DALLAS, August 16, 1999 (PRIMEZONE) -- Transcontinental Realty Investors, Inc. (NYSE:TCI) Monday announced increased rental income and higher occupancy at the company's commercial properties paired with gains from the sale of real estate to boost net income to $7.6 million, or $1.96 per share, on revenue of $20.1 million for the three months ended June 30, 1999, as compared to net income of $1.8 million, or $.47 per share, on revenue of $17.5 million for second quarter 1998.
Net income for the first six months of 1999 was $7.9 million, or $2.03 per share, on revenue of $39.3 million compared to net income of $626,000, or $.16 per share, on revenue of $33.8 million in the same period last year. Gains on the sale of real estate of $8.3 million and $10.2 million were recorded in the three and six months ended June 30, 1999, and gains of $2.1 million and $2.1 million were reported for the corresponding periods in 1998.
Rental income increased to $20.1 million and $39.2 million in the second quarter and first six months of 1999, from $17.3 million and $33.4 million for the same periods in 1998. The 1999 increases were due to 1998 and 1999 acquisitions of 25 properties, as well as increased rental and occupancy rates at TCI's commercial properties contributing $591,000 and $1.9 million for the second quarter and six months. These increases were partially offset by $1.4 million and $2 million decreases in rents due to 1998 and 1999 sales of six properties.
Interest income decreased to $38,000 for the second quarter and $140,000 for the first six months in 1999, as compared to $175,000 and $393,000 for the same periods in 1998. The 1999 decreases were due to the foreclosure of collateral securing a note receivable in 1998, the expected foreclosure of a note receivable in third quarter 1999 and the collection in full of eight notes receivable in 1998 and 1999.
Funds from operations (FFO) for second quarter and the first six months of 1999 of $2.3 million and $3.6 million were comparable to the same periods last year. FFO is defined as net income minus extraordinary gains and gains from the sale of property, plus depreciation and amortization.
Expenses for the second quarter and six months rose to $21.3 million and $42.1 million in 1999, as compared to $18.3 million and $35.7 million for the same periods in 1998. Increased 1999 property operations expenses of $10.2 million and $20.5 million for the second quarter and six months were associated with 25 properties acquired in 1998 and 1999 and were partially offset by decreases of $668,000 and $725,000 due to the sale of six properties during the same periods. Property operations expenses were $8.9 million and $17.3 million in the comparable periods of 1998.
Interest expense increased to $6.2 million and $12.4 million in the three and six months ended June 30, 1999, up from $5.6 million and $10.9 million in 1998. The increases were due to debt incurred or assumed on 23 of the properties acquired in 1998 and 1999, from refinancings where debt balances were increased and financing obtained on unencumbered properties. The sale of six properties in1998 and 1999 partially offset the 1999 increases by $290,000 and $634,000.
Depreciation increased to $3 million and $5.8 million in the three and six months ended June 30, 1999, up from $2.6 million and $5.1 million in 1998, due to the acquisition of 20 income-producing properties in 1998 and 1999 and the depreciation of prior years' capital and tenant improvements. The increases were partially offset by decreases of $290,000 and $569,000 from the sale of six properties in 1998 and 1999.
General and administrative expenses for the second quarter and first six months of 1999 increased to $571,000 and $504,000, from $486,000 and $1.1 million in 1998. The increases mostly were due to an increase in professional fees.
Advisory fees increased to $740,000 and $1.5 million for the second quarter and first six months of 1999, up from $641,000 and $1.3 million in 1998. The increase was due to growth in gross assets. Net income fees were $641,000 and $659,000 in the three and six months ended June 30, 1999, as compared to $48,000 for the same periods in 1998. The fee is paid to the company's advisor based on 7.5 percent of net income.
Transcontinental Realty and Continental Mortgage and Equity Trust (Nasdaq:CMETS) have signed a definitive merger agreement for Transcontinental to acquire Continental in a tax-free exchange of 1.181 shares of Transcontinental common stock for each outstanding Continental share of beneficial interest. The merger and share exchange is subject to customary closing conditions, including a vote of shareholders of both entities. Special shareholder meetings are set for September 28, 1999.
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 second, wraparound and junior mortgages.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
For the three months For the six months
ended June 30, ended June 30,
1999 1998 1999 1998
Revenue $20,111 $17,514 $39,306 $33,786
Expenses 21,275 18,264 42,074 35,724
Loss from operations (1,164) (750) (2,768) (1,938)
Equity in income of investees 479 450 504 432
Gain on sale of real estate 8,283 2,132 10,151 2,132
Net income 7,598 1,832 7,887 626
Preferred dividend requirement (7) --- (14) ---
Net income applicable to
common shares $ 7,591 $1,832 $ 7,873 $ 626
Earnings per share
Net income applicable to
common shares $ 1.96 $ .47 $ 2.03 $ .16
Weighted average common
shares used to compute
earnings per share 3,879,946 3,871,436 3,879,209 3,879,080
Funds from operations $2,277 $2,306 $3,582 $3,623