TCI Transcontinental Realty Investment Inc

Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company is reporting its Results of Operations for 2018. 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. TCI subsequently sold a 50% interest to a third party and recorded a $154 million gain.

The Company believes that both the completion of the joint venture creating Victory Abode Apartments and the issuance of the Series B Bonds in the Israeli Bond Market has positioned the company along the strategic lines that it previously indicated. The Company has created 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.

Beginning November 19, 2018, TCI 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 comparative financial statements and the information below reflect approximately 46 weeks of operations for the properties contributed to VAA in 2018 in their traditional categories as compared to a full 52 weeks for 2017

For the year ended December 31, 2018, we reported net income applicable to common shares of $180.1 million or $20.71 per share compared to a net loss applicable to common shares of $16.7 million or ($1.92) per share for the year ended December 31, 2017.

Revenues

Rental and other property revenues were $121.0 million for the year ended December 31, 2018. This represents a decrease of $4.2 million, as compared to the prior year revenues of $125.2 million. The decrease is primarily due to the contribution of fifty-two properties to the joint venture VAA on November 19, 2018.

Expenses

Property operating expenses were $59.4 million for the year ended December 31, 2018. This represents a decrease of $3.7 million, compared to the prior year operating expenses of $63.1 million. The decrease is primarily due to the contribution of fifty-two properties to the joint venture VAA on November 19, 2018.

Depreciation and amortization expenses were $22.8 million for the year ended December 31, 2018. This represents a decrease of $2.8 million compared to prior year depreciation of $25.6 million. The decrease is primarily due to the contribution of fifty-two properties to the joint venture VAA on November 19, 2018.

General and administrative expenses were $11.4 million for the year ended December 31, 2018. This represents an increase of $5.1 million compared to the prior year expenses of $6.3 million. The increase in general and administrative expenses was due primarily to an increase in fees paid associated with finalizing the formation of VAA as well as and general and professional fees.

Other income (expense)

Interest income was $15.8 million for the year ending December 31, 2018 compared to $13.9 million for the year ended December 31, 2017 for an increase of $1.9 million. This increase was primarily due to an increase of $2.7 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.

Mortgage and loan interest expense was $58.9 million for the year ended December 31, 2018. This represents a decrease of $1.0 million compared to the prior year expense of $59.9 million. The decrease is primarily due to the contribution of fifty-two properties to the joint venture VAA on November 19, 2018.

No gain on sales of income producing properties was recognized during the year ended December 31, 2018. Gain on sale of income-producing properties was $9.8 million for the year ended December 31, 2017, attributable to the recognition of deferred gain.

Gain on land sales was $17.4 million and $4.9 million for the years ended December 31, 2018 and 2017, respectively. The increase of approximately $12.5 million was primarily due to sales of land at Mercer Crossing recognized in 2018.

Other income was $28.2 million and $0.6 million for the years ended December 31, 2018 and 2017, respectively. The increase of $27.6 million was primarily due to a $17.6 million gain recognized in September 2018 for deferred income associated with the sale of assets, as well as income of approximately $7.6 million from insurance proceeds on Mahogany Run Golf Course.

Gain from the sale of 50% ownership in VAA was $154.1 million for the year ended December 31, 2018. There was no such gain in prior years.

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 apartments, office buildings, 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   For the Years Ended December 31, 2018 2017 2016 (dollars in thousands, except per share amounts) Revenues: Rental and other property revenues (including $767, $839 and $708 for the years ended 2018, 2017 and 2016, respectively, from related parties) $ 120,955 $ 125,233 $ 118,471   Expenses: Property operating expenses (including $943, $929 and $865 for the years ended 2018, 2017 and 2016, respectively, from related parties) 59,420 63,056 61,918 Depreciation and amortization 22,761 25,558 23,683 General and administrative (including $4,578, $3,120 and $3,574 for the years ended 2018, 2017 and 2016, respectively, from related parties) 11,359 6,269 5,476 Net income fee to related party 631 250 257 Advisory fee to related party   10,663     9,995     9,490   Total operating expenses   104,834     105,128     100,824   Net operating income 16,121 20,105 17,647   Other income (expenses): Interest income (including $13,132, $11,485 and $13,348 for the years ended 2018, 2017 and 2016, respectively, from related parties) 15,793 13,862 14,670 Other income 28,150 625 1,816 Mortgage and loan interest (including $423, $1,174 and $568 for the year ended 2018, 2017 and 2016, respectively, from related parties) (58,872 ) (59,944 ) (53,088 ) Foreign currency transaction gain (loss) 12,399 (4,536 ) - Earnings from VAA 44 - - Earnings (losses) from other unconsolidated investees   1,085     26     (26 ) Total other expenses   (1,401 )   (49,967 )   (36,628 ) Income (loss) before gain on disposition of 50% interest in VAA, gain on land sales, non-controlling interest, and taxes 14,720 (29,862 ) (18,981 )   Gain on disposition of 50% interest in VAA 154,126 - - Gain on sale of income producing properties - 9,842 16,207 Gain on land sales   17,404     4,884     3,121   Net income (loss) from continuing operations before taxes 186,250 (15,136 ) 347 Income tax expense - current (1,210 ) (180 ) (24 ) Income tax expense - deferred   (2,000 )   -     -   Net income (loss) from continuing operations 183,040 (15,316 ) 323 Discontinued operations: Net income (loss) from discontinued operations - - (2 ) Income tax benefit (expense) from discontinued operations   -     -     1   Net income (loss) from discontinued operations   -     -     (1 ) Net income (loss) 183,040 (15,316 ) 322 Net (income) attributable to non-controlling interest   (1,590 )   (499 )   (285 ) Net income (loss) attributable to Transcontinental Realty Investors, Inc. 181,450 (15,815 ) 37 Preferred dividend requirement   (900 )   (900 )   (900 ) Net income (loss) applicable to common shares $ 180,550   $ (16,715 ) $ (863 )   Earnings per share - basic       Net income (loss) from continuing operations $ 20.71   $ (1.92 ) $ (0.10 ) Net income (loss) applicable to common shares $ 20.71   $ (1.92 ) $ (0.10 )   Earnings per share - diluted       Net income (loss) from continuing operations $ 20.71   $ (1.92 ) $ (0.10 ) Net income (loss) applicable to common shares $ 20.71   $ (1.92 ) $ (0.10 )   Weighted average common shares used in computing earnings per share 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 Amounts attributable to Transcontinental Realty Investors, Inc. Net income (loss) from continuing operations $ 181,450 $ (15,815 ) $ 38 Net income from discontinued operations   -     -     (1 ) Net income (loss) applicable to Transcontinental Realty, Investors, Inc. $ 181,450   $ (15,815 ) $ 37         TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS   December 31, 2018 2017   (dollars in thousands, except share and par value amounts) Assets Real estate, at cost $ 461,718 $ 1,112,721 Real estate subject to sales contracts at cost 2,014 45,739 Less accumulated depreciation   (79,228 )   (178,590 )

Total real estate

384,504 979,870   Notes and interest receivable (including $51,945 in 2018 and $45,155 in 2017 from related parties) 83,541 70,166 Cash and cash equivalents 36,358 33,563 Restricted cash 70,207 54,779 Investment in joint venture 68,399 - Investment in other unconsolidated investees 22,172 2,472 Receivable from related party 133,642 111,665 Other assets   63,557     60,907   Total assets $ 862,380   $ 1,313,422     Liabilities and Shareholders’ Equity Liabilities: Notes and interest payable $ 277,237 $ 892,149 Notes related to real estate held for sale - 376 Notes related to real estate subject to sales contracts - 1,957 Bonds and bond interest payable 158,574 113,047 Deferred revenue (including $21,034 in 2018 and $40,574 in 2017 to related parties) 17,522 60,949 Deferred tax liability 2,000 - Accounts payable and other liabilities (including $3 in 2018 and $7,236 in 2017 to related parties)   26,646     36,683   Total liabilities 481,979 1,105,161   Shareholders’ equity: Preferred Stock, Series D: $0.01 par value, authorized 100,000 shares; issued 100,000 shares in 2018 and 2017; outstanding 0 shares in 2018 and 100,000 shares in 2017 (liquidation preference $100 per share) - 1 Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2018 and 2017; outstanding 8,717,767 shares in 2018 and 2017 87 87 Treasury stock at cost, 200 shares in 2018 and 2017 (2 ) (2 ) Paid-in capital 258,050 268,949 Retained earnings (deficit)   101,585     (79,865 ) Total Transcontinental Realty Investors, Inc. shareholders' equity 359,720 189,170 Non-controlling interest   20,681     19,091   Total shareholders' equity   380,401     208,261   Total liabilities and shareholders' equity $ 862,380   $ 1,313,422    

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