DALLAS, November 11, 1999 (PRIMEZONE)-- Transcontinental Realty Investors, Inc. (NYSE:TCI) Friday announced increased rental income and higher occupancy at the company's commercial and residential properties paired with gains from the sale of real estate to raise net income to $13 million, or $3.35 per share, on revenue of $56.9 million for the nine months ended Sept. 30, 1999, as compared to net income of $8 million, or $2.07 per share, on revenue of $52 million for 1998.
Revenue for the third quarter of 1999 exceeded third quarter 1998, but net income fell short due to a lower gain on the sale of real estate. Third quarter net income was $5.1 million, or $1.32 per share, on revenue of $18.6 million compared to net income of $7.4 million, or $1.91 per share, on revenue of $18.2 million in the same period last year. Gains on the sale of real estate of $5.9 million and $16 million were recorded in the three and nine months ended Sept. 30, 1999, as compared to $9.9 million and $12 million for the same periods in 1998.
Rental income increased to $18.4 million and $57.6 million in the third quarter and first nine months of 1999, from $18 million and $51.4 million for the same 1998 periods. These increases were due to the 29 properties acquired in 1998 and 1999 contributing $1.6 million and $7.3 million in rents, as well as increased rental and occupancy rates at the commercial and residential properties generating an addition $971,000 and $2.5 million for the three and nine months. The increases were partially offset by decreases of $1.7 million and $3.8 million attributable to 1998 and 1999 sales of seven properties. Another $417,000 decrease was due to the leasing of TCI's four hotels early in the third quarter.
Interest and other income decreased to $174,000 for the third quarter and $297,000 for the first nine months in 1999, as compared to $200,000 and $593,000 for the same periods in 1998. The 1999 decreases were due to the foreclosure of collateral securing a note receivable in 1998 and the expected foreclosure of a note receivable in third quarter 1999.
Expenses for the third quarter and nine months rose to $21 million and $65.1 million in 1999, as compared to $20.6 million and $56.3 million for the same periods in 1998. Property operations expense for 1999 declined to $9.7 million in the three months due to property sales and the four hotel leases, and it increased to $30.2 million for the nine months due to costs associated with the 29 acquisitions in 1998 and 1999. The three-month decrease was partially offset by increased costs tied to the 29 acquisitions and higher repairs and maintenance expense. The nine-month increase was partially offset by the sale of seven properties in 1998 and 1999. Property operations expenses were $10.1 million and $27.4 million in the comparable periods in 1998.
Interest expense increased to $6.3 million and $18.7 million in the three and nine months ended Sept. 30, 1999, up from $5.9 million and $16.9 million in 1998. Increased interest was due to the debt incurred or assumed on 26 of the 29 properties acquired in 1998 and 1999, from refinancings where debt balances were increased and from financing obtained on unencumbered properties. The sale of seven properties in1998 and 1999 partially offset the 1999 increases by $561,000 and $1.2 million.
Depreciation increased to $2.9 million and $8.7 million in the three and nine months ended Sept. 30, 1999, up from $2.8 million and $7.9 million in 1998, due to the acquisition of 23 income-producing properties in 1998 and 1999 and the depreciation of prior years' capital and tenant improvements. The increases were partially offset by $440,000 and $972,000 in the 1999 periods by the sale of seven properties in 1998 and 1999.
General and administrative expenses for the third quarter and first nine months of 1999 increased to $962,000 and $2.2 million, from $584,000 and $1.6 million in 1998 mostly due to increased professional fees.
Equity in earnings of investees increased to $1.6 million and $2.1 million in the three and nine months ended Sept. 30, 1999, from a loss of $90,000 and an income of $342,000 in 1998. The increases mainly were due to a higher gain on the sale of real estate in the Tri-city joint venture.
Funds from operations (FFO) for third quarter and nine months of 1999 increased to $2.2 million and $5.7 million as compared to $279,000 and $3.9 million in the same periods last year. FFO is defined as net income minus gains from the sale of property plus depreciation and amortization.
On Sept. 28, 1999, a majority of shares of Transcontinental Realty and Continental Mortgage and Equity Trust (Nasdaq:CMETS) were voted to approve the definitive merger agreement whereby Continental would be merged into Transcontinental. At the close of the merger, Continental shareholders will receive 1.181 shares of Transcontinental common stock for each outstanding Continental share of beneficial interest in a tax-free exchange. As previously announced, the merger closing is delayed, pending approval of a lender and is now expected to occur in the first quarter of 2000.
Transcontinental Realty Investors, Inc., a Dallas-based real estate investment trust, invests in real estate through direct equity ownership and partnerships nationwide. The company also invests in mortgage loans, including third, wraparound and junior mortgages.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
For the 3 months For the 9 months
ended Sept. 30, ended Sept. 30,
1999 1998 1999 1998
Revenue $ 18,619 $ 18,221 $ 57,925 $ 52,007
Expenses 20,979 20,605 65,053 56,329
Loss from operations (2,360) (2,384) (5,128) (4,322)
Equity in income (loss)
of investees 1,631 (90) 2,135 342
Gain on sale of
real estate 5,850 9,883 16,001 12,015
Net income 5,121 7,409 13,008 8,035
Preferred dividend
Requirement (9) --- (23) ---
Net income applicable to
common shares $ 5,112 $ 7,409 $ 12,988 $ 8,035
Earnings per share
Net income applicable to
common shares $ 1.32 $ 1.91 $ 3.35 $ 2.07
Weighted average common
shares used to compute
earnings per
share 3,880,617 3,871,438 3,879,954 3,876,505
Funds from
Operations $ 2,154 $ 279 $ 5,722 $ 3,902
CONTACT: Phyllis Wolper
Director, Investor Relations
214- 692-4902 (800) 400-6407
Investor.relations@bcminc.com