, and
140,000 shares held by TCI (consolidated) as of 2020 and 2019.
(6,395)
(6,395)
Paid-in capital
82,017
82,017
Retained earnings
166,654
163,708
Total American Realty Investors, Inc. shareholders' equity
242,445
239,499
Non-controlling interest
58,459
57,017
Total shareholders' equity
300,904
296,516
Total liabilities and shareholders' equity
$
815,071
$
830,641
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200514005948/en/
American Realty Investors, Inc. Investor Relations
Daniel Moos (469) 522-4200
investor.relations@transconrealty-invest.com
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