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

Date of Report (Date of earliest event reported): August 16, 2010

TRANSCONTINENTAL REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	001-09240	94-6565852
(State or other	(Commission	(I.R.S. Employer
jurisdiction of incorporation)	File No.)	Identification No.)

1800 Valley View Lane, Suite 300
Dallas, Texas	75234
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 469-522-4200

     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:

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

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

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

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 – Financial Information

Item 2.02. Results of Operations and Financial Condition

     On August 16, 2010, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended June 30, 2010. 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
Designation	Description of Exhibit
99.1*	Press Release dated August 16, 2010.

* Furnished herewith.

-1-

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly-caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly-authorized.

Dated: August 20, 2010	TRANSCONTINENTAL REALTY INVESTORS, INC.
	By:	/s/ Gene S. Bertcher
		Gene S. Bertcher, Executive Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

NEWS RELEASE
FOR IMMEDIATE RELEASE	Contact:
	Transcontinental Realty Investors, Inc.
	Investors Relations
	(800) 400-6407
	investor.relations@primeasset.com

Transcontinental Realty Investors, Inc. Reports Second Quarter 2010 Results

DALLAS (August 16, 2010) – Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported results of operations for the first quarter ended June 30, 2010. TCI announced today that the Company reported a net loss applicable to common shares of ($31.2 million) or ($3.84) per share, as compared to a net loss applicable to common shares of ($43.2) million or ($5.32) per share for the same period ended 2009.

Rental and other property revenues were $71.7 million for the six months ended June 30, 2010. This represents a decrease of $0.9 million, as compared to the prior period revenues of $72.6 million. The change, by segment, is a decrease in the apartment portfolio of $0.3 million, a decrease in the commercial portfolio of $1.5 million, offset by an increase in the land and other portfolios of $0.9 million.

Property operating expenses were $41.1 million for the six months ended June 30, 2010. This represents an increase of $0.3 million, as compared to the prior period operating expenses of $40.8 million. This change, by segment, is a decrease in the apartment portfolio of $1.1 million, offset by increases in the commercial portfolio of $0.4 million, the land portfolio of $0.9 million, and the other portfolio of $0.1 million.

Other income was $0.9 million for the six months ended June 30, 2010, as compared to $3.3 million in the prior period. This represents a decrease of $2.4 million, which is primarily due to $2.3 million of gain recorded, in the prior period, on the disposition of our investment in the Korean REIT.

Provision on impairment of notes receivable, investments in real estate partnerships, and real estate assets decreased by $28.6 million as compared to prior period. There were no impairment reserves taken in the current period. Impairment in the prior period was recorded as an additional loss of $1.8 million in the commercial portfolio, $18.0 million in land we currently hold and $8.8 million in land that was sold for a loss in subsequent periods.

Loss on land sales was ($5.6) million for the six months ended June 30, 2010. This represents a decrease of $11.9 million as compared to the prior period gain of $6.3 million. In the current period, we sold an aggregate of 23.6 acres for approximately $17.6 million. In the prior period, we sold an aggregate of 19.39 acres for approximately $20.2 million. There were several properties sold in 2010, that due to the provisions of ASC Topic 360-20 “Property, Plant and Equipment – Real Estate Sale”, we were not able to record the sale or recognize the full gain on the sale. During the current period, we deferred gains of $3.6 million on the sales of income-producing properties. The deferred gains will be recognized when we meet the sales criteria for the full accrual method.

Included in discontinued operations are a total of three and seven properties for 2010 and 2009, respectively. Properties sold in 2010 that were held in 2009 have been reclassified to discontinued operations for 2010. In 2010, we had one 192-unit apartment complex held for sale and sold two apartment complexes totaling 436 units. In 2009, we sold one 232-unit apartment complex and three commercial properties totaling 224,000 square feet.

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 equity ownership and partnerships nationwide. 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 Ended						For the Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
	(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues	$	34,951		$	36,769		$	71,680		$	72,565
Expenses:
Property operating expenses		20,994			18,367			41,089			40,799
Depreciation and amortization		7,421			7,249			14,348			14,311
General and administrative		1,816			1,918			3,652			3,579
Provision on impairment of notes receivable and real estate assets		—			28,196			—			28,575
Advisory fee to affiliate		2,962			2,943			6,058			5,801
Total operating expenses		33,193			58,673			65,147			93,065
Operating income (loss)		1,758			(21,904	)		6,533			(20,500	)
Other income (expense):
Interest income		832			731			1,691			1,367
Other income		249			180			914			3,285
Mortgage and loan interest		(17,771	)		(17,847	)		(34,434	)		(33,854	)
Earnings from unconsolidated subsidiaries and investees		(193	)		(300	)		(253	)		(300	)
Litigation settlement		—			(14	)		—			744
Total other expenses		(16,883	)		(17,250	)		(32,082	)		(28,758	)
Loss before gain on land sales, non-controlling interest, and tax		(15,125	)		(39,154	)		(25,549	)		(49,258	)
Gain (loss) on land sales		(5,640	)		6,548			(5,634	)		6,296
Loss from continuing operations before tax		(20,765	)		(32,606	)		(31,183	)		(42,962	)
Income tax benefit (expense)		92			199			268			(94	)
Net loss from continuing operations		(20,673	)		(32,407	)		(30,915	)		(43,056	)
Discontinued operations:
Income (loss) from discontinued operations		402			569			767			(301	)
Gain (loss)on sale of real estate from discontinued operations		(139	)		—			(139	)		532
Income tax expense from discontinued operations		(92	)		(199	)		(220	)		(81	)
Net income from discontinued operations		171			370			408			150
Net loss		(20,502	)		(32,037	)		(30,507	)		(42,906	)
Net (income) loss attributable to non-controlling interest		113			88			(160	)		198
Net loss attributable to Transcontinental Realty Investors, Inc.		(20,389	)		(31,949	)		(30,667	)		(42,708	)
Preferred dividend requirement		(264	)		(252	)		(527	)		(502	)
Net loss applicable to common shares	$	(20,653	)	$	(32,201	)	$	(31,194	)	$	(43,210	)
Earnings per share — basic
Loss from continuing operations	$	(2.57	)	$	(4.01	)	$	(3.89	)	$	(5.34	)
Discontinued operations		0.02			0.05			0.05			0.02
Net loss applicable to common shares	$	(2.55	)	$	(3.96	)	$	(3.84	)	$	(5.32	)
Earnings per share — diluted
Loss from continuing operations	$	(2.57	)	$	(4.01	)	$	(3.89	)	$	(5.34	)
Discontinued operations		0.02			0.05			0.05			0.02
Net loss applicable to common shares	$	(2.55	)	$	(3.96	)	$	(3.84	)	$	(5.32	)
Weighted average common share used in computing earnings per share		8,113,669			8,113,669			8,113,669			8,113,669
Weighted average common share used in computing diluted earnings per share		8,113,669			8,113,669			8,113,669			8,113,669
Amounts attributable to Transcontinental Realty Investors, Inc.
Loss from continuing operations	$	(20,560	)	$	(32,319	)	$	(31,075	)	$	(42,858	)
Income from discontinued operations		171			370			408			150
Net loss	$	(20,389	)	$	(31,949	)	$	(30,667	)	$	(42,708	)

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

	June 30,			December 31,
	2010			2009
	(dollars in thousands, except share and
	par value amounts)
Assets
Real estate, at cost	$	1,470,661		$	1,520,043
Real estate held for sale at cost, net of depreciation		5,147			5,147
Real estate subject to sales contracts at cost, net of depreciation ($19,236 for 2010 and $13,985 for 2009)		72,609			59,048
Less accumulated depreciation		(145,214	)		(137,054	)
Total real estate		1,403,203			1,447,184
Notes and interest receivable
Performing		47,030			48,051
Less allowance for estimated losses		(2,804	)		(2,804	)
Total notes and interest receivable		44,226			45,247
Cash and cash equivalents		4,363			5,665
Investments in unconsolidated subsidiaries and investees		8,938			9,358
Other assets		88,381			100,833
Total assets	$	1,549,111		$	1,608,287
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	1,090,165		$	1,121,737
Notes related to assets held-for-sale		4,969			5,002
Notes related to subject to sales contracts		71,286			61,886
Affiliate payables		49,270			50,163
Deferred revenue (from sales to related parties)		64,277			60,678
Accounts payable and other liabilities		54,860			63,405
		1,334,827			1,362,871
Commitments and contingencies:
Shareholders’ equity:
Preferred stock, Series C: $.01 par value, authorized 10,000,000 shares, issued and outstanding 30,000 shares in 2010 and 2009 respectively (liquidation preference $100 per share). Series D: $.01 par value, authorized, issued and outstanding 100,000 shares in 2010 and 2009 respectively		1			1
Common stock, $.01 par value, authorized 10,000,000 shares; issued and outstanding 8,113,669 for 2010 and 2009		81			81
Paid-in capital		261,588			262,118
Retained earnings		(65,385	)		(34,718	)
Total Transcontinental Realty Investors, Inc. shareholders’ equity		196,285			227,482
Non-controlling interest		17,999			17,934
Total equity		214,284			245,416
Total liabilities and equity	$	1,549,111		$	1,608,287