Transcontinental Realty Investors Inc Reports Q3 2023 Earnings with Net Income of $4.5 Million
Net income attributable to common shares stands at $4.5 million, a significant decrease from $378.4 million in the same quarter of the previous year.
Rental revenues increased by $4.3 million, driven by multifamily property acquisitions.
Total occupancy reached 79%, with multifamily properties at a high 96% occupancy rate.
TCI secures a $25.4 million construction loan for a new multifamily property development.
Transcontinental Realty Investors Inc (NYSE:TCI) has released its earnings report for the third quarter of 2023 on November 9, 2023. The company reported a net income attributable to common shares of $4.5 million, or $0.52 per diluted share, a stark contrast to the $378.4 million, or $43.79 per diluted share, reported for the same period in 2022. This significant year-over-year decrease is primarily attributed to the gain from the sale of the VAA Sale Portfolio in the previous year.
Financial Performance Overview
TCI's rental revenues saw an increase from $7.6 million in Q3 2022 to $11.8 million in Q3 2023, with a notable $5.0 million increase at multifamily properties, which was slightly offset by a decrease in commercial properties. This growth in rental revenue is largely due to the strategic acquisition of the VAA Holdback Portfolio in 2022. The company's total occupancy stood at 79%, with multifamily properties showing strong performance at 96% occupancy, while commercial properties lagged behind at 49%.
Despite the increase in rental revenues, TCI's net operating loss decreased by $1.0 million, from $2.8 million in the third quarter of 2022 to $1.8 million in the same period of 2023. This improvement is primarily due to a reduction in legal costs. Additionally, TCI has been proactive in its financial management, paying off a $1.2 million loan on Athens and securing a $25.4 million construction loan for a new 216-unit multifamily property in McKinney, Texas.
Income Statement Highlights
The consolidated statements of operations reveal that while total revenue increased, total operating expenses also rose from $11.1 million in Q3 2022 to $14.3 million in Q3 2023. The increase in expenses was due to higher property operating expenses, depreciation, and amortization, although general and administrative expenses saw a decrease. Interest income provided a positive impact, increasing from $7.4 million to $9.7 million year-over-year. However, the equity in income from unconsolidated joint ventures, which significantly boosted the net income in 2022, was not a major contributor in 2023.
TCI's earnings per share (EPS) for the quarter were $0.52, compared to $43.79 in the same quarter of the previous year, reflecting the absence of the large one-time gain from the previous year's asset sale. The weighted average common shares used in computing earnings per share remained unchanged at 8,639,316.
Analysis of TCI's Performance
Transcontinental Realty Investors Inc's third-quarter results demonstrate a mixed financial landscape. The company's ability to increase rental revenue and manage occupancy rates effectively, particularly in the multifamily sector, is a positive indicator of operational strength. However, the year-over-year comparison of net income highlights the impact of non-recurring items on financial results and underscores the importance of evaluating core operating performance separate from one-time events.
TCI's strategic financial moves, including the payoff of existing debt and the acquisition of a new construction loan, suggest a forward-looking approach to growth and development. The focus on multifamily properties aligns with market trends favoring residential real estate investments.
For value investors and potential GuruFocus.com members interested in the real estate sector, TCI's latest earnings report offers insights into the company's operational efficiency, financial management, and strategic direction. The detailed financial results and the company's ongoing projects will be key factors to watch in the coming quarters.
Explore the complete 8-K earnings release (here) from Transcontinental Realty Investors Inc for further details.
This article first appeared on GuruFocus.
