American Realty Investors, Inc. Reports First Quarter 2013 Results

American Realty Investors, Inc. Reports First Quarter 2013 Results

DALLAS--(BUSINESS WIRE)-- American Realty Investors, Inc. (NYS: ARL) , a Dallas-based real estate investment company, today reported results of operations for the first quarter ended March 31, 2013. ARL announced today that the Company reported net loss applicable to common shares of $239,000 or $0.02 per diluted earnings per share, as compared to a net loss applicable to common shares of $6.9 million or $0.59 per diluted earnings per share for the same period ended 2012.

The Company has shown an unwavering commitment to fortify our portfolio and streamline our operational activity, while at the same time maintaining our commitment to creating value. We are pleased that we are seeing improvements in our operations from these endeavors and will continue to adapt to market challenges with an eye on both near-term economic challenges and long-term prospects as the real estate market improves.


Our apartment portfolio continues to thrive in the current economic conditions with occupancies averaging over 95%. We continue to work aggressively to attract new tenants and strive for continuous improvement of our properties in order to maintain our existing tenants.

Included in the net loss applicable to common shares of $239,000, for the three months ended March 31, 2013, is $5.0 million in depreciation and amortization expense, $2.5 million of amortization of deferred borrowing costs and $4.0 million of prepayment penalties incurred in the process of refinancing several apartment loans at lower interest rates. For the same period ending March 31, 2012, included in the net loss applicable to common shares of $6.9 million is $5.2 million in depreciation and amortization expense, $0.9 million of amortization of deferred borrowing costs and $2.4 million of prepayment penalties incurred in the process of refinancing several apartment loans at lower interest rates.

Rental and other property revenues as well as property operations have remained in line during the three months ended March 31, 2013 as they were in the same period ending March 31, 2012.

Mortgage and loan interest expense was $11.5 million for the three months ended March 31, 2013. This represents a decrease of $2.2 million, as compared to the same period ending March 31, 2012 interest expense of $13.7 million. This change, by segment, is a decrease in our apartment portfolio of $0.9 million, a decrease in our commercial portfolio of $1.0 million, and a decrease in our land and other portfolios of $0.3 million. Within the apartment portfolio, the same properties decreased $1.0 million. Within the commercial portfolio, the same properties decreased by $1.0 million primarily due to two commercial loans that were in default status and were accruing default interest and late fees during the prior period. After the settlement with the lenders, the loans have been accruing interest at a lower interest rate with no late fees. The decrease in the land and other segments relates to principal payments made during the periods, thereby requiring less future interest to be paid on debt obligations.

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, 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. For more information, visit the Company's website at www.americanrealtyinvest.com.

AMERICAN REALTY INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

For the Three Months Ended

March 31,

2013

2012

(dollars in thousands, except share
and per share amounts)

Revenues:

Rental and other property revenues (including $165 and $167 for the three months ended 2013 and 2012 respectively from related parties)

$

28,122

$

28,044

Expenses:

Property operating expenses (including $269 and $306 for the three months ended 2013 and 2012 respectively from related parties)

13,913

13,668

Depreciation and amortization

5,043

5,152

General and administrative (including $947 and $922 for the three months ended 2013 and 2012 respectively from related parties)

2,227

2,879

Provision on impairment of notes receivable and real estate assets

-

-

Advisory fee to related party

2,554

2,659

Total operating expenses

23,737

24,358

Operating income

4,385

3,686

Other income (expense):

Interest income (including $3,337 and $3,241 for the three months ended 2013 and 2012 respectively from related parties)

3,541

3,340

Other income (including $0 and $1,500 for the three months ended 2013 and 2012 respectively from related parties)

2,536

1,740

Mortgage and loan interest (including $910 and $922 for the three months ended 2013 and 2012 respectively from related parties)

(11,498

)

(13,713

)

Deferred borrowing costs amortization

(2,477

)

(913

)

Loan charges and prepayment penalties

(3,982

)

(2,393

)

Loss on sale of investments

-

(361

)

Earnings from unconsolidated investees

213

117

Total other expenses

(11,667

)

(12,183

)

Loss before gain on land sales, non-controlling interest, and taxes

(7,282

)

(8,497

)

Loss on land sales

(35

)

(1,021

)

Loss from continuing operations before tax

(7,317

)

(9,518

)

Income tax benefit

2,557

714

Net loss from continuing operations

(4,760

)

(8,804

)

Discontinued operations:

Income (loss) from discontinued operations

79

(1,547

)

Gain on sale of real estate from discontinued operations

7,227

3,588

Income tax expense from discontinued operations

(2,557

)

(714

)

Net income from discontinued operations

4,749

1,327

Net loss

(11

)

(7,477

)

Net loss attributable to non-controlling interest

385

1,177

Net income (loss) attributable to American Realty Investors, Inc.

374

(6,300

)

Preferred dividend requirement

(613

)

(613

)

Net loss applicable to common shares

$

(239

)

$

(6,913

)

Earnings per share - basic

Loss from continuing operations

$

(0.43

)

$

(0.71

)

Income from discontinued operations

0.41

0.12

Net loss applicable to common shares

$

(0.02

)

$

(0.59

)

Earnings per share - diluted

Loss from continuing operations

$

(0.43

)

$

(0.71

)

Income from discontinued operations

0.41

0.12

Net loss applicable to common shares

$

(0.02

)

$

(0.59

)

Weighted average common share used in computing earnings per share

11,525,389

11,525,389

Weighted average common share used in computing diluted earnings per share

11,525,389

11,525,389

Amounts attributable to American Realty Investors, Inc.

Loss from continuing operations

$

(4,375

)

$

(7,627

)

Income from discontinued operations

4,749

1,327

Net income (loss) applicable to American Realty Investors, Inc.

$

374

$

(6,300

)

AMERICAN REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

March 31,

December 31,

2013

2012

(dollars in thousands, except share and par value amounts)

Assets

Real estate, at cost

$

1,002,403

$

1,031,632

Real estate held for sale at cost, net of depreciation ($10,842 for 2013 and $4,393 for 2012)

19,510

17,040

Real estate subject to sales contracts at cost, net of depreciation ($16,212 and $15,948 in 2013 and 2012)

39,466

42,286

Less accumulated depreciation

(154,611

)

(160,525

)

Total real estate

906,768

930,433

Notes and interest receivable

Performing (including $112,582 and $114,275 in 2013 and 2012 from related parties)

119,203

120,998

Non-performing

4,199

4,175

Less allowance for estimated losses (including $18,962 in 2013 and 2012 from related parties)

(21,705

)

(21,704

)

Total notes and interest receivable

101,697

103,469

Cash and cash equivalents

8,262

17,141

Investments in unconsolidated investees

10,089

8,168

Other assets

63,603

76,134

Total assets

$

1,090,419

$

1,135,345

Liabilities and Shareholders' Equity

Liabilities:

Notes and interest payable

$

751,249

$

769,201

Notes related to assets held for sale

18,183

18,915

Notes related to subject to sales contracts

53,838

55,976

Stock-secured notes payable and margin debt

25,354

25,765

Related party payables

1,894

10,922

Deferred gain (including $71,303 in 2013 and 2012 from sales to related parties)

73,148

73,148

Accounts payable and other liabilities (including $16,443 and $15,746 in 2013 and 2012 to related parties)

82,355

96,314

1,006,021

1,050,241

Shareholders' equity:

Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 3,353,954 shares in 2013 and 2012 (liquidation preference $10 per share), including 900,000 shares in 2013 and 2012 held by subsidiaries

4,908

4,908

Common stock, $.01 par value, authorized 100,000,000 shares; issued 11,941,174 shares and outstanding 11,525,389 shares in 2013 and 2012

115

115

Treasury stock at cost; 415,785 shares in 2013 and 2012 and 229,214 shares held by TCI (consolidated) as of 2013 and 2012

(6,395

)

(6,395

)

Paid-in capital

105,005

105,700

Retained earnings

(52,697

)

(53,071

)

Accumulated other comprehensive income

(786

)

(786

)

Total American Realty Investors, Inc. shareholders' equity

50,150

50,471

Non-controlling interest

34,248

34,633

Total equity

84,398

85,104

Total liabilities and equity

$

1,090,419

$

1,135,345



American Realty Investors, Inc.
Gene Bertcher, 800-400-6407
Investor Relations
investor.relations@americanrealtyinvest.com

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS:

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