TCI Transcontinental Realty Investment Inc

Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, reported results of operations for the second quarter ended June 30, 2016. TCI announced today that the Company reported net income applicable to common shares of approximately $4.4 million, or $0.51 per diluted earnings per share, for the three months ended June 30, 2016, as compared to a net loss applicable to common shares of $86 thousand, or $0.01 per diluted earnings per share for the same period ended 2015.

“The Company’s strategic posture of maintaining a strong focus on our multi-family portfolio has created valuable results. We are committed to solidifying the portfolio and paying very close attention to all operational details, while at the same time maintaining our commitment to creating value. We believe our second 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 $30.5 million for the three months ended June 30, 2016. This represents an increase of $6.7 million compared to the prior period revenues of $23.8 million. The change by segment is an increase in the apartment portfolio of approximately $4.7 million and an increase in the commercial portfolio of $2.0 million. During the three months ended June 30, 2016, we recorded $2.5 million rental revenue for six apartment communities purchased since June 30, 2015 and had a decrease in rental revenue of $0.6 million for two apartment communities sold since June 30, 2015, for a net increase of $1.9 million. In addition, we purchased seven apartment communities in the second quarter of 2015, which produced rental revenue of $3.1 million and $1.3 million during the three months ended June 30, 2016 and 2015, respectively, for a net increase of $1.8 million. The $2.0 million increase in revenues for the commercial portfolio was primarily due to the acquisition of a commercial building in Houston, Texas late in the second quarter of 2015.

Property operating expenses were $14.9 million for the three months ended June 30, 2016. This represents an increase of $4.0 million compared to the prior period operating expenses of $10.9 million. The change by segment is an increase in the apartment portfolio of $2.5 million and an increase in the commercial portfolio of $1.5 million. The primary reason for the increase in property operating expenses for the Company’s apartment portfolio was the purchase of six communities with a total of 1,144 units, net of two communities sold with a total of 360 units since June 30, 2015, for a net increase of 784 units. In addition, we purchased seven apartment communities during the second quarter of 2015 which have a total of 1,261 units. Property operating expenses for our commercial portfolio increased $1.5 million due to the acquisition of an office building in Houston, Texas late in the second quarter of 2015.

Mortgage and loan interest expense was $12.1 million for the three months ended June 30, 2016. This represents an increase of $3.9 million compared to the prior period expense of $8.2 million. The change by segment was an increase of $2.8 million in the apartment portfolio due to acquisitions, an increase of $1.8 million in the other portfolio primarily due to securing a new mezzanine debt obligation in June 2015 and an increase in the commercial portfolio of $0.1 million. 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.

Gain on sale of income-producing properties was $5.2 million for the three months ended June 30, 2016. During 2016, the Company sold one apartment community located in Irving, Texas to an independent third party for a total sales price of $8.1 million which resulted in a gain of $5.2 million. There were no sales of income-producing properties during the three months ended June 30, 2015.

Gain on land sales was $1.7 million for the three months ended June 30, 2016 compared to $1.2 million for the three months ended June 30, 2015. In the current period we sold 12.2 acres of land for a total sales price of $3.1 million and recorded a gain of $1.7 million. In 2015, we sold 9.7 acres of land for a total sales price of $1.9 million and recorded a gain of $1.2 million.

About Transcontinental Realty Investors, Inc.

Transcontinental 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. For more information, visit the Company’s website at www.transconrealty-invest.com.

    TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)       Three Months Ended June 30,       Six Months Ended June 30, 2016     2015 2016     2015   Revenues: Rental and other property revenues (including $174 and $173 for the three months and $347 and $343 for the six months ended 2016 and 2015, respectively, from related parties) $ 30,521 $ 23,756 $ 59,424 $ 46,060   Expenses: Property operating expenses (including $223 and $178 for the three months and $423 and $331 for the six months ended 2016 and 2015, respectively, from related parties) 14,919 10,929 29,882 21,793 Depreciation and amortization 5,843 5,107 11,651 9,751 General and administrative (including $753 and $727 for the three months and $1,502 and $1,547 for the six months ended 2016 and 2015, respectively, from related parties) 1,604 1,278 3,213 3,045 Net income fee to related party 54 45 126 90 Advisory fee to related party   2,331     1,951     4,702     3,894   Total operating expenses   24,751     19,310     49,574     38,573   Net operating income 5,770 4,446 9,850 7,487   Other income (expenses): Interest income (including $3,274 and $2,748 for the three months and $6,008 and $6,167 for the six months ended 2016 and 2015, respectively, from related parties) 3,289 2,994 7,136 6,755 Other income 902 14 1,169 81 Mortgage and loan interest (including $165 and $190 for the three months and $627 and $408 for the six months ended 2016 and 2015, respectively, from related parties) (12,092 ) (8,216 ) (25,258 ) (18,401 ) Earnings (losses) from unconsolidated joint ventures and investees - 10 (2 ) 43 Litigation expense   -     (45 )   -     (118 ) Total other expenses   (7,901 )   (5,243 )   (16,955 )   (11,640 ) Loss before gain on sale of income-producing properties, gain on land sales, non-controlling interest, and taxes (2,131 ) (797 ) (7,105 ) (4,153 )   Gain on sale of income-producing properties 5,168 - 4,925 - Gain on land sales   1,719     1,250     3,370     4,126   Net income (loss) from continuing operations before taxes 4,756 453 1,190 (27 ) Income tax benefit (expense)   -     (12 )   1     90   Net income from continuing operations 4,756 441 1,191 63 Discontinued operations: Net income (loss) from discontinued operations - (34 ) 3 258 Income tax expense (benefit) from discontinued operations   -     12     (1 )   (90 ) Net income (loss) from discontinued operations   -     (22 )   2     168   Net income 4,756 419 1,193 231 Net (income) loss attributable to non-controlling interest   (97 )   (281 )   (74 )   12   Net income attributable to Transcontinental Realty Investors, Inc. 4,659 138 1,119 243 Preferred dividend requirement   (224 )   (224 )   (446 )   (446 ) Net income (loss) applicable to common shares $ 4,435   $ (86 ) $ 673   $ (203 )   Earnings per share - basic Net income (loss) from continuing operations $ 0.51 $ (0.01 ) $ 0.08 $ (0.04 ) Net income from discontinued operations   -     -     -     0.02   Net income (loss) applicable to common shares $ 0.51   $ (0.01 ) $ 0.08   $ (0.02 )   Earnings per share - diluted Net income (loss) from continuing operations $ 0.51 $ (0.01 ) $ 0.08 $ (0.04 ) Net income from discontinued operations   -     -     -     0.02   Net income (loss) applicable to common shares $ 0.51   $ (0.01 ) $ 0.08   $ (0.02 )   Weighted average common shares used in computing earnings per share 8,717,767 8,717,767 8,717,767 8,717,767 Weighted average common shares used in computing diluted earnings per share 8,717,767 8,717,767 8,717,767 8,717,767     Amounts attributable to Transcontinental Realty Investors, Inc. Net income from continuing operations $ 4,659 $ 160 $ 1,117 $ 75 Net income (loss) from discontinued operations   -     (22 )   2     168   Net income $ 4,659   $ 138   $ 1,119   $ 243       TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS         June 30, December 31, 2016 2015 (unaudited) (dollars in thousands, except share and par value amounts) Assets Real estate, at cost $ 993,060 $ 935,635 Real estate subject to sales contracts at cost, net of depreciation 47,192 47,192 Less accumulated depreciation   (148,718 )   (138,808 ) Total real estate 891,534 844,019 Notes and interest receivable: Performing (including $67,829 in 2016 and $64,181 in 2015 from related parties) 76,002 71,376 Less allowance for doubtful accounts (including $1,825 in 2016 and 2015 from related parties)   (1,825 )   (1,825 ) Total notes and interest receivable 74,177 69,551 Cash and cash equivalents 19,953 15,171 Restricted cash 29,880 44,060 Investments in unconsolidated joint ventures and investees 2,460 5,243 Receivable from related party 75,615 90,515 Other assets   39,741     41,645   Total assets $ 1,133,360   $ 1,110,204     Liabilities and Shareholders’ Equity Liabilities: Notes and interest payable $ 800,398 $ 772,636 Notes related to real estate held for sale 376 376 Notes related to real estate subject to sales contracts 6,072 6,422 Deferred revenue (including $50,669 in 2016 and $50,645 in 2015 to related parties) 71,045 71,021 Accounts payable and other liabilities (including $6,060 in 2016 and $5,845 in 2015 to related parties)   29,667     34,694   Total liabilities 907,558 885,149   Shareholders’ equity: Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares; issued and outstanding zero shares in 2016 and 2015. Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2016 and 2015 (liquidation preference $100 per share) 1 1 Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2016 and 2015; outstanding 8,717,767 shares in 2016 and 2015 87 87 Treasury stock at cost, 200 shares in 2016 and 2015 (2 ) (2 ) Paid-in capital 270,303 270,749 Retained earnings   (62,968 )   (64,087 ) Total Transcontinental Realty Investors, Inc. shareholders' equity 207,421 206,748 Non-controlling interest   18,381     18,307   Total shareholders' equity   225,802     225,055   Total liabilities and shareholders' equity $ 1,133,360   $ 1,110,204  

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Transcontinental Realty Investors, Inc.Investor RelationsGene Bertcher, 800-400-6407investor.relations@transconrealty-invest.com