Business Wire | Aug 14, 2020 04:30PM EDT

American Realty Investors, Inc. Reports Earnings for Q2 2020

Aug. 14, 2020

DALLAS--(BUSINESS WIRE)--Aug. 14, 2020--American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the quarter ended June 30, 2020. For the three months ended June 30, 2020, The Company reported a net loss applicable to common shares of $2.3 million or $0.14 per diluted share, compared to a net loss applicable to common shares of $2.8 million or $0.17 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant on the Company's results of operations or cash flows during the three months ended June 30, 2020.

* The Company collected approximately 97% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 98% from office tenants. * The Company did not grant any abatements or significant deferments of rents. * Occupancy at its non-lease up properties remains stable at 87% at June 30, 2020 in comparison to 89% at June 30, 2019. * The Company continued to obtain positive leasing spreads for new leases and renewals at it properties. * Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.

The future impact of COVID-19 on the Company's business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

Financial Results

Rental and other property revenues were $11.9 million for the three months ended June 30, 2020 and 2019. For the quarter ended June 30, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.

Property operating expenses decreased to $5.8 million for the three months ended June 30, 2020 from $7.3 million for the same period in 2019. The decrease of $1.5 million in property operating expenses was primarily due to a reduction in property taxes and maintenance costs.

General and administrative expense decreased to $1.7 million for the three months ended June 30, 2020 from $2.4 million for the same period in 2019. The decrease of $0.7 million in general and administrative expenses was primarily due to a reduction in professional fees.

Interest income decreased to $5.3 million for the three months ended June 30, 2020 from $6.5 million for the same period in 2019. The decrease of $1.2 million in interest income was primarily due to a decrease in notes receivable from related parties.

Other income decreased to $2.8 million for the three months ended June 30, 2020 from $3.4 million for the same period in 2019. The decrease of $0.6 million in other income was primarily due to a decrease in tax incentive finance proceeds.

Foreign currency transaction was a loss of $5.6 million for the three months ended June 30, 2020 as compared to a loss of $2.3 million for the same period in 2019. The increase is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

Loss from unconsolidated investments was $0.7 million for the three months ended June 30, 2020, compared to a loss of $0.2 million for the same period in 2019. The increase in loss from unconsolidated investments during the quarter was primarily due to an increase in depreciation and amortization expense related to the VAA Joint Venture.

Gain on land sales was $5.3 million for the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. In the current period the Company sold approximately 25.9 acres of land for an aggregate sales price of $6.6 million which resulted in a gain of $5.3 million. For the same period in 2019, the Company sold approximately 41.6 acres of land for an aggregate sales price of $7.6 million which resulted in a gain of $2.5 million.

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. The Company's primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). 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 For the Six Months Ended June 30, June 30,

2020 2019 2020 2019

(dollars in thousands, except per share amounts)

Revenues: Rental and other property revenues (including $280 and $202 for the three months and $546 $ 11,947 $ 11,840 $ 23,865 $ 23,769 and $413 for the six months ended 2020 and 2019, respectively, from related parties) Expenses: Property operating expenses (including $254 and $246 for the three months ended 5,810 7,323 12,120 13,320 and $496 and $504 for the six months ended 2020 and 2019, respectively, from related parties) Depreciation 3,418 3,439 6,812 6,548 and amortization General and administrative (including $765 and $985 for the three months ended and $1,898 and 1,669 2,419 4,464 5,024 $2,582 for the six months ended 2020 and 2019, respectively, from related parties) Franchise taxes - 585 1,496 585 and other expenses Net income fee 112 90 198 190 to related party Advisory fee to 2,241 2,361 4,528 4,214 related party Total operating 13,250 16,217 29,618 29,881 expenses Net operating (1,303 ) (4,377 ) (5,753 ) (6,112 ) loss Other income (expenses): Interest income (including $5,129 and $6,207 for the three months ended and $9,755 and 5,284 6,505 11,038 12,658 $12,304 for the six months ended 2020 and 2019, respectively, from related parties) Other income 2,794 3,364 4,006 7,031

Mortgage and loan interest (including $1,543 and $2,385 for the three months ended and (9,071 ) (9,408 ) (18,673 ) (19,376 ) $3,458 and $4,692 for the six months ended 2020 and 2019, respectively, from related parties) Foreign currency (5,599 ) (2,325 ) 2,244 (8,143 ) transaction (loss) gain Equity loss (735 ) (236 ) (1,111 ) (1,291 ) from VAA Earnings from unconsolidated 16 173 132 231 subsidiaries and investees Total other (7,311 ) (1,927 ) (2,364 ) (8,890 ) income (expenses) Income (loss) before gain on land sales, (8,614 ) (6,304 ) (8,117 ) (15,002 ) non-controlling interest, and taxes Loss on sale of income - (80 ) - (80 ) producing properties Gain on land 5,339 2,517 9,477 4,733 sales Net income (3,275 ) (3,867 ) 1,360 (10,349 ) (loss) before taxes State income (49 ) - (296 ) - tax expense Net income (3,324 ) (3,867 ) 1,064 (10,349 ) (loss) Net (income) loss 1,018 1,089 (424 ) 1,424 attributable to non-controlling interest Net income (loss) (2,306 ) (2,778 ) 640 (8,925 ) attributable to American Realty Investors, Inc. Net income (loss) $ (2,306 ) $ (2,778 ) $ 640 $ (8,925 ) applicable to common shares (Loss) earnings per share- basic Net income $ (0.21 ) $ (0.24 ) $ 0.07 $ (0.65 ) (loss) Net income (loss) $ (0.14 ) $ (0.17 ) $ 0.04 $ (0.56 ) applicable to common shares (Loss) earnings per share- diluted Net income $ (0.21 ) $ (0.24 ) $ 0.07 $ (0.65 ) (loss) Net income (loss) $ (0.14 ) $ (0.17 ) $ 0.04 $ (0.56 ) applicable to common shares Weighted average common shares used in 15,997,076 15,997,076 15,997,076 15,997,076 computing earnings per share Weighted average common shares used in 15,997,076 15,997,076 15,997,076 15,997,076 computing diluted earnings per share Amounts attributable toAmerican RealtyInvestors, Inc. Net income $ (3,324 ) $ (3,867 ) $ 1,064 $ (10,349 ) (loss) Net income (loss) $ (2,306 ) $ (2,778 ) $ 640 $ (8,925 ) applicable to American Realty Investors, Inc.

AMERICAN REALTY INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

June 30, December 2020 31, 2019

(Unaudited) (Audited)

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

Assets

Real estate, at cost $ 484,639 $ 469,997

Real estate subject to sales contracts at cost 6,307 7,966

Less accumulated depreciation (96,002 ) (90,173 )

Total real estate 394,944 387,790

Notes and interest receivable (including $110,827 in 180,146 169,299 2020 and $106,081 in 2019 from related parties)Less allowance for estimated losses (including (12,557 ) (13,099 )$12,557 and $13,099 in 2020 and 2019 from relatedparties)Total notes and interest receivable 167,589 156,200

Cash and cash equivalents 42,461 51,228

Restricted cash 30,114 32,083

Investment in VAA 52,773 59,148

Investment in other unconsolidated investees 8,639 8,507

Receivable from related party 75,923 85,996

Other assets 55,846 49,689

Total assets $ 828,289 $ 830,641

Liabilities and Shareholders' Equity

Liabilities:Notes and interest payable $ 263,325 $ 254,873

Bond and interest payable 218,216 229,722

Deferred revenue (including $25,660 in 2020 and 25,660 24,762 $24,762 in 2019 to related parties)Accounts payable and other liabilities (including 23,508 24,768 $12,267 in 2020 and $11,817 in 2019 to relatedparties)Total liabilities 530,709 534,125

Shareholders' equity: Preferred stock, Series A: $2.00 par value,authorized 15,000,000 shares, issued 614 and 5 5 outstanding 1,800,614 in 2020 and 2019 (liquidationpreference $10 per share), including 1,800,000 sharesheld by ARL and its subsidiaries in 2020 and 2019.Common stock, $0.01 par value, 100,000,000 sharesauthorized; 16,412,861 shares issued and 15,997,076 164 164 outstanding as of 2020 and 2019, including 140,000shares held by TCI (consolidated) in 2020 and 2019.Treasury stock at cost; 415,785 shares in 2020 and (6,395 ) (6,395 )2019, and 140,000 shares held by TCI (consolidated)as of 2020 and 2019.Paid-in capital 82,017 82,017

Retained earnings 164,348 163,708

Total American Realty Investors, Inc. shareholders' 240,139 239,499 equityNon-controlling interest 57,441 57,017

Total shareholders' equity 297,580 296,516

Total liabilities and shareholders' equity $ 828,289 $ 830,641



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CONTACT: American Realty Investors, Inc. Investor Relations Daniel Moos (469) 522-4200 investor.relations@transconrealty-invest.com