8-K
Transcontinental Realty Investors Inc (TCI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act
Date of Report (Date of earliest event reported): May14,2020
TRANSCONTINENTALREALTY INVESTORS, INC.
(Exact Name of Registrant as Specified in its Charter)
| Nevada | 001-09240 | 94-6565852 |
|---|---|---|
| (State or other<br><br> <br>jurisdiction of incorporation) | (Commission<br><br> <br>File No.) | (I.R.S. Employer<br><br> <br>Identification No.) |
| 1603 LBJ Freeway, Suite 800<br><br> <br>Dallas, Texas | 75234 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code 469-522-4200
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities<br>Act (17 CFR 230.425) | |
|---|---|---|
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act<br>(17 CFR 240.14a-12) | |
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| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the<br>Exchange Act (17 CFR 240.14d-2(b)) | |
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| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the<br>Exchange Act (17 CFR 240.13e-4(c)) | |
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| ****<br><br> <br>Title of Each Class | <br><br> <br><br><br> <br>Trading Symbol | ****<br><br> <br>Name of Each Exchange<br><br> <br>on which Registered |
| --- | --- | --- |
| ****<br><br> <br>Common Stock, par value $0.01 | TCI | New York Stock Exchange |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
[ ]
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Section 2 – Financial Information
Item 2.02. Results of Operations and FinancialCondition
On May 14, 2020, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended March 31, 2020. A copy of the announcement is attached as Exhibit “99.1.”
On May 14, 2020, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended March 31, 2020. A copy of the announcement is attached as Exhibit “99.1.” The information furnished pursuant to Item 2.02 in this Form 8-K, including Exhibit “99.1” attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. We undertake no duty or obligation to publicly update or revise the information furnished pursuant to Item 2.02 of this Current Report on Form 8-K.
Section 9 – Financial Statements andExhibits
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
The following exhibit is furnished with this Report:
ExhibitNo. Description
99.1* Press release dated May 14, 2020
_________________________
* Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, hereunto duly authorized.
| Dated: May 15, 2020 | ||
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| TRANSCONTINENTAL REALTY INVESTORS, INC. | ||
| By: | /s/ Daniel J. Moos | |
| Daniel J. Moos | ||
| President and | ||
| Chief Executive Officer |
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Exhibit "99.1"
| NEWS RELEASE<br><br> <br><br><br> <br>FOR IMMEDIATE RELEASE | Contact:<br><br> <br><br><br> <br>Transcontinental Realty Investors, Inc.<br><br> <br>Investor Relations<br><br> <br>Daniel Moos<br><br> <br>(469) 522-4200<br><br> <br>investor.relations@transconrealty-invest.com |
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Transcontinental RealtyInvestors, Inc. reports Earnings for Q1 2020
DALLAS--(May 14, 2020)--Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, is reporting its Results of Operations for the quarter ended March 31, 2020. For the three months ended March 31, 2020, The Company reported a net income applicable to common shares of $4.6 million or $0.53 per diluted share, compared to a net loss applicable to common shares of $5.6 million or $0.64 per diluted share for the same period in 2019. This was driven by the overall strategic direction of both investing and expanding the core multi-family portfolio. In particular, as certain new multifamily development projects are completed, in which the Company has made significant new investments, it is expected that net income will again be positively impacted throughout the remainder of 2020. All new multifamily real estate projects within TCI’s future pipeline are progressing in various stages of development. Of significant note, the Company experienced a one-time expense as a requirement to pay Franchise Tax due to the Joint Venture Victory Abode Apartments (VAA). The Company does not anticipate this expense to reoccur in future periods.
With the current Coronavirus presenting a concern; we remain confident the underlying need for quality multi-family housing will remain strong. The Company bases this observation on occupancy trends across its portfolio. For the quarter ending March 31, 2020, same store occupancy was at 93.9% compared to 94.3% for the same period one year ago. To date, TCI’s existing portfolio has seen a significant increase in value. For FYE 2019, same store aggregate appraised value of TCI’s holdings was approximately $244.4 million. Whereas for FYE 2020, same store aggregate appraised value of TCI’s holdings was $298.7 million. This represents a $54.3 million or 22% increase in overall asset value year over year.
The Company believes that both the development of new projects and the historically low interest rate environment has positioned the Company along the strategic lines that it previously indicated. The Company has created a dynamic platform to continue its expansion in the multifamily sector. The ongoing plan is to continue to develop and acquire apartments in the geographic markets where demand exceeds supply.
Revenues
Rental and other property revenues were $11.9 million for the three months ended March 31, 2020, and 2019. For the quarter ended March 31, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.
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Expenses
Property operating expenses increased by $0.3 million to $6.3 million for the three months ended March 31, 2020 as compared to $6.0 million for the same period in 2019. The increase in property operating expenses is due to an increase in real estate taxes of approximately $0.5 million offset by an overall decrease in general property operating and maintenance expenses of $0.2 million.
Depreciation and amortization increased by $0.30 million to $3.4 million during the three months ended March 31, 2020 as compared to $3.1 million for the three months ended March 31, 2019. The increase in depreciation is due to an increase in our ownership of residential apartments to ten from nine for the same period a year ago which resulted in an increase in depreciation of $0.9 million from $0.7 million a year ago.
General and administrative expense was $2.5 million for the three months ended March 31, 2020, compared to $2.2 million for the same period in 2019. The increase of $0.3 million in general and administrative expenses was primarily due to increases professional fees of $0.1 million and legal fees of $0.2 million.
Franchise taxes and other expenses was $1.5 million for the three months ended March 31, 2020, compared to $0.125 million for the same period in 2019. The increase of $1.4 million in franchise taxes and other expenses was primarily due to increases in franchise taxes of $1.0 million.
Otherincome (expense)
Interest income was $4.5 million for the three months ended March 31, 2020, compared to $4.6 million for the same period in 2019. The decrease of $0.1 million was due to an decrease in interest of $0.1 on notes receivable from other related parties.
Other income decreased by $3.1 million to $0.84 million for the three months ended March 31, 2020, compared to $3.9 million for the same period in 2019. For the quarter just ended March 31, 2020, the Company received property tax refunds of approximately $0.2 million, and recorded miscellaneous income of $0.6 million. For the same period a year ago, the Company recognized $3.6 million gain associated with the sale of land held by IOR to third parties.
Mortgage and loan interest expense was $7.9 million for the three months ended March 31, 2020, and 2019.
Foreign currency transaction was a gain of $7.8 million for the three months ended March 31, 2020 as compared to a loss of $5.8 million for the same period in 2019. The unrealized gain was the result of the strengthening of the U.S. Dollar against the Israel Shekels due to perceived liquidity issues in Israel most likely as a result of the global pandemic outbreak. During the first quarter just ended, we paid $11.6 million in Series A bond principal and $7.3 million in interest payments to our Series A, B, and C bonds denominated in Israel Shekels.
Loss from unconsolidated investments was a net $0.377 million for the three months ended March 31, 2020 as compared to a net loss of $1.1 million for the three months ended March 31, 2019. The loss from unconsolidated investments during the first quarter just ended was driven primarily from our share in the losses reported by the VAA Joint Venture of $0.376 million.
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Gain on land sales was $4.1 for the three months ended March 31, 2020, compared to $2.2 million for the same period in 2019. In the current period we sold approximately 18.7 acres of land for a sales price of $5.7 million which resulted in a gain of $4.1 million. For the same period in 2019, we sold approximately 22.3 acres of land for a sales price of $8.7 million which resulted in a gain of $2.2 million.
AboutTranscontinental 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**.**
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2019 | |||||
| Revenues: | |||||
| Rental and other property revenues (including 221 and 113 for the three months ended 2020 and 2019, respectively, from related parties) | 11,918 | $ | 11,929 | ||
| Expenses: | |||||
| Property operating expenses (including 242 and 257 for the three months ended 2020 and 2019, respectively, from related parties) | 6,309 | 5,997 | |||
| Depreciation and amortization | 3,394 | 3,109 | |||
| General and administrative (including 1,055 and 1,500 for the three months ended 2020 and 2019, respectively, from related parties) | 2,521 | 2,203 | |||
| Franchise taxes and other expenses | 1,494 | 125 | |||
| Net income fee to related party | 86 | 100 | |||
| Advisory fee to related party | 2,095 | 1,648 | |||
| Total operating expenses | 15,899 | 13,182 | |||
| Net operating (loss) | (3,981 | ) | (1,253 | ) | |
| Other income (expenses): | |||||
| Interest income (including 3,839 and 4,285 for the three months ended 2020 and 2019, respectively, from related parties) | 4,527 | 4,558 | |||
| Other income | 835 | 3,892 | |||
| Mortgage and loan interest (including 444 and 490 for the three months ended 2020 and 2019, respectively, from related parties) | (7,967 | ) | (7,959 | ) | |
| Foreign currency transaction gain (loss) | 7,843 | (5,818 | ) | ||
| Equity loss from VAA | (376 | ) | (1,055 | ) | |
| Losses from other unconsolidated investees | (1 | ) | (7 | ) | |
| Total other income (expenses) | 4,861 | (6,389 | ) | ||
| Income (loss) before gain on land sales, non-controlling interest, and taxes | 880 | (7,642 | ) | ||
| Gain on land sales | 4,138 | 2,216 | |||
| Net income (loss) from continuing operations before taxes | 5,018 | (5,426 | ) | ||
| State income tax expense | (247 | ) | — | ||
| Net income (loss) from continuing operations | 4,771 | (5,426 | ) | ||
| Net income (loss) | 4,771 | (5,426 | ) | ||
| Net (income) attributable to non-controlling interest | (158 | ) | (183 | ) | |
| Net income (loss) attributable to Transcontinental Realty Investors, Inc. | 4,613 | (5,609 | ) | ||
| Net income (loss) applicable to common shares | 4,613 | $ | (5,609 | ) | |
| (Loss) earnings per share - basic | |||||
| Net income (loss) from continuing operations | 0.55 | $ | (0.62 | ) | |
| Net income (loss) applicable to common shares | 0.53 | $ | (0.64 | ) | |
| (Loss) earnings per share - diluted | |||||
| Net income (loss) from continuing operations | 0.55 | $ | (0.62 | ) | |
| Net income (loss) applicable to common shares | 0.53 | $ | (0.64 | ) | |
| Weighted average common shares used in computing earnings per share | 8,717,767 | 8,717,767 | |||
| Weighted average common shares used in computing diluted earnings per share | 8,717,767 | 8,717,767 | |||
| Amounts attributable to Transcontinental Realty Investors, Inc. | |||||
| Net income (loss) from continuing operations | 4,771 | $ | (5,426 | ) | |
| Net income (loss) applicable to Transcontinental Realty, Investors, Inc. | 4,613 | $ | (5,609 | ) |
All values are in US Dollars.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, 2019 | |||||
|---|---|---|---|---|---|
| (Audited) | |||||
| Assets | |||||
| Real estate, at cost | 482,834 | $ | 469,997 | ||
| Real estate subject to sales contracts at cost | 6,887 | 7,966 | |||
| Less accumulated depreciation | (93,144 | ) | (90,173 | ) | |
| Total real estate | 396,577 | 387,790 | |||
| Notes and interest receivable (including 62,130 in 2020 and 57,260 in 2019 from related parties) | 126,870 | 120,986 | |||
| Cash and cash equivalents | 39,922 | 51,179 | |||
| Restricted cash | 28,158 | 32,082 | |||
| Investment in VAA | 53,508 | 59,148 | |||
| Investment in other unconsolidated investees | 22,631 | 22,632 | |||
| Receivable from related parties | 130,909 | 141,541 | |||
| Other assets | 52,214 | 50,560 | |||
| Total assets | 850,789 | $ | 865,918 | ||
| Liabilities and Shareholders’ Equity | |||||
| Liabilities: | |||||
| Notes and interest payable | 252,697 | $ | 246,546 | ||
| Bonds and bond interest payable | 207,832 | 229,722 | |||
| Deferred revenue (including 9,468 in 2020 and 2019 to related parties) | 9,468 | 9,468 | |||
| Accounts payable and other liabilities (including 961 in 2020 and 935 in 2019 to related parties) | 21,954 | 26,115 | |||
| Total liabilities | 491,951 | 511,851 | |||
| Shareholders’ equity: | |||||
| Common stock, 0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2020 and 2019; outstanding 8,717,767 shares in 2020 and 2019 | 87 | 87 | |||
| Treasury stock at cost, 200 shares in 2020 and 2019 | (2 | ) | (2 | ) | |
| Paid-in capital | 257,853 | 257,853 | |||
| Retained earnings | 79,278 | 74,665 | |||
| Total Transcontinental Realty Investors, Inc. shareholders’ equity | 337,216 | 332,603 | |||
| Non-controlling interest | 21,622 | 21,464 | |||
| Total shareholders’ equity | 358,838 | 354,067 | |||
| Total liabilities and shareholders’ equity | 850,789 | $ | 865,918 |
All values are in US Dollars.