Transcontinental Realty Investors, Inc. (NYSE:TCI) is reporting its results of operations for the quarter ended December 31, 2023. For the three months ended December 31, 2023, we reported net loss attributable to common shares of $2.6 million or $0.30 per diluted share, compared to a net income of $58.9 million or $6.82 per diluted share for the same period in 2022.

Financial Highlights

  • Total occupancy was 77% at December 31, 2023, which includes 92% at our multifamily properties and 49% at our commercial properties.
  • On November 6, 2023, we entered into a $25.4 million construction loan to construct a 216 unit multifamily property in McKinney, Texas ("Merano") that bears interest at prime plus 0.25% and matures on November 6, 2028. Merano is expected to be completed in 2025 for a total cost of approximately $51.9 million. As of December 31, 2023, we have incurred a total of $7.2 million in development costs.
  • On December 15, 2023, we entered into a $23.5 million construction loan to construct a 216 unit multifamily property in Temple, Texas ("Bandera Ridge") that bears interest at SOFR plus 3% and matures on December 15, 2028. Bandera Ridge is expected to be completed in 2025 for a total cost of approximately $49.6 million. As of December 31, 2023, we have incurred a total of $3.1 million in development costs.
  • On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.

Financial Results

Rental revenues increased $1.0 million from $11.8 million for the three months ended December 31, 2022 to $12.8 million for the three months ended December 31, 2023. The increase in rental revenue is primarily due to $0.9 million increase at our multifamily properties and $0.1 million at the commercial properties. The increase in revenue from the multifamily properties is primarily due to the acquisition of the VAA Holdback Portfolio in 2022.

Net operating income decreased $2.6 million from net operating income of $0.5 million for three months ended December 31, 2022 to net operating loss of $2.1 million for the three months ended December 31, 2023. The decrease in net operating income is primarily due to an increase of $2.7 million in property operating and depreciation expenses offset in part by the $1.0 million increase in rental revenue as noted above and a decrease of $0.6 million in general administrative and advisory expenses. The increase in property and depreciation expenses is due to the acquisition of the VAA Holdback Portfolio.

Net income attributable to the Company decreased $61.5 million from net income of $58.9 million for the three months ended December 31, 2022 to net loss of $2.6 million for the three months ended December 31, 2023. The decrease in net income is primarily attributed to a $74.7 million decrease in gain on sale, remeasurement or write down of assets offset in part by a decrease of $15.8 million increase in our tax provision. The decrease in gain on our sale or write down of assets and our tax provision is due to the remeasurement of the VAA Holdback Portfolio that was acquired in 2022.

About Transcontinental Realty Investors, Inc.

Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, shopping centers, and developed and undeveloped land. The Company invests in real estate through direct ownership, leases and partnerships and invests in mortgage loans on real estate. The Company also holds mortgage receivables.

TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
 
Three Months Ended
December 31,		Twelve Months Ended
December 31,

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 
Revenues:
Rental revenues

$

12,787

 

$

11,770

 

$

47,023

 

$

34,080

 

Other income

 

666

 

 

1,014

 

 

2,882

 

 

2,580

 

Total revenue

 

13,453

 

 

12,784

 

 

49,905

 

 

36,660

 

Expenses:
Property operating expenses

 

7,316

 

 

5,798

 

 

27,896

 

 

18,339

 

Depreciation and amortization

 

4,031

 

 

2,846

 

 

13,646

 

 

9,686

 

General and administrative

 

1,363

 

 

2,595

 

 

9,199

 

 

9,943

 

Advisory fee to related party

 

2,874

 

 

1,089

 

 

9,156

 

 

7,974

 

Total operating expenses

 

15,584

 

 

12,328

 

 

59,897

 

 

45,942

 

Net operating (loss) income

 

(2,131

)

 

456

 

 

(9,992

)

 

(9,282

)

Interest Income

 

3,022

 

 

7,086

 

 

30,020

 

 

24,248

 

Interest expense

 

(1,876

)

 

(4,174

)

 

(9,291

)

 

(17,316

)

Gain on foreign currency transactions

 

-

 

 

630

 

 

993

 

 

20,067

 

Loss on early extinguishment of debt

 

-

 

 

-

 

 

(1,710

)

 

(2,805

)

Equity in income (loss) from unconsolidated joint venture

 

262

 

 

(2,342

)

 

1,060

 

 

468,086

 

Gain on sale, remeasurement or write down of assets, net

 

(2,079

)

 

72,616

 

 

(1,891

)

 

89,196

 

Income tax provision

 

699

 

 

(15,085

)

 

(1,939

)

 

(103,190

)

Net (loss) income

 

(2,103

)

 

59,187

 

 

7,250

 

 

469,004

 

Net income attributable to noncontrolling interest

 

(458

)

 

(239

)

 

(1,313

)

 

(742

)

Net (loss) income attributable to the Company

$

(2,561

)

$

58,948

 

$

5,937

 

$

468,262

 

Earnings per share
Basic and diluted

$

(0.30

)

$

6.82

 

$

0.69

 

$

54.20

 

Weighted average common shares used in computing earnings per share
Basic and diluted

 

8,639,316

 

 

8,639,316

 

 

8,639,316

 

 

8,639,316