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Transcontinental Realty Investors, Inc. Reports Second Quarter 2011 Results

Included in discontinued operations are a total of four and 17 income-producing properties for 2011 and 2010, respectively. Properties sold in 2011 have been reclassified to discontinued operations for current and prior year reporting periods. As a result of these sales, we recognized losses on the sale of real estate from discontinued operations of $6.9 million and $139,000 for the three months ending June 30, 2011 and 2010, respectively.

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, shopping centers and developed and undeveloped land. The Company invests in real estate through direct equity ownership and partnerships nationwide. For more information, visit the Company’s website 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,
2011     2010 2011     2010
(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues (including $358 and $908 for the three months and $730 and $1,766 for the six months ended 2011 and 2010 respectively from affiliates and related parties) $ 31,785 $ 30,589 $ 61,439 $ 61,287
 
Expenses:
Property operating expenses (including $403 and $429 for the three months and $675 and $884 for the six months ended 2011 and 2010 respectively from affiliates and related parties) 16,200 18,129 32,675 35,338
Depreciation and amortization 5,970 6,353 12,032 12,214
General and administrative (including $906 and $786 for the three months and $1,748 and $1,677 for the six months ended 2011 and 2010 respectively from affiliates and related parties) 2,588 1,793 4,730 3,619
Provision on impairment of notes receivable and real estate assets 25,444 - 31,503 -
Advisory fee to affiliate   2,626     2,962     5,246     6,058  
Total operating expenses   52,828     29,237     86,186     57,229  
Operating income (loss) (21,043 ) 1,352 (24,747 ) 4,058
 
Other income (expense):
Interest income (including $700 and $567 for the three months and $1,051 and $1,220 for the six months ended 2011 and 2010 respectively from affiliates and related parties) 704 832 1,130 1,691
Other income 100 249 1,314 914
Mortgage and loan interest (including $1,269 and $883 for the three months and $1,567 and $1,721 for the six months ended 2011 and 2010 respectively from affiliates and related parties) (14,611 ) (15,663 ) (28,035 ) (30,377 )
Earnings from unconsolidated subsidiaries and investees   117     (50 )   57     (112 )
Total other expenses   (13,690 )   (14,632 )   (25,534 )   (27,884 )
Loss before gain on land sales, non-controlling interest, and tax (34,733 ) (13,280 ) (50,281 ) (23,826 )
Gain (loss) on land sales   1,285     (5,640 )   2,081     (5,634 )
Loss from continuing operations before tax (33,448 ) (18,920 ) (48,200 ) (29,460 )
Income tax benefit   2,584     554     1,637     431  
Net loss from continuing operations   (30,864 )   (18,366 )   (46,563 )   (29,029 )
Discontinued operations:
Loss from discontinued operations (469 ) (1,444 ) (1,440 ) (956 )
Loss on sale of real estate from discontinued operations (6,914 ) (139 ) (3,238 ) (139 )
Income tax expense from discontinued operations   (2,584 )   (554 )   (1,637 )   (383 )
Net loss from discontinued operations (9,967 ) (2,137 ) (6,315 ) (1,478 )
Net loss (40,831 ) (20,503 ) (52,878 ) (30,507 )
Net (income) loss attributable to non-controlling interest   46     113     130     (160 )
Net loss attributable to Transcontinental Realty Investors, Inc. (40,785 ) (20,390 ) (52,748 ) (30,667 )
Preferred dividend requirement   (277 )   (264 )   (551 )   (527 )
Net loss applicable to common shares $ (41,062 ) $ (20,654 ) $ (53,299 ) $ (31,194 )
 
Earnings per share - basic
Loss from continuing operations $ (3.70 ) $ (2.28 ) $ (5.64 ) $ (3.66 )
Loss from discontinued operations   (1.18 )   (0.26 )   (0.76 )   (0.18 )
Net loss applicable to common shares $ (4.88 ) $ (2.54 ) $ (6.40 ) $ (3.84 )
 
Earnings per share - diluted
Loss from continuing operations $ (3.70 ) $ (2.28 ) $ (5.64 ) $ (3.66 )
Loss from discontinued operations   (1.18 )   (0.26 )   (0.76 )   (0.18 )
Net loss applicable to common shares $ (4.88 ) $ (2.54 ) $ (6.40 ) $ (3.84 )
 
Weighted average common share used in computing earnings per share 8,413,469 8,113,669 8,327,281 8,113,669
Weighted average common share used in computing diluted earnings per share 8,413,469 8,113,669 8,327,281 8,113,669
 
 
Amounts attributable to Transcontinental Realty Investors, Inc.
Loss from continuing operations $ (30,818 ) $ (18,253 ) $ (46,433 ) $ (29,189 )
Loss from discontinued operations   (9,967 )   (2,137 )   (6,315 )   (1,478 )
Net loss $ (40,785 ) $ (20,390 ) $ (52,748 ) $ (30,667 )
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
     
June 30, December 31,
2011 2010
(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost $ 1,048,466 $ 1,074,635
Real estate subject to sales contracts at cost, net of depreciation ($54,940 for 2011 and $58,579 for 2010) 131,270 232,495
Less accumulated depreciation   (107,516 )   (94,016 )
Total real estate 1,072,220 1,213,114
Notes and interest receivable
Performing (including $58,246 in 2011 and $66,011 in 2010 from affiliates and related parties) 60,614 71,766
Less allowance for estimated losses (including $2,097 in 2011 and $3,061 in 2010 from affiliates and related parties)   (3,777 )   (4,741 )
Total notes and interest receivable 56,837 67,025
Cash and cash equivalents 7,067 11,259
Investments in unconsolidated subsidiaries and investees 7,441 8,146
Other assets   70,510     85,217  
Total assets $ 1,214,075   $ 1,384,761  
 
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable $ 800,362 $ 831,322
Notes related to subject to sales contracts 125,083 190,693
Affiliate payables 33,885 47,261
Deferred gain (from sales to related parties) 80,709 82,841
Accounts payable and other liabilities (including $1,680 in 2011 and $1,466 in 2010 from affiliates and related parties)   40,514     49,196  
1,080,553 1,201,313
Shareholders’ equity:
Preferred stock, Series C: $.01 par value, authorized 10,000,000 shares, issued and outstanding 30,000 shares in 2011 and 2010 respectively (liquidation preference $100 per share). Series D: $.01 par value, authorized, issued and outstanding 100,000 shares in 2011 and 2010 respectively 1 1
Common stock, $.01 par value, authorized 10,000,000 shares; issued 8,413,669 and 8,113,669 for 2011 and 2010 and outstanding 8,413,469 and 8,113,469 for 2011 and 2010 84 81
Treasury stock at cost; 200 shares in 2011 and 2010 (2 ) (2 )
Paid-in capital 274,405 271,682
Retained earnings   (154,662 )   (101,914 )
Total Transcontinental Realty Investors, Inc. shareholders' equity 119,826 169,848
Non-controlling interest   13,696     13,600  
Total equity   133,522     183,448  
Total liabilities and equity $ 1,214,075   $ 1,384,761  
 
 
The accompanying notes are an integral part of these consolidated financial statements.




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