American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate investment company, today reported results of operations for the first quarter ended March 31, 2010. ARL announced today that the Company reported a net loss applicable to common shares of ($12.5) million or ($1.09) per share, as compared to a net loss applicable to common shares of ($7.2) million or ($0.63) per share for the same period ended 2009.

Rental and other property revenues were $44.8 million for the three months ended March 31, 2010. This represents a decrease of $0.7 million as compared to the prior period revenues of $45.5 million. This change, by segment, is an increase in the apartment portfolio of $0.8 million and an increase in the other portfolio of $0.9 million, offset by a decrease in the commercial portfolio of $1.2 million, a decrease in the hotel portfolio of $1.0 million and a decrease in the land portfolio of $0.2 million.

Property operating expenses were $26.3 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million as compared to the prior period operating expenses of $28.7 million. This change, by segment, is a decrease in our apartments of $2.4 million, a decrease in our commercial properties of $0.1 million and a decrease in our hotels of $0.3 million, offset by an increase in our land and other segments of $0.4 million.

Interest income was $1.5 million for the three months ended March 31, 2010. This represents a decrease of $1.1 million as compared to the prior period interest income of $2.6 million. This change is due to the accrued interest recognition on the cash flow notes from Unified Housing Foundation, Inc. On cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income is only recognized to the extent that cash is received. Less cash was received in the current period, as compared to the prior period.

Other income was $0.9 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million, as compared to the prior period other income of $3.3 million. The majority of the decrease was due to $2.3 million recorded, in the prior period, as a gain on the disposition of our investment in a Korean REIT.

Net income from discontinued operations was $0.2 million for the three months ended March 31, 2010. This represents a decrease of $2.3 million, as compared to the prior period net income from discontinued operations of $2.5 million. The change is due to a decrease in the gains recorded on the sale of real estate.

Included in discontinued operations are properties sold in 2010, which were held in 2009, and properties held for sale as of March 31, 2010. In 2010, we had one apartment complex held for sale (Baywalk), one apartment complex that we sold in March 2010 (Villager), and two apartment complexes that we sold subsequent to March 31, 2010 (Foxwood and Longfellow Arms). In 2009, we sold seven properties, which consisted of three apartment complexes (Bridges on Kinsey, Bridgestone, and Chateau Bayou), three commercial properties (5000 Space Center, 5360 Tulane and Cullman Shopping Center) and one townhouse.

There were no gains recorded on the sale of real estate for the three months ended March 31, 2010. The prior period had recorded gains of $4.8 million. Due to the related party nature of the current period sale, there was no gain recognized on the sale of Villager apartments. The gain on the sale of $0.4 million was deferred in the current period and will be recognized upon the sale of the property to a third party. In the prior period, the sale of Chateau Bayou apartments generated a $4.2 million gain on sale and we recognized the deferred gain on the sale of the Hartford building sold in 2002 in accordance with the requirements per ASC Topic 360-20 “Property, Plant, and Equipment – Real Estate Sales.”

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, hotels, 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.amrealtytrust.com.
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
   

For the Three Months Ended

March 31,
2010   2009
(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues $ 44,794 $ 45,500
 
Expenses:
Property operating expenses 26,304 28,673
Depreciation and amortization 7,423 7,538
General and administrative 2,597 2,834
Provision on impairment of notes receivable and real estate assets - 379
Advisory fee to affiliate   4,053     3,847  
Total operating expenses   40,377     43,271  
Operating income 4,417 2,229
 
Other income (expense):
Interest income 1,502 2,642
Other income 867 3,296
Mortgage and loan interest (20,535 ) (20,445 )
Earnings from unconsolidated subsidiaries and investees (22 ) -
Loss on foreign currency translation (673 ) (525 )
Litigation settlement   -     479  
Total other expenses   (18,861 )   (14,553 )
Loss before gain on land sales, non-controlling interest, and taxes (14,444 ) (12,324 )
Gain on land sales   6     168  
Loss from continuing operations before tax (14,438 ) (12,156 )
Income tax benefit   745     1,353  
Net loss from continuing operations (13,693 ) (10,803 )
Discontinued operations:
Income (loss) from discontinued operations 317 (904 )
Gain on sale of real estate from discontinued operations - 4,771
Income tax expense from discontinued operations   (111 )   (1,353 )
Net income from discontinued operations 206 2,514
Net loss (13,487 ) (8,289 )
Net income attributable to non-controlling interests   1,577     1,685  
Net loss attributable to American Realty Investors, Inc. (11,910 ) (6,604 )
Preferred dividend requirement   (622 )   (622 )
Net loss applicable to common shares $ (12,532 ) $ (7,226 )
 
Earnings per share - basic
Loss from continuing operations $ (1.11 ) $ (0.85 )
Discontinued operations   0.02     0.22  
Net loss applicable to common shares $ (1.09 ) $ (0.63 )
 
Earnings per share - diluted
Loss from continuing operations $ (1.11 ) $ (0.85 )
Discontinued operations   0.02     0.22  
Net loss applicable to common shares $ (1.09 ) $ (0.63 )
 
Weighted average common share used in computing earnings per share 11,514,038 11,514,038
Weighted average common share used in computing diluted earnings per share 11,514,038 11,514,038
 
 
Amounts attributable to American Realty Investors, Inc.
Loss from continuing operations $ (13,693 ) $ (10,803 )
Income from discontinued operations   206     2,514  
Net loss $ (13,487 ) $ (8,289 )
 
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
     
March 31, December 31,
2010 2009
(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost $ 1,720,062 $ 1,718,837
Real estate held for sale at cost, net of depreciation 20,903 5,147
Real estate subject to sales contracts at cost, net of depreciation 53,341 53,341
Less accumulated depreciation   (202,078 )   (195,804 )
Total real estate 1,592,228 1,581,521
Notes and interest receivable
Performing 92,295 91,872
Non-performing 3,096 3,108
Less allowance for estimated losses   (11,836 )   (11,836 )
Total notes and interest receivable 83,555 83,144
Cash and cash equivalents 1,071 4,887
Investments in unconsolidated subsidiaries and investees 12,544 13,149
Other assets   106,496     123,353  
Total assets $ 1,795,894   $ 1,806,054  
 
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable $ 1,309,568 $ 1,327,188
Notes related to assets held-for-sale 24,603 5,002
Notes related to subject to sales contracts 61,886 61,886
Stock-secured notes payable 23,285 24,853
Affiliate payables 22,709 20,574
Deferred revenue 70,410 70,083
Accounts payable and other liabilities   86,569     85,119  
1,599,030 1,594,705
Commitments and contingencies:
Shareholders’ equity:
Preferred Stock, $2.00 par value, authorized 15,000,000 shares, issued and outstanding Series A, 3,390,913 shares in 2010 and in 2009 (liquidation preference $33,909), including 900,000 shares in 2010 and 2009 held by subsidiaries 4,979 4,979
Common Stock, $.01 par value, authorized 100,000,000 shares; issued 11,874,138, and outstanding 11,514,038 shares in 2010 and in 2009 114 114
Treasury stock at cost; 360,100 shares in 2010 and 2009 and 276,972 shares held by TCI (consolidated) as of 2010 and 2009 (5,954 ) (5,954 )
Paid-in capital 91,077 91,081
Retained earnings 34,439 46,971
Accumulated other comprehensive income   -     2,186  
Total American Realty Investors, Inc. shareholders' equity   124,655     139,377  
Non-controlling interest   72,209     71,972  
Total equity   196,864     211,349  
Total liabilities and equity $ 1,795,894   $ 1,806,054  

Copyright Business Wire 2010

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