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American Realty Investors, Inc. Reports Earnings for Q2 2020

American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the quarter ended June 30, 2020. For the three months ended June 30, 2020, The Company reported a net loss applicable to common shares of $2.3 million or $0.14 per diluted share, compared to a net loss applicable to common shares of $2.8 million or $0.17 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant on the Company’s results of operations or cash flows during the three months ended June 30, 2020.

  • The Company collected approximately 97% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 98% from office tenants.
  • The Company did not grant any abatements or significant deferments of rents.
  • Occupancy at its non-lease up properties remains stable at 87% at June 30, 2020 in comparison to 89% at June 30, 2019.
  • The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.
  • Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.

The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

Financial Results

Rental and other property revenues were $11.9 million for the three months ended June 30, 2020 and 2019. For the quarter ended June 30, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.

Property operating expenses decreased to $5.8 million for the three months ended June 30, 2020 from $7.3 million for the same period in 2019. The decrease of $1.5 million in property operating expenses was primarily due to a reduction in property taxes and maintenance costs.

General and administrative expense decreased to $1.7 million for the three months ended June 30, 2020 from $2.4 million for the same period in 2019. The decrease of $0.7 million in general and administrative expenses was primarily due to a reduction in professional fees.

Interest income decreased to $5.3 million for the three months ended June 30, 2020 from $6.5 million for the same period in 2019. The decrease of $1.2 million in interest income was primarily due to a decrease in notes receivable from related parties.

Other income decreased to $2.8 million for the three months ended June 30, 2020 from $3.4 million for the same period in 2019. The decrease of $0.6 million in other income was primarily due to a decrease in tax incentive finance proceeds.

Foreign currency transaction was a loss of $5.6 million for the three months ended June 30, 2020 as compared to a loss of $2.3 million for the same period in 2019. The increase is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Loss from unconsolidated investments was $0.7 million for the three months ended June 30, 2020, compared to a loss of $0.2 million for the same period in 2019. The increase in loss from unconsolidated investments during the quarter was primarily due to an increase in depreciation and amortization expense related to the VAA Joint Venture.

Gain on land sales was $5.3 million for the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. In the current period the Company sold approximately 25.9 acres of land for an aggregate sales price of $6.6 million which resulted in a gain of $5.3 million. For the same period in 2019, the Company sold approximately 41.6 acres of land for an aggregate sales price of $7.6 million which resulted in a gain of $2.5 million.

About American Realty Investors, Inc.

American 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 ownership, leases and partnerships and invests in mortgage loans on real estate. The Company also holds mortgage receivables. The Company’s primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). For more information, visit the Company’s website at www.americanrealtyinvest.com.

 

AMERICAN REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

For the Three Months Ended
June 30,

For the Six Months Ended
June 30,

2020

2019

2020

2019

(dollars in thousands, except per share amounts)

Revenues:
Rental and other property revenues (including $280 and $202 for the three months and $546 and $413 for the six months ended 2020 and 2019, respectively, from related parties)

$

11,947

$

11,840

$

23,865

$

23,769

 
Expenses:
Property operating expenses (including $254 and $246 for the three months ended and $496 and $504 for the six months ended 2020 and 2019, respectively, from related parties)

5,810

7,323

12,120

13,320

Depreciation and amortization

3,418

3,439

6,812

6,548

General and administrative (including $765 and $985 for the three months ended and $1,898 and $2,582 for the six months ended 2020 and 2019, respectively, from related parties)

1,669

2,419

4,464

5,024

Franchise taxes and other expenses

-

585

1,496

585

Net income fee to related party

112

90

198

190

Advisory fee to related party

2,241

2,361

4,528

4,214

Total operating expenses

13,250

16,217

29,618

29,881

Net operating loss

(1,303

)

(4,377

)

(5,753

)

(6,112

)

 
Other income (expenses):
Interest income (including $5,129 and $6,207 for the three months ended and $9,755 and $12,304 for the six months ended 2020 and 2019, respectively, from related parties)

5,284

6,505

11,038

12,658

Other income

2,794

3,364

4,006

7,031

Mortgage and loan interest (including $1,543 and $2,385 for the three months ended and $3,458 and $4,692 for the six months ended 2020 and 2019, respectively, from related parties)

(9,071

)

(9,408

)

(18,673

)

(19,376

)

Foreign currency transaction (loss) gain

(5,599

)

(2,325

)

2,244

(8,143

)

Equity loss from VAA

(735

)

(236

)

(1,111

)

(1,291

)

Earnings from unconsolidated subsidiaries and investees

16

173

132

231

Total other income (expenses)

(7,311

)

(1,927

)

(2,364

)

(8,890

)

Income (loss) before gain on land sales, non-controlling interest, and taxes

(8,614

)

(6,304

)

(8,117

)

(15,002

)

Loss on sale of income producing properties

-

(80

)

-

(80

)

Gain on land sales

5,339

2,517

9,477

4,733

Net income (loss) before taxes

(3,275

)

(3,867

)

1,360

(10,349

)

State income tax expense

(49

)

-

(296

)

-

Net income (loss)

(3,324

)

(3,867

)

1,064

(10,349

)

Net (income) loss attributable to non-controlling interest

1,018

1,089

(424

)

1,424

Net income (loss) attributable to American Realty Investors, Inc.

(2,306

)

(2,778

)

640

(8,925

)

Net income (loss) applicable to common shares

$

(2,306

)

$

(2,778

)

$

640

$

(8,925

)

 
(Loss) earnings per share - basic
Net income (loss)

$

(0.21

)

$

(0.24

)

$

0.07

$

(0.65

)

Net income (loss) applicable to common shares

$

(0.14

)

$

(0.17

)

$

0.04

$

(0.56

)

 
(Loss) earnings per share - diluted
Net income (loss)

$

(0.21

)

$

(0.24

)

$

0.07

$

(0.65

)

Net income (loss) applicable to common shares

$

(0.14

)

$

(0.17

)

$

0.04

$

(0.56

)

 
Weighted average common shares used in computing earnings per share

15,997,076

15,997,076

15,997,076

15,997,076

Weighted average common shares used in computing diluted earnings per share

15,997,076

15,997,076

15,997,076

15,997,076

 
Amounts attributable to American Realty Investors, Inc.
Net income (loss)

$

(3,324

)

$

(3,867

)

$

1,064

$

(10,349

)

Net income (loss) applicable to American Realty Investors, Inc.

$

(2,306

)

$

(2,778

)

$

640

$

(8,925

)

 
 

AMERICAN REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

 

June 30, 2020

December 31, 2019

(Unaudited)

(Audited)

(dollars in thousands, except share and par value amounts)

Assets

Real estate, at cost

$

484,639

$

469,997

Real estate subject to sales contracts at cost

6,307

7,966

Less accumulated depreciation

(96,002

)

(90,173

)

Total real estate

394,944

387,790

 
Notes and interest receivable (including $110,827 in 2020 and $106,081 in 2019 from related parties)

180,146

169,299

Less allowance for estimated losses (including $12,557 and $13,099 in 2020 and 2019 from related parties)

(12,557

)

(13,099

)

Total notes and interest receivable

167,589

156,200

 
Cash and cash equivalents

42,461

51,228

Restricted cash

30,114

32,083

Investment in VAA

52,773

59,148

Investment in other unconsolidated investees

8,639

8,507

Receivable from related party

75,923

85,996

Other assets

55,846

49,689

Total assets

$

828,289

$

830,641

 

Liabilities and Shareholders’ Equity

Liabilities:
Notes and interest payable

$

263,325

$

254,873

Bond and interest payable

218,216

229,722

Deferred revenue (including $25,660 in 2020 and $24,762 in 2019 to related parties)

25,660

24,762

Accounts payable and other liabilities (including $12,267 in 2020 and $11,817 in 2019 to related parties)

23,508

24,768

Total liabilities

530,709

534,125

 
Shareholders’ equity:
 
Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued 614 and outstanding 1,800,614 in 2020 and 2019 (liquidation preference $10 per share), including 1,800,000 shares held by ARL and its subsidiaries in 2020 and 2019.

5

5

Common stock, $0.01 par value, 100,000,000 shares authorized; 16,412,861 shares issued and 15,997,076 outstanding as of 2020 and 2019, including 140,000 shares held by TCI (consolidated) in 2020 and 2019.

164

164

Treasury stock at cost; 415,785 shares in 2020 and 2019, and 140,000 shares held by TCI (consolidated) as of 2020 and 2019.

(6,395

)

(6,395

)

Paid-in capital

82,017

82,017

Retained earnings

164,348

163,708

Total American Realty Investors, Inc. shareholders' equity

240,139

239,499

Non-controlling interest

57,441

57,017

Total shareholders' equity

297,580

296,516

Total liabilities and shareholders' equity

$

828,289

$

830,641

 

Contacts:

American Realty Investors, Inc.
Investor Relations

Daniel Moos (469) 522-4200
investor.relations@transconrealty-invest.com

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