EXHIBIT 99.1
NEWS RELEASE FOR IMMEDIATE RELEASE | Contact: American Realty Investors, Inc. Investor Relations (800) 400-6407 investor.relations@primeasset.com |
American Realty Investors, Inc. Reports 2005 Results
DALLAS (March 31, 2006) -- American Realty Investors, Inc. (NYSE: ARL), a Dallas-based real estate investment company, announced today that the Company reported net income applicable to common shares of $12.8 million and $44.8 million, or $1.26 and $4.42 per share, for the three and twelve months ended December 31, 2005, compared to net income of $47.6 million and $30.6 million, or $4.56 and $2.90 per share, in the same periods in 2004.
Income, sales, and related expenses and costs for the three and twelve months of 2005 resulted in increased operating income of $3.9 million and $12.5 million, compared to operating losses of $(7.4) million and $(8.7) million in the 2004 comparable periods, and included:
- Increases in income from rents to $44.4 million and $165.8 million in 2005, from $39.4 million and $146.6 million in 2004. The increase was primarily attributable to completed apartment construction and the August 2005 acquisition of the 600 Las Colinas office building in Dallas, Texas.
- A decline in property operations expense in the comparable quarters, from $31.8 million in 2004 to $29.1 million in 2005. For the year, property operations expense increased to $112.3 million compared to $110.0 million in 2004. The year-over-year increase was primarily attributable to completed apartment construction.
- Increases in restaurant sales to $9.5 million and $36.8 million in 2005, from $8.9 million and $34.5 million in 2004. Cost of sales increased to $7.0 million and $27.9 million in 2005, from $6.8 million and $26.7 million in 2004. The increases were primarily attributable to same-store sales increases during 2005. Also, two new concepts were not open during the 2004 periods.
- Other operating expenses - consisting of depreciation and amortization, general and administrative expenses, and advisory fees to affiliate - were $13.9 million and $50.0 million in 2005, compared to $17.1 million and $53.1 million in 2004. Depreciation and amortization, general and administrative expenses and advisory fees all declined for the quarter as well as for the year.
Other income items - consisting of interest from notes receivable, gain on foreign currency transaction, gain on settlement of debt, and other income - decreased to $2.2 million and $8.7 million in the three and twelve months of 2005, compared to $19.1 million and $25.3 million in 2004. The decrease was primarily attributable to decreases in gain on foreign currency transaction and gain on settlement of debt.
Other expense items - consisting of mortgage and loan interest expense, discount on sale of notes receivable, net income fee to affiliate, incentive fee to affiliate, litigation settlement and charges for asset impairment -- decreased to $18.3 million and $68.3 million in the three and twelve months of 2005 from $36.3 million and $79.3 million in 2004. The decrease was primarily attributable to decreases in litigation settlement and provision for asset impairment.
Gain on land sales declined for the quarter, from $8.2 million in 2004 to $5.4 million in 2005. For the year however, gain on land sales increased to $39.9 million compared to $11.8 million in 2004, primarily due to the 2005 sale of 149 acres of land in Palm Desert, California.
Income from discontinued operations decreased to $22.6 million and $57.3 million in 2005, compared to $70.3 and $91.4 million in 2004, representing 25 properties sold or held-for-sale in 2005 and 27 properties sold in 2004.
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, hotels, shopping centers and developed and undeveloped land. For more information, go to ARI's web site at www.amrealtytrust.com
AMERICAN REALTY INVESTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| | For the Three Months
Ended December 31, | For the Twelve Months
Ended December 31, |
| | 2005 | 2004 | 2005 | 2004 |
| | (dollars in thousands) |
| | |
Rental and other property revenues | $44,423 | $39,429 | $165,821 | $146,599 |
Restaurant sales | 9,487 | 8,866 | 36,818 | 34,525 |
Total operating revenues | 53,910 | 48,295 | 202,639 | 181,124 |
| | | | | |
Property operating expenses | 29,144 | 31,805 | 112,297 | 109,996 |
Restaurant cost of sales | 6,998 | 6,788 | 27,906 | 26,713 |
Other operating expenses | 13,852 | 17,129 | 49,963 | 53,093 |
Total operating expenses | 49,994 | 55,722 | 190,166 | 189,802 |
| | | | | |
Operating income (loss) | 3,916 | (7,427) | 12,473 | (8,678) |
| | | | | |
Other income | 2,245 | 19,115 | 8,738 | 25,294 |
Other expenses | (18,286) | (36,303) | (68,336) | (79,287) |
| | | | | |
Loss before gain on land sales, minority interest, and equity in earnings of investees | (12,125) | (24,615) | (47,125) | (62,671) |
| | | | | |
Gain on land sales | 5,401 | 8,198 | 39,926 | 11,781 |
Minority interest | (2,647) | (8,111) | (3,056) | (7,270) |
Equity in income (loss) of investees | 114 | 2,465 | 397 | (41) |
| | | | | |
Loss from continuing operations | (9,257) | (22,063) | (9,858) | (58,201) |
| | | | | |
Income from discontinued operations | 22,640 | 70,313 | 57,275 | 91,395 |
| | | | | |
Net income | 13,383 | 48,250 | 47,417 | 33,194 |
Preferred dividend requirement | (623) | (650) | (2,572) | (2,601) |
| | | | | |
Net income applicable to common shares | $12,760 | $47,600 | $44,845 | $30,593 |
| | | | | |
Basic and diluted earnings per share: | | | | |
Net income (loss) from continuing operations | $(0.97) | $(2.17) | $(1.22) | $(5.76) |
Discontinued operations | 2.23 | 6.73 | 5.64 | 8.66 |
Net income (loss) applicable to common shares | $1.26 | $4.56 | $4.42 | $2.90 |
| | | | | |
Weighted average Common shares used to compute earnings per share: | | | |
Basic and diluted | 10,149,000 | 10,448,389 | 10,149,000 | 10,559,571 |
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
| | December 31, 2005 | December 31, 2004 |
| | (dollars in thousands) |
Assets | |
Real estate held for investment | $ 1,025,661 | $ 877,677 |
Less--accumulated depreciation | (153,597) | (157,138) |
| | 872,064 | 720,539 |
| | | |
Real estate held for sale, net of depreciation | 172,303 | 192,533 |
Real estate subject to sales contract | 68,738 | 70,350 |
| | | |
Notes and interest receivable | | |
Performing ($44,500 in 2005 and $43,605 in 2004 from affiliates) | 70,894 | 67,894 |
Non-performing | 11,546 | 6,632 |
| | 82,440 | 74,526 |
Less--allowance for estimated losses | (1,000) | (1,865) |
| | 81,440 | 72,661 |
| | | |
Restaurant equipment | 13,911 | 13,747 |
Less--accumulated depreciation | (7,528) | (6,608) |
| | 6,383 | 7,139 |
| | | |
Marketable securities, at market value | 7,446 | 6,670 |
Cash and cash equivalents | 13,904 | 22,401 |
Investments in equity investees | 13,521 | 8,212 |
Goodwill, net of accumulated amortization ($1,763 in 2005 and 2004) | 11,858 | 11,858 |
Other intangibles, net of accumulated amortization ($926 in 2005 and $871 in 2004) | 1,449 | 1,480 |
Other assets ($30,441 in 2005 and $27,704 in 2004 from affiliates) | 96,689 | 77,000 |
| | $ 1,345,795 | $ 1,190,843 |
| | | |
Liabilities and Stockholders' Equity | | |
Liabilities | | |
Notes and interest payable ($45,530 in 2005 and $36,298 in 2004 to affiliate) | $ 817,944 | $ 722,985 |
Liabilities related to assets held-for-sale | 144,555 | 156,959 |
Liabilities subject to sales contract | 59,323 | 59,977 |
Stock-secured notes payable | 22,549 | 18,663 |
Accounts payable and other liabilities ($4,667 in 2005 and $2,557 in 2004 to affiliates) | 93,842 | 71,357 |
| | 1,138,213 | 1,029,941 |
| | | |
Commitments and contingencies | | |
| | | |
Minority interest | 59,185 | 57,893 |
| | | |
Stockholders' equity | | |
Preferred Stock, $2.00 par value, authorized 50,000,000 shares, issued and outstanding | | |
Series A, 3,390,913 shares in 2005 and 3,469,350 shares in 2004 (liquidation preference $33,909), including 900,000 shares in 2005 and 2004 held by subsidiaries | 4,982 | 5,139 |
Series E, 50,000 shares in 2004 | -- | 100 |
Common Stock, $.01 par value, authorized 100,000,000 shares; issued 11,592,272 shares in 2005 and 2004 | 114 | 114 |
Treasury stock, at cost, 1,443,272 shares in 2005 and 2004 | (15,146) | (15,146) |
Paid-in capital | 93,389 | 94,416 |
Retained earnings | 64,805 | 19,934 |
Accumulated other comprehensive income (loss) | 253 | (1,548) |
| | 148,397 | 103,009 |
| | $ 1,345,795 | $ 1,190,843 |
