Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported results of operations for the first quarter ended June 30, 2010. TCI announced today that the Company reported a net loss applicable to common shares of ($31.2 million) or ($3.84) per share, as compared to a net loss applicable to common shares of ($43.2) million or ($5.32) per share for the same period ended 2009.

Rental and other property revenues were $71.7 million for the six months ended June 30, 2010. This represents a decrease of $0.9 million, as compared to the prior period revenues of $72.6 million. The change, by segment, is a decrease in the apartment portfolio of $0.3 million, a decrease in the commercial portfolio of $1.5 million, offset by an increase in the land and other portfolios of $0.9 million.

Property operating expenses were $41.1 million for the six months ended June 30, 2010. This represents an increase of $0.3 million, as compared to the prior period operating expenses of $40.8 million. This change, by segment, is a decrease in the apartment portfolio of $1.1 million, offset by increases in the commercial portfolio of $0.4 million, the land portfolio of $0.9 million, and the other portfolio of $0.1 million.

Other income was $0.9 million for the six months ended June 30, 2010, as compared to $3.3 million in the prior period. This represents a decrease of $2.4 million, which is primarily due to $2.3 million of gain recorded, in the prior period, on the disposition of our investment in the Korean REIT.

Provision on impairment of notes receivable, investments in real estate partnerships, and real estate assets decreased by $28.6 million as compared to prior period. There were no impairment reserves taken in the current period. Impairment in the prior period was recorded as an additional loss of $1.8 million in the commercial portfolio, $18.0 million in land we currently hold and $8.8 million in land that was sold for a loss in subsequent periods.

Loss on land sales was ($5.6) million for the six months ended June 30, 2010. This represents a decrease of $11.9 million as compared to the prior period gain of $6.3 million. In the current period, we sold an aggregate of 23.6 acres for approximately $17.6 million. In the prior period, we sold an aggregate of 19.39 acres for approximately $20.2 million. There were several properties sold in 2010, that due to the provisions of ASC Topic 360-20 “Property, Plant and Equipment – Real Estate Sale,” we were not able to record the sale or recognize the full gain on the sale. During the current period, we deferred gains of $3.6 million on the sales of income-producing properties. The deferred gains will be recognized when we meet the sales criteria for the full accrual method.

Included in discontinued operations are a total of three and seven properties for 2010 and 2009, respectively. Properties sold in 2010 that were held in 2009 have been reclassified to discontinued operations for 2010. In 2010, we had one 192-unit apartment complex held for sale and sold two apartment complexes totaling 436 units. In 2009, we sold one 232-unit apartment complex and three commercial properties totaling 224,000 square feet.

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,
2010 2009 2010 2009
(dollars in thousands, except share and per share amounts)

Revenues:
Rental and other property revenues $ 34,951 $ 36,769 $ 71,680 $ 72,565
 
Expenses:
Property operating expenses 20,994 18,367 41,089 40,799
Depreciation and amortization 7,421 7,249 14,348 14,311
General and administrative 1,816 1,918 3,652 3,579
Provision on impairment of notes receivable and real estate assets - 28,196 - 28,575
Advisory fee to affiliate   2,962     2,943     6,058     5,801  
Total operating expenses   33,193     58,673     65,147     93,065  
Operating income (loss) 1,758 (21,904 ) 6,533 (20,500 )
 
Other income (expense):
Interest income 832 731 1,691 1,367
Other income 249 180 914 3,285
Mortgage and loan interest (17,771 ) (17,847 ) (34,434 ) (33,854 )
Earnings from unconsolidated subsidiaries and investees (193 ) (300 ) (253 ) (300 )
Litigation settlement   -     (14 )   -     744  
Total other expenses   (16,883 )   (17,250 )   (32,082 )   (28,758 )
Loss before gain on land sales, non-controlling interest, and tax (15,125 ) (39,154 ) (25,549 ) (49,258 )
Gain (loss) on land sales   (5,640 )   6,548     (5,634 )   6,296  
Loss from continuing operations before tax (20,765 ) (32,606 ) (31,183 ) (42,962 )
Income tax benefit (expense)   92     199     268     (94 )
Net loss from continuing operations   (20,673 )   (32,407 )   (30,915 )   (43,056 )
Discontinued operations:
Income (loss) from discontinued operations 402 569 767 (301 )
Gain (loss) on sale of real estate from discontinued operations (139 ) - (139 ) 532
Income tax expense from discontinued operations   (92 )   (199 )   (220 )   (81 )
Net income from discontinued operations 171 370 408 150
Net loss (20,502 ) (32,037 ) (30,507 ) (42,906 )
Net (income) loss attributable to non-controlling interest   113     88     (160 )   198  
Net loss attributable to Transcontinental Realty Investors, Inc. (20,389 ) (31,949 ) (30,667 ) (42,708 )
Preferred dividend requirement   (264 )   (252 )   (527 )   (502 )
Net loss applicable to common shares $ (20,653 ) $ (32,201 ) $ (31,194 ) $ (43,210 )
 
Earnings per share - basic
Loss from continuing operations $ (2.57 ) $ (4.01 ) $ (3.89 ) $ (5.34 )
Discontinued operations   0.02     0.05     0.05     0.02  
Net loss applicable to common shares $ (2.55 ) $ (3.96 ) $ (3.84 ) $ (5.32 )
 
Earnings per share - diluted
Loss from continuing operations $ (2.57 ) $ (4.01 ) $ (3.89 ) $ (5.34 )
Discontinued operations   0.02     0.05     0.05     0.02  
Net loss applicable to common shares $ (2.55 ) $ (3.96 ) $ (3.84 ) $ (5.32 )
 
Weighted average common share used in computing earnings per share 8,113,669 8,113,669 8,113,669 8,113,669
Weighted average common share used in computing diluted earnings per share 8,113,669 8,113,669 8,113,669 8,113,669
 
 
Amounts attributable to Transcontinental Realty Investors, Inc.
Loss from continuing operations $ (20,560 ) $ (32,319 ) $ (31,075 ) $ (42,858 )
Income from discontinued operations   171     370     408     150  
Net loss $ (20,389 ) $ (31,949 ) $ (30,667 ) $ (42,708 )
     
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
 
June 30, December 31,
2010 2009
(dollars in thousands, except share and
par value amounts)
Assets
Real estate, at cost $ 1,470,661 $ 1,520,043
Real estate held for sale at cost, net of depreciation 5,147 5,147
Real estate subject to sales contracts at cost, net of depreciation
($19,236 for 2010 and $13,985 for 2009) 72,609 59,048
Less accumulated depreciation   (145,214 )   (137,054 )
Total real estate 1,403,203 1,447,184
Notes and interest receivable
Performing 47,030 48,051
Less allowance for estimated losses   (2,804 )   (2,804 )
Total notes and interest receivable 44,226 45,247
Cash and cash equivalents 4,363 5,665
Investments in unconsolidated subsidiaries and investees 8,938 9,358
Other assets   88,381     100,833  
Total assets $ 1,549,111   $ 1,608,287  
 
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable $ 1,090,165 $ 1,121,737
Notes related to assets held-for-sale 4,969 5,002
Notes related to subject to sales contracts 71,286 61,886
Affiliate payables 49,270 50,163
Deferred revenue (from sales to related parties) 64,277 60,678
Accounts payable and other liabilities   54,860     63,405  
1,334,827 1,362,871
Commitments and contingencies:
Shareholders’ equity:
Preferred stock, Series C: $.01 par value, authorized 10,000,000 shares, issued and outstanding 30,000 shares in 2010 and 2009 respectively (liquidation preference $100 per share). Series D: $.01 par value, authorized, issued and outstanding 100,000 shares in 2010 and 2009 respectively 1 1
Common stock, $.01 par value, authorized 10,000,000 shares; issued and outstanding 8,113,669 for 2010 and 2009 81 81
Paid-in capital 261,588 262,118
Retained earnings   (65,385 )   (34,718 )
Total Transcontinental Realty Investors, Inc. shareholders' equity 196,285 227,482
Non-controlling interest   17,999     17,934  
Total equity   214,284     245,416  
Total liabilities and equity $ 1,549,111   $ 1,608,287  

Copyright Business Wire 2010

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