ARL American Realty Investors Inc

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, 2016. For the three months ended March 31, 2016, we reported a net loss applicable to common shares of ($3.7) million or ($0.24) per diluted earnings per share, as compared to a net income applicable to common shares of $3.0 million or $0.21 per diluted earnings per share for the same period ended 2015.

The growth in revenue and corresponding improvement in Net Operating Income for the three months ended March 31, 2016 demonstrates the viability of our business strategy. Management will continue its plan for growth from its operating properties and expects to reinvest in areas that will complement this growth; further management will maintain strong attention to all details of its operations including appropriate expense controls.

Our ability to take advantage of lower-interest rate mortgages available has reduced our monthly obligations and increased cash flow within our multifamily portfolio.

Revenues

Rental and other property revenues were $29.2 million for the three months ended March 31, 2016. This represents an increase of $6.0 million, as compared to the prior period revenues of $23.2 million. This change, by segment, is an increase in the apartment portfolio of $5.2 million, and an increase in the commercial portfolio of $0.8 million. Our apartment portfolio continues to thrive in the current economic conditions with occupancies averaging over 95%. We have been able to surpass expectations due to the high-quality product offered, strength of our management team and our commitment to our tenants. The increase in our apartment and commercial portfolios was mainly due to the acquisition of new 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.

Expense

Property operating expenses were $15.2 million for the three months ended March 31, 2016. This represents an increase of $3.5 million, as compared to the prior period operating expenses of $11.7 million. This change, by segment, is an increase in the apartment portfolio of $2.3 million, an increase in the commercial portfolio of $0.8 million, and an increase in the land portfolio of $0.4 million. The increase in property operating expenses is consistent with the acquisition of new properties.

Depreciation and amortization expense was $5.8 million for the three months ended March 31, 2016. This represents an increase of $1.1 million, as compared to the prior period expense of $4.7 million. This change by segment is an increase of $0.7 million in the apartment portfolio and an increase of $0.4 million in the commercial portfolio.

Advisory fees increased $0.4 million for the three months ended March 31, 2016 as compared to the prior period. Advisory fees are computed based on a gross asset fee of 0.0625% per month (0.75% per annum) of the weighted average of the gross asset value.

Other income (expense)

Mortgage and loan interest expense was $13.5 million for the three months ended March 31, 2016. This represents an increase of $3.7 million, as compared to the prior period expense of $9.8 million. The majority of this increase is in the apartments and other portfolios and is due to the acquisition of new apartment complexes, incurring new corporate debt obligations and the acquisition of one commercial property. This increase by segment is reflected in an increase of $0.3 million in the commercial portfolio, an increase of $1.2 million in the apartment portfolio, a decrease in the land portfolio of $0.8 million due to the transfer of mortgage obligations related to land sold, and an increase of $3.0 million in the other portfolio.

Loan charges expense was $0.7 million for the three months ended March 31, 2016. This represents a decrease of $1.2 million, as compared to the prior period expense of $1.9 million. The decrease was due to the decline of prepayment penalties related to refinances in this quarter.

Gain on land sales decreased for the three months ended March 31, 2016, as compared to the prior period. In 2016, we sold 40.88 acres of land for a sales price of $4.2 million and recorded a gain of $1.7 million. In 2015, we sold 33.4 acres of land for a sales price of $7.2 million and recorded a gain of $2.9 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, 2016     2015 (dollars in thousands, except per share amounts) Revenues: Rental and other property revenues (including $173 and $170 for the three months ended 2016 and 2015, respectively, from related parties) $ 29,205 $ 23,156   Expenses: Property operating expenses (including $210 and $162 for the three months ended 2016 and 2015, respectively, from related parties) 15,216 11,668 Depreciation and amortization 5,830 4,704 General and administrative (including $918 and $1,007 for the three months ended 2016 and 2015, respectively, from related parties) 2,025 2,201 Net income fee to related party 72 290 Advisory fee to related party   2,738     2,292   Total operating expenses   25,881     21,155   Net operating income (loss) 3,324 2,001   Other income (expenses): Interest income (including $4,528 and $4,897 for the three months ended 2016 and 2015, respectively, from related parties) 5,291 5,237 Other income 298 4,097 Mortgage and loan interest (including $1,092 and $864 for the three months ended 2016 and 2015, respectively, from related parties) (13,525 ) (9,794 ) Loan charges and prepayment penalties (689 ) (1,850 ) Earnings from unconsolidated subsidiaries and investees 155 45 Litigation settlement (expense)   -     (73 ) Total other expenses   (8,470 )   (2,338 ) Loss before gain on land sales, non-controlling interest, and taxes (5,146 ) (337 ) Gain (loss) on sale of income producing properties (244 ) - Gain on land sales   1,652     2,876   Net income (loss) from continuing operations before taxes (3,738 ) 2,539 Income tax benefit (expense)   1     103   Net income (loss) from continuing operations (3,737 ) 2,642 Discontinued operations: Net income (loss) from discontinued operations 3 293 Income tax benefit (expense) from discontinued operations   (1 )   (103 ) Net income (loss) from discontinued operations   2     190   Net income (loss) (3,735 ) 2,832 Net income (loss) attributable to non-controlling interest   530     508   Net income attributable to American Realty Investors, Inc. (3,205 ) 3,340 Preferred dividend requirement   (497 )   (390 ) Net income applicable to common shares $ (3,702 ) $ 2,950     Earnings per share - basic Net income (loss) from continuing operations $ (0.24 ) $ 0.20 Net income from discontinued operations   -     0.01   Net income applicable to common shares $ (0.24 ) $ 0.21     Earnings per share - diluted Net income (loss) from continuing operations $ (0.24 ) $ 0.16 Net income (loss) from discontinued operations   -     0.01   Net income applicable to common shares $ (0.24 ) $ 0.17     Weighted average common shares used in computing earnings per share 15,514,360 14,027,619 Weighted average common shares used in computing diluted earnings per share 15,514,360 17,426,707   Amounts attributable to American Realty Investors, Inc. Net income (loss) from continuing operations $ (3,207 ) $ 3,150 Net income (loss) from discontinued operations   2     190   Net income applicable to American Realty Investors, Inc. $ (3,205 ) $ 3,340               AMERICAN REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (unaudited)   March 31, December 31, 2016 2015 (dollars in thousands, except share and par value amounts) Assets Real estate, at cost $ 961,548 $ 954,390 Real estate subject to sales contracts at cost, net of depreciation 49,155 49,155 Less accumulated depreciation   (155,332 )   (150,038 ) Total real estate 855,371 853,507 Notes and interest receivable Performing (including $120,370 in 2016 and $125,915 in 2015 from related parties) 133,274 137,280 Less allowance for doubtful accounts (including $15,537 in 2016 and 2015 from related parties)   (17,037 )   (17,037 ) Total notes and interest receivable 116,237 120,243 Cash and cash equivalents 10,239 15,232 Restricted cash 30,664 45,711 Investments in unconsolidated subsidiaries and investees 5,739 8,365 Receivable from related party 32,397 28,147 Other assets   56,620     46,163   Total assets $ 1,107,267   $ 1,117,368     Liabilities and Shareholders’ Equity Liabilities: Notes and interest payable $ 801,905 $ 797,962 Notes related to subject to sales contracts 376 376 Notes related to assets subject to sales contract 6,220 6,422 Payable to related parties - Deferred revenue (including $70,902 in 2016 and $70,892 in 2015 from sales to related parties) 91,347 91,336 Accounts payable and other liabilities (including $10,112 in 2016 and $10,013 in 2015 to related parties)   34,762     44,383   934,610 940,479   Shareholders’ equity: Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 2,000,614 shares in 2016 and 2015 (liquidation preference $10 per share), including 900,000 shares in 2016 and 2015 held by ARL or subsidiaries. 2,205 2,205 Common stock, $0.01 par value, authorized 100,000,000 shares; issued 15,930,145 and 14,443,404 shares; outstanding 15,514,360 and 14,027,619 shares in 2016 and 2015, respectively; including 140,000 shares held by TCI (consolidated) in 2016 and 2015. 156 156 Treasury stock at cost; 415,785 shares in 2016 and 2015, and 140,000 shares held by TCI (consolidated) as of 2016 and 2015 (6,395 ) (6,395 ) Paid-in capital 109,364 109,861 Retained earnings   13,925     17,130   Total American Realty Investors, Inc. shareholders' equity 119,255 122,957 Non-controlling interest   53,402     53,932   Total shareholders' equity   172,657     176,889   Total liabilities and shareholders' equity $ 1,107,267   $ 1,117,368  

View source version on businesswire.com: http://www.businesswire.com/news/home/20160513005912/en/

American Realty Investors, Inc.Investor RelationsGene Bertcher, 800-400-6407investor.relations@americanrealtyinvest.com