American Realty Investors, Inc. Reports First Quarter 2010 Results

Published in Business and Finance on Monday, May 17th 2010 at 18:20 GMT by Market Wire
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DALLAS--([ BUSINESS WIRE ])--American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate investment company, today reported results of operations for the first quarter ended March 31, 2010. ARL announced today that the Company reported a net loss applicable to common shares of ($12.5) million or ($1.09) per share, as compared to a net loss applicable to common shares of ($7.2) million or ($0.63) per share for the same period ended 2009.

"Property, Plant, and Equipment a" Real Estate Sales."

Rental and other property revenues were $44.8 million for the three months ended March 31, 2010. This represents a decrease of $0.7 million as compared to the prior period revenues of $45.5 million. This change, by segment, is an increase in the apartment portfolio of $0.8 million and an increase in the other portfolio of $0.9 million, offset by a decrease in the commercial portfolio of $1.2 million, a decrease in the hotel portfolio of $1.0 million and a decrease in the land portfolio of $0.2 million.

Property operating expenses were $26.3 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million as compared to the prior period operating expenses of $28.7 million. This change, by segment, is a decrease in our apartments of $2.4 million, a decrease in our commercial properties of $0.1 million and a decrease in our hotels of $0.3 million, offset by an increase in our land and other segments of $0.4 million.

Interest income was $1.5 million for the three months ended March 31, 2010. This represents a decrease of $1.1 million as compared to the prior period interest income of $2.6 million. This change is due to the accrued interest recognition on the cash flow notes from Unified Housing Foundation, Inc. On cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income is only recognized to the extent that cash is received. Less cash was received in the current period, as compared to the prior period.

Other income was $0.9 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million, as compared to the prior period other income of $3.3 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 a Korean REIT.

Net income from discontinued operations was $0.2 million for the three months ended March 31, 2010. This represents a decrease of $2.3 million, as compared to the prior period net income from discontinued operations of $2.5 million. The change is due to a decrease in the gains recorded on the sale of real estate.

Included in discontinued operations are properties sold in 2010, which were held in 2009, and properties held for sale as of March 31, 2010. In 2010, we had one apartment complex held for sale (Baywalk), one apartment complex that we sold in March 2010 (Villager), and two apartment complexes that we sold subsequent to March 31, 2010 (Foxwood and Longfellow Arms). In 2009, we sold seven properties, which consisted of three apartment complexes (Bridges on Kinsey, Bridgestone, and Chateau Bayou), three commercial properties (5000 Space Center, 5360 Tulane and Cullman Shopping Center) and one townhouse.

There were no gains recorded on the sale of real estate for the three months ended March 31, 2010. The prior period had recorded gains of $4.8 million. Due to the related party nature of the current period sale, there was no gain recognized on the sale of Villager apartments. The gain on the sale of $0.4 million was deferred in the current period and will be recognized upon the sale of the property to a third party. In the prior period, the sale of Chateau Bayou apartments generated a $4.2 million gain on sale and we recognized the deferred gain on the sale of the Hartford building sold in 2002 in accordance with the requirements per ASC Topic 360-20 aProperty, Plant, and Equipment a" Real Estate Sales.a

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 Companya�s website at [ www.amrealtytrust.com ].

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	For the Three Months Ended March 31,
	2010			2009
	(dollars in thousands, except share and per share amounts)
Revenues:
Rental and other property revenues	$	44,794		$	45,500

Expenses:
Property operating expenses		26,304			28,673
Depreciation and amortization		7,423			7,538
General and administrative		2,597			2,834
Provision on impairment of notes receivable and real estate assets		-			379
Advisory fee to affiliate		4,053			3,847
Total operating expenses		40,377			43,271
Operating income		4,417			2,229

Other income (expense):
Interest income		1,502			2,642
Other income		867			3,296
Mortgage and loan interest		(20,535	)		(20,445	)
Earnings from unconsolidated subsidiaries and investees		(22	)		-
Loss on foreign currency translation		(673	)		(525	)
Litigation settlement		-			479
Total other expenses		(18,861	)		(14,553	)
Loss before gain on land sales, non-controlling interest, and taxes		(14,444	)		(12,324	)
Gain on land sales		6			168
Loss from continuing operations before tax		(14,438	)		(12,156	)
Income tax benefit		745			1,353
Net loss from continuing operations		(13,693	)		(10,803	)
Discontinued operations:
Income (loss) from discontinued operations		317			(904	)
Gain on sale of real estate from discontinued operations		-			4,771
Income tax expense from discontinued operations		(111	)		(1,353	)
Net income from discontinued operations		206			2,514
Net loss		(13,487	)		(8,289	)
Net income attributable to non-controlling interests		1,577			1,685
Net loss attributable to American Realty Investors, Inc.		(11,910	)		(6,604	)
Preferred dividend requirement		(622	)		(622	)
Net loss applicable to common shares	$	(12,532	)	$	(7,226	)

Earnings per share - basic
Loss from continuing operations	$	(1.11	)	$	(0.85	)
Discontinued operations		0.02			0.22
Net loss applicable to common shares	$	(1.09	)	$	(0.63	)

Earnings per share - diluted
Loss from continuing operations	$	(1.11	)	$	(0.85	)
Discontinued operations		0.02			0.22
Net loss applicable to common shares	$	(1.09	)	$	(0.63	)

Weighted average common share used in computing earnings per share		11,514,038			11,514,038
Weighted average common share used in computing diluted earnings per share		11,514,038			11,514,038


Amounts attributable to American Realty Investors, Inc.
Loss from continuing operations	$	(13,693	)	$	(10,803	)
Income from discontinued operations		206			2,514
Net loss	$	(13,487	)	$	(8,289	)

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)

	March 31,			December 31,
	2010			2009
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	1,720,062		$	1,718,837
Real estate held for sale at cost, net of depreciation		20,903			5,147
Real estate subject to sales contracts at cost, net of depreciation		53,341			53,341
Less accumulated depreciation		(202,078	)		(195,804	)
Total real estate		1,592,228			1,581,521
Notes and interest receivable
Performing		92,295			91,872
Non-performing		3,096			3,108
Less allowance for estimated losses		(11,836	)		(11,836	)
Total notes and interest receivable		83,555			83,144
Cash and cash equivalents		1,071			4,887
Investments in unconsolidated subsidiaries and investees		12,544			13,149
Other assets		106,496			123,353
Total assets	$	1,795,894		$	1,806,054

Liabilities and Shareholdersa� Equity
Liabilities:
Notes and interest payable	$	1,309,568		$	1,327,188
Notes related to assets held-for-sale		24,603			5,002
Notes related to subject to sales contracts		61,886			61,886
Stock-secured notes payable		23,285			24,853
Affiliate payables		22,709			20,574
Deferred revenue		70,410			70,083
Accounts payable and other liabilities		86,569			85,119
		1,599,030			1,594,705
Commitments and contingencies:
Shareholdersa� 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 11,514,038 shares in 2010 and in 2009		114			114
Treasury stock at cost; 360,100 shares in 2010 and 2009 and 276,972 shares held by TCI (consolidated) as of 2010 and 2009		(5,954	)		(5,954	)
Paid-in capital		91,077			91,081
Retained earnings		34,439			46,971
Accumulated other comprehensive income		-			2,186
Total American Realty Investors, Inc. shareholders' equity		124,655			139,377
Non-controlling interest		72,209			71,972
Total equity		196,864			211,349
Total liabilities and equity	$	1,795,894		$	1,806,054

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American Realty Investors, Inc. Reports First Quarter 2010 Results