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

Rhea-AI Summary

Transcontinental Realty Investors (NYSE:TCI) reported Q3 2024 results with net income of $1.7 million ($0.20 per diluted share), down from $4.5 million ($0.52 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 234-unit multifamily project in Dallas. A significant 45,000 square foot lease was completed at Stanford Center, expected to increase property occupancy by 14%.

Positive

• New 45,000 sq ft lease at Stanford Center with 20% increase in rent per square foot
• Secured $27.5M construction loan for new 234-unit multifamily development
• Strong multifamily occupancy at 95%
• Decrease in general and administrative expenses

Negative

• Net income decreased by 62% YoY to $1.7M from $4.5M
• Rental revenues declined by $0.7M to $11.1M
• Low commercial property occupancy at 48%
• Operating loss of $1.7M in Q3 2024

Insights

Financial Analyst

The Q3 2024 results reveal mixed performance with some concerning trends. $1.7 million net income ($0.20 per share) marks a significant 62% decline from the previous year's $4.5 million. Revenue dropped by $0.8 million to $11.1 million, primarily due to commercial property weakness showing just 48% occupancy.

Key developments include securing a $27.5 million construction loan for a new Dallas multifamily project and refinancing Forest Grove with a $6.6 million loan. The bright spot is a new Stanford Center lease that should boost both occupancy and rental rates. However, the substantial decline in interest income and commercial property performance raises concerns about near-term growth prospects.

The multifamily segment remains robust with 95% occupancy, providing stability amid commercial weakness. The Mountain Creek development, while promising for long-term growth, represents significant capital investment with completion not expected until 2026.

DALLAS--(BUSINESS WIRE)-- Transcontinental Realty Investors, Inc. (NYSE:TCI) 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 $1.7 million or $0.20 per diluted share, compared to a net income of $4.5 million or $0.52 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.

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 decreased $0.1 million from $1.8 million for the three months ended September 30, 2023 to $1.7 million for the three months ended September 30, 2024. The decrease in net operating loss is primarily due to a decrease in general and administrative expenses.

Net income attributable to the Company decreased $2.7 million from $4.5 million for the three months ended September 30, 2023 to $1.7 million for the three months ended September 30, 2024. The decrease in net income is primarily attributed to a decrease in interest income.

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 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				687				1,738				2,216
Total revenue			11,607				12,525				35,279				36,452
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			1,223				1,432				3,898				7,836
Advisory fee to related party			1,944				2,112				5,789				6,282
Total operating expenses			13,276				14,300				39,363				44,313
Net operating loss			(1,669	)			(1,775	)			(4,084	)			(7,861	)
Interest income			5,917				9,676				17,244				26,998
Interest expense			(2,075	)			(1,902	)			(5,806	)			(7,415	)
Gain on foreign currency transactions			-				-				-				993
Loss on early extinguishment of debt			-				-				-				(1,710	)
Equity in income from unconsolidated joint venture			283				85				827				798
Gain on sale or write-down of assets, net			-				-				-				188
Income tax provision			(546	)			(1,322	)			(1,818	)			(2,638	)
Net income			1,910				4,762				6,363				9,353
Net income attributable to noncontrolling interest			(203	)			(311	)			(609	)			(855	)
Net income attributable to the Company		$	1,707			$	4,451			$	5,754			$	8,498
Earnings per share
Basic and diluted		$	0.20			$	0.52			$	0.67			$	0.98
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 was TCI's net income for Q3 2024?

TCI reported net income of $1.7 million ($0.20 per diluted share) for Q3 2024.

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

TCI's total occupancy was 79%, with 95% occupancy in multifamily properties and 48% in commercial properties.

How much is TCI's new Mountain Creek development project worth?

TCI's Mountain Creek development is expected to cost approximately $49.8 million and will be partially financed by a $27.5 million construction loan.

What was TCI's rental revenue in Q3 2024 compared to Q3 2023?

TCI's rental revenue decreased from $11.8 million in Q3 2023 to $11.1 million in Q3 2024.