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Transcontinental Realty Investors, Inc. Reports Earnings for Q3 2020

·7 min read

Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended September 30, 2020. For the three months ended September 30, 2020, the Company reported a net income applicable to common shares of $7.7 million or $0.88 per diluted share, compared to a net loss applicable to common shares of $7.8 million or $0.89 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant impact on the Company’s results of operations or cash flows during the three months ended September 30, 2020.

  • The Company collected approximately 96% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 97% from office tenants.

  • The Company did not grant any abatements or significant deferments of rents.

  • Occupancy remains stable at 91% at September 30, 2020 and 2019.

  • The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.

  • Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.

The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

Financial Results

Rental revenues were $11.5 million for the three months ended September 30, 2020, compared to $11.4 million for the three months ended September 30, 2019. For 2020, we generated revenues of $7.8 million and $3.7 million from our commercial and multifamily segments respectively.

Net operating (loss) was ($1.5) million for the three months ended September 30, 2020, compared to $0.4 million for the same period in 2019. The $1.9 million increase in net operating loss is primarily due to the placement in service of two new multifamily apartment communities in 2020. Operating expense of new properties generally exceed their rental revenues during initial lease-up.

Interest income was $4.3 million for three months ended September 30, 2020, compared to $5.2 million for the same period in 2019. The decrease of $0.9 million in interest income was primarily due to collection on notes receivable in 2020.

Interest expense was to $6.3 million for the three months ended September 30, 2020, compared to $8.0 million for the same period in 2019. The $1.7 million decrease in interest expense was primarily due to the refinancing of the mortgage note payable on Browning Place in 2019.

Loss on foreign currency transactions was a loss of $1.5 million for the three months ended September 30, 2020 as compared to $5.2 million for the same period in 2019. The decrease is foreign currency loss was due a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Gain on sale or write-down of assets increased $7.2 million for the three months ended September 30, 2020, compared the same period in 2019. The increase is primarily due to the sale Bridgeview Plaza for $5.3 million, resulting in a gain of $4.8 million in 2020, and the sale of Farnham Park Apartments for $13.3 million, resulting in a gain of $2.7 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 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

(dollars in thousands, except per share amounts)

(Unaudited)

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

2020

2019

2020

2019

Revenues:

Rental revenues (including $262 and $212 for the three months and $673 and $527 for the nine months ended 2020 and 2019, respectively, from related parties)

$

11,453

$

11,407

$

34,461

$

34,352

Other income

706

1,990

3,885

7,394

Total revenues

12,159

13,397

38,346

41,746

Expenses:

Property operating expenses (including $254 and $237 for the three months ended and $750 and $741 for the nine months ended 2020 and 2019, respectively, from related parties)

6,388

5,403

18,507

18,722

Depreciation and amortization

3,526

3,416

10,338

9,964

General and administrative (including $1,017 and $935 for the three months ended and $2,783 and $3,355 for the nine months ended 2020 and 2019, respectively, from related parties)

1,643

1,929

7,063

6,468

Advisory fee to related party

2,139

2,200

6,483

6,196

Total operating expenses

13,696

12,948

42,391

41,350

Net operating (loss) income

(1,537

)

449

(4,045

)

396

Interest income (including $3,752 and $4,618 for the three months ended and $11,255 and $13,483 for the nine months ended 2020 and 2019, respectively, from related parties)

4,348

5,232

13,102

14,668

Interest expense (including $380 and $514 for the three months ended and $1,193 and $1,517 for the nine months ended 2020 and 2019, respectively, from related parties)

(6,291

)

(8,037

)

(21,999

)

(23,642

)

(Loss) gain on foreign currency transaction

(1,470

)

(5,153

)

774

(13,296

)

Loss on extinguishment of debt

-

(5,219

)

-

(5,219

)

Income (losses) from unconsolidated joint ventures

365

(178

)

(740

)

(1,474

)

Gain on sales or write-down of assets

12,328

5,140

21,802

9,409

Income tax expense

(50

)

-

(346

)

-

Net income (loss)

7,693

(7,766

)

8,548

(19,158

)

Net income attributable to non-controlling interest

-

(21

)

(400

)

(583

)

Net income (loss) attributable to common shares

$

7,693

$

(7,787

)

$

8,148

$

(19,741

)

Earnings (loss) per share - attributable to common shares

Basic and diluted

$

0.88

$

(0.89

)

$

0.93

$

(2.26

)

Weighted-average number of common shares outstanding:

Basic and diluted

8,717,767

8,717,767

8,717,767

8,717,767

TRANSCONTINENTAL REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share and par value amounts)

(Unaudited)

September 30, 2020

December 31, 2019

Assets

Real estate, net

$

380,715

$

387,790

Notes receivable (including $66.287 in 2020 and $57,817 in 2019 from related parties)

123,854

112,357

Cash and cash equivalents

32,967

51,179

Restricted cash

28,030

32,082

Investment in unconsolidated joint ventures

71,171

81,780

Receivable from related parties

140,050

141,541

Other assets

68,558

59,189

Total assets

$

845,345

$

865,918

Liabilities and Equity

Liabilities:

Mortgages and notes payable

$

242,300

$

245,773

Bonds payable

203,192

223,265

Accounts payable and other liabilities (including $937 in 2020 and $935 in 2019 to related parties)

24,642

26,115

Accrued interest payable

3,281

7,230

Deferred revenue

9,315

9,468

Total liabilities

482,730

511,851

Equity

Shareholders' Equity:

Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares at September 30, 2020 and December 31, 2019.

87

87

Treasury stock at cost, 200 shares in 2020 and 2019

(2

)

(2

)

Paid-in capital

257,853

257,853

Retained earnings

82,813

74,665

Total shareholders' equity

340,751

332,603

Non-controlling interest

21,864

21,464

Total equity

362,615

354,067

Total liabilities and equity

$

845,345

$

865,918

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112006104/en/

Contacts

Transcontinental Realty Investors, Inc.
Investor Relations
Erik Johnson (469) 522-4200
investor.relations@transconrealty-invest.com