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 30, 2015

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.)
1603 LBJ Freeway, Suite 800 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:

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

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

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

¨ 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 30, 2015, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the year ended December 31, 2014.  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 30, 2015
_____________________ *Furnished herewith

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, 2015  TRANSCONTINENTAL REALTY INVESTORS, INC. By: /s/ Gene S. Bertcher Gene S. Bertcher, Executive Vice President and Chief Financial Officer

EX-99.1

EXHIBIT 99.1

NEWS RELEASE FOR IMMEDL4TE RELEASE Contact: Transcontinental Realty Investors, Inc. Investors Relations Gene Bertcher (800) 400-6407 investor.relations@transconrealty-invest.com

Transcontinental Realty Investors, Inc. Reports Fourth Quarter and Full Year 2014 Results

DALLAS (March 30, 2015) — Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported results of operations for the fourth quarter ended December 31, 2014. For the three months ended December 31, 2014, the Company reported net income applicable to common shares of $36.8 million or $4.21 per share, as compared to net income applicable to common shares of $55.3 million or $6.57 per share for the same period ended 2013.

For the twelve months ended December 31, 2014, we reported net income applicable to common shares of $40.6 million or $4.74 per diluted earnings per share, as compared to net income applicable to common shares of $57.4 million or $6.83 per diluted earnings per share for the same period ended 2013.

The current year net income applicable to common shares of $40.6 million includes $17.4 million of depreciation expense and gains on the sale of real estate holdings of $62.4 million.

Management's efforts to enhance the value of our overall portfolio has resulted in the continuing improvement in the Company's results of operations. We continue to see growth in the multifamily market with increasing rents, stable operating expenses, and an occupancy rate over 94%. We are diligent in our mission to provide high-quality living opportunities to our tenants.

In our commercial portfolio, we are seeing the benefit of our efforts with new leases executed and increasing rents as first year concessions expire. We believe that we will continue to see growth in our commercial portfolio as the economic conditions improve and we capitalize on the influx of attractive prospects in the pipeline.

Our ability to take advantage of lower-interest rate mortgages available has reduced our monthly obligations and increased cash flow within our multifamily portfolio.

The positive results of operations has allowed the Company to invest in mortgage receivables in various multifamily projects not under the Company's ownership. We will continue to invest in the multifamily market, as conditions are optimal for achieving a high return on our investment.

In the current period, rental and other property revenues increased within the apartment portfolio by $2.4 million mainly due to increased rental rates and high occupancy. The commercial portfolio decreased by $3.8 million primarily due to a lease termination fee that was received in the prior year.

Property operating expenses were $39.5 million for the twelve months ended December 31, 2014, representing an increase of $2.8 million as compared to the same period in the previous year. Operating expenses have remained consistent with prior periods due to labor efficiencies and improvements in preventative maintenance across the portfolio, with only an increase in real estate taxes as a result of the increase in the value of our portfolio and some non-recurring repair projects completed in the current year.

Litigation settlement expense was a credit of $3.6 million for the twelve months ended December 31, 2014, representing a decrease of $23.9 million as compared to the same period in the previous year. The majority ofthe credit to the current year litigation expense was due to a settlement with the lender relating to one of the commercial properties in which the balance in the amount of $3.5 million was forgiven. Matters were settled in the prior year in order to avoid future litigation and legal expenses.

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 apartments, office buildings, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. For more information, visit the Company's website at www.transconrealty-invest.com.

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
	For the Years Ended December 31,
	2014			2013			2012
	(dollars in thousands, except per share amounts)
Revenues:
Rental and other property revenues (including $701, $670 and $587 for the year ended 2014, 2013 and 2012, respectively, from related parties)	$	75,858		$	77,351		$	78,378
Expenses:
Property operating expenses (including $606, $661 and $851 for the year ended 2014, 2013 and 2012, respectively, from related parties)		39,484			36,669			37,845
Depreciation and amortization		17,398			15,842			14,813
General and administrative (including $2,802, $2,765 and $2,427 for the year ended 2014, 2013 and 2012, respectively, from related parties)		7,163			6,308			5,074
Provision on impairment of notes receivable and real estate assets		-			11,320			2,330
Net income fee to related party		3,669			4,089			180
Advisory fee to related party		7,373			8,494			8,915
Total operating expenses		75,087			82,722			69,157
Net operating income (loss)		771			(5,371	)		9,221
Other income (expense):
Interest income (including $11,469, $13,823 and $11,677 for the year ended 2014, 2013 and 2012, respectively, from related parties)		12,194			13,790			11,725
Other income (including $0, $0 and $6,000 for the year ended 2014, 2013 and 2012, respectively, from related parties)		403			7,847			6,310
Mortgage and loan interest (including $31, $1,761 and $3,153 for the year ended 2014, 2013 and 2012, respectively, from related parties)		(28,368	)		(29,694	)		(34,372	)
Deferred borrowing costs amortization		(2,509	)		(2,582	)		(634	)
Loan charges and prepayment penalties		(2,804	)		(5,219	)		(3,574	)
Gain (loss) on the sale of investments		(92	)		(283	)		125
Losses from unconsolidated joint ventures and investees		(28	)		(172	)		(66	)
Litigation settlement		3,591			(20,313	)		(175	)
Total other expenses		(17,613	)		(36,626	)		(20,661	)
Loss before gain (loss) on land sales, non-controlling interest, and taxes		(16,842	)		(41,997	)		(11,440	)
Gain (loss) on land sales		561			(1,073	)		6,935
Net loss from continuing operations before taxes		(16,281	)		(43,070	)		(4,505	)
Income tax benefit (expense)		20,390			40,949			(1,260	)
Net income (loss) from continuing operations		4,109			(2,121	)		(5,765	)
Discontinued operations:
Net loss from discontinued operations		(3,621	)		(2,589	)		(8,816	)
Gain on sale of real estate from discontinued operations		61,879			97,405			5,217
Income tax benefit (expense) from discontinued operations		(20,390	)		(33,186	)		1,260
Net income (loss) from discontinued operations		37,868			61,630			(2,339	)
Net income (loss)		41,977			59,509			(8,104	)
Net loss attributable to non-controlling interest		(399	)		(979	)		(220	)
Net income (loss) attributable to Transcontinental Realty Investors, Inc.		41,578			58,530			(8,324	)
Preferred dividend requirement		(1,005	)		(1,110	)		(1,112	)
Net income (loss) applicable to common shares	$	40,573		$	57,420		$	(9,436	)
Earnings per share - basic
Net income (loss) from continuing operations	$	0.32		$	(0.50	)	$	(0.84	)
Net income (loss) from discontinued operations		4.42			7.33			(0.28	)
Net income (loss) applicable to common shares	$	4.74		$	6.83		$	(1.12	)
Earnings per share - diluted
Net income (loss) from continuing operations	$	0.32		$	(0.50	)	$	(0.84	)
Net income (loss) from discontinued operations		4.42			7.33			(0.28	)
Net income (loss) applicable to common shares	$	4.74		$	6.83		$	(1.12	)
Weighted average common shares used in computing earnings per share		8,559,370			8,413,469			8,413,469
Weighted average common shares used in computing diluted earnings per share		8,559,370			8,413,469			8,413,469
Amounts attributable to Transcontinental Realty Investors, Inc.
Net income (loss) from continuing operations	$	3,710		$	(3,100	)	$	(5,985	)
Net income (loss) from discontinued operations		37,868			61,630			(2,339	)
Net income (loss)	$	41,578		$	58,530		$	(8,324	)

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
	December 31,			December 31,
	2014			2013
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	781,794		$	777,974
Real estate held for sale at cost, net of depreciation ($0 in 2014 and $2,390 in 2013)		-			16,427
Real estate subject to sales contracts at cost, net of depreciation ($2,300 in 2014 and $1,949 in 2013)		20,395			29,353
Less accumulated depreciation		(113,068	)		(127,952	)
Total real estate		689,121			695,802
Notes and interest receivable
Performing (including $77,853 in 2014 and $66,431 in 2013 from related parties)		84,863			69,626
Non-Performing		584			543
Less allowance for estimated losses (including $1,825 in 2014 and $2,097 in 2013 from related parties)		(1,990	)		(2,262	)
Total notes and interest receivable		83,457			67,907
Cash and cash equivalents		12,201			16,086
Restricted cash		48,238			31,799
Investments in unconsolidated subsidiaries and investees		1,543			1,697
Receivable from related party		58,404			52,380
Other assets		37,441			32,000
Total assets	$	930,405		$	897,671
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	588,749		$	562,734
Notes related to assets held for sale		1,552			17,100
Notes related to subject to sales contracts		18,616			23,011
Deferred revenue (from sales to related parties)		51,356			53,096
Accounts payable and other liabilities (including $4,909 in 2014 and $4,697 in 2013 from related parties)		36,684			50,160
		696,957			706,101
Shareholders’ equity:
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares, issued and outstanding zero shares in 2014 and 30,000 shares in 2013 (liquidation preference $100 per share). Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2014 and 2013 (liquidation preference $100 per share)		1			1
Common Stock, $0.01 par value, authorized 10,000,000 shares, issued 8,717,967 and 8,413,669 shares in 2014 and 2013, respectively and outstanding 8,717,767 and 8,413,469 shares in 2014 and 2013, respectively		87			84
Treasury stock at cost, 200 shares in 2014 and 2013		(2	)		(2	)
Paid-in capital		271,649			271,720
Retained earnings		(56,451	)		(98,029	)
Total Transcontinental Realty Investors, Inc. shareholders' equity		215,284			173,774
Non-controlling interest		18,164			17,796
Total shareholders' equity		233,448			191,570
Total liabilities and shareholders' equity	$	930,405		$	897,671