American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real
estate investment company, today reported results of operations for
the fourth quarter ended December 31, 2015. For the three months
ended December 31, 2015, the Company reported net loss applicable
to common shares of $1.6 million or $0.11 per diluted earnings per
share, as compared to net income applicable to common shares of
$26.7 million or $1.91 per diluted earnings per share for the same
period ended 2014.
For the twelve months ended December 31, 2015, we reported a net
loss applicable to common shares of ($3.2) million or ($0.21) per
diluted earnings per share, as compared to a net income applicable
to common shares of $28.8 million or $2.28 per diluted earnings per
share for the same year ended 2014. The current year net loss
applicable to common shares of ($3.2) million includes gain on land
sales of $21.6 million, provision on the impairment of real estate
assets of $5.3 million and net income from discontinued operations
of $0.9 million, as compared to the prior year net income
applicable to common shares of $28.8 million, which includes a gain
on land sales of $0.6 million, and net income from discontinued
operations of $37.9 million.
Rental and other property revenues were $104.2 million for the
twelve months ended December 31, 2015. This represents an increase
of $24.8 million, as compared to the prior year revenues of $79.4
million. This change, by segment, is an increase in the apartment
portfolio of $14.7 million and an increase in the commercial
portfolio of $10.1 million. The increase in the apartment and
commercial portfolios is mainly due to the acquisition of new
properties. Our apartment portfolio continues to excel in the
current economic conditions with occupancies averaging over 94% and
increasing rental rates. 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 the
commercial segment is also due to a high rise in the occupancy rate
of the commercial complexes, in 2015 the average occupancy rate was
over 86%. Our commercial portfolio is performing significantly
better than in previous periods and we anticipate that it will
continue to improve as the Company has been successful in
attracting high-quality tenants and expects to continue to see the
benefits of those new leases in the future. We continue to work
aggressively to attract new tenants and strive for continuous
improvement of our properties in order to maintain our existing
tenants.
Property operating expenses were $54.0 million for the twelve
months ended December 31, 2015. This represents an increase of
$11.9 million, as compared to the prior year operating expenses of
$42.1 million. This change, by segment, is an increase in the
apartment portfolio of $7.4 million and an increase in the
commercial portfolio of $4.7 million. Within the apartment
portfolio, there was an increase of $5.9 million in the acquired
properties portfolio, and an increase $1.5 million in the same
property portfolio. Within the commercial portfolio, there was an
increase of $3.6 million in the acquired properties portfolio and
an increase of $1.1 million in the same store properties. The
increase in the apartment portfolio was due to the acquisition of
new properties throughout the year. The increase in the commercial
portfolio was due to an acquisition of a property within the year
and an increase in real estate taxes.
Depreciation and amortization expenses were $21.4 million for
the twelve months ended December 31, 2015. This represents an
increase of $3.8 million as compared to prior year depreciation of
$17.6 million. Within the apartment and commercial portfolios, the
majority of this change is due to the acquisition of new properties
and an increase in tenant improvements and repairs projects.
General and administrative expenses were $6.9 million for the
twelve months ended December 31, 2015. This represents a decrease
of $3.4 million, as compared to the prior year general and
administrative expenses of $10.3 million. The majority of this
change is due to decreases in legal expenses and franchise taxes in
the current year.
The provision for impairment of notes receivable, investment in
real estate partnerships, and real estate assets was $5.3 million
for the year ended December 31, 2015. There was no provision for
impairment expense in the prior year. For the year ended, the
Company provided an impairment of $5.3 million for the golf course
and related assets located in the U.S. Virgin Islands. This
impairment relates to the decision to sell the development parcels
in the U.S. Virgin Islands and the resultant decrease in the
estimated fair value of the remaining assets.
Net income fee was $0.5 million for the twelve months ended
December 31, 2015. This represents a decrease of $3.2 million, as
compared to the prior year net income fee of $3.7 million. The net
income fee paid to Pillar is calculated at 7.5% of net income.
Advisory fees were $9.8 million for the twelve months ended
December 31, 2015. This represents an increase of $0.9 million, as
compared to the prior year advisory fees of $8.9 million. Advisory
fees are computed based on a gross asset fee of 0.0625% per month
(0.75% per annum) of the average of the gross asset value.
Interest income was $16.7 million for the twelve months ended
December 31, 2015. This represents a decrease of $3.4 million, as
compared to the prior year interest income of $20.1 million. The
majority of this decrease is due to the recognition of
uncollectable interest in the prior year on notes receivable.
Other income was $4.1 million for the twelve months ended
December 31, 2015. This represents an increase of $2.7 million as
compared to the prior year other income of $1.4 million. The
increase is primarily due to a property with a negotiated
settlement of a debt with the lender.
Mortgage and loan interest expense was $47.5 million for the
twelve months ended December 31, 2015. This represents an increase
of $9.5 million, as compared to the prior year expense of $38.0
million. This change by segment is an increase in the apartment
portfolio of $2.0 million, an increase in the commercial portfolio
of $0.9 million, and an increase in the other portfolio of $6.6
million. Within the apartment and commercial portfolios, the
majority of the increase is due to the acquisition of new
properties, offset by loan refinancing at lower rates. Within the
other portfolio, the majority of the increase is due to incurring
new mezzanine debt obligations.
Loan charges and prepayment penalties were $5.0 million for the
twelve months ended December 31, 2015. This represents an increase
of $2.1 million, as compared to the prior year expense of $2.9
million. This change is mainly due to refinancing and prepayment
penalties made on some of our existing loans.
Litigation settlement expenses were $0.4 million for the twelve
months ended December 31, 2015. This represents an increase of $3.9
million, as compared to the prior year credit of $3.6 million. This
variance is due to the settlement of a debt resulting in a gain of
$3.5 million in the prior year.
Gain on land sales was $21.6 million for the twelve months ended
December 31, 2015. In the current year, we sold approximately 595
acres of land in eleven transactions for a sales price of $107.3
million and recorded a gain of $18.9 million. In addition, we
recognized $2.7 million in deferred gain from prior years’ land
sales.
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
For the Years Ended December 31, 2015
2014 2013 (dollars in thousands, except per share
amounts) Revenues: Rental and other property revenues
(including $726, $701 and $670 for the year ended 2015, 2014 and
2013, respectively, from related parties) $ 104,188 $ 79,412 $
80,750
Expenses: Property operating expenses
(including $770, $645 and $699 for the year ended 2015, 2014 and
2013, respectively, from related parties) 54,002 42,124 39,318
Depreciation 21,418 17,593 15,954 General and administrative
(including $3,855, $3,628 and $3,646 for the year ended 2015, 2014
and 2013, respectively, from related parties) 6,893 10,282 7,919
Provision on impairment of notes receivable and real estate assets
5,300 - 18,980 Net income fee to related party 492 3,669 4,089
Advisory fee to related party 9,775 8,943
10,166 Total operating expenses 97,880
82,611 96,426 Operating income
(loss) 6,308 (3,199 ) (15,676 )
Other income
(expense): Interest income (including $15,859, $19,029 and
$19,110 for the year ended 2015, 2014 and 2013, respectively, from
related parties) 16,674 20,054 19,445 Other income 4,106 1,415
10,163 Mortgage and loan interest (including $3,774, $3,660 and
$3,927 for the year ended 2015, 2014 and 2013, respectively, from
related parties) (47,512 ) (37,972 ) (39,110 ) Loan charges and
prepayment penalties (4,965 ) (2,854 ) (5,557 ) Loss on the sale of
investments (1 ) (92 ) (283 ) Earnings from unconsolidated
subsidiaries and investees 428 347 391 Litigation settlement
(352 ) 3,591 (20,313 ) Total other expenses
(31,622 ) (15,511 ) (35,264 ) Loss before gain
(loss) on land sales, non-controlling interest, and taxes (25,314 )
(18,710 ) (50,940 ) Gain (loss) on land sales 21,648
561 (455 ) Loss from continuing operations
before tax (3,666 ) (18,149 ) (51,395 ) Income tax benefit
(expense) (517 ) 20,413 40,513
Net income (loss) from continuing operations (4,183 )
2,264 (10,882 ) Discontinued operations: Income
(loss) from discontinued operations 644 (3,557 ) (2,634 ) Gain on
sale of real estate from discontinued operations 735 61,879 98,951
Income tax benefit (expense) from discontinued operations
(483 ) (20,413 ) (33,711 ) Net income (loss) from
discontinued operations 896 37,909 62,606 Net income (loss) (3,287
) 40,173 51,724 Net income (loss) attributable to non-controlling
interests 1,327 (9,288 ) (10,448 ) Net
income (loss) attributable to American Realty Investors, Inc.
(1,960 ) 30,885 41,276 Preferred dividend requirement (1,216
) (2,043 ) (2,452 ) Net income (loss) applicable to
common shares $ (3,176 ) $ 28,842 $ 38,824
Earnings per share - basic Loss from continuing operations $
(0.27 ) $ (0.71 ) $ (2.07 ) Income (loss) from discontinued
operations 0.06 2.99 5.43
Net income (loss) applicable to common shares $ (0.21 ) $ 2.28
$ 3.36
Earnings per share - diluted
Loss from continuing operations $ (0.27 ) $ (0.71 ) $ (2.07 )
Income (loss) from discontinued operations 0.06
2.99 5.43 Net income (loss) applicable
to common shares $ (0.21 ) $ 2.28 $ 3.36
Weighted average common shares used in computing earnings per share
15,111,107 12,683,956 11,525,389 Weighted average common shares
used in computing diluted earnings per share 15,111,107 12,683,956
11,525,389
Amounts attributable to American Realty
Investors, Inc. Loss from continuing operations $ (2,856 ) $
(7,024 ) $ (21,330 ) Income (loss) from discontinued operations
896 37,909 62,606 Net
income (loss) $ (1,960 ) $ 30,885 $ 41,276
AMERICAN REALTY INVESTORS, INC. CONSOLIDATED
BALANCE SHEETS
December 31, December 31, 2015 2014
(dollars in thousands, except share and par value amounts)
Assets Real estate, at cost $ 954,390 $ 810,214 Real estate
subject to sales contracts at cost, net of depreciation ($0 in 2015
and $2,300 in 2014) 49,155 19,026 Less accumulated depreciation
(150,038 ) (129,477 ) Total real estate 853,507
699,763 Notes and interest receivable Performing (including
$125,915 in 2015 and $139,466 in 2014 from related parties) 137,280
149,484 Non-performing - 3,161 Less allowance for estimated losses
(including $15,537 in 2015 and $15,537 in 2014 from related
parties) (17,037 ) (18,279 ) Total notes and interest
receivable 120,243 134,366 Cash and cash equivalents 15,232 12,299
Restricted cash 45,711 49,266 Investments in unconsolidated
subsidiaries and investees 8,365 4,279 Receivable from related
party 28,147 21,414 Other assets 46,163 44,111
Total assets $ 1,117,368 $ 965,498
Liabilities and Shareholders’ Equity Liabilities: Notes and
interest payable $ 797,962 $ 638,891 Notes related to assets held
for sale 376 1,552 Notes related to assets subject to sales
contracts 6,422 18,616 Deferred revenue (including $70,892 in 2015
and $72,564 in 2014 from sales to related parties) 91,336 74,409
Accounts payable and other liabilities (including $7,236 in 2015
and $11,024 in 2014 to related parties) 44,383
52,442 940,479 785,910 Shareholders’ equity:
Preferred stock, Series A: $2.00 par value, authorized 15,000,000
shares, issued and outstanding 2,000,614 and 2,461,252 shares in
2015 and 2014, respectively (liquidation preference $10 per share),
including 900,000 shares in 2015 and 2014 held by ARL. 2,205 3,126
Common stock, $0.01 par value, authorized 100,000,000 shares;
issued 15,930,145 and 14,443,404 shares and outstanding 15,514,360
and 14,027,619 shares in 2015 and 2014, respectively; including
140,000 shares held by TCI (consolidated) in 2015 and 2014. 156 141
Treasury stock at cost; 415,785 shares in 2015 and 2014, and
140,000 shares held by TCI (consolidated) as of 2015 and 2014.
(6,395 ) (6,395 ) Paid-in capital 109,861 108,378 Retained earnings
17,130 19,090 Total American Realty
Investors, Inc. shareholders' equity 122,957 124,340
Non-controlling interest 53,932 55,248
Total equity 176,889 179,588 Total
liabilities and equity $ 1,117,368 $ 965,498
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version on businesswire.com: http://www.businesswire.com/news/home/20160330006283/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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