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, 2017. For the three months ended March 31, 2017, we reported a net loss applicable to common shares of $6.0 million or ($0.39) per diluted loss per share compared to a net loss applicable to common shares of $3.7 million or ($0.24) per diluted loss per share for the same period ended 2016. Included in the net loss from operations is non-cash expenses of depreciation and amortization of $6.3 million and $5.8 million for the three months ended March 31, 2017 and 2016 respectively.

The growth in revenue and corresponding improvement in Net Operating Income for the three months ended March 31, 2017 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 $31.8 million for the three months ended March 31, 2017. This represents an increase of $2.6 million compared to the prior period revenues of $29.2 million. This change, by segment, is an increase in the apartment portfolio of $1.3 million, and an increase in the commercial portfolio of $1.3 million. The increase in our apartment portfolio was mainly due to the acquisition of new properties. 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. 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 $16.3 million for the three months ended March 31, 2017. This represents an increase of $1.1 million compared to the prior period operating expenses of $15.2 million. This change, by segment, is an increase in the apartment portfolio of $1.4 million, which was consistent with the acquisition of new properties. In addition, there was a decrease of $0.2 million in property operating expenses for the commercial portfolio.

Depreciation and amortization expense was $6.3 million for the three months ended March 31, 2017. This represents an increase of $0.5 million compared to the prior period expense of $5.8 million. This change by segment is an increase of $0.5 million in the apartment portfolio.

Advisory fees decreased less than $0.1 million for the three months ended March 31, 2017 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 $16.8 million for the three months ended March 31, 2017. This represents an increase of $2.6 million compared to the prior period expense of $14.2 million. The change by segment is an increase in the other portfolio of $1.7 million and an increase in the apartment portfolio of $0.6 million. Within the other portfolio, the increase was primarily due to $1.3 million of interest expense related to the Israeli bond sale, which closed in the first quarter of 2017. In addition, we secured a new mezzanine debt obligation in the third quarter of 2016. The increase within the apartment portfolio is primarily due to loan charges and prepayment penalties for the refinancing of two mortgage loans at lower interest rates.

Gain on land sales decreased for the three months ended March 31, 2017 compared to the prior period. During the first quarter of 2017, we sold 2.49 acres of land for a sales price of $1.1 million and recorded a gain of $0.4 million. During the first quarter of 2016, we sold 40.88 acres of land for a sales price of $4.2 million and recorded a gain of $1.7 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,   2017     2016   (dollars in thousands, except per share amounts) Revenues: Rental and other property revenues (including $190 and $173 for the three months ended 2017 and 2016, respectively, from related parties) $ 31,822 $ 29,205   Expenses: Property operating expenses (including $237 and $210 for the three months ended 2017 and 2016, respectively, from related parties) 16,265 15,216 Depreciation and amortization 6,330 5,830 General and administrative (including $962 and $918 for the three months ended 2017 and 2016, respectively, from related parties) 2,031 2,025 Net income fee to related party 60 72 Advisory fee to related party   2,659     2,738  

Total operating expenses

  27,345     25,881   Net operating income 4,477 3,324 Other income (expenses): Interest income (including $4,476 and $4,528 for the three months ended 2017 and 2016, respectively, from related parties) 4,792 5,291 Other income 1,443 298 Mortgage and loan interest (including $1,511 and $1,092 for the three months ended 2017 and 2016, respectively, from related parties) (16,796 ) (14,214 ) Foreign currency transaction loss (323 ) - Earnings from unconsolidated subsidiaries and investees   55     155   Total other expenses   (10,829 )   (8,470 ) Loss before gain on land sales, non-controlling interest, and taxes (6,352 ) (5,146 ) Loss on sale of income producing properties - (244 ) Gain on land sales   445     1,652   Net loss from continuing operations before taxes (5,907 ) (3,738 ) Income tax benefit   -     1   Net loss from continuing operations (5,907 ) (3,737 ) Discontinued operations: Net income from discontinued operations - 3 Income tax expense from discontinued operations   -     (1 ) Net income from discontinued operations   -     2   Net loss (5,907 ) (3,735 ) Net income attributable to non-controlling interest   193     530   Net loss attributable to American Realty Investors, Inc. (5,714 ) (3,205 ) Preferred dividend requirement   (275 )   (497 ) Net loss applicable to common shares $ (5,989 ) $ (3,702 ) Earnings per share - basic Net loss from continuing operations $ (0.39 ) $ (0.24 )   Earnings per share - diluted Net loss from continuing operations $ (0.39 ) $ (0.24 )   Weighted average common shares used in computing earnings per share 15,514,360 15,514,360 Weighted average common shares used in computing diluted earnings per share 15,514,360 15,514,360   Amounts attributable to American Realty Investors, Inc. Net loss from continuing operations $ (5,714 ) $ (3,207 ) Net income from discontinued operations   -     2   Net loss applicable to American Realty Investors, Inc. $ (5,714 ) $ (3,205 )     AMERICAN REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS     March 31, December 31,   2017     2016   (dollars in thousands, except share and par value amounts) Assets Real estate, at cost $ 1,035,008 $ 1,017,684 Real estate subject to sales contracts at cost 48,323 48,919 Less accumulated depreciation   (171,607 )   (165,597 ) Total real estate 911,724 901,006 Notes and interest receivable: Performing (including $121,173 in 2017 and $125,799 in 2016 from related parties) 138,733 143,601 Less allowance for estimated losses (including $15,537 in 2017 and 2016 from related parties)   (17,037 )   (17,037 ) Total notes and interest receivable 121,696 126,564 Cash and cash equivalents 55,284 17,522 Restricted cash 31,259 38,399 Investments in unconsolidated joint ventures and investees 6,141 6,087 Receivable from related party 22,064 24,672 Other assets   65,557     60,659   Total assets $ 1,213,725   $ 1,174,909     Liabilities and Shareholders’ Equity Liabilities: Notes and interest payable $ 830,742 $ 845,107 Notes related to real estate held for sale 376 376 Notes related to real estate subject to sales contracts 4,177 5,612 Bond and interest payable 71,975 - Deferred revenue (including $70,945 in 2017 and $70,935 in 2016 to related parties) 91,390 91,380 Accounts payable and other liabilities (including $10,793 in 2017 and $10,854 in 2016 to related parties)   45,183     56,303   Total liabilities 1,043,843 998,778   Shareholders’ equity: Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 2,000,614 shares in 2017 and 2016 (liquidation preference $10 per share), including 900,000 shares in 2017 and 2016 held by ARL. 2,205 2,205 Common stock, $0.01 par value, authorized 100,000,000 shares; issued 15,930,145 shares and outstanding 15,514,360 in 2017 and 2016, including 140,000 shares held by TCI (consolidated) in 2017 and 2016. 159 159 Treasury stock at cost; 415,785 shares in 2017 and 2016, and 140,000 shares held by TCI (consolidated) as of 2017 and 2016 (6,395 ) (6,395 ) Paid-in capital 111,168 111,510 Retained earnings   8,684     14,398   Total American Realty Investors, Inc. shareholders' equity 115,821 121,877 Non-controlling interest   54,061     54,254   Total shareholders' equity   169,882     176,131   Total liabilities and shareholders' equity $ 1,213,725   $ 1,174,909  

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