Transcontinental Realty Investors (TCI) 8-K Results of Operations and Financial Condition

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
	(dollars in thousands, except per share amounts)
Revenues:
Rental and other property revenues (including $211 and $175 for the three months and $591 and $526 for the nine months ended 2015 and 2014, respectively, from related parties)	$	27,539		$	18,466		$	73,599		$	55,281
Expenses:
Property operating expenses  (including $192 and $162 for the three months and $522 and $481 for the nine months ended 2015 and 2014, respectively, from related parties)		14,195			10,077			35,987			28,640
Depreciation and amortization		6,555			4,415			16,305			12,967
General and administrative  (including $489 and $714 for the three months and $2,036 and $2,114 for the nine months ended 2015 and 2014, respectively, from related parties)		1,146			1,131			4,191			5,417
Net income fee to related party		51			(186	)		142			514
Advisory fee to related party		2,666			1,826			6,561			5,490
Total operating expenses		24,613			17,263			63,186			53,028
Net operating income		2,926			1,203			10,413			2,253
Other income (expenses):
Interest income  (including $2,503 and $2,718 for the three months and $8,861 and $8,835 for the nine months ended 2015 and 2014, respectively, from related parties)		2,505			3,064			9,260			9,181
Other income (expense)		(77	)		344			4			741
Mortgage and loan interest   (including $0 and $0 for the three months and $31 and $31 for the six months ended 2015 and 2014, respectively, from related parties)		(12,006	)		(8,043	)		(29,703	)		(23,329	)
Loan charges and prepayment penalties		(1,544	)		(1,044	)		(2,250	)		(2,626	)
Earnings (losses) from unconsolidated joint ventures and investees		(4	)		10			39			(5	)
Litigation settlement (expense)		(85	)		(86	)		(203	)		3,666
Total other expenses		(11,211	)		(5,755	)		(22,853	)		(12,372	)
Loss before gain on land sales, non-controlling interest, and taxes		(8,285	)		(4,552	)		(12,440	)		(10,119	)
Gain on sale of income producing properties		735			-			735			-
Gain on land sales		997			40			5,124			634
Net income (loss) from continuing operations before taxes		(6,553	)		(4,512	)		(6,581	)		(9,485	)
Income tax benefit (expense)		16			786			107			5,030
Net income (loss) from continuing operations		(6,537	)		(3,726	)		(6,474	)		(4,455	)
Discontinued operations:
Net income (loss) from discontinued operations		47			477			306			(454	)
Gain on sale of real estate from discontinued operations		-			1,770			-			14,826
Income tax benefit (expense) from discontinued operations		(16	)		(786	)		(107	)		(5,030	)
Net income (loss) from discontinued operations		31			1,461			199			9,342
Net income (loss)		(6,506	)		(2,265	)		(6,275	)		4,887
Net income (loss) attributable to non-controlling interest		(95	)		(81	)		(82	)		(292	)
Net income attributable to Transcontinental Realty Investors, Inc.		(6,601	)		(2,346	)		(6,357	)		4,595
Preferred dividend requirement		(227	)		(227	)		(673	)		(778	)
Net income (loss) applicable to common shares	$	(6,828	)	$	(2,573	)	$	(7,030	)	$	3,817
Earnings per share - basic
Net income (loss) from continuing operations	$	(0.79	)	$	(0.46	)	$	(0.83	)	$	(0.65	)
Net income from discontinued operations		-			0.17			0.02			1.10
Net income (loss) applicable to common shares	$	(0.79	)	$	(0.29	)	$	(0.81	)	$	0.45
Earnings per share - diluted
Net income (loss) from continuing operations	$	(0.79	)	$	(0.46	)	$	(0.83	)	$	(0.65	)
Net income from discontinued operations		-			0.17			0.02			1.10
Net income (loss) applicable to common shares	$	(0.79	)	$	(0.29	)	$	(0.81	)	$	0.45
Weighted average common shares used in computing earnings per share		8,717,767			8,688,018			8,717,767			8,505,991
Weighted average common shares used in computing diluted earnings per share		8,717,767			8,688,018			8,717,767			8,505,991
Amounts attributable to Transcontinental Realty Investors, Inc.
Net income (loss) from continuing operations	$	(6,632	)	$	(3,807	)	$	(6,556	)	$	(4,747	)
Net income from discontinued operations		31			1,461			199			9,342
Net income	$	(6,601	)	$	(2,346	)	$	(6,357	)	$	4,595

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
	September 30,			December 31,
	2015			2014
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	939,024		$	781,794
Real estate subject to sales contracts at cost, net of depreciation ($194 for 2015 and $4,278 for 2014)		10,583			20,395
Less accumulated depreciation		(133,888	)		(113,068	)
Total real estate		815,719			689,121
Notes and interest receivable:
Performing (including $60,443 in 2015 and $77,853 in 2014 from related parties)		67,626			84,863
Non-performing		-			584
Less allowance for doubtful accounts (including $1,825 in 2015 and 2014 from related parties)		(1,825	)		(1,990	)
Total notes and interest receivable		65,801			83,457
Cash and cash equivalents		11,958			12,201
Restricted cash		42,163			48,238
Investments in unconsolidated joint ventures and investees		2,178			1,543
Receivable from related party		101,031			58,404
Other assets		37,727			37,441
Total assets	$	1,076,577		$	930,405
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	754,604		$	588,749
Notes related to real estate held for sale		585			1,552
Notes related to real estate subject to sales contracts		7,765			18,616
Deferred gain (from sales to related parties)		51,356			51,356
Accounts payable and other liabilities (including $2,872 in 2015 and $4,909 in 2014 to related parties)		35,756			36,684
Total liabilities		850,066			696,957
Shareholders’ equity:
Preferred stock, Series C: $0.01 par value, authorized 10,000,000 shares; issued and outstanding zero shares in 2015 and 2014 (liquidation preference $100 per share).  Series D: $0.01 par value, authorized, issued and outstanding 100,000 shares in 2015 and 2014 (liquidation preference $100 per share)		1			1
Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares in 2015 and  2014; outstanding 8,717,767 shares in 2015 and 2014		87			87
Treasury stock at cost, 200 shares in 2015 and 2014		(2	)		(2	)
Paid-in capital		270,976			271,649
Retained earnings		(62,808	)		(56,451	)
Total Transcontinental Realty Investors, Inc. shareholders' equity		208,254			215,284
Non-controlling interest		18,257			18,164
Total shareholders' equity		226,511			233,448
Total liabilities and shareholders' equity	$	1,076,577		$	930,405