Business Wire | Nov 12, 2020 05:07PM EST

Transcontinental Realty Investors, Inc. Reports Earnings for Q3 2020

Nov. 12, 2020

DALLAS--(BUSINESS WIRE)--Nov. 12, 2020--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 For the Nine Months Ended September 30, September 30, 2020 2019 2020 2019

Revenues:Rental revenues(including $262 and$212 for the threemonths and $673 and $ 11,453 $ 11,407 $ 34,461 $ 34,352 $527 for the ninemonths ended 2020and 2019,respectively, fromrelated parties)Other income 706 1,990 3,885 7,394

Total revenues 12,159 13,397 38,346 41,746

Expenses:Property operatingexpenses (including$254 and $237 forthe three monthsended and $750 and 6,388 5,403 18,507 18,722 $741 for the ninemonths ended 2020and 2019,respectively, fromrelated parties)Depreciation and 3,526 3,416 10,338 9,964 amortizationGeneral andadministrative(including $1,017and $935 for thethree months ended 1,643 1,929 7,063 6,468 and $2,783 and$3,355 for the ninemonths ended 2020and 2019,respectively, fromrelated parties)Advisory fee to 2,139 2,200 6,483 6,196 related partyTotal operating 13,696 12,948 42,391 41,350 expensesNet operating (1,537 ) 449 (4,045 ) 396 (loss) income Interest income(including $3,752and $4,618 for thethree months endedand $11,255 and 4,348 5,232 13,102 14,668 $13,483 for thenine months ended2020 and 2019,respectively, fromrelated parties)Interest expense(including $380 and$514 for the threemonths ended and$1,193 and $1,517 (6,291 ) (8,037 ) (21,999 ) (23,642 )for the nine monthsended 2020 and2019, respectively,from relatedparties)(Loss) gain on (1,470 ) (5,153 ) 774 (13,296 )foreign currencytransactionLoss on - (5,219 ) - (5,219 )extinguishment ofdebtIncome (losses) 365 (178 ) (740 ) (1,474 )from unconsolidatedjoint venturesGain on sales or 12,328 5,140 21,802 9,409 write-down ofassetsIncome tax expense (50 ) - (346 ) -

Net income (loss) 7,693 (7,766 ) 8,548 (19,158 )

Net incomeattributable to - (21 ) (400 ) (583 )non-controllinginterestNet income (loss) $ 7,693 $ (7,787 ) $ 8,148 $ (19,741 )attributable tocommon shares Earnings (loss) pershare -attributable tocommon sharesBasic and diluted $ 0.88 $ (0.89 ) $ 0.93 $ (2.26 )

Weighted-averagenumber of commonshares 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, 2020December 31, 2019Assets

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 equivalents32,967

51,179

Restricted cash28,030

32,082

Investment in unconsolidated joint ventures71,171

81,780

Receivable from related parties140,050

141,541

Other assets68,558

59,189

Total assets$

845,345

$

865,918

Liabilities and Equity

Liabilities:Mortgages and notes payable$

242,300

$

245,773

Bonds payable203,192

223,265

Accounts payable and other liabilities (including $937 in 2020 and $935 in 2019 to related parties)24,642

26,115

Accrued interest payable3,281

7,230

Deferred revenue9,315

9,468

Total liabilities482,730

511,851

EquityShareholders' 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 capital257,853

257,853

Retained earnings82,813

74,665

Total shareholders' equity340,751

332,603

Non-controlling interest21,864

21,464

Total equity362,615

354,067

Total liabilities and equity$

845,345

$

865,918

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CONTACT: Transcontinental Realty Investors, Inc. Investor Relations Erik Johnson (469) 522-4200 investor.relations@transconrealty-invest.com