DALLAS--(BUSINESS WIRE)--American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the quarter ended September 30, 2020. For the three months ended September 30, 2020, the Company reported a net income attributable to common shares of $8.0 million or $0.50 per diluted share, compared to a net loss attributable to common shares of $7.6 million or $0.47 per diluted share for the same period in 2019.
COVID-19
The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant impact on the Company’s results of operations or cash flows during the three months ended September 30, 2020.
- The Company collected approximately 96% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 97% from office tenants.
- The Company did not grant any abatements or significant deferments of rents.
- Occupancy remains stable at 91% at September 30, 2020 and 2019.
- The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.
- Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.
The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.
Financial Results
Rental revenues were $11.5 million for the three months ended September 30, 2020, compared to $1.14 million for the three months ended September 30, 2019. For 2020, we generated revenues of $7.8 million and $3.7 million from our commercial and multifamily segments respectively.
Net operating loss was $2.3 million for the three months ended September 30, 2020, compared to $0.6 million for the same period in 2019. The $1.7 million increase in net operating loss is primarily due to the placement in service of two new multifamily apartment communities in 2020. Operating expense of new properties generally exceed their rental revenues during initial lease-up.
Interest income was $5.4 million for the three months ended September 30, 2020, compared to $6.9 million for the same period in 2019. The decrease of $1.5 million in interest income was primarily due to collection on notes receivable in 2020.
Interest expense was $7.6 million for three months ended September 30, 2020, compared to $10.4 million for the same period in 2019. The decrease of $2.8 million in interest expense was primarily due to the refinancing of the mortgage note payable on Browning Place in 2019.
Loss on foreign currency transactions was $1.5 million for the three months ended September 30, 2020 as compared to $5.2 million for the same period in 2019. The decrease is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.
Gain on sale or write-down of assets increased $10.2 million for the three months ended September 30, 2020, compared the same period in 2019. The increase is primarily due to the sales in 2020 of Bridgeview Plaza for $5.3 million, resulting in a gain of $4.8 million; and the sale of Farnham Park Apartments for $13.3 million, resulting in a gain of $2.7 million.
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, 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. The Company also holds mortgage receivables. The Company’s primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). For more information, visit the Company’s website at www.americanrealtyinvest.com.
| AMERICAN REALTY INVESTORS, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (dollars in thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
||||||||||||||
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|||||
| Revenues: | ||||||||||||||||
| Rental revenues (including $262 and $212 for the three months and $808 and $527 for the nine months ended 2020 and 2019, respectively, from related parties) |
$ |
11,453 |
|
$ |
11,407 |
|
$ |
34,460 |
|
$ |
34,352 |
|
||||
| Other income (loss) |
|
484 |
|
|
1,824 |
|
|
5,348 |
|
|
9,679 |
|
||||
| Total revenues |
|
11,937 |
|
|
13,231 |
|
|
39,808 |
|
|
44,031 |
|
||||
| Expenses: | ||||||||||||||||
| Property operating expenses (including $253 and $237 for the three months ended and $750 and $741 for the six months ended 2020 and 2019, respectively, from related parties) |
|
6,387 |
|
|
5,883 |
|
|
18,507 |
|
|
19,203 |
|
||||
| Depreciation and amortization |
|
3,526 |
|
|
3,416 |
|
|
10,338 |
|
|
9,964 |
|
||||
| General and administrative (including $1,094 and $1,002 for the three months ended and $2,991 and $3,680 for the six months ended 2020 and 2019, respectively, from related parties) |
|
1,998 |
|
|
2,107 |
|
|
7,958 |
|
|
7,716 |
|
||||
| Advisory fee to related party |
|
2,329 |
|
|
2,403 |
|
|
7,055 |
|
|
6,807 |
|
||||
| Total operating expenses |
|
14,240 |
|
|
13,809 |
|
|
43,858 |
|
|
43,690 |
|
||||
| Net operating (loss) income |
|
(2,303 |
) |
|
(578 |
) |
|
(4,050 |
) |
|
341 |
|
||||
| Interest income (including $4,812 and $6,240 for the three months ended and $14,566 and $18,328 for the six months ended 2020 and 2019, respectively, from related parties) |
|
5,421 |
|
|
6,856 |
|
|
16,459 |
|
|
19,514 |
|
||||
| Interest expense (including $1,583 and $2,402 for the three months ended and $5,040 and $7,094 for the six months ended 2020 and 2019, respectively, from related parties) |
|
(7,622 |
) |
|
(10,420 |
) |
|
(26,295 |
) |
|
(29,796 |
) |
||||
| (Loss) gain on foreign currency transaction |
|
(1,470 |
) |
|
(5,153 |
) |
|
774 |
|
|
(13,296 |
) |
||||
| Loss on extinguishment of debt |
|
- |
|
|
(5,219 |
) |
|
- |
|
|
(5,219 |
) |
||||
| Income (losses) from unconsolidated joint ventures |
|
337 |
|
|
(75 |
) |
|
(642 |
) |
|
(1,135 |
) |
||||
| Gain on sales or write-down of assets |
|
15,325 |
|
|
5,139 |
|
|
24,802 |
|
|
9,792 |
|
||||
| Income tax expense |
|
(50 |
) |
|
- |
|
|
(346 |
) |
|
- |
|
||||
| Net income (loss) |
|
9,638 |
|
|
(9,450 |
) |
|
10,702 |
|
|
(19,799 |
) |
||||
| Net (income) attributable to non-controlling interest |
|
(1,651 |
) |
|
1,879 |
|
|
(2,075 |
) |
|
3,303 |
|
||||
| Net income (loss) attributable to common shares | $ |
7,987 |
|
$ |
(7,571 |
) |
$ |
8,627 |
|
$ |
(16,496 |
) |
||||
| Earnings (loss) per share - attributable to common shares | ||||||||||||||||
| Basic and diluted | $ |
0.50 |
|
$ |
(0.47 |
) |
$ |
0.54 |
|
$ |
(1.03 |
) |
||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic and diluted |
|
15,997,076 |
|
|
15,997,076 |
|
|
15,997,076 |
|
|
15,997,076 |
|
||||
| AMERICAN REALTY INVESTORS, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (dollars in thousands, except share and par value amounts) | ||||||||
| (Unaudited) | ||||||||
| September 30, 2020 | December 31, 2019 | |||||||
Assets |
||||||||
| Real estate, net | $ |
380,715 |
|
$ |
387,790 |
|
||
| Notes receivable (including $96,181 in 2020 and $93,524 in 2019 from related parties) |
|
151,310 |
|
|
143,086 |
|
||
| Cash and cash equivalents |
|
32,986 |
|
|
51,228 |
|
||
| Restricted cash |
|
28,030 |
|
|
32,083 |
|
||
| Investment in unconsolidated joint ventures |
|
57,144 |
|
|
67,655 |
|
||
| Receivable from related party |
|
86,089 |
|
|
85,996 |
|
||
| Other assets |
|
71,313 |
|
|
62,803 |
|
||
| Total assets | $ |
807,587 |
|
$ |
830,641 |
|
||
Liabilities and Equity |
||||||||
| Liabilities: | ||||||||
| Mortgages and notes payable | $ |
248,943 |
|
$ |
254,094 |
|
||
| Bonds payable |
|
203,192 |
|
|
223,265 |
|
||
| Accounts payable and other liabilities (including $12,495 in 2020 and $11,817 in 2019 to related parties) |
|
23,284 |
|
|
24,769 |
|
||
| Accrued interest payable |
|
3,341 |
|
|
7,236 |
|
||
| Deferred revenue |
|
21,609 |
|
|
24,761 |
|
||
| Total liabilities |
|
500,369 |
|
|
534,125 |
|
||
| Equity | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued 1,800,614 and outstanding 614 at September 30, 2020 and December 31, 2019. |
|
5 |
|
|
5 |
|
||
| Common stock, $0.01 par value, 100,000,000 shares authorized; 16,412,861 shares issued and 15,997,076 outstanding at September 30, 2020 and December 31, 2019. |
|
164 |
|
|
164 |
|
||
| Treasury stock at cost; 415,785 shares in 2020 and 2019. |
|
(6,395 |
) |
|
(6,395 |
) |
||
| Paid-in capital |
|
82,017 |
|
|
82,017 |
|
||
| Retained earnings |
|
172,335 |
|
|
163,708 |
|
||
| Total shareholders' equity |
|
248,126 |
|
|
239,499 |
|
||
| Non-controlling interest |
|
59,092 |
|
|
57,017 |
|
||
| Total equity |
|
307,218 |
|
|
296,516 |
|
||
| Total liabilities and equity | $ |
807,587 |
|
$ |
830,641 |
|
||
