DALLAS, Nov. 11, 1999 (PRIMEZONE) -- Continental Mortgage and Equity Trust (Nasdaq:CMETS) Friday announced higher gains on the sale of real estate and on a mortgage note receivable, as well as increased rental income contributed to improved net income for the nine months and a reduced loss for the three months ended Sept. 30, 1999.
Continental Mortgage reported nine month 1999 net income of $2.2 million, or $.55 per share, on revenue of $50.1 million as compared to net income of $667,000, or $.17 per share, on revenue of $47.8 million for 1998. The third quarter 1999 net loss of $777,000, or $.19 per share, on revenue of $12.1 million was an improvement over the third quarter 1998 net loss of $1.8 million, or $.44 per share, on revenue of $16.7 million, primarily due to lower expenses and higher gains on the sale of real estate.
Rental income decreased to $15.9 million in third quarter of 1999 from $16.5 million in 1998 due to the sale of nine properties in 1998 and 1999. The $1 million decrease was partially offset by rents collected from four income-producing properties acquired in 1998 and 1999, as well as increased rental and occupancy rates at both the commercial and residential properties. Rental income for the nine months increased to $49.8 million from the $47.8 million reported in 1998; $2.6 million of the increase was due to the four acquisitions in 1998 and 1999, $805,000 was due to a tenant lease buyout and the balance came from increased rental and occupancy rates. The increase was partially offset by a $604,000 decrease due to the nine properties sold in 1998 and 1999.
Interest and other income for the three- and nine-month periods in 1999 increased to $191,000 from $168,000 in 1998 and decreased to $316,000 from $539,000 in 1998. The three-month increase was due to the receipt of $104,000 in monthly payments to settle a lawsuit. The nine-month decrease was due to the collection of two notes receivable and the sale of six notes receivable in 1998 and 1999, as well as a decrease in short-term investment income, partially offset by the receipt of $174,000 from the settlement of a lawsuit.
Property operating expense decreased $339,000 to $9.7 million from $10 million in the three months due to the sale of nine properties in 1998 and 1999, partially offset by the acquisition of four properties in 1998 and 1999. In the nine months, operating expense increased to$28.8 million in 1999 from $27.4 million in 1998 due to expenses associated with four properties acquired in 1998 and 1999. The increase was partially offset by a decrease of $685,000 due to sales of the nine properties.
Interest expense decreased to $5 million and $15.8 million in the three and nine months ended Sept. 30, 1999, from $5.8 million and $15.9 million in 1998. The decreases were due to interest expense recorded in 1998 and 1999 on mortgages secured by three leveraged property purchases, a mortgage secured by a commercial building, borrowings secured by mortgages placed on four previously unencumbered land parcels and the refinancing of 11 mortgages where the loan balance increased. The increases were partially offset by the sale of nine properties and a note receivable during 1998 and 1999.
General and administrative expenses rose due to increased franchise taxes and other corporate taxes in the third quarter and nine months ended Sept. 30, 1999. G&A rose to $531,000 and $1.9 million in 1999, as compared to $504,000 and $1.6 million in the same periods last year.
Net income fees for the three and nine months ended Sept. 30, 1999, consisted of a refund of $64,000 and a payment of $178,000, as compared to a refund of $93,000 and a payment of $198,000 in 1998. The fee is based on a percentage of net income. Depreciation and advisory fees for the third quarter and nine months of 1999 were comparable to those in 1998.
Funds from operations (FFO) were $292,000 in the third quarter and $4.7 million for the nine months of 1999 as compared to $230,000 and $825,000 for the same periods last year. FFO is defined as net income minus gains from the sale of property, plus depreciation and amortization.
As previously announced, Continental Mortgage and Transcontinental Realty Investors, Inc. (NYSE:TCI) have signed a definitive merger agreement for Transcontinental to acquire Continental in a tax-free exchange of 1.181 Transcontinental common shares for each outstanding Continental share of beneficial interest. The merger was approved by shareholders at special meetings held September 28, 1999. The closing, delayed pending approval of a CMET lender, is expected to occur in the first quarter of 2000.
Continental Mortgage & Equity Trust, a real estate investment trust, invests in real estate nationwide.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
For the 3 mo.s For the 9 mo.s
1999 1998 1999 1998
Revenue $ 16,063 $ 16,707 $ 50,080 $ 47,826
Expenses 17,810 18,980 54,651 53,183
Loss from operations (1,747) (2,273) (4,571) (5,357)
Equity in income
of partnerships 53 38 164 108
Gain on sale of
real estate 917 454 6,600 5,916
Net income (loss) $ (777) $ (1,781) $ 2,193 $ 667
Earnings per share
Net income (loss) $ (.19) $ (.44) $ .55 $ .17
Weighted average shares
of beneficial interest
used to compute earnings
per share 4,023,393 4,012,507 4,022,199 4,011,072
Funds from
Operations $ 292 $ 230 $ 4,676 $ 825
CONTACT: Phyllis Wolper
Director, Investor Relations
(214) 692-4902 (800) 400-6407
investor.relations@bcminc.com