DALLAS, March 27, 2000 (PRIMEZONE) -- Transcontinental Realty Investors, Inc. (NYSE:TCI) Monday reported increased income resulting from acquired properties, higher rent and occupancy rates at the residential and commercial properties and a larger gain on the sale of real estate boosted 1999 net income to $30.2 million, or $7.05 per share, on revenue of $82.5 million. Net income for 1998 was $6.9 million, or $1.78 per share, on revenue of $70.6 million.
Rental income increased to $82 million in 1999 from $69.8 million in 1998. The increase was due to the 1999 and 1998 acquisitions of property through purchases and foreclosure and the November 30, 1999 merger with Continental Mortgage and Equity Trust, as well as higher rental and occupancy rates at TCI's apartments, office buildings and one warehouse. The increase was partially offset by a $5.1 million decrease in rents due to property sales in 1999 and 1998. Rents are expected to rise further due to (1) a full year of operations of properties acquired through merger and properties acquired in early 2000, (2) increased occupancy in the commercial properties, and (3) increased rents at the apartments.
Interest and other income decreased to $453,000 in 1999, from $807,000 in 1998, due to the collection of eight mortgage notes receivable in 1999 and 1998 and the 1998 foreclosure of a collateral property securing another note. Interest income is expected to rise in 2000 due to two mortgage notes receivable acquired in the merger and TCI providing purchase money financing on two property sales in 1999.
A gain on the sale of real estate of $40.5 million was recognized in 1999 as compared to $12.9 million in 1998. The 1999 gain resulted from sales of one commercial property, three apartments and four undeveloped land parcels. Fourth quarter 1999 gain on the sale of real estate was $22.5 million as compared to $569,000 in 1998.
Funds from operations at year-end totaled $1.4 million, or $.33 per share, compared to $ 4.7 million, or $1.20 per share, in 1998. (FFO is defined as net income/loss excluding extraordinary gains and gains from sales of real estate, plus depreciation and amortization.)
Property operating expense increased to $44.5 million in 1999, as compared to $38.3 million in 1998, which was attributable to the properties acquired in 1999 and 1998 through purchases and the merger with Continental Mortgage. Property operating expenses are expected to rise further in 2000 due to a full year of operations from properties acquired in early 2000, 1999 and 1998.
Interest expense increased to $27.7 million in 1999 from $22.8 million in 1998 due to property purchases, properties obtained through merger and financings and refinancings during 1999 and 1998. The increases were partially offset by a $1.5 million decrease due to property sales and mortgages paid off in 1999 and 1998. Interest expense is expected to increase in 2000 due to refinancings, mortgaged properties acquired through merger and properties purchased during first quarter 2000 on a leveraged basis.
Depreciation expense increased by $1 million in 1999 due to 1999-1998 property purchases, the completion of construction on an apartment complex in 1999 and property additions and tenant improvements. Depreciation is expected to increase in 2000 due to acquisitions through purchases in 1998, 1999 and 2000 and by properties gained in the 1999 merger with CMET.
Advisory and net income fees increased to $5.7 million in 1999 due to increased net income and an increase in gross assets, the basis for the fee. The advisory fee will increase in 2000 due to the merger.
General and administrative expenses increased to $3.3 million in 1999, primarily due to legal fees incurred on litigation related to damage to a commercial property. G and A expenses are expected to increase in 2000 due to the 1999 merger.
Transcontinental Realty Investors, Inc. is a real estate investment trust based in Dallas that owns and operates commercial and residential properties nationwide. Continental Mortgage and Equity Trust was merged into TCI on November 30, 1999. For more information concerning TCI, go to the Web site at www.transconrealty-invest.com.
FINANCIAL HIGHLIGHTS
(in thousands, except share and per share data)
For the year ended For the quarter ended
Dec. 31, Dec. 31,
1999 1998 1999 1998
Revenue $ 82,492 $ 70,636 $ 24,567 $ 18,629
Expenses 92,892 76,602 29,839 20,273
(Loss) from operations (10,400) (5,966) (5,272) (1,644)
Equity in income (
loss) of investees 102 (68) 21 (54)
Gain on sale of
real estate 40,517 12,940 22,462 569
Net income (loss) $ 30,219 $ 6,906 $ 17,211 $ (1,129)
Preferred dividend
requirement (30) (1) (7) (1)
Net income applicable
to Common shares $ 30,189 $ 6,905 $ 17,204 $ (1,130)
Earnings per share
Net income applicable
to Common shares $ 7.05 $ 1.78 $ 3.70 $ (.29)
Funds from operations $ 1,396 $ 4,657 $ (2,294) $ 1,111
Weighted average
Common shares
used to compute
earnings per share 4,283,574 3,876,797 4,649,730 3,896,552
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CONTACT: Phyllis Wolper, Investor Relations
(800) 400-6407 / (214) 692-4800
investor.relations@bcminc.com