Transcontinental Realty Investors, Inc. Reports Earnings for Q3 2020

Rhea-AI Summary

Transcontinental Realty Investors (NYSE: TCI) reported a net income of $7.7 million or $0.88 per diluted share for Q3 2020, a turnaround from a net loss of $7.8 million or $0.89 per diluted share in Q3 2019. Rental revenues increased slightly to $11.5 million, with occupancy stable at 91%. Interest expense decreased to $6.3 million, while interest income fell to $4.3 million. The company reported gains of $7.2 million on asset sales, including a $4.8 million gain from the sale of Bridgeview Plaza.

Positive

• Net income of $7.7 million for Q3 2020, up from a net loss of $7.8 million in Q3 2019.
• Rental revenues increased to $11.5 million compared to $11.4 million in 2019.
• Stable occupancy rate at 91%.
• Gains on asset sales of $7.2 million, including $4.8 million from Bridgeview Plaza.

Negative

• Net operating loss of ($1.5) million for Q3 2020, compared to a profit of $0.4 million in Q3 2019.
• Decrease in interest income to $4.3 million, down by $0.9 million from 2019.
• Loss on foreign currency transactions of $1.5 million.

DALLAS--(BUSINESS WIRE)--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