Transcontinental Realty Investors, Inc. reports Earnings for Quarter Ended December 31, 2022

Rhea-AI Summary

Transcontinental Realty Investors (NYSE: TCI) reported a strong financial turnaround for the quarter ended December 31, 2022, with a net income of $58.9 million or $6.82 per diluted share, compared to a net loss of $8.7 million a year earlier. Rental revenues rose to $11.8 million, up $4.1 million from the previous year, driven by a $4.9 million increase in multifamily properties due to the acquisition of the VAA Holdback Portfolio. Additionally, total occupancy stood at 81%, with multifamily properties at 93%. The company also benefited from a $204 million distribution related to the VAA Sale Portfolio.

Positive

• Net income of $58.9 million for Q4 2022, a significant improvement from the prior year's loss of $8.7 million.
• Rental revenues increased to $11.8 million, primarily due to the acquisition of the VAA Holdback Portfolio.
• Total occupancy at 81%, with multifamily properties achieving 93% occupancy.
• Received $204 million in distribution linked to the sale of the VAA Sale Portfolio.

Negative

• Commercial properties experienced a decrease in rental revenue by $0.7 million.
• Tax provision increased by $15.1 million, impacting net income.

DALLAS--(BUSINESS WIRE)-- Transcontinental Realty Investors, Inc. (NYSE:TCI) is reporting its results of operations for the quarter ended December 31, 2022. For the three months ended December 31, 2022, we reported net income attributable to the common shares of $58.9 million or $6.82 per diluted share, compared to a net loss of $8.7 million or $1.01 per diluted share for the same period in 2021.

Financial Highlights

• We collected approximately 96% of our rents for the three months ended December 31, 2022, comprised of approximately 97% from multifamily tenants and approximately 96% from office tenants.
• Total occupancy was 81% at December 31, 2022, which includes 93% at our multifamily properties and 60% at our commercial properties.
• On November 1, 2022, we received a distribution of approximately $204.0 million in connection with the sale of VAA Sale Portfolio earlier in the year.
• On November 1, 2022, we also received the full control and economical rights to the seven remaining multifamily properties from our Victory Abode Apartments, LLC (“VAA”) joint venture (collectively, the “VAA Holdback Portfolio”) with a fair value of $219.5 million, which resulted in gain on remeasurement of approximately $73.2 million. The VAA Holdback Portfolio consisted of Blue Lake Villas, Blue Lake Villas Phase II, Northside on Travis, Parc at Denham Springs, Residences at Holland Lake, Villas of Park West I and Villas of Park West II.
• On October 21, 2022, we paid off the $38.5 million loan on Stanford Center from the cash generated from sale of the VAA Sale Portfolio.
• On January 31, 2023, we paid off our $66.5 million Series C bonds from cash received from sale of the VAA Sale Portfolio.

Financial Results

Rental revenues increased $4.1 million from $7.6 million for the three months ended December 31, 2021 to $11.8 million for the three months ended December 31, 2022. The increase in rental revenue is primarily due to a $4.9 million increase at our multifamily properties offset in part by a decrease of $0.7 million from the commercial properties. The increase in revenue from the multifamily properties is primarily due to the acquisition of the VAA Holdback Portfolio in 2022.

Net operating income increased $4.6 million from net operating loss of $4.2 million for three months ended December 31, 2021 to net operating income of $0.5 million for the three months ended December 31, 2022. The increase in net operating income is primarily due to the $4.1 million increase in rental revenue as noted above and a decrease of $1.8 million in general administrative and advisory expenses offset in part by an increase of $1.9 million in property operating and depreciation expenses. The decrease in general administrative and advisory expenses is primarily due to a decrease in legal expenses and the increase in property and depreciation expenses is due to the acquisition of the VAA Holdback Portfolio.

Net income attributable to the Company increased $67.7 million from a net loss of $8.7 million for the three months ended December 31, 2021 to net income of $58.9 million for the three months ended December 31, 2022. The increase in net income is primarily attributed to $72.2 million increase in gain on sale, remeasurement or write down of assets offset in part by a $15.1 million increase in our tax provision. The increase in gain on our sale or write down of assets and our tax provision is due to the remeasurement of the VAA Holdback Portfolio that was acquired in 2022.

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 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.

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
				Three Months Ended December 31,								Nine Months Ended December 31,
				2022				2021				2022				2021
Revenues:
Rental revenues				$	11,770			$	7,625			$	34,080			$	37,808
Other income					1,014				492				2,580				2,966
Total revenue					12,784				8,117				36,660				40,774
Expenses:
Property operating expenses					5,798				4,360				18,339				20,860
Depreciation and amortization					2,846				2,397				9,686				11,870
General and administrative					2,595				3,876				9,943				12,425
Advisory fee to related party					1,089				1,638				7,974				11,782
Total operating expenses					12,328				12,271				45,942				56,937
Net operating income (loss)					456				(4,154	)			(9,282	)			(16,163	)
Interest Income					7,938				5,054				26,745				19,572
Interest expense					(5,026	)			(5,504	)			(19,813	)			(24,600	)
Gain (loss) on foreign currency transactions					630				(7,360	)			20,067				(6,175	)
Loss on early extinguishment of debt					-				-				(2,805	)			(1,451	)
Equity in (loss) income from unconsolidated joint venture					(2,342	)			2,996				468,086				14,531
Gain on sale, remeasurement or write down of assets, net					72,616				382				89,196				23,352
Income tax provision					(15,085	)			(26	)			(103,190	)			1,011
Net income (loss)					59,187				(8,612	)			469,004				10,077
Net income attributable to noncontrolling interest					(239	)			(135	)			(742	)			(679	)
Net income (loss) attributable to the Company				$	58,948			$	(8,747	)		$	468,262			$	9,398
Earnings per share
Basic and diluted				$	6.82			$	(1.01	)		$	54.20			$	1.09
Weighted average common shares used in computing earnings per share
Basic and diluted					8,639,316				8,639,316				8,639,316				8,639,316

 

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Transcontinental Realty Investors, Inc.

Investor Relations

Erik Johnson (469) 522-4200

investor.relations@transconrealty-invest.com

Source: Transcontinental Realty Investors, Inc.

FAQ

What were Transcontinental Realty Investors' earnings for Q4 2022?

Transcontinental Realty Investors reported a net income of $58.9 million or $6.82 per diluted share for the quarter ended December 31, 2022.

How much did rental revenues increase for TCI in Q4 2022?

Rental revenues increased to $11.8 million for Q4 2022, up $4.1 million compared to the same period in 2021.

What was the occupancy rate for TCI's properties at the end of December 2022?

Total occupancy was 81% at December 31, 2022, with multifamily properties at 93%.

What significant financial event occurred for TCI related to the VAA Sale Portfolio?

On November 1, 2022, TCI received a distribution of approximately $204 million from the sale of the VAA Sale Portfolio.