EX-99.1 2 d59798exv99w1.htm PRESS RELEASE exv99w1
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