EXHIBIT 99.1
NEWS RELEASE FOR IMMEDIATE RELEASE | Contact: Transcontinental Realty Investors Investor Relations (800) 400-6407 investor.relations@primeasset.com |
Transcontinental Realty Reports 2006 First Quarter Results
DALLAS (May 15, 2006) -- Transcontinental Realty Investors, Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported net loss applicable to common shares of ($8.5) million, or ($1.08) per share for the three months ended March 31, 2006 compared to net income of $4.3 million, or $0.54 per share for the same period in 2005. Although rental revenues and operating income both increased, the Company’s net income swung to a loss due mainly to higher interest expense from 2005 land acquisitions and lower gains on property sales driven by fewer transactions.
Rental income increased to $30.3 million from $22.6 million in 2005, due principally to the completion of apartment construction projects and increased rental revenues from the 2005 acquisition of commercial properties.
Expenses for the three months ended March 31, 2006, compared to the same period in 2005, included:
| · | Operating expenses of $18.4 million, compared to $14.5 million in 2005. The increase is primarily due to the completion of apartment construction projects along with the 2005 acquisition of commercial properties. |
| · | Depreciation and amortization of $5.0 million, compared to $3.8 million in 2005. The increase is related to the purchase of commercial properties in 2005. |
| · | Interest expense of $12.7 million, compared to $8.4 million in 2005. The increase is primarily due to new debt from the completion of apartment construction projects and financing related to land acquisitions and the purchase of commercial properties in 2005. |
Results of discontinued operations, before income taxes, swung to a loss of ($689,000) compared to income of $7.9 million in 2005, due mainly to fewer property sales in 2006. In the first quarter of 2005, among other transactions, TCI sold the Institute Place office building in Chicago, recognizing a gain of $10.1 million. In the first quarter of 2006, TCI sold 10.5 acres of land in Dallas recognizing a gain of $331,000.
About Transcontinental Realty Investors, Inc.,
Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, invests in real estate through direct equity ownership and partnerships nationwide. For more information, go to the web site at www.transconrealty-invest.com.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
| | | For the Three Months Ended March 31, | |
| | | 2006 | | 2005 | |
| Property revenue: | | | | | |
Rents and other property revenues | | $ | 30,303 | | $ | 22,597 | |
| | | | | | | | |
| Expenses: | | | | | | | |
Property operations (including $1,491 in 2006 and $1,240 in 2005 to affiliates and related parties) | | | 18,351 | | | 14,455 | |
Depreciation and amortization | | | 5,029 | | | 3,812 | |
General and administrative (including $0 in 2006 and $475 in 2005 to affiliates and related parties) | | | 1,372 | | | 1,465 | |
Advisory fees | | | 2,026 | | | 1,752 | |
| Total operating expenses | | | 26,778 | | | 21,484 | |
| | | | | | | | |
Operating income | | | 3,525 | | | 1,113 | |
| | | | | | | | |
| Other income (expense): | | | | | | | |
Interest income (including $424 in 2006 and $550 in 2005 from affiliates and related parties) | | | 875 | | | 845 | |
Gain on foreign currency transaction | | | 2 | | | — | |
Mortgage and loan interest | | | (12,723 | ) | | (8,412 | ) |
Provision for asset impairment | | | — | | | — | |
Provision for losses | | | — | | | — | |
Discount on sale of note receivables | | | — | | | — | |
Net income fee | | | — | | | (325 | ) |
Gain on settlement of debt | | | — | | | — | |
Gain on condemnation award | | | — | | | — | |
Other income (expense) | | | 257 | | | — | |
| Total other income (expense) | | | (11,589 | ) | | (7,892 | ) |
| | | | | | | | |
| Loss before gain on land sales, equity in earnings of investees and minority interest | | | (8,064 | ) | | (6,779 | ) |
| | | | | | | | |
| Gain on land sales | | | 331 | | | 14 | |
| Equity in earnings of investees | | | 103 | | | 1,191 | |
| Minority interest | | | (172 | ) | | 155 | |
| | | | 262 | | | 1,360 | |
| | | | | | | | |
| Loss from continuing operations | | | (7,802 | ) | | (5,419 | ) |
| Add: income tax benefit (expense) | | | 2,731 | | | 1,897 | |
Net loss from continuing operations | | | (5,071 | ) | | (3,522 | ) |
| | | | | | | | |
| Income (loss) from discontinued operations (See NOTE 9) | | | (689 | ) | | 9,767 | |
| Less: income tax benefit (expense) | | | (2,731 | ) | | (1,897 | ) |
| Net income (loss) from discontinued operations | | | (3,420 | ) | | 7,870 | |
| | | | | | | | |
Net income (loss) | | | (8,491 | ) | | 4,348 | |
| | | | | | | | |
| Preferred dividend requirement | | | (53 | ) | | (52 | ) |
| Net income applicable to common shares | | $ | (8,544 | ) | $ | 4,296 | |
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
| | | March 31, 2006 | | December 31, 2005 | |
| | | (dollars in thousands) | |
| | | (unaudited) | | | |
Assets | | | |
| Real estate held for investment | | $ | 976,679 | | $ | 911,981 | |
| Less—accumulated depreciation | | | (82,713 | ) | | (78,096 | ) |
| | | | 893,966 | | | 833,885 | |
| | | | | | | | |
| Real estate held-for-sale | | | 40,287 | | | 40,446 | |
| Real estate subject to sales contract | | | 68,326 | | | 68,738 | |
| | | | | | | | |
| Notes and interest receivable | | | | | | | |
Performing (including $33,947 in 2006 and $34,370 in 2005 from affiliates and related parties) | | | 49,764 | | | 59,922 | |
Non-performing, non-accruing | | | 4,896 | | | 4,896 | |
| | | | 54,660 | | | 64,818 | |
| | | | | | | | |
| Less—allowance for estimated losses | | | — | | | — | |
| | | | 54,660 | | | 64,818 | |
| | | | | | | | |
| Investment in real estate entities | | | 24,764 | | | 24,659 | |
| Marketable equity securities, at market value | | | 7,446 | | | 7,446 | |
| Cash and cash equivalents | | | 5,047 | | | 5,462 | |
| Other assets (including $1,085 in 2006 and $1,103 in 2005 from affiliates and related parties) | | | 50,529 | | | 43,625 | |
| | | $ | 1,145,025 | | $ | 1,089,079 | |
| | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
| Liabilities: | | | | | | | |
| Notes payable (including $6,769 in 2006 and $6,769 in 2005 to affiliates and related parties) | | $ | 701,255 | | $ | 654,882 | |
| Interest payable (including $377 in 2006 and $218 in 2005 to affiliates and related parties) | | | 3,475 | | | 3,510 | |
| Liabilities related to assets held-for-sale | | | 48,706 | | | 53,084 | |
| Liabilities related to assets subject to sales contract | | | 58,516 | | | 58,685 | |
| Other liabilities (including $16,595 in 2006 and $15,669 in 2005 to affiliates and related parties) | | | 74,557 | | | 66,500 | |
| | | | 886,509 | | | 836,661 | |
| | | | | | | | |
| Commitments and contingencies | | | | | | | |
| | | | | | | | |
Minority interest | | | 16,074 | | | 1,239 | |
| | | | | | | | |
| Stockholders’ equity: | | | | | | | |
| Preferred Stock | | | | | | | |
Series C Cumulative Convertible; $.01 par value; authorized, issued and outstanding 30,000 shares; (liquidation preference $3,000) | | | — | | | — | |
Common Stock, $.01 par value; authorized, 10,000,000 shares; issued and outstanding 7,900,869 shares at March 31, 2006 and December 31, 2005 | | | 81 | | | 81 | |
| Additional paid-in capital | | | 256,441 | | | 256,494 | |
| Treasury stock | | | (3,086 | ) | | (3,086 | ) |
| Accumulated deficit | | | (10,337 | ) | | (1,846 | ) |
| Accumulated other comprehensive loss | | | (657 | ) | | (464 | ) |
| | | | 242,442 | | | 251,179 | |
| | | $ | 1,145,025 | | $ | 1,089,079 | |
