American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate investment company, today reported results of operations for the second quarter ended June 30, 2010. ARL announced today that the Company reported a net loss applicable to common shares of ($26.9) million or ($2.33) per share, as compared to a net loss applicable to common shares of ($36.1) million or ($3.14) per share for the same period ended 2009.

Rental and other property revenues were $85.9 million for the six months ended June 30, 2010. This represents a decrease of $3.8 million, as compared to the prior period revenues of $89.7 million. This change, by segment, is a decrease in the apartment portfolio of $0.3 million, a decrease in the commercial portfolio of $2.5 million, a decrease in the hotel portfolio of $1.6 million and a decrease in the land portfolio of $0.3 million, offset by an increase in the other portfolio of $0.9 million.

Property operating expenses were $52.8 million for the six months ended June 30, 2010. This represents an increase of $1.2 million, as compared to the prior period operating expenses of $51.6 million. This change, by segment, is an increase in our commercial properties of $0.2 million and an increase in our land and other segments of $2.8 million, offset by a decrease in our apartments of $1.1 million and a decrease in our hotels of $0.7 million.

Other income was $1.9 million for the six months ended June 30, 2010. This represents a decrease of $2.0 million, as compared to the prior period other income of $3.9 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 the Korean REIT.

Provision on impairment of notes receivable, investments in real estate partnerships, and real estate assets decreased by $30.6 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, $19.1 million in land we currently hold and $9.7 million in land that was sold for a loss in subsequent periods.

Loss on land sales was ($4.1) million for the six months ended June 30, 2010. This represents a decrease of $12.3 million as compared to the prior period gain of $8.2 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 28.53 acres for approximately $24.0 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 $6.4 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 five and 12 properties as of 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 four apartment complexes totaling 584 units. In 2009, we sold seven properties, which consisted of three apartment complexes totaling 430 units, three commercial properties totaling 224,000 square feet and one townhouse at 2,363 square feet.

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       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 $ 41,601 $ 44,389 $ 85,921 $ 89,697
 
Expenses:
Property operating expenses 26,756 23,063 52,824 51,589
Depreciation and amortization 7,949 7,946 15,330 15,476
General and administrative 2,724 2,084 5,319 4,917
Provision on impairment of notes receivable and real estate assets - 30,260 - 30,639
Advisory fee to affiliate   3,993     3,839     8,046     7,685  
Total operating expenses   41,422     67,192     81,519     110,306  
Operating income (loss) 179 (22,803 ) 4,402 (20,609 )
 
Other income (expense):
Interest income 1,326 302 2,828 2,944
Other income 1,023 554 1,888 3,850
Mortgage and loan interest (22,480 ) (22,305 ) (42,865 ) (42,699 )
Earnings from unconsolidated subsidiaries and investees (71 ) (197 ) (93 ) (197 )
Gain on foreign currency translation 906 604 233 78
Litigation settlement   -     (162 )   -     318  
Total other expenses   (19,296 )   (21,204 )   (38,009 )   (35,706 )
Loss before gain on land sales, non-controlling interest, and taxes (19,117 ) (44,007 ) (33,607 ) (56,315 )
Gain (loss) on land sales   (4,121 )   8,040     (4,115 )   8,208  
Loss from continuing operations before tax (23,238 ) (35,967 ) (37,722 ) (48,107 )
Income tax benefit   2,081     820     2,842     2,168  
Net loss from continuing operations (21,157 ) (35,147 ) (34,880 ) (45,939 )
Discontinued operations:
Income (loss) from discontinued operations 286 182 649 (738 )
Gain on sale of real estate from discontinued operations 5,660 2,161 5,660 6,932
Income tax expense from discontinued operations   (2,081 )   (820 )   (2,208 )   (2,168 )
Net income from discontinued operations 3,865 1,523 4,101 4,026
Net loss (17,292 ) (33,624 ) (30,779 ) (41,913 )
Net loss attributable to non-controlling interests   3,543     5,338     5,119     7,023  
Net loss attributable to American Realty Investors, Inc. (13,749 ) (28,286 ) (25,660 ) (34,890 )
Preferred dividend requirement   (622 )   (622 )   (1,244 )   (1,244 )
Net loss applicable to common shares $ (14,371 ) $ (28,908 ) $ (26,904 ) $ (36,134 )
 
Earnings per share - basic
Loss from continuing operations $ (1.58 ) $ (2.64 ) $ (2.69 ) $ (3.49 )
Discontinued operations   0.34     0.13     0.36     0.35  
Net loss applicable to common shares $ (1.24 ) $ (2.51 ) $ (2.33 ) $ (3.14 )
 
Earnings per share - diluted
Loss from continuing operations $ (1.58 ) $ (2.64 ) $ (2.69 ) $ (3.49 )
Discontinued operations   0.34     0.13     0.36     0.35  
Net loss applicable to common shares $ (1.24 ) $ (2.51 ) $ (2.33 ) $ (3.14 )
 
Weighted average common share used in computing earnings per share 11,510,322 11,514,038 11,512,169 11,514,038
Weighted average common share used in computing diluted earnings per share 11,510,322 11,514,038 11,512,169 11,514,038
 
 
Amounts attributable to American Realty Investors, Inc.
Loss from continuing operations $ (17,614 ) $ (29,809 ) $ (29,761 ) $ (38,916 )
Income from discontinued operations   3,865     1,523     4,101     4,026  
Net loss $ (13,749 ) $ (28,286 ) $ (25,660 ) $ (34,890 )
 
AMERICAN 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 $ 1,656,063 $ 1,718,837
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 82,757 53,341
Less accumulated depreciation   (192,453 )   (195,804 )
Total real estate 1,551,514 1,581,521
Notes and interest receivable
Performing 91,242 91,872
Non-performing 3,105 3,108
Less allowance for estimated losses   (11,836 )   (11,836 )
Total notes and interest receivable 82,511 83,144
Cash and cash equivalents 4,885 4,887
Investments in unconsolidated subsidiaries and investees 12,748 13,149
Other assets   113,699     123,353  
Total assets $ 1,765,357   $ 1,806,054  
 
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable $ 1,265,484 $ 1,327,188
Notes related to assets held-for-sale 4,969 5,002
Notes related to subject to sales contracts 100,324 61,886
Stock-secured notes payable 23,449 24,853
Affiliate payables 32,397 20,574
Deferred revenue 75,098 70,083
Accounts payable and other liabilities   87,105     85,119  
1,588,826 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 11,499,138 and 11,514,038 shares in 2010 and in 2009 114 114
Treasury stock at cost; 375,000 and 360,100 shares in 2010 and 2009 and 276,972 shares held by TCI (consolidated) as of 2010 and 2009 (6,074 ) (5,954 )
Paid-in capital 91,077 91,081
Retained earnings 20,067 46,971
Accumulated other comprehensive income (loss)   (1,960 )   2,186  
Total American Realty Investors, Inc. shareholders' equity   108,203     139,377  
Non-controlling interest   68,328     71,972  
Total equity   176,531     211,349  
Total liabilities and equity $ 1,765,357   $ 1,806,054  

Copyright Business Wire 2010

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