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 15, 2008

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 CFR240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))

Section 2 — Financial Information

Item 2.02. Results of Operations and Financial Condition

     On August 15, 2008, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended June 30, 2008. 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 15, 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: August 19, 2008	TRANSCONTINENTAL REALTY INVESTORS, INC.
	By:	/s/ Gene S. Bertcher
		Gene S. Bertcher, Executive Vice
		President and Chief Accounting Officer

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EX-99.1

Exhibit 99.1

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

Transcontinental Realty Investors, Inc. Reports Second Quarter 2008 Results

DALLAS (August 15, 2008) — Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, reported net income for the six months ended June 30, 2008. TCI reported net income applicable to common shares of $52.6 million or $6.51 per diluted share for the six months ended June 30, 2008. as compared to a net loss applicable to common shares of ($19.6 million) or ($2.49) per diluted share for the same period ended 2007. During the six months ended June 30, 2008. TCI sold 16 apartment complexes. 4 hotels and 2 commercial buildings for a gain on sale of $100.0 million.

In addition, the Company reported net income for the three months ended June 30, 2008. TCI reported a net loss applicable to common shares of ($14.5 million) or ($1.80) per diluted share for the three months ended June 30, 2008. as compared to a net loss applicable to common shares of ($13.1 million) or ($1.66) per diluted share for the same period ended 2007. During the three months ended June 30, 2008. TCI sold one apartment complex, for a gain on sale of $1.9 million.

Management feels that the Company has a solid start to the six months of 2008. The Company is well aware of the challenges that are currently facing the real estate industry. We believe with the quality of the assets we currently own, our experience in acquiring and disposing of properties and the focus we place on the details of our operations, that the Company will reflect overall positive results for 2008.

Comparison of the six months ended June 30, 2008 as compared to the same period ended June 30, 2007

Rental and other property revenues increased by $5.8 million for the six month period ended June 30, 2008 as compared to the same period ended 2007. Our apartment portfolio increased by $6.2 million and our land and other portfolios increased by $600,000, offset by a decrease in our commercial portfolio of $1.0 million.

Property operating expenses increased by $7.1 million for the six months ended June 30, 2008 as compared to the same period ended 2007. Our commercial portfolio increased by $1.6 million. Our apartment portfolio increased by $5.4 million and our land and other portfolio increased by $100,000.

Depreciation increased by $1.6 million for the six month period ended June 30, 2008 as compared to the same period ended 2007. Our apartments increased by $1.4 million and the commercial portfolio increased by $200,000.

General and Administrative expenses decreased by $538,000 for the six months ended June 30, 2008 as compared to the same period ended 2007, as a result of the Company’s efforts to attempt to control overall costs.

The advisory fee to the affiliate increased by $866,000 for the six month period ended June 30, 2008 as compared to the same period ended 2007, due to an increase in our gross net assets.

Mortgage and loan interest expense increased by $3.9 million for the six months ended June 30, 2008 as compared to the same period ended 2007. Our commercial properties increased by $600,000, our apartment portfolio increased by $3.4 million, and our other portfolio increased by $1.0 million, offset by a $1.1 million decrease in our land portfolio.

Management recorded a $7.0 million Bad debt allowance account against various investments within our portfolio.

Gain on land sales was $3.6 million for the six month period ended June 30, 2008, for an average gain of $50,000 per acre.

Equity in income of investee increased by $3.8 million for the six months ended June 30, 2008 as compared to the same period ended 2007, primarily due to our investment income from Income Opportunity Realty Investors, Inc., an affiliated entity.

Income from discontinued operations increased by $52.4 million for the six months ended June 30, 2008 as compared to the same period ended 2007. Discontinued operations relates to 25 apartments, 6 commercial buildings and 4 hotels.

Comparison of the three months ended June 30, 2008 as compared to the same period ended June 30, 2007

Rental and other property revenues increased by $4.3 million for the three months ended June 30, 2008 as compared to the same period ended 2007. Our apartment portfolio increased by $4.0 million and our land portfolio increase by $500,000, offset by decreases in our commercial and other portfolio of $200,000.

Property operating expenses increased by $2.9 million for the three months ended June 30, 2008 as compared to the same period ended June 30, 2007. Our apartment portfolio increased by $3.5 million, offset by $600,000 decrease in other portfolio.

Advisory fees increased by $270,000 for the three months ended June 30, 2008 as compared to the same period ended 2007, due to an increase in revenues.

Interest income decreased by $ 121,000 for the three months ended June 30, 2008 as compared to the same period ended 2007, due to our affiliated paying down the receivable balance.

Mortgage and loan interest expense increased by $1.1 million for the three months ended June 30, 2008 as compared to the same period ended 2007. Our apartment portfolio attributed to $1.0 million. In addition, the land, and other portfolio increased by $200,000, offset by a $100,000 decrease in our commercial portfolio.

Gain on land sales was $2.6 million for the three month period ended June 30, 2008. We sold 66.2 acres of undeveloped land in Texas for an average gain of $41,000 per acre.

Equity in investees decreased by $1.3 million for the three months ended June 30, 2008 as compared to the same period ended 2007. This is primarily due to our investment income (loss) from Income Opportunity Realty Investors, Inc., an affiliated entity.

Net loss from discontinued operations decreased by $1.9 million for the three months ended June 30, 2008 as compared to the same period ended 2007. Discontinued operations relates to 25 apartments, 6 commercial buildings and 4 hotels.

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, go to TCI’s web site 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,
	2008			2007			2008			2007
	(dollars in thousands)						(dollars in thousands)
Revenue:
Rental and other property revenues	$	34,692		$	30,347		$	66,344		$	60,579
Expenses:
Property operating expenses		19,938			17,053			40,965			33,881
Depreciation and amortization		5,910			5,937			11,725			10,089
General and administrative		2,272			2,497			4,667			5,205
Advisory fee to affiliate		2,966			2,696			5,962			5,096
Total operating expenses		31,086			28,183			63,319			54,271
Operating income		3,606			2,164			3,025			6,308
Other income (expense):
Interest income		541			662			1,303			1,392
Other income		494			495			796			819
Mortgage and loan interest expense		(16,831	)		(15,693	)		(34,035	)		(30,171	)
Provision for allowance on notes receivable and impairment		—			—			(7,000	)		—
Total other income (expense)		(15,796	)		(14,536	)		(38,936	)		(27,960	)
Loss before gain on land sales, minority interest and equity in earnings (loss) of investee		(12,190	)		(12,372	)		(35,911	)		(21,652	)
Gain on land sales		2,580			—			3,855			1,122
Net income fee to affiliate		—			—			—			704
Minority interest		—			(26	)		—			4
Equity in income (loss) of investees		(568	)		700			4,544			700
Loss from continuing operations before income tax expense		(10,178	)		(11,698	)		(27,512	)		(19,122	)
Income tax (benefit) expense		(1,429	)		(417	)		28,207			(15	)
Net Income (loss) from continuing operations		(11,607	)		(12,115	)		695			(19,137	)
Income (loss) from discontinued operations before income taxes		(4,085	)		(1,191	)		80,590			(42	)
Income tax (benefit) expense		1,429			417			(28,207	)		15
Net income (loss) from discontinuing operations		(2,656	)		(774	)		52,383			(27	)
Net income (loss)		(14,263	)		(12,889	)		53,078			(19,164	)
Preferred dividend requirement		(239	)		(227	)		(479	)		(455	)
Net income (loss) applicable to common shares	$	(14,502	)	$	(13,116	)	$	52,599		$	(19,619	)
Earnings Per Share
Basic earnings per share
Net income (loss) from continued operations		(1.47	)		(1.57	)		0.02			(2.49	)
Discontinued operations		(0.33	)		(0.09	)		6.49			—
Net income (loss) applicable to common shares	$	(1.80	)	$	(1.66	)	$	6.51		$	(2.49	)
Diluted earnings per share
Net income (loss) from continued operations	$	(1.47	)	$	(1.57	)	$	0.02		$	(2.49	)
Discontinued operations		(0.33	)		(009	)		6.32			—
Net income (loss) applicable to common shares	$	(180	)	$	(1.66	)	$	6.51		$	(2.49	)
Weighted average common shares used in computing earnings per share:
Basic		8,073,659			7,877,365			8,074,571			7,888,008
Diluted		8,073,659			7,877,365			8,074,571			7,888,008

TRANSCONTINENTAL REALTY INVESTORS, INC
CONSOLIDATED BALANCE SHEET
(unaudited)

	June 30,			December 31,
	2008			2007
	(dollars in thousands)
Assets
Real Estate held for investment	$	1,409,489		$	1,327,913
Less accumulated depreciation		(100,297	)		(97,368	)
		1,309,192			1,230,545
Real estate held for sale		36,924			69,561
Real estate subject to sales contracts		63,468			64,320
Notes and interest receivable performing		35,097			34,677
Allowance for losses		(1,978	)		(1,978	)
		33,119			32,699
Cash and cash equivalents		346			11,239
Marketable equity securities, at market value		1,405			13,157
Investment in equity investees		35,379			27,569
Other assets		89,927			72,099
	$	1,569,760		$	1,521,189
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	1,010,951		$	1,007,226
Liabilities related to assets held for sale		34,995			107,847
Liabilities related to assets subject to sales contract		63,264			62,513
Other liabilities		110,331			56,501
		1,219,541			1,234,087
Commitments and contingencies		—			—
Minority Interest		1,692			1,621
Shareholders’ Equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 8,113,669 and 8,113,669 issued and 8,072,767 and 8,078,966 outstanding shares at 2008 and 2007 respectively.		81			81
Preferred stock, series C: $.01 par value; authorized 10,000,000 shares; issued and outstanding 30,000 shares at 2008 and 2007 (liquidation preference $100 per share).		1			1
Paid in capital		282,064			274,733
Treasury stock		(673	)		(577	)
Retained Earnings		65,849			12,771
Other comprehensive income (loss)		1,205			(1,528	)
		348,527			285,481
	$	1,569,760		$	1,521,189