ARL American Realty Investors Inc

American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate investment company, reported results of operations for the third quarter ended September 30, 2015. ARL announced today that the Company reported a net loss applicable to common shares of ($5.4) million, including $2.0 million in gains on the sale of land and $0.7 million in gains on sale of income producing properties, or ($0.35) per diluted earnings per share, as compared to a net loss applicable to common shares of ($1.7) million, or ($0.13) per diluted earnings per share for the same period ended 2014.

For the nine months ended September 30, 2015, we reported a 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 $2.1 million or $0.17 per diluted earnings per share for the same period ended 2014.

During the three months ended September 30, 2015, we acquired two income-producing properties. “The Company remains highly focused on expanding our multifamily portfolio and enhancing the underlying value of our commercial assets. At the same time, we continue to seek out unique opportunities to secure strategic sales and/or the development of various parcels of land. We also strive aggressively in obtaining improvements associated with operating performance in terms of revenue growth and expense control. We remain significantly focused by paying close attention to all details of our business throughout our organization,” said Daniel J. Moos, the Company’s President and CEO. “Most assuredly, we will continue to be very aware as to the overall economic climate and remain vigilant in our ability to rapidly adjust our business strategies accordingly.”

Rental and other property revenues were $27.8 million for the three months ended September 30, 2015. This represents an increase of $8.5 million, as compared to the prior period revenues of $19.3 million. This change, by segment, is an increase in the apartment portfolio of $5.0 million and an increase in the commercial portfolio of $3.5 million. Within the apartment portfolio there was an increase of $4.8 million in the acquired property portfolio and an increase of $0.2 million in the same property portfolio. Our apartment portfolio continues to thrive in the current economic conditions with occupancies averaging approximately 95%. We have been able to surpass expectations due to the high-quality product offered, the strength of our management team and our commitment to our tenants. This increase in apartment portfolio is also due to the acquisition of new properties. Within the commercial portfolio, there was an increase of $1.8 million in the acquired property portfolio and an increase of $1.7 million in the same store properties. We are continuing to market our properties aggressively to attract new tenants and strive for continuous improvement of our properties to maintain our existing tenants.

Property operating expenses were $14.5 million for the three months ended September 30, 2015. This represents an increase of $3.7 million, as compared to the prior period operating expenses of $10.8 million. This change, by segment, is an increase in the apartment portfolio of $2.1 million and an increase in the commercial portfolio of $1.6 million. Within the apartment portfolio there was an increase of $2.0 million in the acquired properties portfolio and an increase of $0.1 million in the same property portfolio. Within the commercial portfolio, there was an increase of $1.5 million in the acquired properties portfolio and an increase of $0.1 million in the same store properties.

Depreciation and amortization expense was $6.6 million for the three months ended September 30, 2015. This represents an increase of $2.1 million, as compared to the prior period expense of $4.5 million. The majority of this change is in the apartment portfolio related to an increase in the acquired properties portfolio.

Mortgage and loan interest expense was $15.0 million for the three months ended September 30, 2015. This represents an increase of $4.1 million, as compared to the prior period expense of $10.9 million. The majority of this increase is in the other portfolio and is related to the securing of a new loan in 2015.

Interest income was $3.95 million for the three months ended September 30, 2015. This represents a decrease of $1.2 million, as compared to the prior year income of $5.1 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 For the Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (dollars in thousands, except per share amounts) Revenues: Rental and other property revenues (including $211 and $175 for the three months and $591 and $526 for the nine months ended 2015 and 2014, respectively, from related parties) $ 27,826 $ 19,326 $ 75,223 $ 57,986   Expenses: Property operating expenses (including $202 and $172 for the three months and $551 and $511 for the nine months ended 2015 and 2014, respectively, from related parties) 14,499 10,766 37,467 30,677 Depreciation and amortization 6,569 4,463 16,410 13,099 General and administrative (including $634 and $926 for the three months and $2,554 and $2,686 for the nine months ended 2015 and 2014, respectively, from related parties) 1,417 1,590 5,215 6,770 Net income fee to related party 232 (186 ) 567 514 Advisory fee to related party   3,024     2,225     7,625     6,670   Total operating expenses   25,741     18,858     67,284     57,730   Net operating income (loss) 2,085 468 7,939 256 Other income (expenses): Interest income (including $3,886 and $4,699 for the three months and $13,190 and $14,692 for the nine months ended 2015 and 2014, respectively, from related parties) 3,950 5,106 13,722 15,264 Other income (72 ) 1,332 4,040 1,738 Mortgage and loan interest (including $982 and $978 for the three months and $2,797 and $2,709 for the nine months ended 2015 and 2014, respectively, from related parties) (13,481 ) (9,901 ) (34,203 ) (28,651 ) Loan charges and prepayment penalties (1,545 ) (1,044 ) (2,260 ) (2,626 ) Earnings from unconsolidated subsidiaries and investees 81 320 276 266 Litigation settlement (expense)   (85 )   (86 )   (203 )   3,666   Total other expenses   (11,152 )   (4,273 )   (18,628 )   (10,343 ) Loss before gain on land sales, non-controlling interest, and taxes (9,067 ) (3,805 ) (10,689 ) (10,087 ) Gain on sale of income producing properties 735 - 735 - Gain on land sales   1,958     40     7,861     634   Net income (loss) from continuing operations before taxes (6,374 ) (3,765 ) (2,093 ) (9,453 ) Income tax benefit (expense)   16     786     107     5,030   Net income (loss) from continuing operations (6,358 ) (2,979 ) (1,986 ) (4,423 ) Discontinued operations: Net income (loss) from discontinued operations 47 477 306 (454 ) Gain on sale of real estate from discontinued operations - 1,770 - 14,826 Income tax benefit (expense) from discontinued operations   (16 )   (786 )   (107 )   (5,030 ) Net income (loss) from discontinued operations   31     1,461     199       9,342   Net income (loss) (6,327 ) (1,518 ) (1,787 ) 4,919 Net income (loss) attributable to non-controlling interest   1,164     200     1,132     (1,170 ) Net income attributable to American Realty Investors, Inc. (5,163 ) (1,318 ) (655 ) 3,749 Preferred dividend requirement   (275 )   (428 )   (941 )   (1,653 ) Net income applicable to common shares $ (5,438 ) $ (1,746 ) $ (1,596 ) $ 2,096   Earnings per share - basic Net income (loss) from continuing operations $ (0.35 ) $ (0.24 ) $ (0.12 ) $ (0.59 ) Net income from discontinued operations   -     0.11     0.01     0.76   Net income applicable to common shares $ (0.35 ) $ (0.13 ) $ (0.11 ) $ 0.17     Earnings per share - diluted Net income (loss) from continuing operations $ (0.35 ) $ (0.24 ) $ (0.12 ) $ (0.59 ) Net income (loss) from discontinued operations   -     0.11     0.01     0.76   Net income applicable to common shares $ (0.35 ) $ (0.13 ) $ (0.11 ) $ 0.17     Weighted average common shares used in computing earnings per share 15,514,360 13,619,647 14,975,212 12,231,146 Weighted average common shares used in computing diluted earnings per share 15,514,360 13,619,646 14,975,212 12,231,146   Amounts attributable to American Realty Investors, Inc. Net income (loss) from continuing operations $ (5,194 ) $ (2,779 ) $ (854 ) $ (5,593 ) Net income (loss) from discontinued operations   31     1,461     199     9,342   Net income applicable to American Realty Investors, Inc. $ (5,163 ) $ (1,318 ) $ (655 ) $ 3,749       AMERICAN REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (unaudited)       September 30,     December 31, 2015 2014 (dollars in thousands, except share and par value amounts)

Assets

 

Real estate, at cost $ 961,099 $ 810,214 Real estate subject to sales contracts at cost, net of depreciation ($194 for 2015 and $2,300 for 2014) 9,213 19,026 Less accumulated depreciation   (145,101 )   (129,477 )

Total real estate

 

825,211 699,763 Notes and interest receivable Performing (including $121,099 in 2015 and $139,466 in 2014 from related parties) 132,452 149,484 Non-performing - 3,161 Less allowance for doubtful accounts (including $15,537 in 2015 and 2014 from related parties)   (17,037 )   (18,279 )

Total notes and interest receivable

 

115,415 134,366 Cash and cash equivalents 11,989 12,299 Restricted cash 42,214 49,266 Investments in unconsolidated subsidiaries and investees 5,152 4,279 Receivable from related party 43,301 21,414 Other assets   43,829     44,111  

Total assets

 

$ 1,087,111   $ 965,498    

Liabilities and Shareholders’ Equity

 

Liabilities: Notes and interest payable $ 782,570 $ 638,891 Notes related to subject to sales contracts 7,793 20,168 Deferred revenue (including $71,603 in 2015 and $72,564 in 2014 from sales to related parties) 71,672 74,409 Accounts payable and other liabilities (including $7,001 in 2015 and $11,024 in 2014 to related parties)   46,412     52,442   908,447 785,910   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 (liquidation preference $10 per share), including 900,000 shares in 2015 and 2014 held by ARL or subsidiaries. 2,205 3,126 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 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 (6,395 ) (6,395 ) Paid-in capital 110,136 108,378 Retained earnings   18,435     19,090  

Total American Realty Investors, Inc. shareholders' equity

 

124,537 124,340

Non-controlling interest

  54,127     55,248  

Total shareholders' equity

 

  178,664     179,588  

Total liabilities and shareholders' equity

 

$ 1,087,111   $ 965,498  

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