American Realty Investors, Inc. Reports First Quarter 2014 Results

  American Realty Investors, Inc. Reports First Quarter 2014 Results

Business Wire

DALLAS -- May 15, 2014

American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate
investment company, today reported results of operations for the first quarter
ended March 31, 2014. ARL announced today that the Company reported net income
applicable to common shares of $2.9 million or $0.25 per diluted earnings per
share, as compared to a net loss applicable to common shares of $0.2 million
or $0.02 per diluted earnings per share for the same period ended 2013.

The Company continues to demonstrate our unwavering commitment to fortify our
portfolio and streamline our operational activity, while at the same time
maintaining our commitment to creating value. We are pleased that we are
seeing improvements in our operations from these endeavors and will continue
to adapt to market challenges with an eye on both near-term economic
challenges and long-term prospects as the real estate market improves.

Our apartment portfolio continues to thrive in the current economic conditions
with occupancies averaging over 95%. We continue to work aggressively to
attract new tenants and strive for continuous improvement of our properties in
order to maintain our existing tenants.

Rental and other property revenues were $20.6 million for the three months
ended March 31, 2014. This represents an increase of $0.2 million, as compared
to the prior period revenues of $20.4 million. This change, by segment, is an
increase in the apartment portfolio of $0.7 million, offset by a decrease in
the commercial portfolio of $0.5 million. Within the apartment portfolio there
was an increase of $0.7 million in the same property portfolio. Our apartment
portfolio continues to thrive in the current economic conditions with
occupancies averaging 95%. Our existing commercial portfolio decreased by $0.5
million in the same store properties. This decrease is due to lost rents from
tenant vacancies. We are continuing to market our properties aggressively to
attract new tenants and strive for continuous improvement of our properties in
order to maintain our existing tenants.

Property operating expenses were $10.3 million for the three months ended
March 31, 2014. This represents an increase of $0.3 million, as compared to
the prior period operating expenses of $10.0 million. This change, by segment,
is an increase in the apartment portfolio of $0.4 million, offset by a
decrease in the commercial portfolio of $0.1 million. Within the apartment
portfolio, the increase relates to general repair and maintenance expense and
real estate taxes.

Depreciation and amortization expense was $4.5 million for the three months
ended March 31, 2014. This represents an increase of $0.7 million, as compared
to the prior period expense of $3.8 million. This change is attributable to
the commercial portfolio due to new assets placed in service in the current
period.

Mortgage and loan interest expense was $8.5 million for the three months ended
March 31, 2014. This represents a decrease of $0.9 million, as compared to the
prior year expense of $9.4 million. This change by segment is a decrease in
the apartment portfolio of $0.4 million, a decrease in the land portfolio of
$0.5 million, a decrease in the other portfolio of $0.1 million, offset by an
increase in the commercial portfolio of $0.1 million. Within the apartment
portfolio, the majority of the decrease relates to the same apartment
portfolio due to the refinances closed with long-term, low interest rates. The
decrease in the land portfolio was due to land sales.

Deferred borrowing costs amortization was $0.9 million for the three months
ended March 31, 2014. This represents a decrease of $1.6 million, as compared
to the prior period expense of $2.5 million. The majority of the decrease is
in the same store apartment portfolio due to the write off in the prior period
loan deferred borrowing costs upon the refinance into a new mortgage note.

Loan charges and prepayment penalties were $1.6 million for the three months
ended March 31, 2014. This represents a decrease of $2.3 million, as compared
to the prior period expense of $3.9 million. There were fewer refinances
completed in the current period than in the prior period.

About American Realty Investors, Inc.

American 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. For more information,
visit the Company’s website at www.americanrealtyinvest.com.

                                                            
                                                                
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
                                               
                                               For the Three Months Ended
                                               March 31,
                                               2014             2013
                                               (dollars in thousands,
                                               except per share amounts)
Revenues:
Rental and other property revenues
(including $175 and $165 for the three         $ 20,583         $ 20,350
months ended 2014 and 2013, respectively,
from related parties)
                                                                
Expenses:
Property operating expenses (including
$156 and $204 for the three months ended         10,317           9,982
2014 and 2013, respectively, from related
parties)
Depreciation and amortization                    4,476            3,755
General and administrative (including $918
and $890 for the three months ended 2014         1,994            2,012
and 2013, respectively, from related
parties)
Provision on impairment of notes                 -                -
receivable and real estate assets
Net income fee to related party                  490              56
Advisory fee to related party                   2,242          2,554      
Total operating expenses                        19,519         18,359     
Operating income                                 1,064            1,991
                                                                
Other income (expenses):
Interest income (including $3,797 and
$3,410 for the three months ended 2014 and       4,117            3,541
2013, respectively, from related parties)
Other income                                     178              2,536
Mortgage and loan interest (including $798
and $910 for the three months ended 2014         (8,474     )     (9,444     )
and 2013, respectively, from related
parties)
Deferred borrowing costs amortization            (939       )     (2,461     )
Loan charges and prepayment penalties            (1,582     )     (3,937     )
Gain (loss) on sale of investments               -                (8         )
Earnings from unconsolidated subsidiaries        70               213
and investees
Litigation settlement                           3,839          (45        )
Total other expenses                            (2,791     )    (9,605     )
Loss before gain on land sales,                  (1,727     )     (7,614     )
non-controlling interest, and taxes
Gain (loss) on land sales                       753            (35        )
Net loss from continuing operations before       (974       )     (7,649     )
taxes
Income tax benefit                              1,870          2,673      
Net income (loss) from continuing                896              (4,976     )
operations
Discontinued operations:
Net income (loss) from discontinued              (710       )     411
operations
Gain on sale of real estate from                 6,053            7,227
discontinued operations
Income tax expense from discontinued            (1,870     )    (2,673     )
operations
Net income from discontinued operations          3,473            4,965
Net income (loss)                                4,369            (11        )
Net (income) loss attributable to               (819       )    385        
non-controlling interest
Net income attributable to American Realty       3,550            374
Investors, Inc.
Preferred dividend requirement                  (613       )    (613       )
Net income (loss) applicable to common         $ 2,937         $ (239       )
shares
                                                                
Earnings per share - basic
Net loss from continuing operations            $ (0.05      )   $ (0.45      )
Net income from discontinued operations         0.30           0.43       
Net income (loss) applicable to common         $ 0.25          $ (0.02      )
shares
                                                                
Earnings per share - diluted
Net loss from continuing operations            $ (0.05      )   $ (0.45      )
Net income from discontinued operations         0.30           0.43       
Net income (loss) applicable to common         $ 0.25          $ (0.02      )
shares
                                                                
Weighted average common shares used in           11,525,389       11,525,389
computing earnings per share
Weighted average common shares used in           11,525,389       11,525,389
computing diluted earnings per share
                                                                
                                                                
Amounts attributable to American Realty
Investors, Inc.
Net income (loss) from continuing              $ 77             $ (4,591     )
operations
Net income from discontinued operations         3,473          4,965      
Net income applicable to American Realty       $ 3,550         $ 374        
Investors, Inc.

                                                          
                                                               
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
                                                               
                                           March 31,           December 31,
                                           2014                2013
                                           (dollars in thousands, except share
                                           and par value amounts)
Assets
Real estate, at cost                       $   770,960         $  799,698
Real estate held for sale at cost, net
of depreciation ($27,282 for 2014 and          9,787              16,427
$2,390 for 2013)
Real estate subject to sales contracts
at cost, net of depreciation ($2,036           23,335             27,598
for 2014 and $1,949 for 2013)
Less accumulated depreciation                 (120,468  )       (143,429  )
Total real estate                              683,614            700,294
Notes and interest receivable
Performing (including $138,086 in 2014
and $145,754 in 2013 from related              145,670            153,275
parties)
Non-performing                                 3,129              3,140
Less allowance for doubtful accounts
(including $15,809 in 2014 and 2013           (19,579   )       (19,600   )
from related parties)
Total notes and interest receivable            129,220            136,815
Cash and cash equivalents                      18,384             16,437
Restricted cash                                27,736             32,929
Investments in unconsolidated                  3,990              3,789
subsidiaries and investees
Receivable from related party                  34,751             14,086
Other assets                                  42,461           38,972    
Total assets                               $   940,156        $  943,322   
                                                               
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable                 $   629,364         $  618,930
Notes related to assets held for sale          15,717             17,100
Notes related to subject to sales              20,991             23,012
contracts
Deferred revenue (including $74,303 in
2014 and 2013 from sales to related            76,148             76,148
parties)
Accounts payable and other liabilities
(including $15,954 in 2014 and $15,394        59,400           73,271    
in 2013 to related parties)
                                               801,620            808,461
                                                               
Shareholders’ equity:
Preferred stock, Series A: $2.00 par
value, authorized 15,000,000 shares,
issued and outstanding 3,353,954
shares in 2014 and 2013 (liquidation
preference $10 per share), including
900,000 shares in 2014 and 2013 held           4,908              4,908
by subsidiaries. Series K: $2.00 par
value, authorized, issued and
outstanding 135,000 shares in 2014 and
2013, respectively (liquidation
preference $22 per share)
Common stock, $0.01 par value,
authorized 100,000,000 shares; issued          115                115
11,941,174 shares and outstanding
11,525,389 shares in 2014 and 2013
Treasury stock at cost; 415,785 shares
in 2014 and 2013 and 229,214 shares            (6,395    )        (6,395    )
held by TCI (consolidated) as of 2014
and 2013
Paid-in capital                                102,280            102,974
Retained earnings                             (8,245    )       (11,795   )
Total American Realty Investors, Inc.          92,663             89,807
shareholders' equity
Non-controlling interest                      45,873           45,054    
Total equity                                  138,536          134,861   
Total liabilities and equity               $   940,156        $  943,322   

Contact:

American Realty Investors, Inc.
Investor Relations
Gene Bertcher, 800-400-6407
investor.relations@americanrealtyinvest.com
 
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