American Realty Investors, Inc. Reports Earnings for Quarter Ended June 30, 2024

Rhea-AI Summary

American Realty Investors, Inc. (NYSE:ARL) reported its Q2 2024 results, showing a net income of $1.2 million or $0.07 per diluted share, up from $0.1 million or $0.01 per diluted share in Q2 2023. Total occupancy was 78%, with 93% in multifamily and 49% in commercial properties. Rental revenues slightly decreased to $11.2 million from $11.4 million year-over-year. The company's net operating loss improved, decreasing from $3.9 million to $1.3 million. This improvement was primarily due to reduced general and administrative expenses related to repaid bonds. ARL also refinanced its Forest Grove property with a $6.6 million loan at SOFR plus 1.85%, maturing in 2031.

Positive

• Net income increased to $1.2 million from $0.1 million year-over-year
• Earnings per share improved to $0.07 from $0.01 year-over-year
• Net operating loss decreased by $2.6 million to $1.3 million
• Multifamily property revenues increased by $0.3 million
• High occupancy rate of 93% in multifamily properties

Negative

• Overall rental revenues decreased by $0.2 million to $11.2 million
• Commercial property revenues decreased by $0.5 million
• Total occupancy at 78%, with commercial properties at only 49%
• Decrease in interest income reported

Financial Analyst

The Q2 2024 earnings report for American Realty Investors (ARL) shows mixed results. While net income increased to $1.2 million ($0.07 per diluted share) from $0.1 million in Q2 2023, there are some concerning trends. Total occupancy stands at 78%, with a stark difference between multifamily (93%) and commercial properties (49%). This low commercial occupancy is a red flag for potential cash flow issues.

Rental revenues decreased by $0.2 million year-over-year, primarily due to a $0.5 million decline in commercial property revenue. This was partially offset by a $0.3 million increase from multifamily properties. The company's net operating loss improved from $3.9 million to $1.3 million, mainly due to reduced administrative expenses related to repaid bonds. However, investors should note the decrease in interest income, which could impact future earnings.

Real Estate Market Analyst

ARL's Q2 2024 results reflect the diverging trends in the multifamily and commercial real estate sectors. The 93% occupancy in multifamily properties is strong, indicating resilient demand. However, the 49% occupancy in commercial properties is alarmingly low and suggests significant challenges in this segment, possibly due to ongoing shifts in work patterns post-pandemic.

The refinancing of the Forest Grove property with a $6.6 million loan at SOFR plus 1.85% until 2031 is a positive move, potentially reducing interest expenses. The successful lease-up of Landing on Bayou Cane demonstrates ARL's ability to execute on multifamily projects. However, the overall decrease in rental revenues and the stark occupancy disparity between property types suggest that ARL may need to reassess its portfolio mix and consider divesting underperforming commercial assets to focus on the stronger multifamily sector.

DALLAS--(BUSINESS WIRE)-- American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the three months ended June 30, 2024. For the three months ended June 30, 2024, we reported net income attributable to common shares of $1.2 million or $0.07 per diluted share, compared to net income attributable to common shares of $0.1 million or $0.01 per diluted share for the same period in 2023.

Financial Highlights

• Total occupancy was 78% at June 30, 2024, which includes 93% at our multifamily properties and 49% at our commercial properties.
• On July 10, 2024, we replaced the existing loan on Forest Grove with a $6.6 million loan that bears interest at SOFR plus 1.85% and matures on July 10, 2031.

Financial Results

Rental revenues decreased $0.2 million from $11.4 million for the three months ended June 30, 2023 to $11.2 million for the three months ended June 30, 2024. The decrease in rental revenue is primarily due to an increase of $0.3 million from our multifamily properties offset in part by a decrease of $0.5 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 $2.6 million from $3.9 million for the three months ended June 30, 2023 to $1.3 million for the three months ended June 30, 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 increased $1.0 million from $0.1 million for the three months ended June 30, 2023 to $1.2 million for the three months ended June 30, 2024. The increase in net income is primarily attributed to a decrease in general administrative expenses and loss on extinguishment in debt offset in part by a decrease in interest income.

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 June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
Revenues:
Rental revenues		$	11,188		$	11,389		$	22,467		$	22,398
Other income			585			850			1,205			1,529
Total revenue			11,773			12,239			23,672			23,927
Expenses:
Property operating expenses			6,624			7,031			13,258			13,137
Depreciation and amortization			3,137			3,200			6,309			6,302
General and administrative			1,552			3,684			2,960			6,845
Advisory fee to related party			1,737			2,183			3,939			4,588
Total operating expenses			13,050			16,098			26,466			30,872
Net operating loss			(1,277)			(3,859)			(2,794)			(6,945)
Interest income			4,794			7,898			10,527			16,193
Interest expense			(1,913)			(2,480)			(3,835)			(5,620)
Gain on foreign currency transactions			-			22			-			993
Loss on early extinguishment of debt			-			(1,710)			-			(1,710)
Equity in income from unconsolidated joint ventures			501			293			984			2,712
Gain on sale or write-down of assets, net			-			188			-			188
Income tax provision			(614)			(49)			(1,089)			(1,289)
Net income			1,491			303			3,793			4,522
Net income attributable to noncontrolling interest			(324)			(178)			(875)			(1,419)
Net income attributable to the common shares		$	1,167		$	125		$	2,918		$	3,103
Earnings per share
Basic and diluted		$	0.07		$	0.01		$	0.18		$	0.19
Weighted average common shares used in computing earnings per share
Basic and diluted			16,152,043			16,152,043			16,152,043			16,152,043

 

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American Realty Investors, Inc.

Investor Relations

Erik Johnson (469) 522-4200

investor.relations@americanrealtyinvest.com

Source: American Realty Investors, Inc.

FAQ

What was American Realty Investors' (ARL) net income for Q2 2024?

American Realty Investors (ARL) reported a net income of $1.2 million or $0.07 per diluted share for Q2 2024.

How did ARL's rental revenues change in Q2 2024 compared to Q2 2023?

ARL's rental revenues decreased by $0.2 million, from $11.4 million in Q2 2023 to $11.2 million in Q2 2024.

What was the occupancy rate for ARL's properties as of June 30, 2024?

As of June 30, 2024, ARL's total occupancy was 78%, with 93% occupancy in multifamily properties and 49% in commercial properties.

How did ARL's net operating loss change in Q2 2024?

ARL's net operating loss decreased by $2.6 million, from $3.9 million in Q2 2023 to $1.3 million in Q2 2024.