8-K 1 transcontinental8k.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): November 12, 2020                                                            

 

 

TRANSCONTINENTAL REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Nevada

 

001-09240

 

94-6565852

(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))

 

 

 

Title of Each Class

 

 

Trading Symbol

 

Name of Each Exchange

on which Registered

 

Common Stock, par value $0.01

 

TCI

 

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 November 12, 2020, Transcontinental Realty Investors, Inc. (“TCI” or the “Company”) announced its operational results for the quarter ended September 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 November 12, 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: November 13, 2020    
       
      TRANSCONTINENTAL REALTY INVESTORS, INC.
       
       
By: /s/ Erik L. Johnson
    Erik L. Johnson
    Executive Vice President and
    Chief Financial Officer

 

 

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Exhibit "99.1"

 

NEWS RELEASE

 

FOR IMMEDIATE RELEASE

Contact:

 

Transcontinental Realty Investors, Inc.

Investor Relations

Erik Johnson (469) 522-4200

investor.relations@transconrealty-invest.com

 

Transcontinental Realty Investors, Inc. reports Earnings for Q2 2020

DALLAS (November 12, 2020) - Transcontinental Realty Investors, Inc. (NYSE: TCI), is reporting its results of operations for the quarter ended September 30, 2020. For the three months ended September 30, 2020, the Company reported a net income applicable to common shares of $7.7 million or $0.88 per diluted share, compared to a net loss applicable to common shares of $7.8 million or $0.89 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 impact on the Company’s results of operations or cash flows during the three months ended September 30, 2020.

  • The Company collected approximately 96% of its second quarter rents, comprised of approximately 95% from multi-family tenants and approximately 97% from office tenants.
  • The Company did not grant any abatements or significant deferments of rents.
  • Occupancy remains stable at 91% at September 30, 2020 and 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 revenues were $11.5 million for the three months ended September 30, 2020, compared to $11.4 million for the three months ended September 30, 2019. For 2020, we generated revenues of $7.8 million and $3.7 million from our commercial and multifamily segments respectively.

    Net operating (loss) was ($1.5) million for the three months ended September 30, 2020, compared to $0.4 million for the same period in 2019. The $1.9 million increase in net operating loss is primarily due to the placement in service of two new multifamily apartment communities in 2020. Operating expense of new properties generally exceed their rental revenues during initial lease-up.

    Interest income was $4.3 million for three months ended September 30, 2020, compared to $5.2 million for the same period in 2019. The decrease of $0.9 million in interest income was primarily due to collection on notes receivable in 2020.

    Interest expense was to $6.3 million for the three months ended September 30, 2020, compared to $8.0 million for the same period in 2019. The $1.7 million decrease in interest expense was primarily due to the refinancing of the mortgage note payable on Browning Place in 2019.

    Loss on foreign currency transactions was a loss of $1.5 million for the three months ended September 30, 2020 as compared to $5.2 million for the same period in 2019. The decrease is foreign currency loss was due a decrease in the exchange rate from U.S. Dollars to the Israel Shekel offset in part by a reduction in the bonds outstanding.

    Gain on sale or write-down of assets increased $7.2 million for the three months ended September 30, 2020, compared the same period in 2019. The increase is primarily due to the sale Bridgeview Plaza for $5.3 million, resulting in a gain of $4.8 million in 2020, and the sale of Farnham Park Apartments for $13.3 million, resulting in a gain of $2.7 million.

    About Transcontinental Realty Investors, Inc.

    Transcontinental Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including apartments, office buildings, 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. For more information, visit the Company’s website at www.transconrealty-invest.com.

     

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    TRANSCONTINENTAL REALTY INVESTORS, INC. 

    CONSOLIDATED STATEMENTS OF OPERATIONS

    (Unaudited)

     

       For the Three Months Ended
     September 30,    		  For the Nine Months Ended
     September 30,
       2020  2019  2020  2019
    Revenues:            
    Rental revenues (including $262 and $212 for the three months and $673 and $527 for the nine months ended 2020 and 2019, respectively, from related parties)  $11,453   $11,407   $34,461   $34,352 
    Other income   706    1,990    3,885    7,394 
    Total revenues   12,159    13,397    38,346    41,746 
    Expenses:                    
    Property operating expenses (including $254 and $237 for the three months ended and $750 and $741 for the nine months ended 2020 and 2019, respectively, from related parties)   6,388    5,403    18,507    18,722 
    Depreciation and amortization   3,526    3,416    10,338    9,964 
    General and administrative (including $1,017 and $935 for the three months ended and $2,783 and $3,355 for the nine months ended 2020 and 2019, respectively, from related parties)   1,643    1,929    7,063    6,468 
    Advisory fee to related party   2,139    2,200    6,483    6,196 
    Total operating expenses   13,696    12,948    42,391    41,350 
    Net operating (loss) income   (1,537)   449    (4,045)   396 
                         
    Interest income (including $3,752 and $4,618 for the three months ended and $11,255 and $13,483 for the nine months ended 2020  and 2019, respectively, from related parties)   4,348    5,232    13,102    14,668 
    Interest expense (including $380 and $514 for the three months ended and $1,193 and $1,517 for the nine months ended 2020 and 2019, respectively, from related parties)   (6,291)   (8,037)   (21,999)   (23,642)
    (Loss) gain on foreign currency transaction   (1,470)   (5,153)   774    (13,296)
    Loss on extinguishment of debt   —      (5,219)   —      (5,219)
    Income (losses) from unconsolidated joint ventures   365    (178)   (740)   (1,474)
    Gain on sales or write-down of assets   12,328    5,140    21,802    9,409 
    Income tax expense   (50)   —      (346)   —   
    Net income (loss)   7,693    (7,766)   8,548    (19,158)
    Net income attributable to non-controlling interest   —      (21)   (400)   (583)
    Net income (loss) attributable to common shares  $7,693   $(7,787)  $8,148   $(19,741)
                         
    Earnings (loss)  per share - attributable to common shares                    
    Basic and diluted  $0.88   $(0.89)  $0.93   $(2.26)
    Weighted-average number of common shares outstanding:                    
    Basic and diluted   8,717,767    8,717,767    8,717,767    8,717,767 

     

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    TRANSCONTINENTAL REALTY INVESTORS, INC.
    CONSOLIDATED BALANCE SHEETS

     

        September 30, 2020     December 31, 2019  
    Assets                
    Real estate, net   $ 380,715     $ 387,790  
    Notes receivable (including $66.287 in 2020 and $57,817 in 2019 from related parties)     123,854       112,357  
    Cash and cash equivalents     32,967       51,179  
    Restricted cash     28,030       32,082  
    Investment in unconsolidated joint ventures     71,171       81,780  
    Receivable from related parties     140,050       141,541  
    Other assets     68,558       59,189  
    Total assets   $ 845,345     $ 865,918  
                     
    Liabilities and Equity                
    Liabilities:                
    Mortgages and notes payable   $ 242,300     $ 245,773  
    Bonds payable     203,192       223,265  
    Accounts payable and other liabilities (including $937 in 2020 and $935 in 2019 to related parties)     24,642       26,115  
    Accrued interest payable     3,281       7,230  
    Deferred revenue     9,315       9,468  
    Total liabilities     482,730       511,851  
                     
    Equity                
    Shareholders' Equity:                
    Common stock, $0.01 par value, authorized 10,000,000 shares; issued 8,717,967 shares at September 30, 2020 and December 31, 2019.     87       87  
    Treasury stock at cost, 200 shares in 2020 and 2019     (2 )     (2 )
    Paid-in capital     257,853       257,853  
    Retained earnings     82,813       74,665  
    Total shareholders' equity     340,751       332,603  
    Non-controlling interest     21,864       21,464  
    Total equity     362,615       354,067  
    Total liabilities and equity   $ 845,345     $ 865,918