American Realty Investors, Inc. Reports Earnings for Quarter Ended September 30, 2024

DALLAS--(BUSINESS WIRE)--November 07, 2024-- 

American Realty Investors, Inc. $(ARL)$ is reporting its results of operations for the three months ended September 30, 2024. For the three months ended September 30, 2024, we reported net income attributable to common shares of $17.5 million or $1.08 per diluted share, compared to net income attributable to common shares of $3.0 million or $0.18 per diluted share for the same period in 2023.

Financial Highlights

   -- Total occupancy was 79% at September 30, 2024, which includes 95% at our 
      multifamily properties and 48% at our commercial properties. 
 
   -- On July 10, 2024, we replaced the existing loan on Forest Grove with a 
      $6.6 million loan that bears interest at SOFR plus 1.85% and matures on 
      August 1, 2031. 
 
   -- On October 18, 2024, we completed a 45,000 square foot lease at Stanford 
      Center. This is the first new lease at the property following our major 
      renovation of the property. The new lease provides a 14% increase in 
      occupancy to the property and a 20% increase in rent per square foot over 
      recent expired leases at the property. The lease is expected to commence 
      in April 2025. 
 
   -- On October 21, 2024, we obtained a $27.5 million construction loan to 
      finance the development of a 234 unit multifamily property in Dallas, 
      Texas ("Mountain Creek") that is expected to be completed in 2026 for a 
      total cost of approximately $49.8 million. The construction loan on 
      Mountain Creek bears interest at SOFR plus 3.45% and matures on October 
      20, 2026. 
 
   -- On October 31, 2024, we paid $23.4 million to resolve all claims 
      litigation with David Clapper and related entities related (collectively, 
      the "Clapper") that had been ongoing since 1999. The matter originally 
      involved a transaction in 1998 in which we were to acquire eight 
      multifamily properties from the Clapper. As a result of the settlement, 
      we accrued a loss on real estate transactions of $23.4 million during the 
      three and nine months ended September 30, 2024. 

Financial Results

Rental revenues decreased $0.8 million from $11.8 million for the three months ended September 30, 2023 to $11.1 million for the three months ended September 30, 2024. The decrease in rental revenue is primarily due to a decrease in occupancy at our commercial properties. We expect occupancy to improve in the fourth quarter due to our recently completed 45,000 square foot lease at Stanford Center.

Net operating loss was $2.1 million for the three months ended September 30, 2023 and September 30, 2024. Our decrease in revenue was offset by a decrease in operating expenses, including a decrease in general and administrative expenses.

Net income attributable to common shares decreased $20.4 million from net income of $3.0 million for the three months ended September 30, 2023 to a net loss of $17.5 million for the three months ended September 30, 2024. The decrease in net income is primarily attributed to our accrual of the $23.4 million Clapper Settlement in 2024.

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. $(TCI)$. For more information, visit the Company's website at www.americanrealtyinvest.com.

 
 
                           AMERICAN REALTY INVESTORS, INC. 
                        CONSOLIDATED STATEMENTS OF OPERATIONS 
                  (Dollars in thousands, except per share amounts) 
                                     (Unaudited) 
 
 
                              Three Months Ended 
                                September 30,         Nine Months Ended September 30, 
                          --------------------------  ------------------------------- 
                              2024          2023           2024             2023 
                          ------------  ------------  ---------------  -------------- 
 
Revenues: 
      Rental revenues     $    11,074   $    11,838   $    33,541      $    34,236 
      Other income                533           688         1,738            2,217 
                           ----------    ----------    ----------       ---------- 
         Total revenue         11,607        12,526        35,279           36,453 
                           ----------    ----------    ----------       ---------- 
Expenses: 
      Property operating 
       expenses                 6,989         7,443        20,247           20,580 
      Depreciation and 
       amortization             3,120         3,313         9,429            9,615 
      General and 
       administrative           1,590         1,579         4,550            8,424 
      Advisory fee to 
       related party            1,971         2,295         5,910            6,883 
                           ----------    ----------    ----------       ---------- 
         Total operating 
          expenses             13,670        14,630        40,136           45,502 
                           ----------    ----------    ----------       ---------- 
         Net operating 
          loss                 (2,063)       (2,104)       (4,857)          (9,049) 
Interest income                 5,506         9,008        16,033           25,201 
Interest expense               (2,123)       (1,954)       (5,958)          (7,574) 
Gain on foreign currency 
 transactions                       -             -             -              993 
Loss on early 
 extinguishment of debt             -             -             -           (1,710) 
Equity in income from 
 unconsolidated joint 
 ventures                         423           234         1,407            2,946 
(Loss) gain on real 
 estate transactions          (23,400)          (32)      (23,400)             156 
Income tax provision            4,641        (1,127)        3,552           (2,416) 
                           ----------    ----------    ----------       ---------- 
Net (loss) income             (17,016)        4,025       (13,223)           8,547 
Net income attributable 
 to noncontrolling 
 interest                        (444)       (1,037)       (1,319)          (2,456) 
                           ----------    ----------    ----------       ---------- 
Net (loss) income 
 attributable to the 
 common shares            $   (17,460)  $     2,988   $   (14,542)     $     6,091 
                           ==========    ==========    ==========       ========== 
Earnings per share 
      Basic and diluted   $     (1.08)  $      0.18   $     (0.90)     $      0.38 
                           ==========    ==========    ==========       ========== 
Weighted average common 
 shares used in 
 computing earnings per 
 share 
      Basic and diluted    16,152,043    16,152,043    16,152,043       16,152,043 
                           ==========    ==========    ==========       ========== 
 

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    CONTACT:    American Realty Investors, Inc. 

Investor Relations

Erik Johnson (469) 522-4200

investor.relations@americanrealtyinvest.com

(END) Dow Jones Newswires

November 07, 2024 17:00 ET (22:00 GMT)