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, 2016. For the three months
ended December 31, 2016, the Company reported net income applicable
to common shares of $1.5 million or $0.09 per diluted earnings per
share, as compared to net loss applicable to common shares of $1.6
million or ($0.11) per diluted earnings per share for the same
period ended 2015.
For the twelve months ended December 31, 2016, we reported a net
loss applicable to common shares of $3.8 million or ($0.25) per
diluted earnings per share, as compared to a net loss applicable to
common shares of $3.2 million or ($0.21) per diluted earnings per
share for the same period ended 2015. The current year net loss
applicable to common shares of $3.8 million includes gain on sales
of income-producing properties of $16.2 million and gain on land
sales of $3.1 million, compared to the prior year net loss
applicable to common shares of $3.2 million, which 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.
Rental and other property revenues were $119.7 million for the
year ended December 31, 2016. This represents an increase of $15.5
million compared to the prior year revenues of $104.2 million. The
change by segment is an increase in the apartment portfolio of
$13.0 million and an increase in the commercial portfolio of $2.5
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 92% 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 an increase in rental rates and maintaining an average occupancy
rate of 85% in the commercial complexes in 2016. We anticipate that
our commercial portfolio 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.
Property operating expenses were $63.0 million for the year
ended December 31, 2016. This represents an increase of $9.0
million compared to the prior year operating expenses of $54.0
million. The change by segment is an increase in the apartment
portfolio of $5.8 million and an increase in the commercial
portfolio of $2.6 million. We added a net 2,145 apartment units
during 2015 and 723 during 2016 resulting in a $5.8 million
increase in the apartment portfolio. The increase in our commercial
portfolio was primarily due to the acquisition of an office
building in Houston, Texas late in the second quarter of 2015.
Depreciation and amortization expenses were $23.8 million for
the year ended December 31, 2016. This represents an increase of
$2.4 million compared to prior year depreciation of $21.4 million.
The increase is primarily due to the growth in our apartment
portfolio.
General and administrative expenses were $7.1 million dollars
for the year ended December 31, 2016. This represents an increase
of $0.2 million compared to the prior year general and
administrative expenses of $6.9 million.
There was no provision for impairment of notes receivable,
investment in real estate partnerships and real estate assets for
the year ended December 31, 2016 as compared to the prior year
provision of $5.3 million for our golf course and related assets
located in the U.S. Virgin Islands. This impairment was due to the
decision to sell the development parcels in the U.S. Virgin Islands
which resulted in a decrease in the estimated fair value of the
remaining assets.
Net income fee was $0.3 million for the year ended December 31,
2016, which represents a decrease of $0.2 million compared to the
prior year net income fee of $0.5 million. The net income fee paid
to Pillar is calculated at 7.5% of net income.
Advisory fees were $10.9 million for the year ended December 31,
2016, for an increase of $1.1 million compared to the prior year
advisory fees of $9.8 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 $20.5 million for the year ending December
31, 2016. This represents an increase of $3.8 million compared to
the prior year interest income of $16.7 million dollars. This
increase was primarily due to an increase in amount receivable owed
from our Advisor.
Other income was $2.1 million for the year ending December 31,
2016. This represents a decrease of $2.0 million compared to prior
year other income of $4.1 million. The decrease is primarily due to
a property with a negotiated settlement of a debt with the lender
during 2015.
Mortgage and loan interest expense was $59.4 million for the
year ended December 31, 2016. This represents an increase of $6.9
million compared to the prior year expense of $52.5 million. The
change by segment is an increase in the other portfolio of $7.4
million, an increase in the apartment portfolio of $1.7 million and
an increase in the commercial portfolio of $0.3 million, partially
offset by a decrease in the land portfolio of $2.5 million. Within
the other portfolio, the majority of the increase is due to
incurring two new mezzanine debt obligations during 2015. Within
the apartment and commercial portfolios, the majority of the
increase is due to the acquisition of new properties, partially
offset by loan refinancing at lower rates.
Gain on sale of income-producing properties was $16.2 million
for the year ended December 31, 2016. During 2016, we sold two
apartment communities for a total sales price of $20.4 million and
recorded an aggregate gain of $16.4 million from the sale of these
two properties. We also sold an industrial warehouse that resulted
in a loss of $0.2 million.
Gain on land sales was $3.1 million and $21.6 million for the
years ended December 31, 2016 and 2015, respectively. During 2016,
we sold a combined 129.7 acres of land for a total sales price of
$29.1 million and recorded an aggregate gain of $3.1 million.
During 2015, we sold approximately 595 acres of land for a total
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 during the year ended December 31, 2015.
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 BALANCE SHEETS December
31, December 31, 2016
2015 (dollars in thousands, except share and par
value amounts) Assets Real estate, at cost $ 1,017,684 $
954,390 Real estate subject to sales contracts at cost, net of
depreciation ($0 in 2016 and $0 in 2015) 48,919 49,155 Less
accumulated depreciation (165,597 ) (150,038 ) Total
real estate 901,006 853,507 Notes and interest receivable
Performing (including $125,799 in 2016 and $125,915 in 2015 from
related parties) 143,601 137,280 Less allowance for estimated
losses (including $15,537 in 2016 and $15,537 in 2015 from related
parties) (17,037 ) (17,037 ) Total notes and interest
receivable 126,564 120,243 Cash and cash equivalents 17,522 15,232
Restricted cash 38,399 45,711 Investments in unconsolidated
subsidiaries and investees 6,087 8,365 Receivable from related
party 24,672 28,147 Other assets 60,659 46,163
Total assets $ 1,174,909 $ 1,117,368
Liabilities and Shareholders’ Equity Liabilities: Notes and
interest payable $ 845,107 $ 797,962 Notes related to assets held
for sale 376 376 Notes related to assets subject to sales contracts
5,612 6,422 Deferred revenue (including $70,935 in 2016 and $70,892
in 2015 from sales to related parties) 91,380 91,336 Accounts
payable and other liabilities (including $10,854 in 2016 and $7,236
in 2015 to related parties) 56,303 44,383
998,778 940,479 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 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 shares in 2016 and 2015, including 140,000
shares held by TCI (consolidated) in 2016 and 2015 159 156 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 111,510 109,861 Retained earnings 14,398
17,130 Total American Realty Investors, Inc.
shareholders' equity 121,877 122,957 Non-controlling interest
54,254 53,932 Total equity
176,131 176,889 Total liabilities and equity $
1,174,909 $ 1,117,368
AMERICAN REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS For the Years Ended December 31,
2016 2015
2014 (dollars in thousands, except per share
amounts) Revenues: Rental and other property revenues
(including $708, $726 and $701 for the year ended 2016, 2015 and
2014, respectively, from related parties) $ 119,663 $ 104,188 $
79,412
Expenses: Property operating expenses
(including $900, $770 and $645 for the year ended 2016, 2015 and
2014, respectively, from related parties) 62,950 54,002 42,124
Depreciation 23,785 21,418 17,593 General and administrative
(including $4,053, $3,855 and $3,628 for the year ended 2016, 2015
and 2014, respectively, from related parties) 7,119 6,893 10,282
Provision on impairment of real estate assets - 5,300 - Net income
fee to related party 257 492 3,669 Advisory fee to related party
10,918 9,775 8,943 Total
operating expenses 105,029 97,880
82,611 Operating income (loss) 14,634 6,308 (3,199 )
Other income (expense): Interest income (including
$18,864, $15,859 and $19,029 for the year ended 2016, 2015 and
2014, respectively, from related parties) 20,453 16,674 20,054
Other income 2,091 4,106 1,415 Mortgage and loan interest
(including $5,300, $3,774 and $3,660 for the year ended 2016, 2015
and 2014, respectively, from related parties) (59,362 ) (52,477 )
(40,826 ) Loss on the sale of investments - (1 ) (92 ) Earnings
from unconsolidated subsidiaries and investees 493 428 347
Litigation settlement - (352 ) 3,591
Total other expenses (36,325 ) (31,622 )
(15,511 ) Loss before gain on sales, non-controlling
interest and taxes (21,691 ) (25,314 ) (18,710 ) Gain on sale of
income-producing properties 16,207 - - Gain on land sales
3,121 21,648 561 Loss from
continuing operations before tax (2,363 ) (3,666 ) (18,149 ) Income
tax benefit (expense) (46 ) (517 ) 20,413
Net income (loss) from continuing operations (2,409 )
(4,183 ) 2,264 Discontinued operations: Income
(loss) from discontinued operations (2 ) 644 (3,557 ) Gain on sale
of real estate from discontinued operations - 735 61,879 Income tax
expense from discontinued operations 1 (483 )
(20,413 ) Net income from discontinued operations (1 ) 896
37,909 Net income (loss) (2,410 ) (3,287 ) 40,173 Net (income) loss
attributable to non-controlling interests (322 )
1,327 (9,288 ) Net income (loss) attributable
to American Realty Investors, Inc. (2,732 ) (1,960 ) 30,885
Preferred dividend requirement (1,101 ) (1,216 )
(2,043 ) Net income (loss) applicable to common shares $
(3,833 ) $ (3,176 ) $ 28,842
Earnings per share -
basic Loss from continuing operations $ (0.25 ) $ (0.27 ) $
(0.71 ) Income from discontinued operations -
0.06 2.99 Net income (loss) applicable to
common shares $ (0.25 ) $ (0.21 ) $ 2.28
Earnings
per share - diluted Loss from continuing operations $ (0.25 ) $
(0.27 ) $ (0.71 ) Income from discontinued operations -
0.06 2.99 Net income (loss)
applicable to common shares $ (0.25 ) $ (0.21 ) $ 2.28
Weighted average common shares used in computing earnings
per share 15,514,360 15,111,107 12,683,956 Weighted average common
shares used in computing diluted earnings per share 15,514,360
15,111,107 12,683,956
Amounts attributable to
American Realty Investors, Inc. Loss from continuing operations
$ (2,731 ) $ (2,856 ) $ (7,024 ) Income from discontinued
operations (1 ) 896 37,909 Net
income (loss) $ (2,732 ) $ (1,960 ) $ 30,885
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version on businesswire.com: http://www.businesswire.com/news/home/20170403006540/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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