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:
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: August 14,
2019
|
|
|
TRANSCONTINENTAL REALTY INVESTORS, INC.
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Gene S. Bertcher
|
|
|
|
Gene
S. Bertcher
|
|
|
|
Executive Vice President and
|
|
|
|
Chief Financial Officer
|
Exhibit 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
|
Contact:
Transcontinental
Realty Investors,
Inc. Investor
Relations
Gene
Bertcher
(800)
400-6407
investor.relations@transconrealty-invest.com
|
Transcontinental
Realty Investors, Inc. Reports First Quarter 2019 Results
DALLAS (August
14, 2019 -- Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported
results of operations for the second quarter ended June 30, 2019.
For the three
months ended June 30, 2019, we reported net loss applicable to common shares of $6.3 million or ($0.73) per diluted loss per share
compared to a net income applicable to common shares of $7.0 million or ($0.81) per share for the same period ended 2018.
We would like to take a brief moment to share with you our recent
successes for TCI and affiliated Companies and thank you for your steadfast dedication to the company.
2018 and 2019 have been met with unprecedented expansion and repositioning
for Pillar, TCI, SPC, and affiliated Companies. We ended 2018 with our largest and most strategic transactions, the newly created
subsidiary Victory Abode Apartments, LLC (“VAA”) Joint Venture and Bond Series B raised on the Tel Aviv Stock Exchange.
In 2019, the company recently raised an additional $78 million bond series C on the Tel Aviv Stock Exchange. This expanded offering
creates additional financial strength to our already thriving organization. With these existing and newly engaged projects and
our continuously burgeoning multifamily asset base, we are committed to the continued growth and education of our staff.
The JV’s primary focus is to create a
business platform that will allow dramatic expansion in the multifamily arena. The intent is to increase the overall size of the
portfolio over the next several years through strategic buildout of its robust development pipeline alongside opportunistic acquisitions.
All of these initiatives further demonstrate our ability to increase
shareholder value, aligning with the strategic direction we announced three years ago. Our company has been dramatically transformed
to a highly viable operating company with solid development capabilities in the multifamily arena. Our main goal has always been
to act in the best interest of the company and protect asset value for its investors. We continue to invest in new development
projects and grow the company’s asset base.
Revenues
Rental and other property revenues were $11.8
million for the three months ended June 30, 2019, compared to $31.6 million for the same period in 2018. The $19.8 million decrease
is primarily due to a decrease in the amount of multifamily residential apartment buildings currently in our portfolio of nine
as compared to fifty-three multifamily residential apartment buildings for the same period a year ago as a result of the deconsolidation
of forty-nine residential apartment properties that were sold into the VAA Joint Venture during the fourth quarter of 2018. As
the assets are now treated as unconsolidated investments, our share of rental revenues is part of income from unconsolidated investments
in the current period and are no longer treated as rental income.
Expenses
Property
operating expenses decreased by $8.2 million to $7.3 million for the three months ended June 30, 2019 as compared to $15.5 million
for the same period in 2018. The decrease in property operating expenses is primarily due to the deconsolidation of forty-nine
residential apartment properties that were sold into the VAA Joint Venture during the fourth quarter of 2018 which resulted in
a decrease in salary and related payroll expenses of $1.8 million, real estate taxes of approximately $2.4 million, management
fees paid to third parties of $0.7 million, and other general property operating and maintenance expenses of $3.3 million.
Depreciation and amortization decreased
by $3.1 million to $3.4 million during the three months ended June 30, 2019 as compared to $6.5 million for
the three months ended June 30, 2018. This decrease is primarily due to the deconsolidation of the residential apartments
in connection with our previous sale and contribution of our interests to the VAA Joint Venture.
General
and administrative expense was $3.3 million for the three months ended June 30, 2019 and $2.2 million for the same period in 2018.
The increase of $1.1 million in general and administrative expenses is due primarily to increases in fees paid to our Advisors
of $0.9 million and professional fees of $0.2 million.
Other income (expense)
Interest income was $4.9 million for the three months ended June
30, 2019, compared to $3.5 million for the same period in 2018. The increase of $1.4 million was due primarily to an increase
of $1.3 million in interest on the receivables owed by our Advisors.
Other income was $0.7 million for the three
months ended June 30, 2019, compared to $7.5 million for the same period in 2018. The decrease of $6.8 million was due primarily
to cash proceeds of $0.2 million received during the quarter ended June 30, 2019, from the collection of tax increment incentives
related to infrastructure development work at Mercer Crossing, located in Farmers Branch, Texas, and other miscellaneous income
of $0.5 million, compared to insurance proceeds received during the second quarter of 2018 of approximately $6.6 million as a result
of damages caused by a hurricane to one of our properties that was subsequently sold during the same quarter.
Mortgage
and loan interest expense
was $7.6 million for the three months ended June
30, 2019 as compared to $14.2 million for the same period in 2018. The decrease of $6.6 million is due to the
deconsolidation of
residential apartment properties
into
the VAA Joint Venture which were encumbered by mortgage debt.
Foreign currency transaction was a loss
of $2.3 million for the three months ended June 30, 2019 as compared to a gain of $5.9 million for the same period in 2018. The
foreign currency loss is due primarily to a decrease in the exchange rate of our Israel New Shekels (NIS) denominated corporate
bonds registered on the Tel-Aviv Stock Exchange. The exchange rate of the NIS to USD went from 3.63 at the beginning of the second
quarter to an exchange rate of 3.58 at June 30, 2019. As of June 30, 2019, we have outstanding bonds of $159.4 million (or NIS
570 million) and accrued interest payable of approximately $2.8 million (or NIS 10.1 million).
Loss from unconsolidated investments was a
net of $0.2 million for the three months ended June 30, 2019 as compared to a loss of $0.009 million for the three months ended
June 30, 2018. The loss from unconsolidated investments during the second quarter just ended was driven primarily from our share
in the losses reported by our VAA Joint Venture of $0.2 million.
Loss from the sale of income-producing property
increased for the three months ended June 30, 2019 as compared to the prior period. In the current period, we sold a multifamily
residential property, located in Mary Ester, Florida for a sales price of $3.1 million and recorded a loss of $0.08 million. There
were no apartment sales for the three months ended June 30, 2018.
Gain on land sales increased for the three
months ended June 30, 2019 as compared to the prior period. In the current period, we sold 41.6 acres of land for an aggregate
sales price of $7.6 million and recorded a gain of $2.1 million. There were no land sales for the three months ended
June 30, 2018.
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 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
.