EXHIBIT 99.1
NEWS RELEASE | ||
FOR IMMEDIATE RELEASE | Contact: | |
Transcontinental Realty Investors, Inc. | ||
Investor Relations | ||
(800) 400-6407 | ||
investor.relations@primeasset.com |
Transcontinental Realty Investors, Inc. Reports Fourth Quarter 2006 Results
DALLAS (April 2, 2007) — Transcontinental Realty Investors. Inc. (NYSE: TCI), a Dallas-based real estate investment company, today reported net income applicable to common shares of $115 million, or $1.42 per diluted share for the fourth quarter ended December 31, 2006, compared to net income of $12.0 million, or $1.52 per diluted share for the fourth quarter ended December 31, 2005.
TCI also reported net income applicable to common shares of $3.3 million or $0.40 per diluted share for the year ended December 31, 2006 compared to net income of $8.9 million or $1.12 per diluted share for the year ended December 31, 2005.
Results for the fourth quarter ended December 31, 2006:
• | Increases in rents and other property revenues of $6.1 million, from $29.5 million in 2005 to $35.6 million in 2006. The increase was primarily attributable to the continued leaseup of developed residential apartment communities, 2006 acquisitions of existing apartment communities and increased hotel revenues driven by higher room rates and average occupancies. | |
• | Increases in property operations expenses of $5.8 million, from $16.7 million in 2005 to $22.5 million in 2006. The increase was primarily attributable to the continued leaseup of developed residential apartment communities, 2006 acquisitions of existing apartment communities and increases in hotel and land operating expenses. | |
• | Although net operating income from real estate activities increased $200,000, from $12.8 million in 2005 to $13.0 million in 2006, overall operating income decreased $800,000 from 2005 due to higher depreciation charges in 2006 (due primarily to completed development projects and acquisitions) and higher asset-based advisory fees expense. | |
• | 2006 gain on involuntary conversion of $20.5 million relates to hurricane damage sustained at the Company’s New Orleans office buildings from Hurricane Katrina in 2005. In 2006, the Company received $45.0 million (including business interruption) in insurance proceeds and has spent $7.3 million to repair the New Orleans properties: $7.2 million has been reserved to fund remaining repairs. Two of the three New Orleans properties have reopened; the third building is closed. TCI has reduced the carrying value of the closed property to an amount equal to the value of the underlying land. | |
• | Interest expense increased $2.8 million, from $11.3 million in 2005 to $14.1 million in 2006. The increase was primarily attributable to 2006 land acquisitions and refinancings of existing land loans, certain apartment projects and hotels. Rising interest payments on the Company’s variable-rate debt also contributed to the overall increase. | |
• | Gain on land sales decreased $3.5 million in 2006 compared to 2005. In 2005, the company sold 6.4 acres at an average sales price of $727,000 per acre, generating net cash proceeds of $1.2 million. There were no land sales during the comparable period in 2006. | |
• | Income from discontinued operations declined $12.1 million, from $14.7 million in 2005 to $2.6 million in 2006. In 2005, TCI sold four operating properties, comprised of 463 residential apartment units for an average of $43,000 per unit and approximately 200,000 square feet of commercial and industrial property for an average of $76 per foot. No operating properties were sold in the comparable period of 2006. |
Results for the year ended December 31, 2006:
• | Increases in rents and other property revenues of $25.0 million, from $103.1 million in 2005 to $128.1 million in 2006. The increase was primarily attributable to the continued leaseup of developed residential apartment communities. 2006 acquisitions of existing apartment communities, increases in rental revenues from commercial properties driven primarily by 2005 acquisitions and increased hotel revenues driven by higher room rates and average occupancies during 2006. | |
• | Increases in property operations expenses of $16.1 million, from $62.9 million in 2005 to $79.0 million in 2006. The increase was primarily attributable to the continued leaseup of developed residential apartment communities, 2006 acquisitions of existing apartment communities, increases in property operations expenses from commercial properties driven primarily by 2005 acquisitions and increases in hotel and land operating expenses. | |
• | Net operating income increased $8.9 million, from $40.2 million in 2005 to $49.1 million in 2006, and overall operating income increased $3.7 million from 2005 due primarily to improved operating performance in the apartment, commercial and hotel segments, which were partially offset by increased depreciation expense as a result of property additions in late 2005 and 2006. | |
• | 2006 gain on involuntary conversion of $20.5 million relates to hurricane damage sustained at the Company’s New Orleans office buildings from Hurricane Katrina in 2005. In 2006, the Company received $45.0 million in insurance proceeds and has spent $7.3 million to repair the New Orleans properties; $7.2 million has been reserved to fund remaining repairs. Two of the three New Orleans properties have reopened; the third building is closed. TCI has reduced the carrying value of the closed property to an amount equal to the value of the underlying land. | |
• | Interest expense increased $12.6 million, from $39.2 million in 2005 to $51.8 million in 2006. The increase was primarily attributable to 2006 land acquisitions and refinancings of existing land loans ($5.8 million), 2005 commercial property acquisitions ($3.6 million) and refinancings of certain apartment projects ($2.9 million) and hotels ($300,000). Rising interest payments on the Company’s variable-rate debt also contributed to the overall increase. | |
• | Gain on land sales increased $3.7 million in 2006 compared to 2005. In 2006, the Company sold 192.6 acres (187.1 acres located in Texas) in seven separate transactions at an average sales price of $196,000 per acre, generating net cash proceeds of $20.4 million and recognized gains of $11.4 million. In 2005, the Company sold 66.7 acres (all located in Texas) in nine separate transactions at an average sales price of $428,000 per acre, generating net cash proceeds of $11.8 million and recognized gains of $7.7 million. | |
• | Income from discontinued operations (net of income taxes) declined $24.2 million, from $25.8 million in 2005 to $1.6 million in 2006. The decrease was due to lower operating losses on sold (and to be sold) properties of $1.6 million, offset by a decline in gains on sales of income-producing properties of $25.8 million. In 2006 TCI sold four apartment projects containing 545 units at an average sales price of $28,000 per unit, generating net cash proceeds of $20.4 million and recognized gains of $5.7 million. In 2005, the Company sold two apartment projects, one hotel and six commercial properties for a total of $78.6 million, generating net cash proceeds of $31.3 million and recognized gains of $31.5 million. |
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, visit the Company’s web site atwww.transconrealty-invest.com.
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, visit the Company’s web site atwww.transconrealty-invest.com.
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months | For the Twelve Months | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(dollars in thousands, except per share) | ||||||||||||||||
Rental and other property revenues | $ | 35,557 | $ | 29,494 | $ | 128,064 | $ | 103,076 | ||||||||
Property operating expenses | 22,549 | 16,726 | 78,965 | 62,877 | ||||||||||||
Depreciation expense | 6,057 | 5,345 | 21,641 | 16,051 | ||||||||||||
Other operating expenses | 2,957 | 2,578 | 12,632 | 12,991 | ||||||||||||
Total operating expenses | 31,563 | 24,649 | 113,238 | 91,919 | ||||||||||||
Operating income (loss) | 3,994 | 4,845 | 14,826 | 11,157 | ||||||||||||
Gain on involuntary conversion | 20,479 | — | 20,479 | — | ||||||||||||
Other income | 659 | 1,010 | 3,628 | 4,333 | ||||||||||||
Interest expense | (14,132 | ) | (11,271 | ) | (51,830 | ) | (39,178 | ) | ||||||||
Other expenses | (2,462 | ) | (872 | ) | (2,462 | ) | (2,361 | ) | ||||||||
Income (loss) before gain on land sales, minority interest, and equity in earnings of investees | 8,538 | (6,288 | ) | (15,359 | ) | (26,049 | ) | |||||||||
Gain on land sales | (573 | ) | 2,967 | 11,421 | 7,702 | |||||||||||
Minority interest | (151 | ) | (8 | ) | 890 | 968 | ||||||||||
Equity in income (loss) of investees | 1,216 | (119 | ) | 393 | (112 | ) | ||||||||||
Income (loss) from continuing operations, before tax | 9,030 | (3,448 | ) | 2,655 | (17,491 | ) | ||||||||||
Add: Income tax benefit | 35 | 802 | 4,608 | 802 | ||||||||||||
Income (loss) from continuing operations | 9,065 | (2,646 | ) | 1,953 | (16,689 | ) | ||||||||||
Net income (loss) from discontinued operations, net of tax | 2,597 | 14,661 | 1,553 | 25,758 | ||||||||||||
Income (loss) | 11,662 | 12,015 | 3,506 | 9,069 | ||||||||||||
Preferred dividend requirement | (52 | ) | (52 | ) | (210 | ) | (210 | ) | ||||||||
Net income (loss) applicable to Common shares | $ | 11,510 | $ | 11,963 | $ | 3,296 | $ | 8,859 | ||||||||
Basic and diluted earnings per share: | ||||||||||||||||
Income (loss) from continuing operations | $ | 1.14 | $ | (.34 | ) | $ | 0.22 | $ | (2.14 | ) | ||||||
Discontinued operations | (.33 | ) | 1.86 | 0.20 | 3.26 | |||||||||||
Net income (loss) applicable to Common shares | $ | 1.47 | $ | 1.52 | $ | 0.42 | $ | 1.12 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Income (loss) from continuing operations | $ | 1.10 | $ | (.34 | ) | $ | 0.21 | $ | (2.14 | ) | ||||||
Discontinued operations | (.32 | ) | 1.86 | 0.19 | 3.26 | |||||||||||
Income (loss) applicable to Common shares | $ | 1.42 | $ | 1.52 | $ | 0.40 | $ | 1.12 | ||||||||
Weighted average Common shares used to compute earnings per share:
Basic | 7,900,869 | 7,900,869 | 7,900,869 | 7,900,869 | ||||||||||||
Diluted | 8,180,401 | 7,900,869 | 8,180,401 | 7,900,869 |
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
December 31, | December 31, | |||||||
2006 | 2005 | |||||||
(dollars in thousands) | ||||||||
Assets | ||||||||
Real estate held for investment | $ | 1,089,995 | $ | 911,981 | ||||
Less—accumulated depreciation | (97,541 | ) | (78,096 | ) | ||||
991,454 | 833,885 | |||||||
Real estate held-for-sale (net of accumulated depreciation of $5,035 in 2006 and $4,476 in 2005) | 54,935 | 40,446 | ||||||
Real estate subject to sales contract (net of accumulated depreciation of $7,006 in 2006 and $5,387 in 2005) | 66,027 | 68,738 | ||||||
Notes and interest receivable | ||||||||
Performing (including $22,249 in 2006 and $34,370 in 2005 from affiliates and related parties) | 39,566 | 59,922 | ||||||
Non-performing, non-accruing | — | 4,896 | ||||||
39,566 | 64,818 | |||||||
Investment in unconsolidated real estate entities | 30,573 | 24,659 | ||||||
Marketable equity securities, at market value | 9,038 | 7,446 | ||||||
Cash and cash equivalents | 4,803 | 5,462 | ||||||
Other assets (including $320 in 2006 and $1,103 in 2005 from affiliates and related parties) | 52,771 | 43,625 | ||||||
$ | 1,250,167 | $ | 1,089,079 | |||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities: | ||||||||
Notes and interest payable (including $6,769 in 2006 and $6,885 in 2005 to affiliates and related parties) | $ | 799,069 | $ | 657,481 | ||||
Liabilities related to assets held for sale | 43,579 | 53,357 | ||||||
Liabilities related to assets subject to sales contract | 58,816 | 59,323 | ||||||
Other liabilities (including $396 in 2006 and $12,272 in 2005 to affiliates and related parties) | 66,608 | 66,500 | ||||||
968,072 | 836,661 | |||||||
Commitments and contingencies | ||||||||
Minority interest | 16,166 | 1,239 | ||||||
Stockholders’ equity: | ||||||||
Preferred Stock | ||||||||
Series C; $.01 par value; authorized, issued and outstanding 30,000 shares (liquidation preference $100 per share) | — | — | ||||||
Series D: $.01 par value: authorized, issued and outstanding 100,000 shares at December 31, 2006 (liquidation preference $100 per share) | 1 | — | ||||||
Common Stock, $.01 par value; authorized, 10,000,000 shares: issued and outstanding 7,900,869 shares at December 31, 2006 and 2005 | 81 | 81 | ||||||
Paid-in capital | 226,206 | 256,494 | ||||||
Treasury stock | (3,086 | ) | (3,086 | ) | ||||
Retained earnings (deficit) | 1,660 | (1,846 | ) | |||||
Accumulated other comprehensive income (loss) | 1,067 | (464 | ) | |||||
265,929 | 251,179 | |||||||
$ | 1,250,167 | $ | 1,089,079 | |||||