DALLAS, Nov. 14, 2002 (PRIMEZONE) -- Transcontinental Realty Investors, Inc. (NYSE:TCI) Thursday reported net income of $1.79 million, or $.22 per share, on revenue of $28.34 million, for the third quarter ended Sept. 30, 2002, compared to net income of $11.11 million, or $1.28 per share, on revenue of $23.97 million for third quarter 2001, due to decreased occupancy at the company's apartments, commercial properties and U.S. hotels, increased expenses and lower gain on the sale of property, partially offset by higher rents. Gain on the sale of real estate for the three months was $13.74 million, compared to $17.74 million in the 2001 period.
For the nine months ended Sept. 30, 2002, TCI reported a net loss of $1.48 million, or ($.18) per share, on revenue of $82.41 million, compared to net income of $25.74 million, or $2.97 per share, on revenue of $72.69 million, for the comparable period in 2001, due to decreased occupancy rates, lower gains and increased expenses. Gain on the sale of real estate for the nine months was $26.44 million, compared to $47.53 million in the 2001 period.
Income for the third quarter and nine months of 2002, compared to the same periods in 2001, included:
-- Increased rental income of $28.76 million and $82.35 million, compared to $25.11 million and $74.91 million in 2001, due to the purchase of seven existing properties in 2002 and 2001, including five apartments and two commercial properties, and the completion of construction on two apartments and a European hotel. Decreased commercial property and U.S. hotel occupancies offset the increased rents.
-- Decreased interest and other income in the three months due to the payoff of four loans.
-- Decreased equity in losses of investees of $1.18 million and $2.75 million, compared to $2.08 million and $4.48 million in the comparable periods of 2001.
Total expenses increased for third quarter and nine months 2002 to $40.04 million and $109.04 million, compared to $31.55 million and $93.87 million for the same periods in 2001. Total expenses included:
-- Increased operations expense of $19.70 million and $53.37 million, compared to $15.09 million and $43.02 million in the 2001 periods, due to the completion of construction of two apartments and a hotel in 2002 and the purchase of existing properties in 2002 and 2001.
-- Provision for asset impairments of $700,000 and $2.58 million that represented the write down of five apartments and one land parcel to current estimated fair value. No provision for asset impairment was recorded in the 2001 periods.
-- Increased interest expense of $11.39 million and $28.18 million, compared to $7.38 million and $22.63 million in the 2001 periods, due to costs related to refinancing properties in 2002, the 2001-2002 purchase of 14 properties subject to debt and an interest swap agreement on newly built apartments, partially offset by lower variable interest rates and principal paydowns.
-- Increased depreciation of $4.85 million and $14.14 million, up from $3.92 million and $11.45 million in the 2001 periods, due to the purchase of eight properties subject to depreciation in 2001-2002, the completion of three construction projects and capital improvements in the office buildings and hotels.
-- General and administrative expenses of $2.28 million and $6.69 million, compared to $1.69 million and $7.61 million in the 2001 periods, due to increased insurance, office rent and legal fees in the three months and decreased advisor cost reimbursements and professional fees in the nine months.
-- Decreased advisory fees, net income fees and incentive fees that totaled $1.53 million and $4.22 million, down from $3.54 million and $9.19 million in the 2001 periods. No net income or incentive fees were paid in the nine months of 2002.
Properties sold for the third quarter and nine months of 2002 included:
-- Increased losses from operations of $199,000 and $1.16 million, compared to losses of $90,000 and $591,000 in 2001.
-- Decreased gains on the sale of property of $13.74 million and $23.34 million, compared to $17.74 million and $43.57 million in the 2001 periods. Gains resulted from sales of 12 apartments, three office buildings, two industrial warehouses and four parcels of land in 2002.
-- Decreased equity in investees gain on sale of real estate of $2,000 and $3.11 million, compared to $1.04 million and $3.96 million in the 2001 periods.
Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, invests in real estate through direct equity ownership and partnerships nationwide. For more information, go to the website at www.transconrealty-invest.com.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2002 2001 2002 2001
-------- -------- -------- -------
Income from rents $ 28,761 $ 25,111 $ 82,353 $ 74,914
Expense from operations 19,699 15,089 53,365 43,020
-------- -------- -------- -------
Operating income 9,062 10,022 28,988 31,894
Other income (loss) $ (425) $ (1,139) $ 59 $ (2,224)
Other expense 20,345 16,457 55,678 50,845
-------- -------- -------- -------
Net loss from continuing
operations 11,708) (7,574) (26,631) (21,175)
Net loss from discontinued
operations (199) (90) (1,162) (591)
Gain on sale
of operations 13,744 17,736 23,337 43,569
Equity in investees
gain on
sale of operations 2 1,044 3,106 3,960
-------- -------- -------- -------
13,547 18,690 25,281 46,938
Net income (loss) $ 1,839 $ 11,116 $ (1,350) $ 25,763
Preferred dividend
requirement (45) (7) (134) (22)
-------- -------- -------- -------
Net income (loss)
applicable
to Common shares $ 1,794 $ 11,109 $ (1,484) $ 25,741
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Earnings Per Share
Net loss from continued
operations $ (1.45) $ (.88) $ (3.31) $ (2.46)
Net income from
discontinued
operations 1.68 2.16 3.14 5.41
-------- -------- -------- -------
Net income applicable to
Common shares $ .22 $ 1.28 $ (.18) $ 2.97
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Weighted average common
shares used to
compute earnings
per share 8,071,180 8,603,614 8,052,227 8,625,230