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

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American Realty Investors (NYSE:ARL) reported Q3 2024 results with a net loss of $17.5 million ($1.08 per diluted share), compared to net income of $3.0 million ($0.18 per share) in Q3 2023. Total occupancy was 79%, with 95% in multifamily and 48% in commercial properties. Rental revenues decreased to $11.1 million from $11.8 million year-over-year. The company secured a $6.6 million loan for Forest Grove and a $27.5 million construction loan for a new Dallas multifamily project. A significant $23.4 million settlement payment was made to resolve long-standing Clapper litigation from 1999.

American Realty Investors (NYSE:ARL) ha riportato i risultati del terzo trimestre del 2024, registrando una perdita netta di 17,5 milioni di dollari (1,08 dollari per azione diluita), rispetto a un reddito netto di 3,0 milioni di dollari (0,18 dollari per azione) nel terzo trimestre del 2023. L'occupazione totale è stata del 79%, con il 95% nei settori residenziale e il 48% in quello commerciale. I ricavi da locazioni sono diminuiti a 11,1 milioni di dollari da 11,8 milioni di dollari rispetto all'anno precedente. L'azienda ha ottenuto un prestito di 6,6 milioni di dollari per Forest Grove e un prestito per costruzione di 27,5 milioni di dollari per un nuovo progetto multifamiliare a Dallas. È stato effettuato un pagamento di regolamento significativo di 23,4 milioni di dollari per risolvere una controversia legale di lunga data riguardante il caso Clapper risalente al 1999.

American Realty Investors (NYSE:ARL) informó los resultados del tercer trimestre de 2024 con una pérdida neta de 17,5 millones de dólares (1,08 dólares por acción diluida), en comparación con un ingreso neto de 3,0 millones de dólares (0,18 dólares por acción) en el tercer trimestre de 2023. La ocupación total fue del 79%, con un 95% en propiedades multifamiliares y un 48% en propiedades comerciales. Los ingresos por alquileres disminuyeron a 11,1 millones de dólares desde 11,8 millones de dólares en el año anterior. La compañía obtuvo un préstamo de 6,6 millones de dólares para Forest Grove y un préstamo de construcción de 27,5 millones de dólares para un nuevo proyecto multifamiliar en Dallas. Se realizó un pago de liquidación significativo de 23,4 millones de dólares para resolver un litigio prolongado de Clapper desde 1999.

American Realty Investors (NYSE:ARL)는 2024년 3분기 실적을 보고하며 1억 7500만 달러(희석 주당 1.08달러)의 순손실을 기록했습니다. 이는 2023년 3분기 300만 달러(주당 0.18달러)의 순이익과 비교됩니다. 총 점유율은 79%로, 다가구 주택은 95%, 상업용 부동산은 48%를 차지했습니다. 임대 수익은 전년 대비 1180만 달러에서 1110만 달러로 감소했습니다. 회사는 포레스트 그로브를 위해 660만 달러의 대출을 확보했으며, Dallas의 새로운 다가구 프로젝트를 위한 2750만 달러의 건설 대출도 확보했습니다. 1999년의 클래퍼 소송을 해결하기 위해 2340만 달러의 중요한 합의금이 지급되었습니다.

American Realty Investors (NYSE:ARL) a publié ses résultats du troisième trimestre 2024, enregistrant une perte nette de 17,5 millions de dollars (1,08 dollar par action diluée), contre un bénéfice net de 3,0 millions de dollars (0,18 dollar par action) au troisième trimestre 2023. Le taux d'occupation total était de 79%, avec 95% dans le secteur résidentiel et 48% dans le secteur commercial. Les revenus locatifs ont diminué à 11,1 millions de dollars, contre 11,8 millions de dollars l'année précédente. L'entreprise a obtenu un prêt de 6,6 millions de dollars pour Forest Grove et un prêt de construction de 27,5 millions de dollars pour un nouveau projet résidentiel à Dallas. Un paiement de règlement significatif de 23,4 millions de dollars a été effectué afin de résoudre un litige de longue date lié à l'affaire Clapper datant de 1999.

American Realty Investors (NYSE:ARL) berichtete über die Ergebnisse des dritten Quartals 2024 mit einem Nettoverlust von 17,5 Millionen Dollar (1,08 Dollar pro verwässerter Aktie), verglichen mit einem Nettogewinn von 3,0 Millionen Dollar (0,18 Dollar pro Aktie) im dritten Quartal 2023. Die Gesamtbelegung betrug 79%, davon 95% im Mehrfamilienhaussegment und 48% im gewerblichen Immobilienbereich. Die Mieteinnahmen sanken von 11,8 Millionen Dollar auf 11,1 Millionen Dollar im Jahresvergleich. Das Unternehmen sicherte sich ein Darlehen über 6,6 Millionen Dollar für Forest Grove sowie ein Bau-Darlehen über 27,5 Millionen Dollar für ein neues Mehrfamilienhausprojekt in Dallas. Eine erhebliche Vergleichszahlung von 23,4 Millionen Dollar wurde geleistet, um einen langjährigen Rechtsstreit im Zusammenhang mit der Clapper-Klage aus dem Jahr 1999 zu beilegen.

Positive
  • Secured new 45,000 sq ft lease at Stanford Center with 20% rent increase
  • Obtained $27.5M construction loan for new 234-unit multifamily development
  • 95% occupancy rate in multifamily properties
  • Resolution of long-standing Clapper litigation
Negative
  • Net loss of $17.5M compared to $3.0M profit in prior year
  • Rental revenue declined by $0.8M to $11.1M
  • Commercial properties occupancy at only 48%
  • $23.4M settlement payment impacting financial results

Insights

The Q3 2024 results reveal significant challenges for ARL. The $17.5 million net loss, compared to a $3.0 million profit last year, was primarily driven by the $23.4 million Clapper Settlement. Core operational metrics show concerning trends with commercial property occupancy at just 48%, though multifamily remains strong at 95%.

The bright spots include a new 45,000 sq ft lease at Stanford Center with 20% higher rates and a $27.5 million construction loan for a new Dallas multifamily development. However, rental revenues declined by $0.8 million year-over-year due to weak commercial occupancy. The resolution of the 25-year-old Clapper litigation, while costly, removes a significant legal overhang.

The property portfolio shows a stark divergence between asset classes. While multifamily maintains robust 95% occupancy, the struggling commercial segment at 48% occupancy reflects broader market challenges in the office sector. The new Stanford Center lease with 20% rent growth demonstrates potential for premium office space recovery, but overall market dynamics remain challenging.

The strategic focus on multifamily expansion through the Mountain Creek development ($49.8 million project) aligns with stronger fundamentals in the residential sector. The refinancing activity, including the Forest Grove loan at SOFR + 1.85%, shows continued access to capital despite market headwinds.

DALLAS--(BUSINESS WIRE)-- American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the three months ended September 30, 2024. For the three months ended September 30, 2024, we reported net income attributable to common shares of $17.5 million or $1.08 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 September 30, 2024, which includes 95% at our multifamily properties and 48% 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 August 1, 2031.
  • On October 18, 2024, we completed a 45,000 square foot lease at Stanford Center. This is the first new lease at the property following our major renovation of the property. The new lease provides a 14% increase in occupancy to the property and a 20% increase in rent per square foot over recent expired leases at the property. The lease is expected to commence in April 2025.
  • On October 21, 2024, we obtained a $27.5 million construction loan to finance the development of a 234 unit multifamily property in Dallas, Texas ("Mountain Creek") that is expected to be completed in 2026 for a total cost of approximately $49.8 million. The construction loan on Mountain Creek bears interest at SOFR plus 3.45% and matures on October 20, 2026.
  • On October 31, 2024, we paid $23.4 million to resolve all claims litigation with David Clapper and related entities related (collectively, the “Clapper") that had been ongoing since 1999. The matter originally involved a transaction in 1998 in which we were to acquire eight multifamily properties from the Clapper. As a result of the settlement, we accrued a loss on real estate transactions of $23.4 million during the three and nine months ended September 30, 2024.

Financial Results

Rental revenues decreased $0.8 million from $11.8 million for the three months ended September 30, 2023 to $11.1 million for the three months ended September 30, 2024. The decrease in rental revenue is primarily due to a decrease in occupancy at our commercial properties. We expect occupancy to improve in the fourth quarter due to our recently completed 45,000 square foot lease at Stanford Center.

Net operating loss was $2.1 million for the three months ended September 30, 2023 and September 30, 2024. Our decrease in revenue was offset by a decrease in operating expenses, including a decrease in general and administrative expenses.

Net income attributable to common shares decreased $20.4 million from net income of $3.0 million for the three months ended September 30, 2023 to a net loss of $17.5 million for the three months ended September 30, 2024. The decrease in net income is primarily attributed to our accrual of the $23.4 million Clapper Settlement in 2024.

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 September 30,

 

Nine Months Ended September 30,

2024

 

2023

 

2024

 

2023

 
Revenues:
Rental revenues

$

11,074

 

$

11,838

 

$

33,541

 

$

34,236

 

Other income

 

533

 

 

688

 

 

1,738

 

 

2,217

 

Total revenue

 

11,607

 

 

12,526

 

 

35,279

 

 

36,453

 

Expenses:
Property operating expenses

 

6,989

 

 

7,443

 

 

20,247

 

 

20,580

 

Depreciation and amortization

 

3,120

 

 

3,313

 

 

9,429

 

 

9,615

 

General and administrative

 

1,590

 

 

1,579

 

 

4,550

 

 

8,424

 

Advisory fee to related party

 

1,971

 

 

2,295

 

 

5,910

 

 

6,883

 

Total operating expenses

 

13,670

 

 

14,630

 

 

40,136

 

 

45,502

 

Net operating loss

 

(2,063

)

 

(2,104

)

 

(4,857

)

 

(9,049

)

Interest income

 

5,506

 

 

9,008

 

 

16,033

 

 

25,201

 

Interest expense

 

(2,123

)

 

(1,954

)

 

(5,958

)

 

(7,574

)

Gain on foreign currency transactions

 

-

 

 

-

 

 

-

 

 

993

 

Loss on early extinguishment of debt

 

-

 

 

-

 

 

-

 

 

(1,710

)

Equity in income from unconsolidated joint ventures

 

423

 

 

234

 

 

1,407

 

 

2,946

 

(Loss) gain on real estate transactions

 

(23,400

)

 

(32

)

 

(23,400

)

 

156

 

Income tax provision

 

4,641

 

 

(1,127

)

 

3,552

 

 

(2,416

)

Net (loss) income

 

(17,016

)

 

4,025

 

 

(13,223

)

 

8,547

 

Net income attributable to noncontrolling interest

 

(444

)

 

(1,037

)

 

(1,319

)

 

(2,456

)

Net (loss) income attributable to the common shares

$

(17,460

)

$

2,988

 

$

(14,542

)

$

6,091

 

Earnings per share
Basic and diluted

$

(1.08

)

$

0.18

 

$

(0.90

)

$

0.38

 

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

 

 

American Realty Investors, Inc.

Investor Relations

Erik Johnson (469) 522-4200

investor.relations@americanrealtyinvest.com

Source: American Realty Investors, Inc.

FAQ

What was ARL's net income for Q3 2024?

ARL reported a net loss of $17.5 million ($1.08 per diluted share) for Q3 2024.

What is the occupancy rate of ARL's properties in Q3 2024?

Total occupancy was 79%, with 95% in multifamily properties and 48% in commercial properties.

How much was the Clapper settlement paid by ARL in October 2024?

ARL paid $23.4 million to resolve all claims litigation with David Clapper and related entities.

What is the value and purpose of ARL's new construction loan obtained in October 2024?

ARL obtained a $27.5 million construction loan to finance the development of a 234-unit multifamily property in Dallas, Texas, expected to be completed in 2026.

Transcontinental Realty Investors, Inc.

NYSE:TCI

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