8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 24, 2023

Transcontinental Realty Investors, Inc.

(Exact name of registrant as specified in its charter)

Nevada		001-09240		94-6565852
(State or other jurisdiction of  Incorporation or organization)		(Commission File Number)		(IRS Employer Identification Number)
1603 LBJ Freeway,	Suite 800	Dallas	TX	75234
(Address of principal executive offices)				(Zip Code)

(469) 522-4200

Registrant’s Telephone Number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 ☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 ☐  Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 230.425)

 ☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Securities Act (17 CFR 240.14d-2(b))

 ☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Securities Act (17 CFR 240.413e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	TCI	NYSE

Indicate by check mark whether teh Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 ((17 CFR 230.405 of or Rule 12b-2 of the Securities Act of 1934 (17 CFR 230.405):

☐  Emerging growth company

If an emerging growth company indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition

On March 24, 2023, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended December 31, 2022. A copy of the announcement is attached as Exhibit “99.1.”

The information furnished pursuant to Item 2.02 in this Form 8-K, including Exhibit “99.1” attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. We undertake no duty or obligation to publicly update or revise the information furnished pursuant to Item 2.02 of this Current Report on Form 8-K.

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

The following exhibit is furnished with this Report:

Exhibit No.	Description
99.1*	Press release dated	March 24, 2023

_________________________

* Furnished herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		TRANSCONTINENTAL REALTY INVESTORS, INC.
Dated: November 10, 2022	By:	/s/  ERIK L. JOHNSON
		Erik L. Johnson
		Executive Vice President and Chief Financial Officer
		(Principal Executive and Financial Officer)

EX-99.1

NEWS RELEASE	Contact:
	Transcontinental Realty Investors, Inc. Investor Relations
FOR IMMEDIATE RELEASE	Erik Johnson (469) 522-4200 investor.relations@transconrealty-invest.com

Transcontinental Realty Investors, Inc. reports Earnings for Q4 2022

DALLAS (March 24, 2023) -- 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 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 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 $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)

	Three Months Ended December 31,				Twelve 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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Cover	Mar. 24, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Mar. 24, 2023
Entity Registrant Name	Transcontinental Realty Investors, Inc.
Entity Incorporation, State or Country Code	NV
Entity File Number	001-09240
Entity Tax Identification Number	94-6565852
Entity Address, Address Line One	1603 LBJ Freeway,
Entity Address, Address Line Two	Suite 800
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75234
City Area Code	469
Local Phone Number	522-4200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock
Trading Symbol	TCI
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0000733590
Amendment Flag	false