NEWS RELEASE
FOR IMMEDIATE RELEASE
Contact:
Transcontinental Realty Investors, Inc.
Investors Relations
Gene Bertcher (800) 400-6407
[email protected]
Transcontinental Realty Investors, Inc. Reports Fourth Quarter and Full Year 2016 Results
DALLAS (April 3, 2017) -- Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment
company, today reported results of operations for the fourth quarter ended December 31, 2016. For the three months ended
December 31, 2016, the Company reported net income applicable to common shares of $3.2 million or $0.37 per share compared
to a net loss applicable to common shares of $1.5 million or ($0.17) per share for the same period ended 2015.
For the year ending December 31, 2016, we reported net loss applicable to common shares of $0.9 million or ($0.10) per diluted
earnings per share compared to a net loss applicable to common shares of $8.5 million or ($0.98) per diluted earnings per share for
the same period ended 2015. The current year net loss applicable to common shares of $0.9 million includes gain on sales of
income-producing properties of $16.2 million and gain on land sales of $3.1 million, compared to the prior year net loss applicable
to common shares of $3.2 million, which includes gain on land sales of $18.9 million, provision on the impairment of real estate
assets of $5.3 million and net income from discontinued operations of $0.9 million.
The Company continues to demonstrate our unwavering commitment to fortify our portfolio and streamline operational activity,
while at the same time maintaining our commitment to creating value. During the past year we made major steps toward our
strategic financing goals allowing for the acquisition and/or development of several Class A Multifamily assets. We created added
value by taking advantage of the strong market opportunities in the multifamily arena.
TCI’s revenue increased to over $118 million in 2016, up from $102 million in 2015. Net Operating Income for 2016 is $17
million dollars, showing an $8 million dollar NOI increase after all operating expenses. TCI capped off its stellar 2016 with a Net
Income of $37,000 thousand dollar after 2015’s net income loss of $7,000 thousand. Several factors attributed to these successes.
Our multifamily portfolio continues to thrive with occupancies over 95% heading into 2017, and 2016 held several other notable
highlights; such as achieving HUD Major Borrower Endorsement, acquiring four multifamily assets, beginning construction on
four new multifamily assets, and adding over 1600 units to our existing portfolio.
Rental and other property revenues were $118.5 million for the year ended December 31, 2016. This represents an
increase of $16.3 million, as compared to the prior year revenues of $102.2 million. The change by segment is an increase in the
apartment portfolio of $13.8 million and an increase in the commercial portfolio of approximately $2.5 million. The increase in
the apartment and commercial portfolios is mainly due to the acquisition of new properties. Our apartment portfolio continues to
excel in the current economic conditions with occupancies averaging over 92% and increasing rental rates. We have been able to
surpass expectations due to the high-quality product offered, strength of our management team and our commitment to our tenants.
The increase in the commercial segment is also due to an increase in rental rates. We anticipate that our commercial portfolio will
continue to improve as the Company has been successful in attracting high-quality tenants and expects to continue to see the
benefits of those new leases in the future.
Property operating expenses were $61.9 million for the year ended December 31, 2016. This represents an increase of
$9.6 million compared to the prior year operating expenses of $52.3 million. The growth in our apartment portfolio resulted i n a
$6.3 million increase in property operating expenses. We added a net 2,145 apartment units during 2015 and 723 during 2016. In
addition, we had an increase of $2.6 million in property operating expenses for our commercial portfolio primarily due to the
acquisition of an office building in Houston, Texas late in the second quarter of 2015.
Depreciation and amortization expenses were $23.7 million for the year ended December 31, 2016. This represents an
increase of $2.4 million as compared to prior year depreciation of $21.3 million. The increase is primarily due to the growth in our
apartment portfolio which had an increase of $2.3 million year-over-year.
General and administrative expenses remained constant at $5.5 million for the years ended December 31, 2016 and 2015.
There was no provision for impairment of notes receivable, investment in real estate partnerships and real estate assets for
the year ended December 31, 2016 as compared to the prior year provision of $5.3 million for our golf course and related assets
located in the U.S. Virgin Islands. This impairment was due to the decision to sell the development parcels in the U.S. Virgin
Islands which resulted in a decrease in the estimated fair value of the remaining assets.
Net income fee was $0.3 million for the year ended December 31, 2016. This represents an increase of $0.1 million
compared to the prior year net income fee of $0.2 million. The net income fee paid to Pillar is calculated at 7.5% of net inc ome.
Advisory fees were $9.5 million for the year ended December 31, 2016. This represents an increase of $1.1 million
compared to the prior year advisory fees of $8.4 million. Advisory fees are computed based on a gross asset fee of 0.0625% pe r
month (0.75% per annum) of the average of the gross asset value.
Interest income was $14.7 million for the year ended December 31, 2016 compared to $10.7 million for the year ended
December 31, 2015 for an increase of $4.0 million. This increase was primarily due to an increase in amount receivable owed
from our Advisor.
Mortgage and loan interest expense was $53.1 million for the year ended December 31, 2016. This represents an increase
of $6.6 million compared to the prior year expense of $46.5 million. The change by segment is an increase in the other portfo lio of
$6.9 million, an increase in the apartment portfolio of $1.9 million and an increase in the commercial portfolio of $0.3 million,
partially offset by a decrease in the land portfolio of $2.5 million. Within the other portfolio, the increase is due to incurring two
new mezzanine debt obligations during 2015. Within the apartment portfolio, the majority of the increase is due to the acquisition
of new properties, partially offset by loan refinancing at lower rates.
Gain on sale of income-producing properties was $16.2 million for the year ended December 31, 2016. During 2016, we
sold two apartment communities for a total sales price of $20.4 million and recorded an aggregate gain of $16.4 million from the
sale of these two properties. We also sold an industrial warehouse that resulted in a loss of $0.2 million.
Gain on land sales was $3.1 million and $18.9 million for the years ended December 31, 2016 and 2015, respectively.
During 2016, we sold a combined 129.7 acres of land for a total sales price of $29.1 million and recorded an aggregate gain of $3.1
million. During 2015, we sold approximately 595 acres of land for a total sales price of $107.3 million and recorded a gain of
$18.9 million.
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 apartments, office buildings, 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 . For
more information, visit the Company’s website at www.transconrealty-invest.com.
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
2016
2015
2014
(dollars in thousands, except per share amounts)
Revenues:
Rental and other property revenues (including $708, $726 and $701 for the year ended 2016, 2015
and 2014, respectively, from related parties)
$
Expenses:
Property operating expenses (including $865, $740 and $606 for the year ended 2016, 2015 and 2014,
respectively, from related parties)
Depreciation and amortization
General and administrative (including $3,574, $3,105 and $2,802 for the year ended 2016, 2015 and
2014, respectively, from related parties)
Provision on impairment of real estate assets
Net income fee to related party
Advisory fee to related party
Total operating expenses
Net operating income
Other income (expense):
Interest income (including $14,155, $10,071 and $11,469 for the year ended 2016, 2015 and 2014,
respectively, from related parties)
Other income
Mortgage and loan interest (including $568, $0, and $31 for the year ended 2016, 2015 and 2014,
respectively, from related parties)
Loss on the sale of investments
Income (loss) from unconsolidated joint ventures and investees
Litigation settlement
Total other expenses
Loss before gain on sales, non-controlling interest and taxes
Gain on sale of income-producing properties
118,471
$ 102,220
61,918
23,683
52,257
21,299
39,484
17,398
5,476
257
9,490
100,824
5,508
5,300
187
8,368
92,919
7,163
3,669
7,373
75,087
17,647
9,301
771
14,670
1,816
10,687
71
12,194
403
(53,088)
(26)
-
(46,541)
(1)
41
(352)
(33,681)
(92)
(28)
3,591
(36,628)
(36,095)
(17,613)
(18,981)
(26,794)
(16,842)
16,207
Gain on land sales
$
-
75,858
-
3,121
18,911
561
347
(7,883)
(16,281)
(24)
(517)
20,390
323
(8,400)
4,109
Net income (loss) from discontinued operations
(2)
644
(3,621)
Gain on sale of real estate from discontinued operations
Income tax expense from discontinued operations
-
735
(483)
61,879
(20,390)
Net income (loss) from continuing operations before taxes
Income tax benefit (expense)
Net income (loss) from continuing operations
Discontinued operations:
1
Net income from discontinued operations
Net income (loss)
Net income attributable to non-controlling interest
Net income (loss) attributable to Transcontinental Realty Investors, Inc.
Preferred dividend requirement
Net income (loss) applicable to common shares
Earnings per share - basic
Net income (loss) from continuing operations
Net income from discontinued operations
Net income (loss) applicable to common shares
Earnings per share - diluted
Net income (loss) from continuing operations
Net income from discontinued operations
Net income (loss) applicable to common shares
896
37,868
(7,504)
41,977
(285)
(132)
(399)
37
(7,636)
41,578
(900)
(900)
(1,005)
$
(863)
$
(8,536)
$
40,573
$
(0.10)
(0.10)
$
(1.08)
0.10
(0.98)
$
0.32
4.42
4.74
(0.10)
(0.10)
$
(1.08)
0.10
(0.98)
$
$
$
$
Weighted average common shares used in computing earnings per share
Weighted average common shares used in computing diluted earnings per share
Amounts attributable to Transcontinental Realty Investors, Inc.
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss)
(1)
322
$
$
8,717,767
8,717,767
$
$
38
(1)
37
The accompanying notes are an integral part of these consolidated financial statements.
$
$
8,717,767
8,717,767
$
$
(8,532)
896
(7,636)
0.32
4.42
4.74
8,559,370
8,559,370
$
$
3,710
37,868
41,578
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2016
December 31,
2015
(dollars in thousands, except share and
par value amounts)
Assets
Real estate, at cost
Real estate subject to sales contracts at cost, net of depreciation ($0 in 2016 and $0 in 2015)
Less accumulated depreciation
Total real estate
Notes and interest receivable
Performing (including $67,912 in 2016 and $64,181 in 2015 from related parties)
Less allowance for estimated losses (including $1,825 in 2016 and $1,825 in 2015 from related parties)
Total notes and interest receivable
Cash and cash equivalents
Restricted cash
Investments in unconsolidated subsidiaries and investees
Receivable from related party
Other assets
Total assets
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable
Notes related to assets held for sale
Notes related to subject to sales contracts
Deferred revenue (including $50,689 in 2016 and $50,645 in 2015 from related parties)
Accounts payable and other liabilities (including $6,487 in 2016 and $3,060 in 2015 from related parties)
Shareholders’ equity:
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares, issued and outstanding zero shares
in 2016 and 2015 (liquidation preference $100 per share). Series D: $0.01 par value, authorized, issued and
outstanding 100,000 shares in 2016 and 2015 (liquidation preference $100 per share)
Common Stock, $0.01 par value, authorized 10,000,000 shares, issued 8,717,967 shares in 2016 and 2015 and
outstanding 8,717,767 in 2016 and 2015
Treasury stock at cost, 200 shares in 2016 and 2015
Paid-in capital
Retained earnings
Total Transcontinental Realty Investors, Inc. shareholders' equity
Non-controlling interest
Total shareholders' equity
Total liabilities and shareholders' equity
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
998,498
46,956
(154,281)
891,173
81,133
(1,825)
79,308
17,506
38,227
2,446
101,649
55,605
1,185,914
835,528
376
5,612
71,065
48,856
961,437
$
$
$
935,635
47,192
(138,808)
844,019
71,376
(1,825)
69,551
15,171
44,060
5,243
90,515
41,645
1,110,204
772,636
376
6,422
71,021
34,694
885,149
1
1
87
(2)
269,849
(64,050)
205,885
18,592
224,477
1,185,914
87
(2)
270,749
(64,087)
206,748
18,307
225,055
1,110,204
$