EX-99.1 2 d45317exv99w1.htm PRESS RELEASE exv99w1
 

Exhibit 99.1
     
NEWS RELEASE
    
 
    
FOR IMMEDIATE RELEASE
  Contact:
 
  American Realty Investors, Inc.
 
  Investor Relations
 
  (800) 400-6407
 
  investor.relations@primeasset.com
American Realty Investors, Inc. Reports 2006 Results
DALLAS (April 2, 2007) — American Realty Investors, Inc. (NYSE: ARL) (“ARI” or the “Company”), a Dallas-based real estate investment company, announced today that the Company reported net income applicable to common shares of $24.6 million and $10.6 million, or $2.42 and $1.04 per share, for the three and twelve months ended December 31, 2006, compared to net income of $12.8 million and $44.8 million, or $1.26 and $4.42 per share, in the same periods in 2005.
Results for the fourth quarter ended December 31, 2006:
•   Increase in rents and other property revenues of $1.8 million, to $46.2 million in 2006 from $44.4 million in 2005. The increase was primarily attributable to the continued lease up of developed residential apartment communities. 2006 acquisitions of existing apartment communities and increased hotel revenues driven by higher room rates and average occupancies.
 
•   An increase in property operations expense of $3.5 million, to $32.6 million in 2006 from $29.1 million in 2005. The increase was primarily attributable to the continued lease up of developed residential apartment communities, 2006 acquisitions of existing apartment communities and increases in hotel and land operating expenses.
 
•   Operating income increased $4.4 million due primarily to lower general and administrative expenses and reduced depreciation charges, offset by a reduction in net operating income for the quarter.
 
•   2006 gain on involuntary conversion of $20.5 million relates to hurricane damage sustained at the Company’s New Orleans office buildings from Hurricane Katrina in 2005. In 2006, the Company received $45.0 million (including business interruption) in insurance proceeds and has spent $7.3 million to repair the New Orleans properties; $7.2 million has been reserved to fund remaining repairs. Two of the three New Orleans properties have reopened; the third building is closed. TCI has reduced the carrying value of the closed property to an amount equal to the value of the underlying land.
 
•   An increase in interest expense of $4.3 million, to $18.6 million in 2006 from $14.3 million in 2005. The increase was primarily attributable to 2006 land acquisitions and refinancing of existing land loans, commercial property acquisitions and refinancing of certain apartment projects and hotels. Rising interest payments on the company’s variable-rate debt also contributed to the overall increase.
 
•   An increase on gain on land sales of $700,000, to $6.1 million in 2006 from $5.4 million in 2005. In 2006, ARI sold 63 acres of land in four separate transactions for a total sales price of $14.4 million, generating cash proceeds of $6.6 million.
 
•   A decrease in income from discontinued operations of $11.8 million, from $10.6 million in 2006, compared to $22.4 million in 2005. In 2006, ARI sold the Oaktree Square Apartments in Grandview, Missouri and the Williamsburg Hospitality House in Williamsburg, Virginia for a total sales price of $33.0 million, generating cash proceeds of $11.5 million.

Exhibit 99.1 — Page 1

 

Results for the year ended December 31, 2006:
•   Increase in rents and other property revenues of $23.1 million, to $182.3 million in 2006 from $159.2 million in 2005. The increase was primarily attributable to the continued lease up of developed residential apartment communities, 2006 acquisitions of existing apartment communities and increased hotel revenues driven by higher room rates and average occupancies.
 
•   An increase in property operations expense of $16.0 million, to $122.9 million in 2006 from $106.9 million in 2005. The increase was primarily attributable to the continued lease up of developed residential apartment communities, 2006 acquisitions of existing apartment communities and increases in hotel and land operating expenses.
 
•   Operating income increased $9.0 million due to a $7.1 million increase is net operating income and a $4.9 million decrease in other expenses (principally general and administrative expenses), offset by a $3.0 million increase in depreciation.
 
•   2006 gain on involuntary conversion of $20.5 million relates to hurricane damage sustained at the Company’s New Orleans office buildings from Hurricane Katrina in 2005. In 2006, the Company received $45.0 million (including business interruption) in insurance proceeds and has spent $7.3 million to repair the New Orleans properties; $7.2 million has been reserved to fund remaining repairs. Two of the three New Orleans properties have reopened; the third building is closed. TCI has reduced the carrying value of the closed property to an amount equal to the value of the underlying land.
 
•   An increase in interest expense of $15.5 million, to $76.5 million in 2006, from $61.0 million in 2005. The increase was primarily attributable to 2006 land acquisitions and refinancing of existing land loans, commercial property acquisitions and refinancing of certain apartment projects and hotels. Rising interest payments on the company’s variable-rate debt also contributed to the overall increase.
 
•   A decrease on gain on land sales of $16.0 million, to $24.0 million in 2006 from $40.0 million in 2005. In 2006, ARI sold 318 acres in 19 separate transactions for a total sales price of $62.0 million, generating cash proceeds of $27.8 million.
 
•   A decrease in discontinued operations of $41.9 million, to $22.5 million in 2006, from $64.4 million in 2005. In 2006, ARI sold five apartments and one hotel for a total sales price of $48.3 million, generating cash proceeds of $16.2 million. In 2005, ARI sold eight apartments, one hotel and six commercial properties for a total sales price of $130.6 million, generating cash proceeds of $45.8 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, hotels, shopping centers and developed and undeveloped land. For more information, go to ARI’s web site at www.amrealtytrust.com.

Exhibit 99.1 - Page 2

 

###
AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
                 
    December 31,     December 31,  
    2006     2005  
    (dollars in thousands)  
Assets
                
Real estate held for investment
   $ 1,249,833     $ 1,025,661  
Less—accumulated depreciation
     (178,029 )     (153,597 )
 
            
 
     1,071,804       872,064  
 
                
Real estate held for sale, net of depreciation
     134,593       172,303  
Real estate subject to sales contract
     66,027       68,738  
 
                
Notes and interest receivable
                
Performing ($28,541 in 2006 and $44,500 in 2005 from affiliates)
     50,668       70,894  
Non-performing
     2,963       11,546  
 
            
 
     53,631       82,440  
Less—allowance for estimated losses
     (1,000 )     (1,000 )
 
            
 
     52,631       81,440  
 
                
Marketable securities, at market value
     9,038       7,446  
Cash and cash equivalents
     7,035       13,904  
Restricted Cash
     6,000       —  
Investments in equity investees
     25,056       13,521  
Goodwill, net of accumulated amortization ($1,763 in 2005)
     —       11,858  
Other intangibles, net of accumulated amortization ($926 in 2005)
     —       1,449  
Other assets ($52,793 in 2006 and $30,441 in 2005 from affiliates)
     121,487       103,072  
 
            
 
   $ 1,493,671     $ 1,345,795  
 
            
 
                
Liabilities and Stockholders’ Equity
                
Liabilities
                
Notes and interest payable ($7,499 in 2006 and $45,590 in 2005 to affiliate)
   $ 1,022,370     $ 817,944  
Liabilities related to assets held-for-sale
     43,579       144,555  
Liabilities subject to sales contract
     58,816       59,323  
Stock-secured notes payable
     22,452       22,549  
Accounts payable and other liabilities ($10,542 in 2006 and $4,667 in 2005 to affiliates)
     107,771       93,842  
 
            
 
     1,254,988       1,138,213  
 
                
Commitments and contingencies
                
 
                
Minority interest
     78,194       59,185  
 
                
Stockholders' equity
                
Preferred Stock, $2.00 par value, authorized 50,000,000 shares, issued and outstanding
Series A, 3,390,913 shares in 2006 and 2005 (liquidation preference $33,909), including 900,000 shares in 2006 and 2005 held by subsidiaries
     4,979       4,982  
Common Stock, $.01 par value, authorized 100,000,000 shares; issued 11,592,272 shares in 2006 and 2005
     114       114  
Treasury stock, at cost, 1,443,272 shares in 2006 and 2005
     (15,146 )     (15,146 )
Paid-in capital
     93,378       93,389  
Retained earnings
     75,380       64,805  
Accumulated other comprehensive income (loss)
     1,784       253  
 
            
 
     160,489       148,397  
 
            
 
   $ 1,493,671     $ 1,345,795  
 
            
###

Exhibit 99.1 - Page 3

 

AMERICAN REALTY INVESTORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 
    For the Three Months     For the Twelve Months  
    Ended December 31,     Ended December 31,  
    2006     2005     2006     2005  
    (dollars in thousands, except per share)  
Rental and other property revenues
   $ 46,232     $ 44,375     $ 182,344     $ 159,200  
 
                                
Property operating expenses
     32,668       29,144       122,916       106,930  
Depreciation expense
     5,191       6,148       25,394       22,328  
Other operating expenses
     2,456       7,556       22,143       27,019  
 
                        
Total operating expenses
     40,315       42,848       170,453       156,277  
 
                        
 
                                
Operating income (loss)
     5,917       1,527       11,891       2,923  
 
                                
Gain on involuntary conversion
     20,479       —       20,479       —  
 
                                
Other income
     2,531       2,245       12,148       8,738  
Interest expense
     (18,608 )     (14,254 )     (76,518 )     (60,966 )
Other expenses
     (2,462 )     (3,435 )     (3,632 )     (4,985 )
 
                        
 
                                
Income (loss) before gain on land sales, minority interest, and equity in earnings of investees
     7,857       (13,917 )     (35,632 )     (54,290 )
 
                                
Gain on land sales
     6,094       5,401       23,973       39,926  
Minority interest
     (614 )     (2,647 )     672       (3,056 )
Equity in income (loss) of investees
     1,308       114       1,540       397  
 
                        
 
                                
Income (loss) from continuing operations
     (14,645 )     (11,049 )     (9,447 )     (17,023 )
 
                                
Income from discontinued operations
     10,562       22,432       22,513       64,440  
 
                                
Net income (loss)
     25,207       13,383       13,066       47,417  
Preferred dividend requirement
     (623 )     (623 )     (2,491 )     (2,572 )
 
                        
 
                                
Net income (loss) applicable to Common shares
  $ 24,584     $ 12,760     $ 10,575     $ 44,845  
 
                        
 
                                
Basic and diluted earnings per share:
                                
Income (loss) from continuing operations
   $ 1.38     $ (1.15 )   $ (1.18 )   $ (1.93 )
Discontinued operations
     1.04       2.41       2.22       6.35  
 
                        
Net income (loss) applicable to Common shares
  $ 2.42     $ 1.26     $ 1.04     $ 4.42  
 
                        
 
                                
Diluted earnings per share:
                                
Income (loss) from continuing operations
   $ 1.38     $ (1.15 )   $ (1.18 )   $ (1.93 )
Discontinued operations
     1.04       2.41       2.22       6.35  
 
                        
Income (loss) applicable to Common shares
   $ 2.42     $ 1.26     $ 1.04     $ 4.42  
 
                        
 
                                
Weighted average Common shares used to compute earnings per share:
 
                                
Basic
     10,149,000       10,149,000       10,149,000       10,149,000  
 
                                
Diluted
     10,149,000       10,149,000       10,149,000       10,149,000  

Exhibit 99.1 - Page 4