Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following
provisions:
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf
by the undersigned, hereunto duly authorized.
Dated: May 16,
2019
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AMERICAN REALTY INVESTORS, INC.
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By:
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/s/ Gene S. Bertcher
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Gene
S. Bertcher
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Executive Vice President and
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Chief Financial Officer
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Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
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Contact:
American Realty Investors, Inc.
Investor
Relations
Gene Bertcher (800) 400-6407 investor.relations@americanrealtyinvest.com
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American Realty Investors, Inc. Reports First
Quarter 2019 Results
Dallas (May 15, 2019) – American Realty Investors,
Inc. (NYSE:ARL), a Dallas-based real estate investment company, today reported results of operations for the first quarter ended
March 31, 2019.
In November 2018, the Company created a new
subsidiary Victory Abode Apartments, LLC (“VAA”) and contributed 52 multi-family projects that it owned and operated
to VAA. The Company subsequently sold a 50% interest to a third party and recorded a $154 million gain. Beginning November 19,
2018, the Company began reflecting its ownership of VAA on the Balance Sheet as an investment and its share of the Revenues, Operating
Expenses, Depreciation, Amortization and Interest as “Earning from VAA”. The Statement of Operations for the three
months ended March 31, 2018 and the information thereon reflect the operations for the properties contributed to VAA on a consolidated
basis.
The Company believes that the completion of the joint venture creating
Victory Abode Apartments has positioned the company with a dynamic platform to continue its expansion in the multifamily sector.
The ongoing plan is to continue to develop and acquire apartments in the geographic markets where demand exceeds supply.
For the three months ended March 31, 2019, we reported a net loss applicable
to common shares of $6.1 million or ($0.38) per diluted loss per share compared to a net loss applicable to common shares of $0.9
million or ($0.06) per diluted loss per share for the same period ended 2018.
Revenues
Rental and other property revenues were $11.9 million for
the three months ended March 31, 2019, compared to $31.1 million for the same period in 2018. The $19.2 million decrease is primarily
due to a decrease in the amount of multifamily residential apartment buildings currently in our portfolio of nine as compared to
53 multifamily residential apartment buildings for the same period a year ago as a result of the deconsolidation of 49 residential
apartment properties that were sold into the VAA Joint Venture during the fourth quarter of 2018. As the assets are now treated
as unconsolidated investments, our share of rental revenues is part of income from unconsolidated investments in the current period
and are no longer treated as rental income.
Expense
Property operating expenses decreased by $8.4
million to $6.0 million for the three months ended March 31, 2019 as compared to $14.4 million for the same period in 2018. The
decrease in property operating expenses is primarily due to the deconsolidation of 49 residential apartment properties that were
sold into the VAA Joint Venture during the fourth quarter of 2018 which resulted in a decrease in salary and related payroll expenses
of $1.7 million, real estate taxes of approximately $3.0 million and general property operating and maintenance expenses of $3.7
million.
Depreciation and amortization decreased by
$3.3 million to $3.1 million during the three months ended March 31, 2019 as compared to $6.4 million for
the three months ended March 31, 2018. This decrease is primarily due to the deconsolidation of the residential apartments
in connection with our previous sale and contribution of our interests to the VAA Joint Venture.
General
and administrative expense was $2.6 million for the three months ended March 31, 2019, compared to $2.3 million for the same period
in 2018. The increase of $0.3 million in general and administrative expenses is the result of increases in advisory and management
fees of approximately $0.4 million and professional and finance fees of $0.3 million offset by a decrease in accounting, tax and
other general administrative fees of $0.6 million.
Other income (expense)
Interest income was $6.2 million for the three months ended March
31, 2019, compared to $5.1 million for the same period in 2018. The increase of $1.1 million was due to an increase of $1.3
million in interest on receivable owed from our Advisors, offset by a decrease of $0.8 in interest on notes receivable from other
related parties.
Other income was $3.7 million for the three
months ended March 31, 2019, compared to $1.9 million for the same period in 2018. The increase is primarily the result of a $3.6
million gain recognized for deferred income associated with the sale of land during the quarter just ended to third parties.
Mortgage and loan interest expense was $9.9
million for the three months ended March 31, 2019 as compared to $15.7 million for the same period
in 2018. The decrease of $5.8 million is due to the deconsolidation of residential apartment properties into the VAA Joint
Venture which were encumbered by mortgage debt.
Foreign currency transaction was a loss
of $5.8 million for the three months ended March 31, 2019 as compared to a gain of $1.8 million for the same period in 2018. During
the first quarter just ended, we paid $10.4 million in principal and $5.8 million in interests payments to our bonds denominated
in Israel Shekels.
Loss from unconsolidated investments was $1.0
million for the three months ended March 31, 2019 as compared to earnings of $320 thousand for the three months ended March 31,
2018. The loss from unconsolidated investments during the first quarter just ended was driven primarily from our share in the losses
reported by the VAA Joint Venture.
Gain on land sales was $2.2 for the three months
ended March 31, 2019, compared to $1.3 million for the same period in 2018. In the current period, we sold approximately 22.3 acres
of land for a sales price of $8.7 million, which resulted in a gain of $2.2 million. For the same period in 2018, we sold 112.2
acres of land for a sales price of $7.2 million and recognized a gain of $1.3 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.