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): March 31, 2008

TRANSCONTINENTAL REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	001-09240	94-6565852
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer 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 March 31, 2008, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the fiscal year ended December 31, 2007. 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 March 31, 2008 .

* Furnished herewith.

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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: April 1, 2008	TRANSCONTINENTAL REALTY INVESTORS, INC.
	By:	/s/ Gene S. Bertcher
		Gene S. Bertcher, Executive Vice
		President and Interim 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 Fourth Quarter 2007 Results

DALLAS (March 31, 2008) — Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported net income for the year ended December 31, 2007. The Company is aware of the challenges that are currently facing the real estate industry. Despite these issues, given the quality of the underlying assets and our attention to details, management remains highly focused on its operations, development projects and investment strategy.

TCI reported net income applicable to common shares of $10.2 million, or $1.24 per diluted share for the Year ended December 31, 2007, compared to net income of $3.3 million, or $.40 per diluted share for the year ended December 31, 2006.

TCI also reported net income applicable to common shares of $34.7 million or $4.17 per diluted share for the quarter ended December 2007 as compared to $11.6 million or $1.42 per diluted share for the quarter ended December 2006.

Results for the year ended December 31, 2007:

     We had net income applicable to common shares of $10.2 million in 2007, which includes gains of land sales of $12.0 million, and net income from discontinued operations of $10.2 million, compared to net income applicable to common shares of $3.3 million in 2006, including gains on land sales totaling $11.4 million and net income from discontinued operations of $3.3 million.

     Rental and other property revenues were $134.5 million in 2007 as compared to $105.4 million in 2006 an increase of $29.1 million. A majority of the increase was due to the acquisition of the ParkWest I & II in the current year.

     Operating expenses from property operations were $80.6 million in 2007, compared to $65.0 million in 2006 an increase of $15.6 million. A majority of the increase was due to the acquisition of the ParkWest I & II in the current year.

     Depreciation and amortization expense was $22.6 million in 2007, compared to $20.0 million in 2006 and increase of $2.6 million. A majority of the increase was due to the acquisition of the ParkWest I & II.

     General and administrative expenses were $9.8 million in 2007 as compared to $4.0 million in 2006, an increase of $5.8 million due to increased legal and consulting fees.

     Advisory fee to affiliate was $10.7 million in 2007 as compared to $8.6 million in 2006, an increase of $2.1 million. The increase was due to higher gross assets in 2007 as compared to 2006. Our Advisory fee is based in part on gross assets.

     Gain on foreign currency transaction was $2.4 million in 2007 as compared to $2,000 in 2006, an increase of $2.4 million. This increase was due to the exchange rate conversion on the Poland Hotel.

     Mortgage and loan interest expense was $67.0 million in 2007 as compared to $47.5 million in 2006, an increase of $19.5 million. The increase the debt is due to the purchase of ParkWest I & II, refinancings of existing mortgages and acquisitions in the current year.

     We recorded an asset impairment charge of $3.7 million in the current year, related to the write down of three properties; Foxwood apartments for $1.7 million; Executive Court Office building, for $1.2 million: and the Encon Warehouse for $800,000.

     Gain on involuntary conversion was $34.8 million in 2007 as compared to $20.5 million in 2006. This represents the insurance proceeds from the New Orleans properties that suffered damage from Hurricane Katrina in 2005.

     Incentive sales fee to affiliate was $2.6 million in 2007 as compared to $1.5 million in 2006, an increase of $1.1 million. The increase is due to the increased sales of properties in the current year.

     Gain on land sales was 12.0 million in 2007 as compared to 11.4 million in 2006, an increase of $600,000. In 2007, we sold 127.7 acres of land in nine separate transactions with an aggregate sales price of $20.8 million. In 2006, we sold 192.6 acres of land in seven separate transactions, at an average sales price of $196,000 per acre.

     Income from discontinued operations was $10.2 million in 2007 as compared to $3.3 million in 2006, an increase of $6.9 million. In 2007, we sold 5 apartments, and subsequent to year end, we sold 15 apartments, 3 hotels and 1 commercial building, in 2006, 4 apartment communities were sold and 4 apartment communities were repositioned as held for sales, which are included in discontinued operations.

Results for the quarter ended December 31, 2007

Total operating revenues were $36.3 million for the three months ended December 2007 as compared to 30.4 million for the same period in 2006, an increase of $5.9 million. The increase was primarily due to the acquisition of commercial buildings (mainly ParkWest I & II) in 2007.

Total operating expenses were $34.2 million for the three months ended December 31, 2007 as compared to $29.7 for the same period ended 2006, an increase of $4.5 million. The increase was primarily due to the acquisition of ParkWest I & 11 in 2007.

Other income was $16.5 million for the three months ended December 2007, as compared to $5.7 million for the same period ended 2006, an increase of $10.8 million. A majority of the increase is from the receipt of insurance proceeds in the fourth quarter, offset by the additional mortgage interest expense from refinancings and new debt obligations.

Gain on sales for the three months ended December 31, 2007 was $5.1 million. During the fourth quarter, we sold 93 acres of land for a gross sales price of $7.2 million, receiving cash proceeds of $4.5 million.

Income discontinued operations was $4.5 million for the three months ended December 31, 2007 as compared to $864,000 for the same period ended 2006. During the fourth quarter ended 2007, 2 apartments were sold for a gross sales price of $11.0 million. We recorded a gain on sales from income producing properties of $7.4 million. In addition, subsequent to year end, 15 apartments, 1 commercial building, and 3 hotels were sold. These properties were repositioned to discontinued operations in the fourth quarter of 2007.

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, hotels, shopping centers and developed and undeveloped land. We invest in real estate through direct equity ownership and partnerships nationwide. For more information, visit the Company’s web site at www.transconrealty-invest.com.

TRANSCONTINENTAL REALTY INVESTORS INC
CONSOLIDATED BALANCE SHEET

	December 31,			December 31,
	2007			2006
	(dollars in thousands)
Assets
Real Estate held for investment	$	1,327,913		$	1,089,995
Less-accumulated depreciation		(97,368	)		(97,541	)
		1,230,545			992,454
Real estate held for sale		69,561			54,935
Real estate subject to sales contracts		64,320			66,027
Notes and interest receivable
Performing		34,677			39,566
Allowance for losses		(1,978	)		—
		32,699			39,566
Investment in unconsolidated real estate entities		27,569			30,573
Marketable equity securities, at market value		13,157			9,038
Cash and cash equivalents		11,239			4,803
Other Assets		72,099			52,771
	$	1,521,189		$	1,250,167
Liabilities and Stockholders’ Equity
Notes and interest payable	$	1,007,226		$	799,069
Liabilities related to assets held for sale		107,847			43,579
Liabilities related to assets subject to sales contract		62,513			58,816
Other Liabilities		56,501			66,608
		1,234,087			968,072
Commitments and contingencies
Minority Interest		1,621			16,166
Stockholders’ Equity:
Common Stock, $.01 par value; authorized, 10,000,000 shares; issued and outstanding 8,078,966 and 7,900,869 shares at December 31, 2007 and 2006		81			81
Preferred Stock
Series C: $.01 par value; authorized 10,000,000 shares; issued and outstanding 30,000 shares at December 31, 2007 and 2006 respectively (liquidation preference $100 per share).		—			—
Series D: $.01 par value; authorized, issued and outstanding 100,000 shares at December 31, 2007 and 2006 (liquidation preference $100 per share)		1			1
Paid-in capital		274,733			266,206
Treasury Stock		(577	)		(3,086	)
Accumulated distributions in excess of accumulated earnings		12,771			1,660
Other Comprehensive Income/(Loss)		(1,528	)		1,067
		285,481			265,929
	$	1,521,189		$	1,250,167

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	2007			2006			2005
	(dollars in thousands)
Property Revenue:
Rents and other property revenues	$	134,490		$	105,421		$	81,630
Operating expenses:
Property operating expenses		80,624			65,030			49,859
Depreciation and amortization		22,623			19,951			14,243
General and administrative		9,793			3,979			8,078
Advisory fee to affiliate		10,704			8,626			4,736
Total operating expenses		123,744			97,586			76,916
Operating income		10,746			7,835			4,714
Other income (expense)
Interest income		2,257			2,698			3,671
Gain on foreign currency transaction		2,368			2			292
Other income		1,805			928			370
Mortgage and loan interest expense		(67,044	)		(47,481	)		(32,816	)
Net income fee to affiliate		514			(972	)		(522	)
Impairment		(3,686	)		—			(1,840	)
Gain on involuntary conversion		34.771			20,479			—
Incentive fee to affiliate		(2,564	)		(1,490	)		—
Total other income (expense)		(31,579	)		(25.836	)		(30,845	)
Loss before gain on land sales, equity in earnings (loss) of investee and minority interest		(20,833	)		(18,001	)		(26,131	)
Gain on land sales		11,956			11,421			7,702
Minority interest		50			393			(112	)
Equity in income of investees		1.502			890			968
Loss from continuing operations before income taxes		(7,325	)		(5,297	)		(17,573	)
Income tax benefit		8,250			5,533			9,049
Net Income (loss) from continuing operations		925			236			(8,524	)
Income from discontinued operations before income taxes		15,670			5,032			27,066
Income lax expense		(5,484	)		(1,762	)		(9,473	)
Net Income from discontinuing operations		10,186			3,270			17,593
Net income		11,111			3,506			9,069
Preferred dividend requirement		(925	)		(210	)		(210	)
Net income applicable to Common shares	$	10,186		$	3.296		$	8,859
Earnings Per Share
Basic earning per share
Net Income (Loss) from continued operations		—		$	0.01		$	(1.11	)
Discontinued operations		1.28			0.41			2.23
Net Income applicable to common shares	$	1.28		$	0.42		$	1.12
Diluted earnings per share
Net Income (Loss) from continued operations	$	—		$	—		$	(1.11	)
Discontinued operations		1.24			0.40			2.23
Net Income applicable to common shares	$	1.24		$	0.40		$	1.12
Weighted average common shares used in computing earnings per share:
Basic		7,953,676			7,900,869			7,900.869
Diluted		8,188,602			8,180,401			7,900,869