Transcontinental Realty Investors, Inc. reports Earnings for Quarter Ended December 31, 2022

Transcontinental Realty Investors, Inc. (NYSE:TCI) is reporting its results of operations for the quarter ended December 31, 2022. For the three months ended December 31, 2022, we reported net income attributable to the common shares of $58.9 million or $6.82 per diluted share, compared to a net loss of $8.7 million or $1.01 per diluted share for the same period in 2021.

Financial Highlights

  • We collected approximately 96% of our rents for the three months ended December 31, 2022, comprised of approximately 97% from multifamily tenants and approximately 96% from office tenants.
  • Total occupancy was 81% at December 31, 2022, which includes 93% at our multifamily properties and 60% at our commercial properties.
  • On November 1, 2022, we received a distribution of approximately $204.0 million in connection with the sale of VAA Sale Portfolio earlier in the year.
  • On November 1, 2022, we also received the full control and economical rights to the seven remaining multifamily properties from our Victory Abode Apartments, LLC (“VAA”) joint venture (collectively, the “VAA Holdback Portfolio”) with a fair value of $219.5 million, which resulted in gain on remeasurement of approximately $73.2 million. The VAA Holdback Portfolio consisted of Blue Lake Villas, Blue Lake Villas Phase II, Northside on Travis, Parc at Denham Springs, Residences at Holland Lake, Villas of Park West I and Villas of Park West II.
  • On October 21, 2022, we paid off the $38.5 million loan on Stanford Center from the cash generated from sale of the VAA Sale Portfolio.
  • On January 31, 2023, we paid off our $66.5 million Series C bonds from cash received from sale of the VAA Sale Portfolio.

Financial Results

Rental revenues increased $4.1 million from $7.6 million for the three months ended December 31, 2021 to $11.8 million for the three months ended December 31, 2022. The increase in rental revenue is primarily due to a $4.9 million increase at our multifamily properties offset in part by a decrease of $0.7 million from the commercial properties. The increase in revenue from the multifamily properties is primarily due to the acquisition of the VAA Holdback Portfolio in 2022.

Net operating income increased $4.6 million from net operating loss of $4.2 million for three months ended December 31, 2021 to net operating income of $0.5 million for the three months ended December 31, 2022. The increase in net operating income is primarily due to the $4.1 million increase in rental revenue as noted above and a decrease of $1.8 million in general administrative and advisory expenses offset in part by an increase of $1.9 million in property operating and depreciation expenses. The decrease in general administrative and advisory expenses is primarily due to a decrease in legal expenses and the increase in property and depreciation expenses is due to the acquisition of the VAA Holdback Portfolio.

Net income attributable to the Company increased $67.7 million from a net loss of $8.7 million for the three months ended December 31, 2021 to net income of $58.9 million for the three months ended December 31, 2022. The increase in net income is primarily attributed to $72.2 million increase in gain on sale, remeasurement or write down of assets offset in part by a $15.1 million increase in our tax provision. The increase in gain on our sale or write down of assets and our tax provision is due to the remeasurement of the VAA Holdback Portfolio that was acquired in 2022.

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 ownership, leases and partnerships and invests in mortgage loans on real estate. The Company also holds mortgage receivables.

 

TRANSCONTINENTAL REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Nine Months Ended

December 31,

 

 

 

 

2022

 

2021

 

2022

 

2021

 
Revenues:
Rental revenues

$

11,770

 

$

7,625

 

$

34,080

 

$

37,808

 

Other income

 

1,014

 

 

492

 

 

2,580

 

 

2,966

 

Total revenue

 

12,784

 

 

8,117

 

 

36,660

 

 

40,774

 

Expenses:
Property operating expenses

 

5,798

 

 

4,360

 

 

18,339

 

 

20,860

 

Depreciation and amortization

 

2,846

 

 

2,397

 

 

9,686

 

 

11,870

 

General and administrative

 

2,595

 

 

3,876

 

 

9,943

 

 

12,425

 

Advisory fee to related party

 

1,089

 

 

1,638

 

 

7,974

 

 

11,782

 

Total operating expenses

 

12,328

 

 

12,271

 

 

45,942

 

 

56,937

 

Net operating income (loss)

 

456

 

 

(4,154

)

 

(9,282

)

 

(16,163

)

Interest Income

 

7,938

 

 

5,054

 

 

26,745

 

 

19,572

 

Interest expense

 

(5,026

)

 

(5,504

)

 

(19,813

)

 

(24,600

)

Gain (loss) on foreign currency transactions

 

630

 

 

(7,360

)

 

20,067

 

 

(6,175

)

Loss on early extinguishment of debt

 

-

 

 

-

 

 

(2,805

)

 

(1,451

)

Equity in (loss) income from unconsolidated joint venture

 

(2,342

)

 

2,996

 

 

468,086

 

 

14,531

 

Gain on sale, remeasurement or write down of assets, net

 

72,616

 

 

382

 

 

89,196

 

 

23,352

 

Income tax provision

 

(15,085

)

 

(26

)

 

(103,190

)

 

1,011

 

Net income (loss)

 

59,187

 

 

(8,612

)

 

469,004

 

 

10,077

 

Net income attributable to noncontrolling interest

 

(239

)

 

(135

)

 

(742

)

 

(679

)

Net income (loss) attributable to the Company

$

58,948

 

$

(8,747

)

$

468,262

 

$

9,398

 

Earnings per share
Basic and diluted

$

6.82

 

$

(1.01

)

$

54.20

 

$

1.09

 

Weighted average common shares used in computing earnings per share
Basic and diluted

 

8,639,316

 

 

8,639,316

 

 

8,639,316

 

 

8,639,316

 

 

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