Business Wire | Aug 14, 2020 04:30PM EDT

Transcontinental Realty Investors, Inc. Reports Earnings for Q2 2020

Aug. 14, 2020

DALLAS--(BUSINESS WIRE)--Aug. 14, 2020--Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended June 30, 2020. For the three months ended June 30, 2020, The Company reported a net loss applicable to common shares of $4.2 million or $0.48 per diluted share, compared to a net loss applicable to common shares of $6.3 million or $0.73 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 on the Company's results of operations or cash flows during the three months ended June 30, 2020.

* The Company collected approximately 97% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 98% from office tenants. * The Company did not grant any abatements or significant deferments of rents. * Occupancy at its non-lease up properties remains stable at 87% at June 30, 2020 in comparison to 89% at June 30, 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 and other property revenues were $11.9 million for the three months ended June 30, 2020 and 2019. For the quarter ended June 30, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.

Property operating expenses decreased to $5.8 million for the three months ended June 30, 2020 from $7.3 million for the same period in 2019. The decrease of $1.5 million in property operating expenses was primarily due to a reduction in property taxes and maintenance costs.

General and administrative expense decreased to $1.4 million for the three months ended June 30, 2020 from $2.2 million for the same period in 2019. The decrease of $0.8 million in general and administrative expenses was primarily due to a reduction in professional fees.

Interest income decreased to $4.2 million for the three months ended June 30, 2020 from $4.9 million for the same period in 2019. The decrease of $0.7 million in interest income was due to a decrease in notes receivable from related parties.

Other income increased to $1.5 million for the three months ended June 30, 2020, compared to $0.7 million for the same period in 2019. The increase in other income was primarily due to an increase in tax incentive finance proceeds.

Foreign currency transaction was a loss of $5.6 million for the three months ended June 30, 2020 as compared to a loss of $2.3 million for the same period in 2019. The increase is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Loss from unconsolidated investments was $0.7 million for the three months ended June 30, 2020, compared to a loss of $0.2 million for the same period in 2019. The increase in loss from unconsolidated investments during the quarter was primarily due to an increase in depreciation and amortization expense related to the VAA Joint Venture.

Gain on land sales was $5.3 million for the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. In the current period the Company sold approximately 25.9 acres of land for an aggregate sales price of $6.6 million which resulted in a gain of $5.3 million. For the same period in 2019, the Company sold approximately 41.6 acres of land for an aggregate sales price of $7.6 million which resulted in a gain of $2.1 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) For the Three Months For the Six Months Ended Ended June

June 30, 30,

2020 2019 2020 2019

(dollars in thousands, except per share amounts)Revenues:Rental and other property revenues(including $280 and $203 for the $ 11,947 $ 11,840 $ 23,865 $ 23,769three months and $456 and $413 forthe six months ended 2020 and 2019,respectively, from related parties) Expenses:Property operating expenses(including $254 and $246 for thethree months ended and $496 and 5,810 7,322 12,119 13,319$504 for the six months ended 2020and 2019, respectively, fromrelated parties)Depreciation and amortization 3,418 3,439 6,812 6,548

General and administrative(including $711 and $919 for thethree months ended and $1,766 and 1,405 2,211 3,926 4,539$2,420 for the six months ended2020 and 2019, respectively, fromrelated parties)Franchise taxes and other expenses - - 1,494 -

Net income fee to related party 112 90 198 190

Advisory fee to related party 2,051 2,158 4,146 3,806

Total operating expenses 12,796 15,220 28,695 28,402

Net operating (loss) (849) (3,380) (4,830) (4,633)

Other income (expenses):Interest income (including $4,088and $4,585 for the three months 4,227 4,878 8,754 9,436ended and $7,503 and $8,897 for thesix months ended 2020 and 2019,respectively, from related parties)Other income 1,484 688 2,319 4,580

Mortgage and loan interest(including $369 and $513 for thethree months ended and $813 and (7,741) (7,646) (15,708) (15,605)$1,003 for the six months ended2020 and 2019, respectively, fromrelated parties)Foreign currency transaction gain (5,599) (2,325) 2,244 (8,143)(loss)Equity loss from VAA (735) (236) (1,111) (1,291)

Losses from other unconsolidated 7 2 6 (5)investeesTotal other income (expenses) (8,357) (4,639) (3,496) (11,028)

Income (loss) before gain on land (9,206) (8,019) (8,326) (15,661)sales, non-controlling interest,and taxesLoss on sale of income producing - (80) - (80)propertiesGain on land sales 5,339 2,133 9,477 4,349

Net income (loss) before taxes (3,867) (5,966) 1,151 (11,392)

State income tax expense (49) - (296) -

Net income (loss) (3,916) (5,966) 855 (11,392)

Net (income) attributable to (242) (379) (400) (562)non-controlling interestNet income (loss) attributable to (4,158) (6,345) 455 (11,954)Transcontinental Realty Investors,Inc.Net income (loss) applicable to $ (4,158) $ (6,345) $ 455 $common shares (11,954)

(Loss) earnings per share - basicNet income (loss) $ (0.45) $ (0.68) $ 0.10 $ (1.31)

Net income (loss) applicable to $ (0.48) $ (0.73) $ 0.05 $ (1.37)common shares (Loss) earnings per share - dilutedNet income (loss) $ (0.45) $ (0.68) $ 0.10 $ (1.31)

Net income (loss) applicable to $ (0.48) $ (0.73) $ 0.05 $ (1.37)common shares Weighted average common shares used 8,717,767 8,717,767 8,717,767 8,717,767in computing earnings per shareWeighted average common shares used 8,717,767 8,717,767 8,717,767 8,717,767in computing diluted earnings pershareAmounts attributable toTranscontinental Realty Investors,Inc. $ (3,916) $ (5,966) $ 855 $Net income (loss) (11,392)

Net income (loss) applicable to $ (4,158) $ (6,345) $ 455 $Transcontinental Realty, Investors, (11,954)Inc.

TRANSCONTINENTAL REALTY INVESTORS, INC.CONSOLIDATED BALANCE SHEETS June 30, December 2020 31, 2019 (Unaudited) (Audited) (dollars in thousands, except share and par value amounts) AssetsReal estate, $ 484,639 $ 469,997at costReal estate subject to sales contracts at cost 6,307 7,966

Less accumulated depreciation (96,002) (90,173)

Total real estate 394,944 387,790

Notes and interest receivable (including $68,170 in 2020 135,664 120,986and $57,817 in 2019 from related parties)Cash and cash equivalents 42,250 51,179

Restricted 30,114 32,082cashInvestment in 52,773 59,148VAAInvestment in other unconsolidated investees 22,638 22,632

Receivable from related parties 128,617 141,541

Other assets 57,167 50,560

Total assets $ 864,167 $ 865,918

Liabilities and Shareholders' EquityLiabilities:Notes and interest payable $ 255,884 $ 246,546

Bonds and bond interest payable 218,216 229,722

Deferred revenue (including $10,367 in 2020 and $9,468 10,367 9,4682019 to related parties)Accounts payable and other liabilities (including $934 in 24,778 26,1152020 and $935 in 2019 to related parties)Total liabilities 509,245 511,851

Shareholders'equity:Common stock, $0.01 par value, authorized 10,000,000 87 87shares; issued 8,717,967 shares in 2020 and 2019;outstanding 8,717,767 shares in 2020 and 2019Treasury stock at cost, 200 shares in 2020 and 2019 (2) (2)

Paid-in 257,853 257,853capitalRetained earnings 75,120 74,665

Total Transcontinental Realty Investors, Inc. 333,058 332,603shareholders' equityNon-controlling interest 21,864 21,464

Total shareholders' equity 354,922 354,067

Total liabilities and shareholders' equity $ 864,167 $ 865,918



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