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, 2014. For the three months
ended December 31, 2014, the Company reported net income applicable
to common shares of $26.7 million or $1.91 per diluted earnings per
share, as compared to net income applicable to common shares of
$38.4 million or $3.33 per diluted earnings per share for the same
period ended 2013.
For the twelve months ended December 31, 2014, we reported net
income applicable to common shares of $28.8 million or $2.28 per
diluted earnings per share, as compared to net income applicable to
common shares of $38.8 million or $3.36 per diluted earnings per
share for the same period ended 2013.
The current year net, income applicable to common shares of
$28.8 million includes $17.6 million of depreciation expense, a
credit of $3.6 million of litigation settlement expense and gains
from the sales of real estate holdings of $62.4 million.
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 94%. 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.
In the current period, rental and other property revenues
increased within the apartment portfolio by $2.5 million mainly due
to increased rental rates and high occupancy. The commercial
portfolio decreased by $3.8 million primarily due to a lease
termination fee that was received in the prior year.
Property operating expenses were $42.1 million for the twelve
months ended December 31, 2014, representing an increase of $2.8
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 year.
Litigation settlement expense was a credit of $3.6 million for
the twelve months ended December 31, 2014, representing a decrease
of $23.9 million as compared to the same period in the previous
year. The majority of the credit to the current year litigation
expense was due to a settlement with the lender relating to one of
the commercial properties in which the balance in the amount of
$3.5 million was forgiven. Matters were settled in the prior year
in order to avoid future litigation and legal expenses.
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, 2014
2013 2012 (dollars in thousands, except per share
amounts) Revenues: Rental and other property revenues
(including $701, $670 and $587 for the year ended 2014, 2013 and
2012, respectively, from related parties) $ 79,412 $ 80,750 $
81,849
Expenses: Property operating expenses
(including $645, $699 and $879 for the year ended 2014, 2013 and
2012, respectively, from related parties) 42,124 39,318 40,000
Depreciation 17,593 15,954 14,873 General and administrative
(including $3,628, $3,646 and $3,539 for the year ended 2014, 2013
and 2012, respectively, from related parties) 10,282 7,919 6,037
Provision on impairment of notes receivable and real estate assets
- 18,980 2,330 Net income fee to related party 3,669 4,089 180
Advisory fee to related party 8,943 10,166
10,182 Total operating expenses 82,611
96,426 73,602 Operating income
(loss) (3,199 ) (15,676 ) 8,247
Other income
(expense): Interest income (including $19,029, $19,110 and
$14,182 for the year ended 2014, 2013 and 2012, respectively, from
related parties) 20,054 19,445 14,612 Other income (including $0,
$0 and $6,000 for the year ended 2014, 2013 and 2012, respectively,
from related parties) 1,415 10,163 7,770 Mortgage and loan interest
(including $3,660, $3,927 and $3,692 for the year ended 2014, 2013
and 2012, respectively, from related parties) (35,416 ) (36,158 )
(38,224 ) Deferred borrowing costs amortization (2,556 ) (2,952 )
(684 ) Loan charges and prepayment penalties (2,854 ) (5,557 )
(3,574 ) Loss on the sale of investments (92 ) (283 ) (118 )
Earnings from unconsolidated subsidiaries and investees 347 391 372
Litigation settlement 3,591 (20,313 )
(175 ) Total other expenses (15,511 ) (35,264 )
(20,021 ) Loss before gain (loss) on land sales,
non-controlling interest, and taxes (18,710 ) (50,940 ) (11,774 )
Gain (loss) on land sales 561 (455 )
5,475 Loss from continuing operations before tax (18,149 )
(51,395 ) (6,299 ) Income tax benefit (expense) 20,413
40,513 (144 ) Net income (loss) from
continuing operations 2,264 (10,882 )
(6,443 ) Discontinued operations: Loss from discontinued operations
(3,557 ) (2,634 ) (9,297 ) Gain on sale of real estate from
discontinued operations 61,879 98,951 8,885 Income tax benefit
(expense) from discontinued operations (20,413 )
(33,711 ) 144 Net income (loss) from discontinued
operations 37,909 62,606 (268 ) Net income (loss) 40,173 51,724
(6,711 ) Net (income) loss attributable to non-controlling
interests (9,288 ) (10,448 ) 1,126 Net
income (loss) attributable to American Realty Investors, Inc.
30,885 41,276 (5,585 ) Preferred dividend requirement (2,043
) (2,452 ) (2,452 ) Net income (loss) applicable to
common shares $ 28,842 $ 38,824 $ (8,037 )
Earnings per share - basic Loss from continuing operations $
(0.71 ) $ (2.07 ) $ (0.67 ) Income (loss) from discontinued
operations 2.99 5.43 (0.02 ) Net
income (loss) applicable to common shares $ 2.28 $ 3.36
$ (0.69 )
Earnings per share - diluted Loss
from continuing operations $ (0.71 ) $ (2.07 ) $ (0.67 ) Income
(loss) from discontinued operations 2.99 5.43
(0.02 ) Net income (loss) applicable to common shares
$ 2.28 $ 3.36 $ (0.69 ) Weighted average
common shares used in computing earnings per share 12,683,956
11,525,389 11,525,389 Weighted average common shares used in
computing diluted earnings per share 12,683,956 11,525,389
11,525,389
Amounts attributable to American Realty
Investors, Inc. Loss from continuing operations $ (7,024 ) $
(21,330 ) $ (5,317 ) Income (loss) from discontinued operations
37,909 62,606 (268 ) Net income
(loss) $ 30,885 $ 41,276 $ (5,585 )
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS December 31,
December 31, 2014 2013 (dollars in
thousands, except share and par value amounts) Assets
Real estate, at cost $ 810,214 $ 799,698
Real estate held for sale at cost, net of
depreciation ($0 in 2014 and $2,390 in 2013)
- 16,427 Real estate subject to sales contracts at cost, net of
depreciation ($2,300 in 2014 and $1,949 in 2013) 19,026 27,598 Less
accumulated depreciation (129,477 ) (143,429 ) Total
real estate 699,763 700,294 Notes and interest receivable
Performing (including $139,466 in 2014 and $145,754 in 2013 from
related parties) 149,484 153,275 Non-performing 3,161 3,140 Less
allowance for estimated losses (including $15,537 in 2014 and
$15,809 in 2013 from related parties) (18,279 )
(19,600 ) Total notes and interest receivable 134,366 136,815 Cash
and cash equivalents 12,299 16,437 Restricted cash 49,266 32,929
Investments in unconsolidated subsidiaries and investees 4,279
3,789 Receivable from related party 21,414 14,086 Other assets
44,111 38,972 Total assets $ 965,498
$ 943,322
Liabilities and Shareholders’
Equity Liabilities: Notes and interest payable $ 638,891 $
618,930 Notes related to assets held for sale 1,552 17,100 Notes
related to assets subject to sales contracts 18,616 23,012 Deferred
revenue (including $72,564 in 2014 and $74,303 in 2013 from sales
to related parties) 74,409 76,148 Accounts payable and other
liabilities (including $11,024 in 2014 and $15,394 in 2013 to
related parties) 52,442 73,271 785,910
808,461 Shareholders’ equity: Preferred stock, Series A:
$2.00 par value, authorized 15,000,000 shares, issued and
outstanding 2,461,252 and 3,353,954 shares in 2014 and 2013,
respectively (liquidation preference $10 per share), including
900,000 shares in 2014 and 2013 held by ARL. Series K: $2.00 par
value, authorized, issued and outstanding zero and 135,000 shares
in 2014 and 2013, respectively (liquidation preference $22 per
share) 3,126 4,908 Common stock, $0.01 par value, authorized
100,000,000 shares; issued 14,443,404 and 11,941,174 shares and
outstanding 14,027,619 and 11,525,389 shares in 2014 and 2013,
respectively; 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 and
140,000 shares held by TCI (consolidated) as of 2014 and 229,214
shares held by TCI (consolidated) as of 2013 (6,395 ) (6,395 )
Paid-in capital 108,378 102,974 Retained earnings 19,090
(11,795 ) Total American Realty Investors, Inc.
shareholders' equity 124,340 89,807 Non-controlling interest
55,248 45,054 Total equity 179,588
134,861 Total liabilities and equity $ 965,498
$ 943,322
American Realty Investors, Inc.Investor
RelationsGene Bertcher,
800-400-6407investor.relations@americanrealtyinvest.com
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