8-K 1 americanrealty8k.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act

 

 

Date of Report (Date of earliest event reported): August 14, 2020                                                            

 

 

AMERICAN REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Nevada

 

001-15663

 

75-2847135

(State or other

jurisdiction of incorporation)

(Commission

File No.)

(I.R.S. Employer

Identification No.)

     
   

1603 LBJ Freeway, Suite 800

Dallas, Texas

75234
(Address of principal executive offices) (Zip Code)
       

 

Registrant’s telephone number, including area code 469-522-4200                                                                   

                                                                                                                                                                       

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

[  ]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of Each Class

 

 

Trading Symbol

 

Name of Each Exchange

on which Registered

 

Common Stock, par value $0.01

 

ARL

 

New York Stock Exchange

 

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

[  ]

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Section 2 – Financial Information

 

Item 2.02. Results of Operations and Financial Condition

 

On August 14, 2020, American Realty Investors, Inc. (“ARL” or the “Company”) announced its operational results for the quarter ended June 30, 2020. A copy of the announcement is attached as Exhibit “99.1.”

  

The information furnished pursuant to Item 2.02 in this Form 8-K, including Exhibit “99.1” attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. We undertake no duty or obligation to publicly update or revise the information furnished pursuant to Item 2.02 of this Current Report on Form 8-K.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01. Financial Statements and Exhibits

 

(d)       Exhibits.

 

The following exhibit is furnished with this Report:

 

                    Exhibit No. Description

 

99.1*       Press release dated August 14, 2020 

 

_________________________

* Furnished herewith

 

 

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SIGNATURES

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

  Dated: August 14, 2020    
       
      AMERICAN REALTY INVESTORS, INC.
       
       
By: /s/ Daniel J. Moos
    Daniel J. Moos
    President
    and Chief Executive Officer

 

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Exhibit "99.1"

 

NEWS RELEASE

 

FOR IMMEDIATE RELEASE

Contact:

 

American Realty Investors, Inc.

Investor Relations

Daniel Moos (469) 522-4200

investor.relations@americanrealtyinvest.com

 

American Realty Investors, Inc. reports Earnings for Q2 2020

DALLAS (August 14, 2020) - American Realty Investors, Inc. (NYSE:ARL) is reporting its results of operations for the quarter ended June 30, 2020. For the three months ended June 30, 2020, The Company reported a net loss applicable to common shares of $2.3 million or $0.14 per diluted share, compared to a net loss applicable to common shares of $2.8 million or $0.17 per diluted share for the same period in 2019.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. COVID-19 did not have a significant on the Company’s results of operations or cash flows during the three months ended June 30, 2020.

  • The Company collected approximately 97% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 98% from office tenants.
  • The Company did not grant any abatements or significant deferments of rents.
  • Occupancy at its non-lease up properties remains stable at 87% at June 30, 2020 in comparison to 89% at June 30, 2019.
  • The Company continued to obtain positive leasing spreads for new leases and renewals at it properties.
  • Ongoing development projects continued during the quarter unabated without work stoppages. In addition, the Company is evaluating several new development projects.
  •  

    The future impact of COVID-19 on the Company’s business and financial activities will depend on future developments, which at this stage are unpredictable considering the fluctuations of COVID-19 outbreaks and the resulting changes in the markets.

    Financial Results

    Rental and other property revenues were $11.9 million for the three months ended June 30, 2020 and 2019. For the quarter ended June 30, 2020, the Company generated revenues of $7.9 million and $4.0 million from its commercial and residential segments, respectively.

    Property operating expenses decreased to $5.8 million for the three months ended June 30, 2020 from $7.3 million for the same period in 2019. The decrease of $1.5 million in property operating expenses was primarily due to a reduction in property taxes and maintenance costs.

    General and administrative expense decreased to $1.7 million for the three months ended June 30, 2020 from $2.4 million for the same period in 2019. The decrease of $0.7 million in general and administrative expenses was primarily due to a reduction in professional fees.

    Interest income decreased to $5.3 million for the three months ended June 30, 2020 from $6.5 million for the same period in 2019. The decrease of $1.2 million in interest income was primarily due to a decrease in notes receivable from related parties.

    Other income decreased to $2.8 million for the three months ended June 30, 2020 from $3.4 million for the same period in 2019. The decrease of $0.6 million in other income was primarily due to a decrease in tax incentive finance proceeds.

    Foreign currency transaction was a loss of $5.6 million for the three months ended June 30, 2020 as compared to a loss of $2.3 million for the same period in 2019. The increase is foreign currency loss was due to a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

    Loss from unconsolidated investments was $0.7 million for the three months ended June 30, 2020, compared to a loss of $0.2 million for the same period in 2019. The increase in loss from unconsolidated investments during the quarter was primarily due to an increase in depreciation and amortization expense related to the VAA Joint Venture.

    Gain on land sales was $5.3 million for the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019. In the current period the Company sold approximately 25.9 acres of land for an aggregate sales price of $6.6 million which resulted in a gain of $5.3 million. For the same period in 2019, the Company sold approximately 41.6 acres of land for an aggregate sales price of $7.6 million which resulted in a gain of $2.5 million.

    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. The Company’s primary asset and source of its operating results is its investment in Transcontinental Realty Investors, Inc. (NYSE:TCI). For more information, visit the Company’s website at www.americanrealtyinvest.com.

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    AMERICAN REALTY INVESTORS, INC.

    CONSOLIDATED STATEMENTS OF OPERATIONS

    (Unaudited)

     

        For the Three Months Ended June 30,     For the Six Months Ended June 30,  
        2020     2019     2020     2019  
        (dollars in thousands, except per share amounts)  
    Revenues:                                
    Rental and other property revenues (including $280 and $202 for the three months and $546 and $413 for the six months ended 2020 and 2019, respectively, from related parties)   $ 11,947     $ 11,840     $ 23,865     $ 23,769  
                                     
    Expenses:                                
    Property operating expenses (including $254 and $246 for the three months ended and $496 and $504 for the six months ended 2020 and 2019, respectively, from related parties)     5,810       7,323       12,120       13,320  
    Depreciation and amortization     3,418       3,439       6,812       6,548  
    General and administrative (including $765 and $985 for the three months ended and $1,898 and $2,582 for the six months ended 2020 and 2019, respectively, from related parties)     1,669       2,419       4,464       5,024  
    Franchise taxes and other expenses           585       1,496       585  
    Net income fee to related party     112       90       198       190  
    Advisory fee to related party     2,241       2,361       4,528       4,214  
    Total operating expenses     13,250       16,217       29,618       29,881  
    Net operating loss     (1,303 )     (4,377 )     (5,753 )     (6,112 )
                                     
    Other income (expenses):                                
    Interest income (including $5,129 and $6,207 for the three months ended and $9,755 and $12,304 for the six months ended 2020 and 2019, respectively, from related parties)     5,284       6,505       11,038       12,658  
    Other income     2,794       3,364       4,006       7,031  
    Mortgage and loan interest (including $1,543 and $2,385 for the three months ended and $3,458 and $4,692 for the six months ended 2020 and 2019, respectively, from related parties)     (9,071 )     (9,408 )     (18,673 )     (19,376 )
    Foreign currency transaction (loss) gain     (5,599 )     (2,325 )     2,244       (8,143 )
    Equity loss from VAA     (735 )     (236 )     (1,111 )     (1,291 )
    Earnings from unconsolidated subsidiaries and investees     16       173       132       231  
    Total other income (expenses)     (7,311 )     (1,927 )     (2,364 )     (8,890 )
    Income (loss) before gain on land sales, non-controlling interest, and taxes     (8,614 )     (6,304 )     (8,117 )     (15,002 )
    Loss on sale of income producing properties           (80 )           (80 )
    Gain on land sales     5,339       2,517       9,477       4,733  
    Net income (loss) before taxes     (3,275 )     (3,867 )     1,360       (10,349 )
    State income tax expense     (49 )           (296 )      
    Net income (loss)     (3,324 )     (3,867 )     1,064       (10,349 )
    Net (income) loss attributable to non-controlling interest     1,018       1,089       (424 )     1,424  
    Net income (loss) attributable to American Realty Investors, Inc.     (2,306 )     (2,778 )     640       (8,925 )
    Net income (loss) applicable to common shares   $ (2,306 )   $ (2,778 )   $ 640     $ (8,925 )
                                     
    (Loss) earnings per share - basic                                
    Net income (loss)   $ (0.21 )   $ (0.24 )   $ 0.07     $ (0.65 )
    Net income (loss) applicable to common shares   $ (0.14 )   $ (0.17 )   $ 0.04     $ (0.56 )
                                     
    (Loss) earnings per share - diluted                                
    Net income (loss)   $ (0.21 )   $ (0.24 )   $ 0.07     $ (0.65 )
    Net income (loss) applicable to common shares   $ (0.14 )   $ (0.17 )   $ 0.04     $ (0.56 )
                                     
    Weighted average common shares used in computing earnings per share     15,997,076       15,997,076       15,997,076       15,997,076  
    Weighted average common shares used in computing diluted earnings per share     15,997,076       15,997,076       15,997,076       15,997,076  
                                     
    Amounts attributable to American Realty Investors, Inc.                                
    Net income (loss)   $ (3,324 )   $ (3,867 )   $ 1,064     $ (10,349 )
    Net income (loss) applicable to American Realty Investors, Inc.   $ (2,306 )   $ (2,778 )   $ 640     $ (8,925 )

     

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    AMERICAN REALTY INVESTORS, INC.

    CONSOLIDATED BALANCE SHEETS

     

        June 30, 2020     December 31, 2019  
        (Unaudited)     (Audited)  
        (dollars in thousands, except share and par value amounts)  
    Assets            
    Real estate, at cost   $ 484,639     $ 469,997  
    Real estate subject to sales contracts at cost     6,307       7,966  
    Less accumulated depreciation     (96,002 )     (90,173 )
    Total real estate     394,944       387,790  
                     
    Notes and interest receivable (including $110,827 in 2020 and $106,081 in 2019 from related parties)     180,146       169,299  
    Less allowance for estimated losses (including $12,557 and $13,099 in 2020 and 2019 from related parties)     (12,557 )     (13,099 )
    Total notes and interest receivable     167,589       156,200  
                     
    Cash and cash equivalents     42,461       51,228  
    Restricted cash     30,114       32,083  
    Investment in VAA     52,773       59,148  
    Investment in other unconsolidated investees     8,639       8,507  
    Receivable from related party     75,923       85,996  
    Other assets     55,846       49,689  
    Total assets   $ 828,289     $ 830,641  
                     
    Liabilities and Shareholders’ Equity                
    Liabilities:                
    Notes and interest payable   $ 263,325     $ 254,873  
    Bond and interest payable     218,216       229,722  
    Deferred revenue (including $25,660 in 2020 and $24,762 in 2019 to related parties)     25,660       24,762  
    Accounts payable and other liabilities (including $12,267 in 2020 and $11,817 in 2019 to related parties)     23,508       24,768  
    Total liabilities     530,709       534,125  
                     
    Shareholders’ equity:                
                     
    Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued 614 and outstanding 1,800,614 in 2020 and 2019 (liquidation preference $10 per share), including 1,800,000 shares held by ARL and its subsidiaries in 2020 and 2019.     5       5  
    Common stock, $0.01 par value, 100,000,000 shares authorized; 16,412,861 shares issued and 15,997,076 outstanding as of  2020 and 2019, including 140,000 shares held by TCI (consolidated) in 2020 and 2019.     164       164  
    Treasury stock at cost; 415,785 shares in 2020 and 2019, and 140,000 shares held by TCI (consolidated) as of 2020 and 2019.     (6,395 )     (6,395 )
    Paid-in capital     82,017       82,017  
    Retained earnings     164,348       163,708  
    Total American Realty Investors, Inc. shareholders' equity     240,139       239,499  
    Non-controlling interest     57,441       57,017  
    Total shareholders' equity     297,580       296,516  
    Total liabilities and shareholders' equity   $ 828,289     $ 830,641