American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real
estate investment company, reported results of operations for the
third quarter ended September 30, 2016. For the three months ended
September 30, 2016, the Company reported net loss applicable to
common shares of $4.0 million or $0.26 earnings per diluted share,
as compared to net loss applicable to common shares of $5.4 million
or $0.35 earnings per diluted share for the same period in
2015.
“The Company believes there is no reason to adjust our strategic
posture of maintaining a strong focus on our multi-family
portfolio. We will also continue to solidify the portfolio and pay
close attention to all operational details, while at the same time
maintaining our commitment to creating value. We believe our third
quarter 2016 operating results, combined with our recent
acquisitions, demonstrates yet another quarter of stabilized
performance for the Company. We believe the portfolio is well
positioned to deliver solid financial returns for the remainder of
2016,” said Danny Moos, the Company’s Chief Executive Officer and
President. “We are pleased that we are seeing continued
improvements in our operations from these endeavors and will
continue to adapt to market challenges with an eye on both near
term economic challenges and long-term prospects as the real estate
market improves.”
Rental and other property revenues were $30.1 million for the
three months ended September 30, 2016. This represents an increase
of $2.3 million compared to the prior period revenues of $27.8
million. The change by segment is an increase in the apartment
portfolio of approximately $2.7 million and a decrease in the
commercial portfolio of $0.4 million. During the three months ended
September 30, 2016, we recorded $2.1 million rental revenue for
five apartment communities purchased since September 30, 2015 and
had a decrease in rental revenue of $0.4 million for one apartment
community sold since September 30, 2015, for a net increase of $1.7
million. The $0.4 million decrease in revenues for the commercial
portfolio was primarily due to a decrease of $0.4 million in
revenues for the Mahogany Run Golf Course in the third quarter of
2016 as compared to the third quarter of 2015.
Property operating expenses were $15.7 million for the three
months ended September 30, 2016. This represents an increase of
$1.2 million compared to the prior period operating expenses of
$14.5 million. The change by segment is an increase in the
apartment portfolio of approximately $1.3 million and an increase
in the commercial portfolio of $0.3 million. The primary reason for
the increase in property operating expenses for the Company’s
apartment portfolio was the purchase of five communities with a
total of 777 units, net of one community sold with a total of 160
units since September 30, 2015, for a net increase of 617 units.
The increases in property operating expenses in the apartment
portfolio and commercial portfolio were partially offset by
decreases in the land and other segments of $0.2 million and $0.3
million, respectively.
Depreciation and amortization expense was approximately $6.0
million for the three months ended September 30, 2016 for a
decrease of $0.5 million as compared to the prior period expense of
$6.5 million. This decrease was primarily due to the assets of
Whispering Pines Apartments being fully depreciated in the third
quarter of 2015.
Mortgage and loan interest expense was $15.4 million for the
three months ended September 30, 2016. This represents an increase
of approximately $0.4 million compared to the prior period expense
of $15.0 million. The change by segment was an increase of $1.2
million in the other portfolio primarily due to securing a new
mezzanine debt obligation in the third quarter of 2016 and an
increase of $0.1 million in the apartment portfolio due to
acquisitions. These increases were partially offset by a decrease
in the land portfolio of $0.8 million due to the transfer of
mortgage obligations related to land sold and a decrease in the
commercial portfolio of $0.2 million.
Gain on land sales was $0.6 million for the three months ended
September 30, 2016 compared to $2.0 million for the three months
ended September 30, 2015. In the current period, we sold 4.8 acres
of land for a total sales price of $0.8 million and recorded a gain
of $0.6 million. In 2015, we sold 155.2 acres of land for a sales
price of $2.9 million and recorded a gain of $1.0 million. During
the third quarter of 2015, we also recognized a deferred gain of
$0.9 million on a prior sale.
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, 2016 2015 2016
2015 (dollars in thousands, except per share amounts)
Revenues: Rental and other property revenues (including $174
and $211 for the three months and $521 and $591 for the nine months
ended 2016 and 2015, respectively, from related parties) $ 30,067 $
27,826 $ 90,106 $ 75,223
Expenses: Property operating
expenses (including $230 and $202 for the three months and $671 and
$551 for the nine months ended 2016 and 2015, respectively, from
related parties) 15,671 14,499 46,078 37,467 Depreciation and
amortization 6,025 6,569 17,723 16,410 General and administrative
(including $941 and $912 for the three months and $1,860 and $1,920
for the nine months ended 2016 and 2015, respectively, from related
parties) 1,760 1,417 6,197 5,215 Net income fee to related party 67
232 193 567 Advisory fee to related party 2,749
3,024 8,174 7,625 Total
operating expenses 26,272 25,741
78,365 67,284 Net operating income 3,795 2,085
11,741 7,939
Other income (expenses): Interest income
(including $5,395 and $3,886 for the three months and $14,482 and
$13,190 for the nine months ended 2016 and 2015, respectively, from
related parties) 5,712 3,950 15,791 13,722 Other income 252 (72 )
1,452 4,040 Mortgage and loan interest (including $1,412 and $982
for the three months and $3,860 and $2,797 for the nine months
ended 2016 and 2015, respectively, from related parties) (15,362 )
(15,026 ) (43,551 ) (36,463 ) Earnings from unconsolidated
subsidiaries and investees 146 81 430 276 Litigation settlement
(expense) - (85 ) - (203
) Total other income (expenses) (9,252 ) (11,152 )
(25,878 ) (18,628 ) Loss before gain on land sales,
non-controlling interest, and taxes (5,457 ) (9,067 ) (14,137 )
(10,689 ) Gain on sale of income producing properties - 735 4,925
735 Gain on land sales 555 1,958
3,925 7,861 Net loss from continuing
operations before taxes (4,902 ) (6,374 ) (5,287 ) (2,093 ) Income
tax benefit (expense) (46 ) 16 (45 )
107 Net loss from continuing operations (4,948 )
(6,358 ) (5,332 ) (1,986 ) Discontinued operations: Net income
(loss) from discontinued operations - 47 3 306 Income tax expense
from discontinued operations - (16 ) (1
) (107 ) Net income (loss) from discontinued operations
- 31 2 199
Net loss (4,948 ) (6,327 ) (5,330 ) (1,787 ) Net loss attributable
to non-controlling interest 1,194 1,164
860 1,132 Net loss attributable to
American Realty Investors, Inc. (3,754 ) (5,163 ) (4,470 ) (655 )
Preferred dividend requirement (275 ) (275 )
(825 ) (941 ) Net loss applicable to common shares $ (4,029
) $ (5,438 ) $ (5,295 ) $ (1,596 )
Earnings per share -
basic Net loss from continuing operations $ (0.26 ) $ (0.35 ) $
(0.34 ) $ (0.12 ) Net income from discontinued operations -
- - 0.01 Net loss
applicable to common shares $ (0.26 ) $ (0.35 ) $ (0.34 ) $ (0.11 )
Earnings per share - diluted Net loss from continuing
operations $ (0.26 ) $ (0.35 ) $ (0.34 ) $ (0.12 ) Net income from
discontinued operations - - -
0.01 Net loss applicable to common shares $
(0.26 ) $ (0.35 ) $ (0.34 ) $ (0.11 ) Weighted average
common shares used in computing earnings per share 15,514,360
15,514,360 15,514,360 14,975,212 Weighted average common shares
used in computing diluted earnings per share 15,514,360 15,514,360
15,514,360 14,975,212
Amounts attributable to American
Realty Investors, Inc. Net loss from continuing operations $
(3,754 ) $ (5,194 ) $ (4,472 ) $ (854 ) Net income (loss) from
discontinued operations - 31 2
199 Net loss applicable to American Realty
Investors, Inc. $ (3,754 ) $ (5,163 ) $ (4,470 ) $ (655 )
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, December 31, 2016 2015
(dollars in thousands, except share and par value amounts)
Assets Real estate, at cost $ 1,026,235 $ 954,390 Real
estate subject to sales contracts at cost 49,155 49,155 Less
accumulated depreciation (165,681 ) (150,038 ) Total
real estate 909,709 853,507 Notes and interest receivable
Performing (including $127,909 in 2016 and $125,915 in 2015 from
related parties) 136,111 137,280 Less allowance for doubtful
accounts (including $15,537 in 2016 and 2015 from related parties)
(17,037 ) (17,037 ) Total notes and interest
receivable 119,074 120,243 Cash and cash equivalents 7,343 15,232
Restricted cash 33,598 45,711 Investments in unconsolidated
subsidiaries and investees 6,024 8,365 Receivable from related
party 14,260 28,147 Other assets 49,388 46,163
Total assets $ 1,139,396 $ 1,117,368
Liabilities and Shareholders’ Equity Liabilities: Notes and
interest payable $ 827,789 $ 797,962 Notes related to assets held
for sale 376 376 Notes related to subject to sales contracts 5,815
6,422 Deferred revenue (including $70,915 in 2016 and $70,892 in
2015 from sales to related parties) 91,370 91,336 Accounts payable
and other liabilities (including $10,586 in 2016 and $10,013 in
2015 to related parties) 43,312 44,383
968,662 940,479 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 2016 and 2015
(liquidation preference $10 per share), including 900,000 shares in
2016 and 2015 held by ARL or subsidiaries. 2,205 2,205 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 2016 and 2015, respectively; including 140,000
shares held by TCI (consolidated) in 2016 and 2015. 156 156
Treasury stock at cost; 415,785 shares (6,395 ) (6,395 ) Paid-in
capital 109,036 109,861 Retained earnings 12,660
17,130 Total American Realty Investors, Inc.
shareholders' equity 117,662 122,957 Non-controlling interest
53,072 53,932 Total shareholders'
equity 170,734 176,889 Total
liabilities and shareholders' equity $ 1,139,396 $ 1,117,368
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161115006845/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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