DALLAS--(BUSINESS WIRE)--Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported results of operations for the second quarter ended June 30, 2018. For the three months ended June 30, 2018, we reported net income applicable to common shares of $7.0 million or ($0.81) per share compared to a net loss applicable to common shares of $10.6 million or ($1.22) per share for the same period ended 2017.
The Company maintained its overall focus on growing its portfolio and is working on several strategic initiatives that we previously announced earlier this year. Overall, management remains very encouraged about the overall performance of the company; especially tied to the quality of our assets in our portfolio, and the new multifamily apartment projects under various stages of development.
Revenues
Rental and other property revenues were $31.6 million for the three months ended June 30, 2018. This represents an increase of $0.3 million compared to the prior period revenues of $31.3 million. The increase is driven primarily by an increase in revenues of $1.2 million from our apartment operating segment, offset by a decrease of $0.9 million from our commercial segment.
Expense
Property operating expenses were $15.5 million for the three months ended June 30, 2018. This represents an increase of $0.3 million compared to the prior period operating expenses of $15.2 million. The increase is due to increases in operating expenses in the apartment portfolio of $1.0 million, offset by a decrease in the commercial portfolio of $0.5 million and a decrease in the land portfolio of $0.1 million.
Depreciation and amortization expense was $6.5 million for the three months ended June 30, 2018 for an increase of $0.1 million as compared to the prior period expense of $6.4 million. The change is attributable to the depreciation on acquired apartments.
General and Administrative expenses were $2.2 million for the three months ended June 30, 2018. This represents an increase of $0.9 million compared to the prior period expense of $1.3 million. The increase is due to an increase in expense reimbursements paid to our advisor of approximately $0.7 million and professional fees for audit and tax services of approximately $0.2 million.
Other income (expense)
Mortgage and loan interest expense was $14.2 million for the three months ended June 30, 2018. This represents a decrease of $1.6 million compared to the prior period expense of $15.8 million. The change by segment is a decrease in the other portfolio of $1.2 million, land portfolio of $0.5 million and a decrease in the commercial portfolio of $0.2 million, offset by an increase in the apartment portfolio of $0.3 million. Within the other portfolio, the decrease is primarily due to $1.2 million of interest expense savings related to maturing notes payable paid during the first quarter of 2018.
Other income was $7.5 million for the three months ended June 30, 2018. This represents an increase of $7.6 million compared to prior period other expense of $0.1 million. The increase is the result of insurance proceeds of approximately $6.6 million received subsequent to the "as is" sale of a property damaged by a hurricane, and other miscellaneous income of approximately $1.0 million.
Foreign currency transaction was a gain of $5.9 million for the three months ended June 30, 2018. This represents an increase of $9.3 million compared to prior period foreign currency transaction loss of $3.4 million. The increase is the result of a gain in foreign currency exchange as a result of the favorable exchange rate between the Israel Shekels and the U.S. Dollar related to our Bond program.
For the three months ended June 30, 2018, we sold a golf course for a total sales price of $2.3 million and recorded no gain or loss on the sale. For the same period in 2017, the Company recorded a loss of approximately $0.5 million from the sale of 8.3 acres of land for a sales price of $0.5 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 | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, |
June 30, |
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2018 | 2017 | 2018 | 2017 | ||||||||||||||||||
(dollars in thousands, except share and par value amounts) | |||||||||||||||||||||
Revenues: | |||||||||||||||||||||
Rental and other property revenues (including $208 and $199 for the three months and $415 and $389 for the six months ended 2018 and 2017, respectively, from related parties) | $ | 31,607 | $ | 31,302 | $ | 62,689 | $ | 62,837 | |||||||||||||
Expenses: | |||||||||||||||||||||
Property operating expenses (including $231 and $232 for the three months and $458 and $460 for the six months ended 2018 and 2017, respectively, from related parties) | 15,492 | 15,210 | 29,947 | 31,099 | |||||||||||||||||
Depreciation and amortization | 6,522 | 6,378 | 12,968 | 12,681 | |||||||||||||||||
General and administrative (including $1,187 and $558 for the three months and $2,280 and $1,072 for the six months ended 2018 and 2017, respectively, from related parties) | 2,173 | 1,295 | 4,365 | 3,075 | |||||||||||||||||
Net income fee to related party | 53 | 76 | 106 | 136 | |||||||||||||||||
Advisory fee to related party | 2,726 | 2,501 | 5,474 | 4,806 | |||||||||||||||||
Total operating expenses | 26,966 | 25,460 | 52,860 | 51,797 | |||||||||||||||||
Net operating income | 4,641 | 5,842 | 9,829 | 11,040 | |||||||||||||||||
Other income (expenses): | |||||||||||||||||||||
Interest income (including $3,486 and $3,070 for the three months and $6,722 and $6,502 for the six months ended 2018 and 2017, respectively, from related parties) |
3,544 | 3,709 | 7,420 | 7,130 | |||||||||||||||||
Other income (expense) | 7,482 | (104 | ) | 9,308 | 1,338 | ||||||||||||||||
Mortgage and loan interest (including $327 and $283 for the three months and $645 and $836 for the six months ended 2018 and 2017, respectively, from related parties) | (14,175 | ) | (15,783 | ) | (28,268 | ) | (30,973 | ) | |||||||||||||
Foreign currency transaction gain (loss) | 5,889 | (3,425 | ) | 7,645 | (3,748 | ) | |||||||||||||||
Earnings (losses) from unconsolidated joint ventures and investees | (9 | ) | (10 | ) | 2 | (18 | ) | ||||||||||||||
Total other income (expenses) | 2,731 | (15,613 | ) | (3,893 | ) | (26,271 | ) | ||||||||||||||
Gain (Loss) before gain on land sales, non-controlling interest, and taxes | 7,372 | (9,771 | ) | 5,936 | (15,231 | ) | |||||||||||||||
(Loss) gain on land sales | - | (476 | ) | 1,335 | (31 | ) | |||||||||||||||
Net income (loss) from continuing operations before taxes | 7,372 | (10,247 | ) | 7,271 | (15,262 | ) | |||||||||||||||
Net income (loss) from continuing operations | 7,372 | (10,247 | ) | 7,271 | (15,262 | ) | |||||||||||||||
Net income (loss) | 7,372 | (10,247 | ) | 7,271 | (15,262 | ) | |||||||||||||||
Net (income) attributable to non-controlling interest | (126 | ) | (163 | ) | (258 | ) | (282 | ) | |||||||||||||
Net income (loss) attributable to Transcontinental Realty Investors, Inc. | 7,246 | (10,410 | ) | 7,013 | (15,544 | ) | |||||||||||||||
Preferred dividend requirement | (224 | ) | (224 | ) | (446 | ) | (446 | ) | |||||||||||||
Net income (loss )applicable to common shares | $ | 7,022 | $ | (10,634 | ) | $ | 6,567 | $ | (15,990 | ) | |||||||||||
Earnings per share - basic | |||||||||||||||||||||
Net income (loss) from continuing operations | $ | 0.81 | $ | (1.22 | ) | $ | 0.75 | $ | (1.83 | ) | |||||||||||
Earnings per share - diluted | |||||||||||||||||||||
Net income (loss) from continuing operations | $ | 0.81 | $ | (1.22 | ) | $ | 0.75 | $ | (1.83 | ) | |||||||||||
Weighted average common shares used in computing earnings per share | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 | |||||||||||||||||
Weighted average common shares used in computing diluted earnings per share | 8,717,767 | 8,717,767 | 8,717,767 | 8,717,767 | |||||||||||||||||
Amounts attributable to Transcontinental Realty Investors, Inc. | |||||||||||||||||||||
Net income (loss) from continuing operations | $ | 7,246 | $ | (10,410 | ) | $ | 7,013 | $ | (15,544 | ) | |||||||||||
Net income (loss) applicable to Transcontinental Realty, Investors, Inc. | $ | 7,246 | $ | (10,410 | ) | $ | 7,013 | $ | (15,544 | ) | |||||||||||
TRANSCONTINENTAL REALTY INVESTORS, INC. | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
June 30, | December 31, | |||||||||
2018 | 2017 | |||||||||
(unaudited) | (audited) | |||||||||
(dollars in thousands, except share and par value amounts) | ||||||||||
Assets | ||||||||||
Real estate, at cost | $ | 1,150,055 | $ | 1,112,721 | ||||||
Real estate subject to sales contracts at cost | 43,767 | 45,739 | ||||||||
Less accumulated depreciation | (184,741 | ) | (178,590 | ) | ||||||
Total real estate | 1,009,081 | 979,870 | ||||||||
Notes and interest receivable (including $50,020 in 2018 and $45,155 in 2017 from related parties) | 83,463 | 70,166 | ||||||||
Cash and cash equivalents | 28,105 | 42,705 | ||||||||
Restricted cash | 64,669 | 45,637 | ||||||||
Investments in unconsolidated joint ventures and investees | 2,474 | 2,472 | ||||||||
Receivable from related party | 126,181 | 111,665 | ||||||||
Other assets | 54,772 | 60,907 | ||||||||
Total assets | $ | 1,368,745 | $ | 1,313,422 | ||||||
Liabilities and Shareholders’ Equity | ||||||||||
Liabilities: | ||||||||||
Notes and interest payable | $ | 915,183 | $ | 892,149 | ||||||
Notes related to real estate held for sale | 376 | 376 | ||||||||
Notes related to real estate subject to sales contracts | - | 1,957 | ||||||||
Bond and bond interest payable | 143,897 | 113,047 | ||||||||
Deferred revenue (including $40,907 in 2018 and $40,574 in 2017 to related parties) | 62,166 | 60,949 | ||||||||
Accounts payable and other liabilities (including $6,930 in 2018 and $7,236 in 2017 to related parties) |
32,037 | 36,683 | ||||||||
Total liabilities | 1,153,659 | 1,105,161 | ||||||||
Shareholders’ equity: | ||||||||||
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares; issued and outstanding zero shares in 2018 and 2017. Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2018 and 2017 (liquidation preference $100 per share) | 1 | 1 | ||||||||
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2018 and 2017; outstanding 8,717,767 shares in 2018 and 2017 | 87 | 87 | ||||||||
Treasury stock at cost, 200 shares in 2018 and 2017 | (2 | ) | (2 | ) | ||||||
Paid-in capital | 268,503 | 268,949 | ||||||||
Retained deficit | (72,852 | ) | (79,865 | ) | ||||||
Total Transcontinental Realty Investors, Inc. shareholders' equity | 195,737 | 189,170 | ||||||||
Non-controlling interest | 19,349 | 19,091 | ||||||||
Total shareholders' equity | 215,086 | 208,261 | ||||||||
Total liabilities and shareholders' equity | $ | 1,368,745 | $ | 1,313,422 | ||||||