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 third quarter ended September 30, 2014. ARL announced today that the Company reported net loss applicable to common shares of $1.7 million or $0.13 per diluted earnings per share, as compared to a net loss applicable to common shares of $7.0 million or $0.62 per diluted earnings per share for the same period ended 2013.

Management’s efforts to enhance the value of our overall portfolio has resulted in the continuing improvement in the Company’s results of operations. We continue to see growth in the multifamily market with increasing rents, stable operating expenses, and an occupancy rate over 93%. We are diligent in our mission to provide high-quality living opportunities to our tenants.

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.

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

The positive results of operations has allowed the Company to invest in mortgage receivables in various multifamily projects not under the Company’s ownership. We will continue to invest in the multifamily market, as conditions are optimal for achieving a high return on our investment.

Rental and other property revenues were slightly lower for the three months ended September 30, 2014, as compared to the same period in the prior year. This was mainly attributable to our commercial portfolio, which was lower in the current period related to some prior year larger square-foot tenants downsizing or moving out and first year lease specials for new tenants. Rental revenue from our apartment portfolio increased in the current period as we continue to excel with high occupancy rates and increasing rental rates.

Property operating expenses were $10.8 million for the three months ended September 30, 2014, representing an increase of $0.4 million as compared to the same period in the previous year. Operating expenses have remained consistent with prior periods due to labor efficiencies and improvements in preventative maintenance across the portfolio, with only an increase in real estate taxes as a result of the increase in the value of our portfolio and some non-recurring repair projects completed in the current period.

Interest income was $5.1 million for the three months ended September 30, 2014, representing an increase of $1.3 million as compared to the same period in the prior year. During the current quarter, we invested $17.3 million in mortgage receivables which would increase the basis for our interest income.

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

For the Nine Months Ended

September 30, September 30, 2014 2013 2014 2013 (dollars in thousands, except per share amounts) Revenues: Rental and other property revenues (including $175 and $165 for the three months and $525 and $497 for the nine months ended 2014 and 2013, respectively, from related parties) $ 19,326 $ 19,530 $ 57,986 $ 57,810   Expenses: Property operating expenses (including $171 and $178 for the three months and $484 and $550 for the nine months ended 2014 and 2013, respectively, from related parties) 10,766 10,387 30,677 29,107 Depreciation and amortization 4,463 4,053 13,099 11,820 General and administrative (including $926 and $878 for the three months and $2,686 and $2,765 for the nine months ended 2014 and 2013, respectively, from related parties) 1,590 1,867 6,770 5,911 Provision on impairment of notes receivable and real estate assets - 1,125 - 1,926 Net income fee to related party (186 ) 55 514 159 Advisory fee to related party   2,225     2,584     6,670     7,625   Total operating expenses   18,858     20,071     57,730     56,548   Operating income (loss) 468 (541 ) 256 1,262   Other income (expenses): Interest income (including $4,699 and $3,718 for the three months and $14,693 and $10,574 for the nine months ended 2014 and 2013, respectively, from related parties) 5,106 3,778 15,264 10,831 Other income 1,332 59 1,738 2,734 Mortgage and loan interest (including $978 and $1,168 for the three months and $2,709 and $2,849 for the nine months ended 2014 and 2013, respectively, from related parties) (9,053 ) (9,130 ) (26,573 ) (27,152 ) Deferred borrowing costs amortization (848 ) (247 ) (2,078 ) (2,672 ) Loan charges and prepayment penalties (1,044 ) (49 ) (2,626 ) (4,166 ) Loss on sale of investments - (275 ) - (283 ) Earnings from unconsolidated subsidiaries and investees 320 69 266 256 Litigation settlement   (86 )   (2,739 )   3,666     (2,727 ) Total other expenses   (4,273 )   (8,534 )   (10,343 )   (23,179 ) Loss before gain on land sales, non-controlling interest, and taxes (3,805 ) (9,075 ) (10,087 ) (21,917 ) Gain on land sales   40     598     634     563   Net loss from continuing operations before taxes (3,765 ) (8,477 ) (9,453 ) (21,354 ) Income tax benefit   786     402     5,030     8,561   Net loss from continuing operations (2,979 ) (8,075 ) (4,423 ) (12,793 ) Discontinued operations: Net income (loss) from discontinued operations 477 1,021 (454 ) (970 ) Gain on sale of real estate from discontinued operations 1,769 127 14,826 25,429 Income tax expense from discontinued operations   (786 )   (402 )   (5,030 )   (8,561 ) Net income from discontinued operations 1,460 746 9,342 15,898 Net income (loss) (1,519 ) (7,329 ) 4,919 3,105 Net (income) loss attributable to non-controlling interest   200     903     (1,170 )   (803 ) Net income (loss) attributable to American Realty Investors, Inc. (1,319 ) (6,426 ) 3,749 2,302 Preferred dividend requirement   (427 )   (613 )   (1,653 )   (1,839 ) Net income (loss) applicable to common shares $ (1,746 ) $ (7,039 ) $ 2,096   $ 463     Earnings per share - basic Net loss from continuing operations $ (0.24 ) $ (0.68 ) $ (0.59 ) $ (1.34 ) Net income from discontinued operations   0.11     0.06     0.76     1.38   Net income (loss) applicable to common shares $ (0.13 ) $ (0.62 ) $ 0.17   $ 0.04     Earnings per share - diluted Net loss from continuing operations $ (0.24 ) $ (0.68 ) $ (0.59 ) $ (1.34 ) Net income from discontinued operations   0.11     0.06     0.76     1.38   Net income (loss) applicable to common shares $ (0.13 ) $ (0.62 ) $ 0.17   $ 0.04     Weighted average common shares used in computing earnings per share 13,619,647 11,525,389 12,231,146 11,525,389 Weighted average common shares used in computing diluted earnings per share 13,619,647 11,525,389 12,231,146 11,525,389     Amounts attributable to American Realty Investors, Inc. Net loss from continuing operations $ (2,779 ) $ (7,172 ) $ (5,593 ) $ (13,596 ) Net income from discontinued operations   1,460     746     9,342     15,898   Net income (loss) applicable to American Realty Investors, Inc. $ (1,319 ) $ (6,426 ) $ 3,749   $ 2,302             AMERICAN REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (unaudited)   September 30, December 31, 2014 2013 (dollars in thousands, except share and par value amounts) Assets Real estate, at cost $ 745,544 $ 799,698 Real estate held for sale at cost, net of depreciation ($2,066 for 2014 and $2,390 for 2013) 44,288 16,427 Real estate subject to sales contracts at cost, net of depreciation ($2,212 for 2014 and $1,949 for 2013) 19,594 27,598 Less accumulated depreciation   (125,352 )   (143,429 ) Total real estate 684,074 700,294 Notes and interest receivable Performing (including $147,978 in 2014 and $145,754 in 2013 from related parties) 163,335 153,275 Non-performing 3,151 3,140 Less allowance for doubtful accounts (including $15,537 in 2014 and $15,809 in 2013 from related parties)   (18,279 )   (19,600 ) Total notes and interest receivable 148,207 136,815 Cash and cash equivalents 4,383 16,437 Restricted cash 28,813 32,929 Investments in unconsolidated subsidiaries and investees 4,137 3,789 Receivable from related party 22,930 14,086 Other assets   43,442     38,972   Total assets $ 935,986   $ 943,322     Liabilities and Shareholders’ Equity Liabilities: Notes and interest payable $ 597,469 $ 618,930 Notes related to assets held for sale 42,883 17,100 Notes related to subject to sales contracts 18,769 23,012 Deferred revenue (including $74,303 in 2014 and 2013 from sales to related parties) 76,148 76,148 Accounts payable and other liabilities (including $10,634 in 2014 and $15,394 in 2013 to related parties)   55,917     73,271   791,186 808,461   Shareholders’ equity: Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 2,461,252 shares in 2014 and 3,353,954 shares in 2013 (liquidation preference $10 per share), including 900,000 shares in 2014 and 2013 held by ARL or subsidiaries. Series K: $2.00 par value, authorized, issued and outstanding 0 shares in 2014 and 135,000 shares in 2013 (liquidation preference $22 per share) 3,126 4,908 Common stock, $0.01 par value, authorized 100,000,000 shares; issued 14,443,404 shares in 2014 and 11,941,174 shares in 2013; outstanding 14,027,619 shares in 2014 and 11,525,389 shares in 2013; including 140,000 shares held by TCI (consolidated) in 2014 and 229,214 shares held by TCI (consolidated) in 2013. 141 115 Treasury stock at cost; 415,785 shares in 2014 and 2013 (6,395 ) (6,395 ) Paid-in capital 108,844 102,974 Retained earnings   (8,046 )   (11,795 ) Total American Realty Investors, Inc. shareholders' equity 97,670 89,807 Non-controlling interest   47,130     45,054   Total equity   144,800     134,861   Total liabilities and equity $ 935,986   $ 943,322  

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