N@N

Transcontinental Realty Investors, Inc. Reports Fourth Quarter and Full Year 2010 Results

^{Published on 2011-04-02 11:55:33 - Market Wire}
 

DALLAS--([ BUSINESS WIRE ])--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, 2010. The Company reported net loss applicable to common shares of $68.3 million or $8.42 per diluted earnings per share, as compared to a net loss applicable to common shares of $80.7 million or $9.94 per diluted earnings per share for the same period ended 2009.

Net loss applicable to common shares for the three months ended December 31, 2010 was $27.9 million or $3.43 per share, as compared to a net loss applicable to common shares of $26.0 million or $3.20 per share. The Company took impairment on notes receivable and real estate of $24.5 million in the fourth quarter of 2010, compared to $14.0 million for the same period ended 2009.

Rental and other property revenues were $129.9 million for the twelve months ended December31, 2010. This represents a decrease of $1.0 million, as compared to the prior year revenues of $130.9 million. This change, by segment, is an increase in the apartment portfolio of $3.3 million, an increase in the other portfolio of $1.5 million, offset by a decrease in the commercial portfolio of $5.7 million and a decrease in the land portfolio of $0.1 million. The commercial and hotel portfolios saw an increase in vacancy, which we attribute to the current state of the economy with some commercial tenants struggling to stay afloat and make their rental payments in the commercial properties. We have been successful in our efforts to develop new apartment communities along with operating and leasing our existing apartments. We continue to market our properties aggressively to attract new tenants and strive for continuous improvement of our properties in order to maintain our existing tenants.

Property operating expenses were $74.0 million for the twelve months ended December31, 2010. This represents an increase of $0.4 million as compared to the prior year operating expenses of $73.6 million. This change, by segment, is an increase in the land portfolio of $1.3 million offset by a decrease in the apartment portfolio of $0.9 million. We have been working hard to decrease our overall operating expenses while maintaining the same level of product and services and have been successful in doing so. The increase within the land portfolio was primarily due to an adjustment in 2009 to correct over accrual of 2008 real estate property taxes, resulting in recording lower operating expenses in the prior period. In the current period, we incurred additional real estate tax penalties and interest that we did not incur in the prior period.

Depreciation and amortization expense was $26.8 million for the twelve months ended December31, 2010. This represents an increase of $1.7 million, as compared to the prior year expense of $25.1 million. The majority of this increase is due to the newly developed apartment communities.

General and administrative expenses were $8.5 million for the twelve months ended December31, 2010. This represents a decrease of $2.6 million as compared to the prior year expenses of $11.1 million. This change is due to a reduction in administrative expenses and cost reimbursements to our Advisor, in addition to reductions in professional services.

The current year provision on impairment of notes receivable, investment in real estate partnerships, and real estate assets was $24.5 million. This was a decrease of $18.0 million as compared to the prior year expense of $42.5 million. In the current year, impairment was recorded as an additional loss in the investment portfolio of $1.9 in commercial properties we currently hold, $18.3 million in land we sold subsequent to year end and $4.3 million in impairment on notes receivable. Management, at the time of the sale or during the reorganization process in the fourth quarter, reviewed the properties that were considered asubject to sales contracta and impairment was taken to the extent the basis of the property exceeded the current value.

Other income was $8.4 million for the twelve months ended December31, 2010. This represents an increase of $4.8 million as compared to the prior year income of $3.6 million. The increase was due to revenue received from a consulting agreement and an incentive fee from the management company.

Mortgage and loan interest expense was $62.7 million for the twelve months ended December31, 2010. This represents an increase of $1.6 million, as compared to the prior year expense of $61.1 million. This change, by segment, is an increase in the apartment portfolio of $3.5million, an increase in the commercial portfolio of $0.3 million, a decrease in the land portfolio of $4.3million and an increase in the other portfolio of $2.1 million. Within the apartment portfolio, the same apartment portfolio increased $1.7 million and the developed properties increased $1.8 million due to properties in the lease-up phase. Once an apartment is completed, the interest expense is no longer capitalized. The land portfolio decrease was due to land sales.

Gain on land sales decreased in the current year. This decrease is in part due to the overall economic environment, which, among other issues, has resulted in the tightening of the credit markets, causing an inability of potential buyers to obtain financing. Thus, we have found it difficult to complete land transactions. In the current year, we sold 1,227.53 acres of land in 13 separate transactions for an aggregate sales price of $23.1million, receiving $8,984 in cash and recorded a loss of $15.1 million. The average sales price was $18,823 per acre.

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, 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.transconrealty-invest.com ].