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American Realty Investors, Inc. (NYSE: ARL) reported net income attributable to common shares of $1.8 million or $0.11 per diluted share for the three months ended March 31, 2024, compared to $3.0 million or $0.18 per diluted share for the same period in 2023. Rental revenues increased to $11.3 million, with total occupancy at 79% as of March 31, 2024. The company extended the loan maturity on Windmill Farms to 2026 at a 7.50% interest rate.
Positive
Rental revenues increased from $11.0 million in Q1 2023 to $11.3 million in Q1 2024, driven by growth in multifamily properties.
Total occupancy stood at 79% as of March 31, 2024, reflecting stability in the real estate portfolio.
The extension of the loan maturity on Windmill Farms to 2026 at a 7.50% interest rate indicates favorable terms for the company.
Negative
Net income attributable to common shares decreased from $3.0 million in Q1 2023 to $1.8 million in Q1 2024, primarily due to lower interest income and foreign currency transaction gains.
The net operating loss decreased from $3.1 million in Q1 2023 to $1.5 million in Q1 2024, mainly driven by reduced general and administrative expenses.
Insights
American Realty Investors, Inc.'s earnings report demonstrates a mixed financial performance for the quarter ending March 31, 2024. The company experienced a decrease in net income attributable to common shares, down from $3.0 million to $1.8 million and a dip in earnings per share from $0.18 to $0.11. This decline is a sign of reduced profitability, possibly due to a less favorable mix of interest income and foreign currency transactions. On the positive side, the reduction in the net operating loss, from $3.1 million to $1.5 million, likely reflects improved operational efficiency, particularly a notable decrease in general and administrative expenses. Investors should consider the company's ability to manage its expenses as a positive development that could lead to better margins in the future, although the decreased net income may be a concern. The extension of the maturity of their loan on Windmill Farms with an interest rate of 7.50% could imply strategic financial management but also suggests a reliance on debt financing which necessitates scrutiny of the company's long-term debt management strategy. The occupancy rates, with multifamily properties at 94% and commercial properties lagging at 49%, might indicate market demand trends and the company's asset performance. However, investors should be cautious, as the overall occupancy of 79% might not fully reflect recovery in the commercial real estate sector. As a retail investor, the decrease in net income warrants attention, despite the lower net operating loss, to assess the sustainability of earnings.
The report's indication of an 79% total occupancy rate, differentiated between multifamily and commercial properties, provides insight into the real estate market's segmentation. The strong performance of multifamily units, at a 94% occupancy rate, suggests robust demand in residential rental spaces, which might be driven by broader market trends such as urbanization or housing shortages. Conversely, the 49% occupancy for commercial properties points to potential challenges in the commercial real estate market, perhaps due to shifts towards remote work or changes in retail patterns. This disparity could signal a need for American Realty Investors, Inc. to reevaluate their commercial property portfolio strategy or explore redevelopment opportunities to enhance value. The launch of the Landing on Bayou Cane multifamily project and its contribution to the increase in rental revenue exemplify successful asset growth and management. For investors, the portfolio rebalancing or asset enhancement initiatives are important considerations for long-term asset value growth and stability in dividends.
DALLAS--(BUSINESS WIRE)--
American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the three months ended March 31, 2024. For the three months ended March 31, 2024, we reported net income attributable to common shares of $1.8 million or $0.11 per diluted share, compared to net income attributable to common shares of $3.0 million or $0.18 per diluted share for the same period in 2023.
Financial Highlights
Total occupancy was 79% at March 31, 2024, which includes 94% at our multifamily properties and 49% at our commercial properties.
On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.
Financial Results
Rental revenues increased $0.3 million from $11.0 million for the three months ended March 31, 2023 to $11.3 million for the three months ended March 31, 2024. The increase in rental revenue is primarily due to a $0.7 million increase at our multifamily properties offset in part by a decrease of $0.4 million from the commercial properties. The increase in revenue from the multifamily properties is primarily due to the lease-up of Landing on Bayou Cane.
Net operating loss decreased $1.6 million from $3.1 million for three months ended March 31, 2023 to $1.5 million for the three months ended March 31, 2024. The decrease in net operating loss is primarily due to a decrease in general and administrative expenses associated with our bonds payable, which were repaid in 2023.
Net income attributable to common shares decreased $1.2 million from $3.0 million for the three months ended March 31, 2023 to $1.8 million for the three months ended March 31, 2024. The decrease in net income is primarily attributed to a decrease in interest income and gain in foreign currency transactions offset in part by a decrease in net operating loss and interest expense.
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. The Company’s primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). For more information, visit the Company’s website at www.americanrealtyinvest.com.
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
2024
2023
Revenues:
Rental revenues
$
11,279
$
11,009
Other income
620
679
Total revenue
11,899
11,688
Expenses:
Property operating expenses
6,634
6,106
Depreciation and amortization
3,172
3,102
General and administrative
1,408
3,161
Advisory fee to related party
2,202
2,405
Total operating expenses
13,416
14,774
Net operating loss
(1,517
)
(3,086
)
Interest income
5,733
8,295
Interest expense
(1,922
)
(3,140
)
Gain on foreign currency transactions
-
971
Equity in income from unconsolidated joint ventures
483
2,419
Income tax provision
(475
)
(1,240
)
Net income
2,302
4,219
Net income attributable to noncontrolling interest
(551
)
(1,241
)
Net income attributable to common shares
$
1,751
$
2,978
Earnings per share
Basic and diluted
$
0.11
$
0.18
Weighted average common shares used in computing earnings per share
What was the net income per diluted share for American Realty Investors, Inc. in Q1 2024?
American Realty Investors, Inc. reported a net income per diluted share of $0.11 for Q1 2024.
What was the total occupancy rate for American Realty Investors, Inc. as of March 31, 2024?
The total occupancy rate for American Realty Investors, Inc. was 79% as of March 31, 2024.
What was the change in rental revenues for American Realty Investors, Inc. from Q1 2023 to Q1 2024?
Rental revenues increased from $11.0 million in Q1 2013 to $11.3 million in Q1 2024, driven by growth in multifamily properties.
Why did the net income attributable to common shares decrease for American Realty Investors, Inc. in Q1 2024 compared to Q1 2023?
The decrease in net income was primarily due to lower interest income and foreign currency transaction gains, offset by reduced net operating loss and interest expense.
