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, 2015. For the three months ended
March 31, 2015, the Company reported net income applicable to
common shares of $3.0 million or $0.17 per diluted earnings per
share, as compared to net income applicable to common shares of
$2.9 million or $0.25 per diluted earnings per share for the same
period ended 2014.
The Company continues to demonstrate our unwavering commitment
to fortify our portfolio and streamline our operational activity,
while at the same time maintaining our commitment to creating
value. We are pleased that we are seeing improvements in our
operations from these endeavors and will continue to adapt to
market challenges with an eye on both near term economic challenges
and long-term prospects as the real estate market improves.
Management’s efforts to enhance the value of our overall
portfolio has resulted in the continuing improvement in the
Company’s results of operations. Our apartment portfolio continues
to thrive in the current economic conditions with occupancies
averaging over 95%. We continue to work aggressively to attract new
tenants and strive for continuous improvement of our properties in
order to maintain our existing tenants.
Our ability to take advantage of lower-interest rate mortgages
available has reduced our monthly obligations and increased cash
flow within our multifamily portfolio.
In our commercial portfolio, we are seeing the benefit of our
efforts with new leases executed and increasing rents as first year
concessions expire. We believe that we will continue to see growth
in our commercial portfolio as the economic conditions improve and
we capitalize on the influx of attractive prospects in the
pipeline.
Rental and other property revenues were $23.2 million for the
three months ended March 31, 2015. This represents an increase of
$4.0 million, as compared to the prior period revenues of $19.2
million. This change, by segment, is an increase in the apartment
portfolio of $1.6 million, and an increase in the commercial
portfolio of $2.4 million. Within the apartment portfolio there was
an increase of $1.3 million in the acquired property portfolio and
an increase of $0.3 million in the same property portfolio. Within
the commercial portfolio, there was an increase of $1.5 million in
the acquired property portfolio and increase of $0.9 million in the
same store properties. We are continuing to market our properties
aggressively to attract new tenants and strive for continuous
improvement of our properties in order to maintain our existing
tenants.
Property operating expenses were $11.6 million for the three
months ended March 31, 2015. This represents an increase of $1.7
million, as compared to the prior period operating expenses of $9.9
million. This change, by segment, is an increase in the apartment
portfolio of $0.6 million, and an increase in the commercial
portfolio of $1.1 million. Within the apartment portfolio there was
an increase of $0.5 million in the acquired properties portfolio
and an increase of $0.1 million in the same property portfolio.
Within the commercial portfolio, there was an increase of $1.0
million in the acquired properties portfolio and an increase of
$0.1 million in the same store properties.
Interest income was $5.2 million for the three months ended
March 31, 2015. This represents an increase of $1.1 million, as
compared to the prior year income of $4.1 million. The increase was
primarily due to additional notes receivable acquired in prior
periods.
Other income was $4.1 million for the three months ended March
31, 2015. This represents an increase of $3.9 million, as compared
to the prior period income of $0.2 million. The majority of this
increase was due to a settlement agreement on one of the commercial
properties whereby upon payoff of the mortgage, we received a debt
forgiveness of $3.9 million.
Mortgage and loan interest expense was $9.2 million for the
three months ended March 31, 2015. This represents an increase of
$1.1 million, as compared to the prior period expense of $8.1
million. The majority of this increase is in the other portfolio
and is due to the securing of a new loan subsequent to the prior
period.
Litigation settlement expenses were $0.07 million for the three
months ended March 31, 2015, compared to $3.8 million of income in
2014 from settlements that occurred in that period. This increase
is the result of guarantor settlements on various real estate
properties in the prior period, therefore avoiding future
litigation.
Gain on land sales increased for the three months ended March
31, 2015, as compared to the prior period. In the current period,
we sold 33.39 acres of land in two transactions for a sales price
of $7.3 million and recorded a gain of $2.9 million. In the prior
period, we sold 6.31 acres of land in one transaction for a sales
price of $1.6 million and recorded a gain of $0.8 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,
2015 2014 (dollars in thousands, except per share
amounts) Revenues: Rental and other property revenues
(including $170 and $175 for the three months ended 2015 and 2014,
respectively, from related parties) $ 23,156 $ 19,159
Expenses: Property operating expenses (including $162 and
$155 for the three months ended 2015 and 2014, respectively, from
related parties) 11,668 9,928 Depreciation and amortization 4,704
4,313 General and administrative (including $1,007 and $918 for the
three months ended 2015 and 2014, respectively, from related
parties) 2,201 1,984 Net income fee to related party 290 490
Advisory fee to related party 2,292 2,242
Total operating expenses 21,155 18,957
Net operating income 2,001 202
Other income
(expenses): Interest income (including $4,897 and $4,036 for
the three months ended 2015 and 2014, respectively, from related
parties) 5,237 4,117 Other income 4,097 173 Mortgage and loan
interest (including $864 and $798 for the three months ended 2015
and 2014, respectively, from related parties) (9,193 ) (8,119 )
Deferred borrowing costs amortization (601 ) (938 ) Loan charges
and prepayment penalties (1,850 ) (1,582 ) Earnings from
unconsolidated subsidiaries and investees 45 70 Litigation
settlement (73 ) 3,839 Total other expenses
(2,338 ) (2,440 ) Loss before gain on land sales,
non-controlling interest, and taxes (337 ) (2,238 ) Gain on land
sales 2,876 753 Net income (loss) from
continuing operations before taxes 2,539 (1,485 ) Income tax
benefit 103 2,049 Net income from
continuing operations 2,642 564 Discontinued operations: Net income
(loss) from discontinued operations 293 (199 ) Gain on sale of real
estate from discontinued operations - 6,053 Income tax expense from
discontinued operations (103 ) (2,049 ) Net income
from discontinued operations 190 3,805
Net income 2,832 4,369 Net (income) loss attributable to
non-controlling interest 508 (819 ) Net income
attributable to American Realty Investors, Inc. 3,340 3,550
Preferred dividend requirement (390 ) (613 ) Net
income applicable to common shares $ 2,950 $ 2,937
Earnings per share - basic Net income (loss) from
continuing operations $ 0.20 $ (0.08 ) Net income from discontinued
operations 0.01 0.33 Net income
applicable to common shares $ 0.21 $ 0.25
Earnings per share - diluted Net income (loss) from
continuing operations $ 0.16 $ (0.08 ) Net income from discontinued
operations 0.01 0.33 Net income
applicable to common shares $ 0.17 $ 0.25
Weighted average common shares used in computing earnings per share
14,027,619 11,525,389 Weighted average common shares used in
computing diluted earnings per share 17,426,707 11,525,389
Amounts attributable to American Realty Investors,
Inc. Net income (loss) from continuing operations $ 3,150 $
(255 ) Net income from discontinued operations 190
3,805 Net income applicable to American Realty
Investors, Inc. $ 3,340 $ 3,550
AMERICAN REALTY INVESTORS, INC. CONSOLIDATED
BALANCE SHEETS (unaudited) March 31,
December 31, 2015 2014 (dollars in
thousands, except share and par value amounts) Assets
Real estate, at cost $ 811,359 $ 810,214 Real estate subject to
sales contracts at cost, net of depreciation ($2,387 for 2015 and
$2,300 for 2014) 19,047 19,026 Less accumulated depreciation
(133,800 ) (129,477 )
Total real estate
696,606 699,763 Notes and interest receivable Performing (including
$136,841 in 2015 and $139,466 in 2014 from related parties) 153,271
149,484 Non-performing 3,171 3,161 Less allowance for doubtful
accounts (including $15,537 in 2015 and 2014 from related parties)
(18,279 ) (18,279 ) Total notes and interest
receivable 138,163 134,366 Cash and cash equivalents 19,700 12,299
Restricted cash 36,135 49,266 Investments in unconsolidated
subsidiaries and investees 4,462 4,279 Receivable from related
party 5,409 21,414 Other assets 45,213 44,111
Total assets $ 945,688 $ 965,498
Liabilities and Shareholders’ Equity Liabilities: Notes and
interest payable $ 621,596 $ 638,891 Notes related to assets held
for sale 1,227 1,552 Notes related to subject to sales contracts
18,434 18,616 Deferred revenue (including $72,564 in 2015 and 2014
from sales to related parties) 74,409 74,409 Accounts payable and
other liabilities (including $11,412 in 2015 and $11,024 in 2014 to
related parties) 48,317 52,442 763,983
785,910 Shareholders’ equity: Preferred stock, Series A:
$2.00 par value, authorized 15,000,000 shares, issued and
outstanding 2,461,252 shares in 2015 and 2014 (liquidation
preference $10 per share), including 900,000 shares in 2015 and
2014 held by ARL or subsidiaries. 3,126 3,126 Common stock, $0.01
par value, authorized 100,000,000 shares; issued 14,443,404 shares
in 2015 and 2014; outstanding 14,027,619 shares in 2015 and 2014;
including 140,000 shares held by TCI (consolidated) in 2015 and
2014. 141 141 Treasury stock at cost; 415,785 shares in 2015 and
2014 (6,395 ) (6,395 ) Paid-in capital 107,652 108,378 Retained
earnings 22,430 19,090 Total American
Realty Investors, Inc. shareholders' equity 126,954 124,340
Non-controlling interest 54,751 55,248
Total shareholders' equity 181,705 179,588
Total liabilities and shareholders' equity $ 945,688
$ 965,498
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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