QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer ☐ | Accelerated filer ☐ | Smaller reporting company | |||||||||
Emerging growth Company |
PAGE | ||||||||
March 31, 2024 | December 31, 2023 | ||||||||||
Assets | |||||||||||
Real estate | $ | $ | |||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Short-term investments | |||||||||||
Notes receivable (including $ | |||||||||||
Investment in unconsolidated joint venture | |||||||||||
Receivables from related party | |||||||||||
Other assets (including $ | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Equity | |||||||||||
Liabilities: | |||||||||||
Mortgages and other notes payable | $ | $ | |||||||||
Accounts payable and other liabilities (including $ | |||||||||||
Accrued interest | |||||||||||
Deferred revenue | |||||||||||
Total liabilities | |||||||||||
Equity | |||||||||||
Shareholders' Equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Total shareholders' equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Revenues: | ||||||||||||||
Rental revenues (including $ | $ | $ | ||||||||||||
Other income | ||||||||||||||
Total revenue | ||||||||||||||
Expenses: | ||||||||||||||
Property operating expenses (including $ | ||||||||||||||
Depreciation and amortization | ||||||||||||||
General and administrative (including $ | ||||||||||||||
Advisory fee to related party | ||||||||||||||
Total operating expenses | ||||||||||||||
Net operating loss | ( | ( | ||||||||||||
Interest income (including $ | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Gain on foreign currency transactions | ||||||||||||||
Equity in income from unconsolidated joint venture | ||||||||||||||
Income tax provision | ( | ( | ||||||||||||
Net income | ||||||||||||||
Net income attributable to noncontrolling interest | ( | ( | ||||||||||||
Net income attributable to the Company | $ | $ | ||||||||||||
Earnings per share - basic and diluted | $ | $ | ||||||||||||
Weighted average common shares used in computing earnings per share - basic and diluted |
Common Stock | Additional Paid-in Capital | Retained Earnings | Total Shareholders' Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||||||||||||||
Repurchase of treasury shares by IOR | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Adjustment to noncontrolling interest | — | — | ( | |||||||||||||||||||||||||||||||||||
Balance, March 31, 2024 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Net income | — | — | ||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Cash Flow From Operating Activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Gain on foreign currency transactions | ( | ||||||||||
Depreciation and amortization | |||||||||||
Provision for bad debts | |||||||||||
Equity in income from unconsolidated joint venture | ( | ( | |||||||||
Changes in assets and liabilities: | |||||||||||
Other assets | ( | ||||||||||
Related party receivable | ( | ||||||||||
Interest payable | ( | ||||||||||
Accounts payable and other liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash Flow From Investing Activities: | |||||||||||
Collection of notes receivable | |||||||||||
Purchase of short-term investments | ( | ( | |||||||||
Redemption of short-term investments | |||||||||||
Development and renovation of real estate | ( | ( | |||||||||
Deferred leasing costs | ( | ||||||||||
Distributions from unconsolidated joint venture | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash Flow From Financing Activities: | |||||||||||
Payments on mortgages, other notes and bonds payable | ( | ( | |||||||||
Repurchase of IOR shares | ( | ||||||||||
Deferred financing costs | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Net income | $ | $ | ||||||||||||
Net income attributable to noncontrolling interest | ( | ( | ||||||||||||
Net income attributable to the Company | $ | $ | ||||||||||||
Weighted-average common shares outstanding — basic and diluted | ||||||||||||||
EPS - attributable to common shares — basic and diluted | $ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Cash paid for interest | $ | $ | |||||||||
Cash - beginning of period | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
$ | $ | ||||||||||
Cash - end of period | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
$ | $ | ||||||||||
Payments on mortgages, other notes and bonds payable | |||||||||||
Payments on mortgages and other notes payable | $ | $ | |||||||||
Payments on bond payable | |||||||||||
$ | $ |
Three Months Ended March 31, | |||||||||||
2024 | 2023 | ||||||||||
Property acquired in exchange for reduction of related party receivable | $ | $ | |||||||||
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Multifamily Segment | ||||||||||||||
Revenues | $ | $ | ||||||||||||
Operating expenses | ( | ( | ||||||||||||
Profit from segment | ||||||||||||||
Commercial Segment | ||||||||||||||
Revenues | ||||||||||||||
Operating expenses | ( | ( | ||||||||||||
Profit from segment | ||||||||||||||
Total profit from segments | $ | $ |
Three Months Ended March 31, | ||||||||||||||
2024 | 2023 | |||||||||||||
Total profit from segments | $ | $ | ||||||||||||
Other non-segment items of income (expense) | ||||||||||||||
Depreciation and amortization | ( | ( | ||||||||||||
General and administrative | ( | ( | ||||||||||||
Advisory fee to related party | ( | ( | ||||||||||||
Other income | ||||||||||||||
Interest income | ||||||||||||||
Interest expense | ( | ( | ||||||||||||
Gain on foreign currency transactions | ||||||||||||||
Income from unconsolidated joint venture | ||||||||||||||
Income tax provision | ( | ( | ||||||||||||
Net income | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
2024 | 2023 | ||||||||||||||||
Fixed component | $ | $ | |||||||||||||||
Variable component | |||||||||||||||||
$ | $ |
2024 | $ | |||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
2028 | ||||||||
Thereafter | ||||||||
$ |
March 31, 2024 | December 31, 2023 | ||||||||||
Land | $ | $ | |||||||||
Building and improvements | |||||||||||
Tenant improvements | |||||||||||
Construction in progress | |||||||||||
Total cost | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Total real estate | $ | $ |
March 31, 2024 | December 31, 2023 | |||||||||||||
Corporate bonds, at par value | $ | $ | ||||||||||||
Demand notes | ||||||||||||||
Less discount | ( | ( | ||||||||||||
$ | $ |
Carrying value | ||||||||||||||||||||||||||
Property/Borrower | March 31, 2024 | December 31, 2023 | Interest Rate | Maturity Date | ||||||||||||||||||||||
ABC Land and Development, Inc. | $ | $ | % | 6/30/26 | ||||||||||||||||||||||
ABC Paradise, LLC | % | 6/30/26 | ||||||||||||||||||||||||
Autumn Breeze(1) | % | 7/1/25 | ||||||||||||||||||||||||
Bellwether Ridge(1) | % | 11/1/26 | ||||||||||||||||||||||||
Cascades at Spring Street(2)(3) | % | 6/30/27 | ||||||||||||||||||||||||
Dominion at Mercer Crossing(4) | % | 6/7/28 | ||||||||||||||||||||||||
Forest Pines(1) | % | 5/1/27 | ||||||||||||||||||||||||
Inwood on the Park(2)(3) | % | 6/30/28 | ||||||||||||||||||||||||
Kensington Park(2)(3) | % | 3/31/27 | ||||||||||||||||||||||||
Lake Shore Villas(2)(3) | % | 12/31/32 | ||||||||||||||||||||||||
Legacy Pleasant Grove | % | 10/23/24 | ||||||||||||||||||||||||
McKinney Ranch | % | 9/15/24 | ||||||||||||||||||||||||
Ocean Estates II(2)(3) | % | 5/31/28 | ||||||||||||||||||||||||
One Realco Land Holding, Inc. | % | 6/30/26 | ||||||||||||||||||||||||
Parc at Ingleside(1) | % | 11/1/26 | ||||||||||||||||||||||||
Parc at Opelika Phase II(1)(5) | % | 1/13/23 | ||||||||||||||||||||||||
Parc at Windmill Farms(1)(5) | % | 11/1/22 | ||||||||||||||||||||||||
Phillips Foundation for Better Living, Inc.(2) | % | 3/31/28 | ||||||||||||||||||||||||
Plaza at Chase Oaks(2)(3) | % | 3/31/28 | ||||||||||||||||||||||||
Plum Tree(1) | % | 4/26/26 | ||||||||||||||||||||||||
Polk County Land | % | 6/30/26 | ||||||||||||||||||||||||
Riverview on the Park Land, LLC | % | 6/30/26 | ||||||||||||||||||||||||
Spartan Land | % | 1/16/25 | ||||||||||||||||||||||||
Spyglass of Ennis(1) | % | 11/1/24 | ||||||||||||||||||||||||
Steeple Crest(1) | % | 8/1/26 | ||||||||||||||||||||||||
Timbers at The Park(2)(3) | % | 12/31/32 | ||||||||||||||||||||||||
Tuscany Villas(2)(3) | % | 4/30/27 | ||||||||||||||||||||||||
$ | $ |
Carrying Value | Interest Rate | Maturity Date | ||||||||||||||||||||||||
Property/ Entity | March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||
770 South Post Oak | $ | $ | % | 6/1/2025 | ||||||||||||||||||||||
Blue Lake Villas | % | 11/1/2055 | ||||||||||||||||||||||||
Blue Lake Villas Phase II | % | 6/1/2052 | ||||||||||||||||||||||||
Chelsea | % | 12/1/2050 | ||||||||||||||||||||||||
EQK Portage | % | 11/13/2024 | ||||||||||||||||||||||||
Forest Grove | % | 5/5/2024 | ||||||||||||||||||||||||
Landing on Bayou Cane | % | 9/1/2053 | ||||||||||||||||||||||||
Legacy at Pleasant Grove | % | 4/1/2048 | ||||||||||||||||||||||||
Northside on Travis | % | 2/1/2053 | ||||||||||||||||||||||||
Parc at Denham Springs | % | 4/1/2051 | ||||||||||||||||||||||||
Parc at Denham Springs Phase II | % | 2/1/2060 | ||||||||||||||||||||||||
RCM HC Enterprises | % | 12/31/2024 | ||||||||||||||||||||||||
Residences at Holland Lake | % | 3/1/2053 | ||||||||||||||||||||||||
Villas at Bon Secour | % | 9/1/2031 | ||||||||||||||||||||||||
Villas of Park West I(1) | % | 3/1/2053 | ||||||||||||||||||||||||
Villas of Park West II(1) | % | 3/1/2053 | ||||||||||||||||||||||||
Vista Ridge | % | 8/1/2053 | ||||||||||||||||||||||||
Windmill Farms(2) | % | 2/28/2026 | ||||||||||||||||||||||||
$ | $ |
Three Months Ended March 31, | |||||||||||||||||
2024 | 2023 | ||||||||||||||||
Current | $ | $ | |||||||||||||||
Deferred | |||||||||||||||||
$ | $ |
Three Months Ended March 31, | |||||||||||||||||
2024 | 2023 | Variance | |||||||||||||||
Multifamily Segment | |||||||||||||||||
Revenue | $ | 8,053 | $ | 7,373 | $ | 680 | |||||||||||
Operating expenses | (4,219) | (3,708) | (511) | ||||||||||||||
3,834 | 3,665 | 169 | |||||||||||||||
Commercial Segment | |||||||||||||||||
Revenue | 3,226 | 3,636 | (410) | ||||||||||||||
Operating expenses | (2,415) | (2,398) | (17) | ||||||||||||||
811 | 1,238 | (427) | |||||||||||||||
Segment operating income | 4,645 | 4,903 | (258) | ||||||||||||||
Other non-segment items of income (expense) | |||||||||||||||||
Depreciation and amortization | (3,172) | (3,102) | (70) | ||||||||||||||
General, administrative and advisory | (3,426) | (5,053) | 1,627 | ||||||||||||||
Interest income, net | 4,258 | 5,741 | (1,483) | ||||||||||||||
Gain on foreign currency transactions | — | 971 | (971) | ||||||||||||||
Income from joint venture | 435 | 688 | (253) | ||||||||||||||
Other expense | 17 | (433) | 450 | ||||||||||||||
Net income | $ | 2,757 | $ | 3,715 | $ | (958) |
Three Months Ended March 31, | |||||||||||||||||
2024 | 2023 | Variance | |||||||||||||||
Net cash provided by operating activities | $ | 3,869 | $ | 1,533 | $ | 2,336 | |||||||||||
Net cash provided by (used in) investing activities | $ | 11,574 | $ | (24,212) | $ | 35,786 | |||||||||||
Net cash used in financing activities | $ | (1,456) | $ | (89,127) | $ | 87,671 |
Three Months Ended March 31, | |||||||||||||||||
2024 | 2023 | ||||||||||||||||
Net income attributable to the Company | $ | 2,549 | $ | 3,517 | |||||||||||||
Depreciation and amortization | 3,172 | 3,102 | |||||||||||||||
FFO-Basic and Diluted | 5,721 | 6,619 | |||||||||||||||
Gain on foreign currency transactions | — | (971) | |||||||||||||||
FFO-adjusted | $ | 5,721 | $ | 5,648 |
Exhibit Number | Description | |||||||
3.0 | Articles of Incorporation of Transcontinental Realty Investors, Inc., (incorporated by reference to Exhibit No. 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1991). | |||||||
3.1 | Certificate of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., (incorporated by reference to the Registrant’s Current Report on Form 8-K, dated June 3, 1996). | |||||||
3.2 | Certificate of Amendment of Articles of Incorporation of Transcontinental Realty Investors, Inc., dated October 10, 2000 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000). | |||||||
3.3 | Articles of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., setting forth the Certificate of Designations, Preferences and Rights of Series A Cumulative Convertible Preferred Stock, dated October 20, 1998 (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998). | |||||||
3.4 | Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designations, References, Limitations, Restriction and Relative Rights of Series B Cumulative Convertible Preferred Stock, dated October 23, 2000 (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000). | |||||||
3.5 | Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designating, Preferences, Limitations, Restrictions and Relative Rights of Series C Cumulative Convertible Preferred Stock, dated September 28, 2001 (incorporated by reference to Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001). | |||||||
3.6 | Articles of Amendment to the Articles of Incorporation of Transcontinental Realty Investors, Inc., Decreasing the Number of Authorized Shares of and Eliminating Series B Preferred Stock dated December 14, 2001 (incorporated by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001). | |||||||
3.7 | By-Laws of Transcontinental Realty Investors, Inc. (incorporated by reference to Exhibit No. 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 1991). | |||||||
3.8 | Certificate of Designation of Transcontinental Realty Investors, Inc., setting forth the Voting Powers, Designations, Preferences, Limitations, Restrictions and Relative Rights of Series D Cumulative Preferred Stock filed August 14, 2006 with the Secretary of State of Nevada (incorporated by reference to Registrant’s Current Report on Form 8-K for event dated November 21, 2006 at Exhibit 3.8 thereof). | |||||||
10.1 | Advisory Agreement dated as of April 30, 2011, between Transcontinental Realty Investors, Inc., and Pillar Income Asset Management, Inc. (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K for event occurring May 2, 2011). | |||||||
31.1* | Certification of the Principal Executive and Financial Officer pursuant to Rule 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended. | |||||||
32.1* | Certification pursuant to 18 U.S.C. 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||
101.INS | XBRL Instance Document | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
TRANSCONTINENTAL REALTY INVESTORS, INC. | ||||||||
Date: May 9, 2024 | By: | /s/ ERIK L. JOHNSON | ||||||
Erik L. Johnson | ||||||||
Executive Vice President and Chief Financial Officer |
Dated: May 9, 2024 | By: | /s/ ERIK L. JOHNSON | ||||||
Erik L. Johnson | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Executive and Financial Officer) |
Dated: May 9, 2024 | By: | /s/ ERIK L. JOHNSON | ||||||
Erik L. Johnson | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Executive and Financial Officer) | ||||||||
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Notes receivable | $ 130,831 | $ 133,837 |
Other assets | 100,963 | 101,380 |
Accounts payable and other liabilities | $ 11,542 | $ 13,735 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, issued (in shares) | 8,639,316 | 8,639,316 |
Common stock, outstanding (in shares) | 8,639,316 | 8,639,316 |
Related Party | ||
Notes receivable | $ 63,012 | $ 65,057 |
Other assets | 890 | 1,742 |
Accounts payable and other liabilities | $ 1,022 | $ 1,016 |
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Rental revenues | $ 11,279 | $ 11,009 |
Property operating expenses | 6,634 | 6,106 |
General and administrative | 1,261 | 2,883 |
Interest income | 6,127 | 8,828 |
Related Party | ||
Rental revenues | 178 | 268 |
Property operating expenses | 80 | 100 |
General and administrative | 914 | 1,431 |
Interest income | $ 2,692 | $ 5,137 |
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands |
Total |
Total Shareholders' Equity |
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Noncontrolling Interest |
---|---|---|---|---|---|---|
Balance at beginning at Dec. 31, 2022 | $ 840,612 | $ 819,467 | $ 86 | $ 260,387 | $ 558,994 | $ 21,145 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 3,715 | 3,517 | 3,517 | 198 | ||
Balance at ending at Mar. 31, 2023 | 844,327 | 822,984 | 86 | 260,387 | 562,511 | 21,343 |
Balance at beginning at Dec. 31, 2023 | 846,954 | 826,007 | 86 | 260,990 | 564,931 | 20,947 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 2,757 | 2,549 | 2,549 | 208 | ||
Repurchase of treasury shares by IOR | (587) | (587) | ||||
Adjustment to noncontrolling interest | 0 | 299 | 299 | (299) | ||
Balance at ending at Mar. 31, 2024 | $ 849,124 | $ 828,855 | $ 86 | $ 261,289 | $ 567,480 | $ 20,269 |
Organization |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization As used herein, the terms “the Company”, “we”, “our”, or “us” refer to Transcontinental Realty Investors, Inc., a Nevada corporation, which was formed in 1984. Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “TCI”. We are owned approximately 78% by American Realty Investors, Inc. (“ARL”), whose common stock is listed on the NYSE under the symbol “ARL”, and 7% by the controlling shareholder of ARL. Our primary business is the acquisition, development and ownership of income-producing residential and commercial real estate properties. In addition, we opportunistically acquire land for future development in in-fill or high-growth suburban markets. From time to time, and when we believe it appropriate to do so, we will also sell land and income-producing properties. We generate revenues by leasing apartment units to residents, and leasing office, industrial and retail space to various for-profit businesses as well as certain local, state and federal agencies. We also generate income from the sales of income-producing properties and land. Substantially all of our assets are held by our wholly-owned subsidiary, Southern Properties Capital Ltd. (“SPC”), which was formed for the purpose of raising funds by issuing non-convertible bonds that were listed on the Tel Aviv Stock Exchange ("TASE"). At March 31, 2024, our portfolio of properties consisted of: ● Four office buildings comprising in aggregate of approximately 1,056,793 square feet; ● Fourteen multifamily properties, owned directly by us, comprising of 2,328 units; and ● Approximately 1,843 acres of developed and undeveloped land. Our day to day operations are managed by Pillar Income Asset Management, Inc. (“Pillar”). Pillar's duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities, asset management, property development, construction management and arranging debt and equity financing with third party lenders and investors. We have no employees; all of our services are performed by Pillar employees. Three of our commercial properties are managed by Regis Realty Prime, LLC (“Regis”). Regis provides leasing and brokerage services. Our multifamily properties and one of our commercial properties are managed by outside management companies. Pillar and Regis are considered to be related parties (See Note 12 – Related Party Transactions).
|
Summary of Significant Accounting Policies |
3 Months Ended |
---|---|
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Short-Term Investments We account for our investment in corporate bonds and demand notes (collectively "debt securities") as held-to-maturity securities as we have the intent and the ability to hold these securities until maturity. Accordingly, our debt securities are carried at their amortized cost. The discount on these debt securities are amortized into interest income on a straight-line basis over the term of the underlying notes, which approximate the effective interest method. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. Certain prior year amounts have been reclassified to conform with the current year presentation. These reclassifications had no effect on the reported results of operation. An adjustment has been made to reclassify $944 interest expense to related party for the three months ended March 31, 2023 from interest expense to interest income on the consolidated statements of operations. The consolidated balance sheet at December 31, 2023 was derived from the audited consolidated financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. We consolidate entities in which we are considered to be the primary beneficiary of a variable interest entity (“VIE”) or have a majority of the voting interest of the entity. We have determined that we are a primary beneficiary of the VIE when we have (i) the power to direct the activities of a VIE that most significantly impacts its economic performance, and (ii) the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management representation, ability to control decision and other contractual rights. We account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of these entities in our results of operations
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Earnings per share (“EPS”) is computed by dividing net income attributable to the Company by the weighted-average number of common shares outstanding during the period. The following table details our basic and diluted earnings per common share calculation:
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following presents the schedule of interest paid and other supplemental cash flow information:
The following is a schedule of noncash investing activity:
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Operating Segments |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Segments | Operating Segments Our segments are based on the internal reporting that we review for operational decision-making purposes. We operate in two reportable segments: (i) the acquisition, development, ownership and management of multifamily properties and (ii) the acquisition, ownership and management of commercial properties. The services for our multifamily segment include rental of apartments and other tenant services, including parking and storage space rental. Asset information by segment is not reported because we do not use this measure to assess performance or make decisions to allocate resources. Therefore, depreciation and amortization expense is not allocated among segments. General and administrative expenses, advisory fees, interest income and interest expense are not included in segment profit as our internal reporting addresses these items on a corporate level. The following table presents our reportable segments for the three months ended March 31, 2024 and 2023:
The table below reflects the reconciliation of total profit from segments to net income for the three months ended March 31, 2024 and 2023:
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Lease Revenue |
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Lease Revenue | Lease Revenue We lease our multifamily properties and commercial properties under agreements that are classified as operating leases. Our multifamily property leases generally include minimum rents and charges for ancillary services. Our commercial property leases generally include minimum rents and recoveries for property taxes and common area maintenance. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. The following table summarizes the components of our rental revenue for the three months ended March 31, 2024 and 2023:
The following table summarizes the future rental payments that are payable to us from non-cancelable leases. The table excludes multifamily leases, which typically have a term of one-year or less:
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Real Estate Activity |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Activity | Real Estate Activity Below is a summary of our real estate as of March 31, 2024 and December 31, 2023:
On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida ("Lake Wales") that is expected to be completed in 2025 for a total cost of approximately $55,330. The cost of construction will be funded in part by a $33,000 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,637 fee that will be paid to Pillar over the construction period. As of March 31, 2024, we have incurred a total of $18,888 in development costs. On November 6, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in McKinney, Texas ("Merano") that is expected to be completed in 2025 for a total cost of approximately $51,910. The cost of construction will be funded in part by a $25,407 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,551 fee that will be paid to Pillar over the construction period. As of March 31, 2024, we have incurred a total of $8,916 in development costs. On December 15, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in Temple, Texas ("Bandera Ridge") that is expected to be completed in 2025 for a total cost of approximately $49,603. The cost of construction will be funded in part by a $23,500 construction loan (See Note 11 – Mortgages and Other Notes Payable). The development agreement provides for a $1,607 fee that will be paid to Pillar over the construction period. As of March 31, 2024, we have incurred a total of $3,124 in development costs. Construction in progress includes the cost of development of Windmill Farms and the costs associated with our multifamily projects. We incurred depreciation expense of $3,018 and $2,935 for the three months ended March 31, 2024 and 2023, respectively.
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Short-term Investments |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term Investments | Short-term Investments The following is a summary of our short term investment as of March 31, 2024 and December 31, 2023:
The average interest rate on the investments was 5.71% and 5.65% at March 31, 2024 and December 31, 2023, respectively.
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Notes Receivable |
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Notes Receivable | Notes Receivable The following table summarizes our notes receivable as of March 31, 2024 and December 31, 2023:
(1)The note is convertible, at our option, into a 100% ownership interest in the underlying property, and is collateralized by the underlying property. (2) The borrower is determined to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. (3) Principal and interest payments on the notes from Unified Housing Foundation, Inc. (“UHF”) are funded from surplus cash flow from operations, sale or refinancing of the underlying properties and are cross collateralized to the extent that any surplus cash available from any of the properties underlying the notes. On October 1, 2023, the interest rate on the notes was amended from a fixed rate of 12.0% to a floating rate indexed to the Secured Overnight Financing Rate ("SOFR") in effect on the last day of the preceding calendar quarter. In connection with the amendment, accrued interest of $3,601 was forgiven in exchange for participation in the proceeds from any future sale or refinancing of the underlying property. (4) The note bears interest at prime plus 1.0%. (5) We are working with the borrower to extend the maturity and/or exercise our conversion option.
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Investment in Unconsolidated Joint Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | |
Investment in Unconsolidated Joint Ventures | Investment in Unconsolidated Joint Ventures On November 16, 2018, our SPC subsidiary formed the Victory Abode Apartments, LLC ("VAA"), a joint venture with the Macquarie Group (“Macquarie”). VAA was formed as a result of our sale of a 50% ownership interest in a portfolio of multifamily properties to Macquarie in exchange for a 50% voting interest in VAA and a note payable. On September 16, 2022, VAA sold 45 of its properties (“VAA Sale Portfolio”) for $1,810,700, resulting in a gain on sale of $738,444 to the joint venture. In connection with the sale, we received an initial distribution of $182,848 from VAA. On November 1, 2022, we received an additional distribution from VAA, which included the full operational control of the remaining seven properties of VAA (“VAA Holdback Portfolio”) and a cash payment of $204,036. On March 23, 2023, we received $17,976 from VAA, which represented the remaining distribution of the proceeds from the sale of the VAA Sale Portfolio. We used our share of the proceeds from the sale of the VAA Sale Portfolio to invest in short-term investments and real estate, pay down our debt and for general corporate purposes. We anticipate that the final liquidation of the joint venture will be completed during the remainder of 2024.
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Mortgages and Other Notes Payable |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages and Other Notes Payable | Mortgages and Other Notes Payable The following table summarizes our mortgages and other notes payable as of March 31, 2024 and December 31, 2023:
(1) On November 1, 2022, we agreed to assume the mortgage note payable from our joint venture in connection with the acquisition of the underlying property (See Note 10 - Investment in Unconsolidated Joint Ventures) and obtained final lender approval of the assumption in 2024. (2) On February 8, 2024, we extended the maturity to February 28, 2026 at an interest rate of 7.50%. As of March 31, 2024, we were in compliance with all of our loan covenants except for the minimum debt service coverage ratio (“DSCR”) for the loan on 770 South Post Oak. As a result, the lender requires us to lock the surplus cash flow of the property into a designated deposit account controlled by them, until we are in compliance with the DSCR for a period of two consecutive quarters. On March 15, 2023, we entered into a $33,000 construction loan to finance the development of Lake Wales (See Note 7 - Real Estate Activity) that bears interest at SOFR plus 3% and matures on March 15, 2026, with two one-year extension options. As of March 31, 2024, no advances have been drawn on the loan. On November 6, 2023, we entered into a $25,407 construction loan to finance the development of Merano (See Note 7 - Real Estate Activity) that bears interest at prime plus 0.25% and matures on November 6, 2028. As of March 31, 2024, no advances have been drawn on the loan. On December 15, 2023, we entered into a $23,500 construction loan to finance the development of Bandera Ridge (See Note 7 - Real Estate Activity) that bears interest at SOFR plus 3% and matures on December 15, 2028. As of March 31, 2024, no advances have been drawn on the loan. All of the above mortgages and other notes payable are collateralized by the underlying property. In addition, we have guaranteed the loans on Bandera Ridge, Forest Grove, Lake Wales, Merano, Villas at Bon Secour and Windmill Farms.
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Related Party Transactions |
3 Months Ended |
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Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions We engage in certain business transactions with related parties, including but not limited to asset acquisition and dispositions of real estate. Transactions involving related parties cannot be presumed to be carried out on an arm’s length basis due to the absence of free market forces that naturally exist in business dealings between two or more unrelated entities. Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in our best interest. Pillar and Regis are wholly owned by a subsidiary of May Realty Holdings, Inc. ("MRHI"), which owns approximately 90.8% of ARL, which in turn owns approximately 78% of the Company. Pillar is compensated for advisory services in accordance with an advisory agreement and is compensated for development services in accordance with project specific agreements. Regis receives property management fees and leasing commissions in accordance with the terms of its property-level management agreement. In addition, Regis is entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement. Rental income includes $178 and $268 for the three months ended March 31, 2024 and 2023, respectively, for office space leased to Pillar and Regis. Property operating expense includes $80 and $100 for the three months ended March 31, 2024 and 2023, respectively, for management fees on commercial properties payable to Regis. General and administrative expense includes $914 and $1,431 for the three months ended March 31, 2024 and 2023, respectively, for employee compensation and other reimbursable costs payable to Pillar. Advisory fees paid to Pillar were $2,165 and $2,170 for the three months ended March 31, 2024 and 2023, respectively. Development fees paid to Pillar were $388 for the three months ended March 31, 2024. Notes receivable include amounts held by UHF (See Note 9 – Notes Receivable). UHF is deemed to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. In addition, we have a related party receivable from Pillar ("Pillar Receivable"), which represents amounts advanced to Pillar net of unreimbursed fees, expenses and costs as provided above. The Pillar Receivable bears interest in accordance with a cash management agreement. On January 1, 2024, an amendment to the cash management ageement changed the interest rate on the Pillar Receivable from prime plus one percent to SOFR. Interest income on the UHF notes and the Pillar Receivable was $2,692 and $5,137 for the three months ended March 31, 2024 and 2023, respectively.
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Noncontrolling Interests |
3 Months Ended |
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Mar. 31, 2024 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests | Noncontrolling InterestsThe noncontrolling interest represents the third party ownership interest in Income Opportunity Realty Investors, Inc. ("IOR"). Shares of IOR are listed on the NYSE American stock exchange under the symbol of IOR. We owned 82.3% and 81.1% of IOR at March 31, 2024 and December 31, 2023, respectively. |
Deferred Income |
3 Months Ended |
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Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Deferred Income | Deferred Income In previous years, we sold properties to related parties at a gain, and therefore the sales criteria for the full accrual method was not met, and as such, we deferred the gain recognition and accounted for the sales by applying the finance, deposit, installment or cost recovery methods, as appropriate. The gain on these transactions is deferred until the properties are sold to a non-related third party. As of March 31, 2024 and December 31, 2023, we had deferred gain of $581.
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Income Taxes |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes We are part of a tax sharing and compensating agreement with respect to federal income taxes with MRHI, ARL and IOR. In accordance with the agreement, our expense in each year is calculated based on the amount of losses absorbed by taxable income multiplied by the maximum statutory tax rate of 21%. The following table summarizes our income tax provision:
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We believe that we will generate excess cash from property operations in the next twelve months; such excess, however, might not be sufficient to discharge all of our obligations as they become due. We intend to sell income-producing assets, refinance real estate and obtain additional borrowings primarily secured by real estate to meet our liquidity requirements.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The date to which events occurring after March 31, 2024, the date of the most recent balance sheet, have been evaluated for possible adjustment to the consolidated financial statements or disclosure is May 9, 2024, which is the date on which the consolidated financial statements were available to be issued.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net Income (Loss) | $ 2,549 | $ 3,517 |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Short-Term Investments | Short-Term Investments We account for our investment in corporate bonds and demand notes (collectively "debt securities") as held-to-maturity securities as we have the intent and the ability to hold these securities until maturity. Accordingly, our debt securities are carried at their amortized cost. The discount on these debt securities are amortized into interest income on a straight-line basis over the term of the underlying notes, which approximate the effective interest method.
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Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. Certain prior year amounts have been reclassified to conform with the current year presentation. These reclassifications had no effect on the reported results of operation. An adjustment has been made to reclassify $944 interest expense to related party for the three months ended March 31, 2023 from interest expense to interest income on the consolidated statements of operations. The consolidated balance sheet at December 31, 2023 was derived from the audited consolidated financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023. We consolidate entities in which we are considered to be the primary beneficiary of a variable interest entity (“VIE”) or have a majority of the voting interest of the entity. We have determined that we are a primary beneficiary of the VIE when we have (i) the power to direct the activities of a VIE that most significantly impacts its economic performance, and (ii) the obligations to absorb losses or the right to receive benefits that could potentially be significant to the VIE. In determining whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management representation, ability to control decision and other contractual rights. We account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of these entities in our results of operations.
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Earnings per Share (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share | The following table details our basic and diluted earnings per common share calculation:
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Supplemental Cash Flow Information (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Paid and Other Supplemental Cash Flow Information | The following presents the schedule of interest paid and other supplemental cash flow information:
The following is a schedule of noncash investing activity:
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Operating Segments (Tables) |
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Profit by Reportable Segment | The following table presents our reportable segments for the three months ended March 31, 2024 and 2023:
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Schedule of Reconciliation of Revenue from Segments to Consolidated | The table below reflects the reconciliation of total profit from segments to net income for the three months ended March 31, 2024 and 2023:
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Lease Revenue (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rental Revenue | The following table summarizes the components of our rental revenue for the three months ended March 31, 2024 and 2023:
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Schedule of Future Rental Payments | The following table summarizes the future rental payments that are payable to us from non-cancelable leases. The table excludes multifamily leases, which typically have a term of one-year or less:
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Real Estate Activity (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of the Real Estate Owned | Below is a summary of our real estate as of March 31, 2024 and December 31, 2023:
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Short-term Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of short term investment | The following is a summary of our short term investment as of March 31, 2024 and December 31, 2023:
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Notes Receivable (Tables) |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notes Receivable | The following table summarizes our notes receivable as of March 31, 2024 and December 31, 2023:
(1)The note is convertible, at our option, into a 100% ownership interest in the underlying property, and is collateralized by the underlying property. (2) The borrower is determined to be a related party due to our significant investment in the performance of the collateral secured by the notes receivable. (3) Principal and interest payments on the notes from Unified Housing Foundation, Inc. (“UHF”) are funded from surplus cash flow from operations, sale or refinancing of the underlying properties and are cross collateralized to the extent that any surplus cash available from any of the properties underlying the notes. On October 1, 2023, the interest rate on the notes was amended from a fixed rate of 12.0% to a floating rate indexed to the Secured Overnight Financing Rate ("SOFR") in effect on the last day of the preceding calendar quarter. In connection with the amendment, accrued interest of $3,601 was forgiven in exchange for participation in the proceeds from any future sale or refinancing of the underlying property. (4) The note bears interest at prime plus 1.0%. (5) We are working with the borrower to extend the maturity and/or exercise our conversion option.
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Mortgages and Other Notes Payable (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes our mortgages and other notes payable as of March 31, 2024 and December 31, 2023:
(1) On November 1, 2022, we agreed to assume the mortgage note payable from our joint venture in connection with the acquisition of the underlying property (See Note 10 - Investment in Unconsolidated Joint Ventures) and obtained final lender approval of the assumption in 2024. (2) On February 8, 2024, we extended the maturity to February 28, 2026 at an interest rate of 7.50%.
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Income Taxes (Tables) |
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Provision | The following table summarizes our income tax provision:
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Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Related Party Transaction [Line Items] | ||
Interest expense | $ 1,869 | $ 3,087 |
Related Party | ||
Related Party Transaction [Line Items] | ||
Interest expense | $ 944 |
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 2,757 | $ 3,715 |
Net income attributable to noncontrolling interest | (208) | (198) |
Net income attributable to the Company | $ 2,549 | $ 3,517 |
Weighted-average common shares outstanding - basic (in shares) | 8,639,316 | 8,639,316 |
Weighted-average common shares outstanding - diluted (in shares) | 8,639,316 | 8,639,316 |
EPS - attributable to common shares - basic (in dollars per share) | $ 0.30 | $ 0.41 |
EPS - attributable to common shares - diluted (in dollars per share) | $ 0.30 | $ 0.41 |
Supplemental Cash Flow Information - Noncash Investing and Financing Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
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Supplemental Cash Flow Elements [Roll Forward] | ||
Cash paid for interest | $ 1,544 | $ 6,403 |
Cash and cash equivalents, beginning balance | 36,700 | 113,424 |
Restricted cash and cash equivalents, beginning balance | 42,327 | 108,883 |
Cash, cash equivalents and restricted cash, beginning of period | 79,027 | 222,307 |
Cash and cash equivalents, ending balance | 54,662 | 55,313 |
Restricted cash and cash equivalents, ending balance | 38,352 | 55,188 |
Cash, cash equivalents and restricted cash, end of period | 93,014 | 110,501 |
Payments on mortgages, other notes and bonds payable | ||
Payments on mortgages and other notes payable | 858 | 832 |
Payments on bond payable | 0 | 88,279 |
Payments on mortgages, other notes and bonds payable | $ 858 | $ 89,111 |
Supplemental Cash Flow Information - Schedule of Noncash Investing and Financing Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
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Supplemental Cash Flow Elements [Abstract] | ||
Property acquired in exchange for reduction of related party receivable | $ 0 | $ 5,487 |
Operating Segments - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2024
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Operating Segments - Profit by Reportable Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Segment Reporting Information [Line Items] | ||
Revenues | $ 11,899 | $ 11,688 |
Total profit from segments | (1,333) | (2,573) |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Total profit from segments | 4,645 | 4,903 |
Operating segments | Multifamily Segment | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8,053 | 7,373 |
Operating expenses | (4,219) | (3,708) |
Profit from segment | 3,834 | 3,665 |
Operating segments | Commercial Segment | ||
Segment Reporting Information [Line Items] | ||
Revenues | 3,226 | 3,636 |
Operating expenses | (2,415) | (2,398) |
Profit from segment | $ 811 | $ 1,238 |
Lease Revenue - Schedule of Rental Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Leases [Abstract] | ||
Fixed component | $ 10,999 | $ 10,708 |
Variable component | 280 | 301 |
Total rental revenue | $ 11,279 | $ 11,009 |
Lease Revenue - Schedule of Future Rental Payments (Details) $ in Thousands |
Mar. 31, 2024
USD ($)
|
---|---|
Leases [Abstract] | |
2024 | $ 11,441 |
2025 | 11,067 |
2026 | 10,700 |
2027 | 10,408 |
2028 | 9,681 |
Thereafter | 16,393 |
Total | $ 69,690 |
Real Estate Activity - Real Estate Investment Components (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Real Estate [Abstract] | ||
Land | $ 104,156 | $ 104,156 |
Building and improvements | 373,020 | 372,399 |
Tenant improvements | 16,234 | 16,286 |
Construction in progress | 79,873 | 76,110 |
Total cost | 573,283 | 568,951 |
Less accumulated depreciation | (70,144) | (67,365) |
Total real estate | $ 503,139 | $ 501,586 |
Short-term Investments - Schedule of Short-term Investments (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Short Term Investment [Line Items] | ||
Short term investment, gross | $ 76,679 | $ 91,484 |
Less discount | (526) | (1,036) |
Short-term investments | 76,153 | 90,448 |
Corporate bonds, at par value | ||
Short Term Investment [Line Items] | ||
Short term investment, gross | 70,266 | 90,000 |
Demand notes | ||
Short Term Investment [Line Items] | ||
Short term investment, gross | $ 6,413 | $ 1,484 |
Short-term Investments (Details) |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Investment interest rate | 5.71% | 5.65% |
Mortgages and Other Notes Payable - Narrative (Details) $ in Thousands |
Dec. 15, 2023
USD ($)
|
Nov. 06, 2023 |
Mar. 15, 2023
USD ($)
extension_option
|
---|---|---|---|
Debt Instrument [Line Items] | |||
Number of extension options | extension_option | 2 | ||
Lake Wales | |||
Debt Instrument [Line Items] | |||
Proceeds from construction loans payable | $ 33,000 | ||
Extension term | 1 year | ||
Bandera Ridge | |||
Debt Instrument [Line Items] | |||
Proceeds from construction loans payable | $ 23,500 | ||
SOFR | Lake Wales | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 3.00% | 3.00% | |
SOFR | Merano | |||
Debt Instrument [Line Items] | |||
Variable interest rate | 0.25% |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Related Party Transaction [Line Items] | |||
Rental revenues | $ 11,279 | $ 11,009 | |
Property operating expenses | 6,634 | 6,106 | |
General and administrative | 1,261 | 2,883 | |
Advisory fee to related party | 2,165 | 2,170 | |
Development fees to related party | 388 | ||
Interest income | $ 6,127 | 8,828 | |
Investment interest rate | 5.71% | 5.65% | |
Related Party | Pillar and Regis | |||
Related Party Transaction [Line Items] | |||
Rental revenues | 268 | ||
Related Party | Regis | |||
Related Party Transaction [Line Items] | |||
Property operating expenses | 100 | ||
Related Party | Pillar | |||
Related Party Transaction [Line Items] | |||
General and administrative | $ 914 | 1,431 | |
Advisory fee to related party | 2,165 | 2,170 | |
Related Party | UHF and Pillar | |||
Related Party Transaction [Line Items] | |||
Interest income | $ 2,692 | $ 5,137 | |
Investment interest rate | 1.00% | ||
Related Party | MRHI | ARL | |||
Related Party Transaction [Line Items] | |||
Ownership interest | 90.80% |
Noncontrolling Interests (Details) |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
IOR | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest | 82.30% | 81.10% |
Deferred Income (Details) - USD ($) $ in Thousands |
Mar. 31, 2024 |
Dec. 31, 2023 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue | $ 581 | $ 581 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Current | $ 603 | $ 41 |
Deferred | 0 | 1,071 |
Income tax provision | $ 603 | $ 1,112 |
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