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, 2018. For the three months
ended September 30, 2018, we reported a net income applicable to
common shares of $20.1 million or $1.26 per diluted loss per share
compared to a net income applicable to common shares of $9.1
million or $0.59 per diluted loss per share for the same period
ended 2017.
The results demonstrate the Company’s overall focus on growing
its portfolio as it continues working on several strategic
initiatives that were previously announced earlier this year.
Overall, management remains very encouraged about the overall
performance of the company; especially tied to the quality of our
assets in our portfolio, and the new multifamily apartment projects
under various stages of development.
Revenues
Rental and other property revenues were $33.5 million for the
three months ended September 30, 2018. This represents an increase
of $1.6 million compared to revenues in the same period in 2017 of
$31.8 million. The increase is driven primarily by an increase in
revenues of $2.0 million from our apartment-operating segment,
offset by a decrease of $0.2 million from our commercial segment,
and $0.2 million from our land segment.
Expense
Property operating expenses were $15.9 million for the three
months ended September 30, 2018. This represents an increase of
$0.5 million compared to property operating expenses in the same
period in 2017 of $15.4 million. This increase is due to
correlating increase in property operating expenses in the
apartment portfolio of $0.3 million and in the commercial portfolio
of $0.2 million as occupancy revenue continues to rise.
Depreciation and amortization expense was $6.9 million for the
three months ended September 30, 2018, as compared to $6.4 million
in the same period of 2017. This increase was due primarily to the
growth in our apartment portfolio, which resulted in a $0.3 million
increase in the expense year over year.
General and Administrative expenses was $2.1 million for the
three months ended September 30, 2018. This represents an increase
of $0.3 million compared to general and administrative expenses in
the same period in 2017 of $1.8 million. The increase is
primarily due to $1.8 million of transaction costs.
Other income (expense)
Other income was $18.8 million for the three months ended
September 30, 2018. This represents an increase of $18.6 million
compared to other expenses in the same period in 2017 of $0.2
million. The increase is primarily the result of a $17.6 million
gain recognized in September 2018 for deferred income associated
with the IOR sale of assets.
Mortgage and loan interest expense was $17.4 million for the
three months ended September 30, 2018. This represents an increase
of $1.7 million compared to mortgage and loan interest expense in
the same period in 2017 of $15.7 million. The change by segment
represents an increase in the other portfolio of $3.9 million and
in the commercial portfolio of $0.5 million, offset by decreases in
the land portfolio of $9.9 million and in the apartment portfolio
of $3.8 million.
Foreign currency transaction was a loss of $1.3 million for the
three months ended September 30, 2018. This represents a decrease
of $3.2 million compared to foreign currency transaction gain for
the same period in 2017 of $1.9 million. The increase is the result
of a gain in foreign currency exchange as a result of the favorable
exchange rate between the Israel Shekels and the U.S. Dollar
related to our Bond program.
There was no sale of income-producing properties during the
three months ended September 30, 2018. For the same period in 2017,
we recognized a gain on sale of income-producing properties of
$12.8 million as a result of a deferred gain from property sales of
two apartment communities.
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)
Three Months Ended Nine Months
Ended September 30, September 30, 2018
2017 2018 2017
(dollars in thousands, except per share amounts)
Revenues: Rental and other property revenues (including $207
and $199 for the three months and $623 and $289 for the nine months
ended 2018 and 2017, respectively, from related parties) $ 33,409 $
31,807 $ 96,099 $ 95,216
Expenses: Property operating
expenses (including $231 and $245 for the three months and $689 and
$721 for the nine months ended 2018 and 2017, respectively, from
related parties) 15,945 15,403 45,919 47,098 Depreciation and
amortization 6,873 6,373 19,768 19,113 General and administrative
(including $1,197 and $1,074 for the three months and $3,634 and
$2,534 for the nine months ended 2018 and 2017, respectively, from
related parties) 2,062 1,766 7,357 5,797 Net income fee to related
party 383 53 489 189 Advisory fee to related party 2,936
2,802 8,821 8,310
Total operating expenses 28,199 26,397
82,354 80,507 Net operating income
5,210 5,410 13,745 14,709
Other income (expenses):
Interest income (including $3,275 and $3,638 for the three months
and $8,554 and $13,511 for the nine months ended 2018 and 2017,
respectively, from related parties) 5,710 4,232 15,701 14,083 Other
income 18,750 190 28,188 1,517 Mortgage and loan interest
(including $2,072 and $1,718 for the three months and $5,780 and
$4,914 for the nine months ended 2018 and 2017, respectively, from
related parties) (17,422 ) (15,717 ) (49,053 ) (49,859 ) Foreign
currency transaction gain (loss) (1,288 ) 1,906 6,357 (1,841 )
Earnings from unconsolidated subsidiaries and investees 205
41 802 249 Total
other income (expenses) 5,955 (9,348 )
1,995 (35,851 ) Income (loss) before gain on land
sales, non-controlling interest, and taxes 11,165 (3,938 ) 15,740
(21,142 ) Gain on sale of income-producing properties - 12,760 -
12,760 Gain (loss) on land sales 12,243 1,062
13,578 1,032 Net income (loss)
from continuing operations before taxes 23,408 9,884 29,318 (7,350
) Income tax expense (792 ) - (792 )
- Net income (loss) from continuing operations 22,616
9,884 28,526 (7,350 ) Net income (loss) 22,616 9,884 28,526 (7,350
) Net (income) loss attributable to non-controlling interest
(2,265 ) (522 ) (2,981 ) 106 Net income
(loss) attributable to American Realty Investors, Inc. 20,351 9,362
25,545 (7,244 ) Preferred dividend requirement (225 )
(275 ) (675 ) (825 ) Net income (loss) applicable to
common shares $ 20,126 $ 9,087 $ 24,870 $
(8,069 )
Earnings per share - basic Net loss from
continuing operations $ 1.26 $ 0.59 $ 1.56 $
(0.52 )
Earnings per share - diluted Net income
(loss) from continuing operations $ 1.26 $ 0.59 $
1.56 $ (0.52 ) Weighted average common shares used in
computing earnings per share 15,997,076 15,514,360 15,977,626
15,514,360 Weighted average common shares used in computing diluted
earnings per share 15,997,076 15,514,360 15,977,626 15,514,360
Amounts attributable to American Realty Investors,
Inc. Net income (loss) from continuing operations $ 20,351
$ 9,362 $ 25,545 $ (7,244 ) Net income (loss)
applicable to American Realty Investors, Inc. $ 20,351 $
9,362 $ 25,545 $ (7,244 )
AMERICAN REALTY INVESTORS, INC. CONSOLIDATED
BALANCE SHEETS September
30, December 31, 2018 2017
(unaudited) (audited) (dollars in thousands,
except share and par value amounts) Assets Real estate,
at cost $ 319,713 $ 1,117,429 Real estate subject to sales
contracts at cost 46,262 48,234 Less accumulated depreciation
(76,482 ) (177,546 ) Total real estate 289,493
988,117 Real estate held for sale at cost, net of
depreciation 760,497 - Notes and interest receivable (including
$96,594 in 2018 and $99,410 in 2017 from related parties) 138,290
127,865 Less allowance for estimated losses (including $14,269 in
2018 and 2017 from related parties) (14,270 ) (15,770
) Total notes and interest receivable 884,517 112,095 Cash
and cash equivalents 23,768 42,920 Restricted cash 72,670 45,618
Investments in unconsolidated joint ventures and investees 7,504
6,396 Receivable from related party 62,530 38,311 Other assets
61,956 63,263 Total assets $ 1,402,438
$ 1,296,720
Liabilities and Shareholders’
Equity Liabilities: Notes and interest payable $ 319,958 $
898,750 Notes related to real estate held for sale 651,401 376
Notes related to real estate subject to sales contracts - 1,957
Bond and interest payable 161,010 113,049 Deferred revenue
(including $33,083 in 2018 and $56,887 in 2017 to related parties)
39,426 77,332 Accounts payable and other liabilities (including
$10,683 in 2018 and $11,893 in 2017 to related parties)
37,304 39,373 Total liabilities 1,209,099
1,130,837 Shareholders’ equity: Preferred stock, Series A:
$2.00 par value, authorized 15,000,000 shares, issued and
outstanding 1,800,614 and 2,000,614 shares in 2018 and 2017
(liquidation preference $10 per share), including 900,000 shares in
2018 and 2017 held by ARL. 1,805 2,205 Common stock, $0.01 par
value, 100,000,000 shares authorized; 16,412,861 shares issued and
15,997,076 outstanding as of 2018 and 15,930,145 shares issued and
15,514,360 outstanding as of 2017, including 140,000 shares held by
TCI (consolidated) in 2018 and 2017. 164 159 Treasury stock at
cost; 415,785 shares in 2018 and 2017, and 140,000 shares held by
TCI (consolidated) as of 2018 and 2017 (6,395 ) (6,395 ) Paid-in
capital 109,463 110,138 Retained earnings 31,512
5,967 Total American Realty Investors, Inc.
shareholders' equity 136,549 112,074 Non-controlling interest
56,790 53,809 Total shareholders'
equity 193,339 165,883 Total
liabilities and shareholders' equity $ 1,402,438 $ 1,296,720
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version on businesswire.com: https://www.businesswire.com/news/home/20181113006263/en/
American Realty Investors, Inc.Investor
RelationsGene Bertcher (800)
400-6407investor.relations@americanrealtyinvest.com
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