EX-99.1 2 d55510exv99w1.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 Fourth Quarter 2007 Results
DALLAS (March 31, 2008) — American Realty Investors, Inc. (NYSE: ARL), a Dallas-based real estate investment company, today reported net income for the year ended December 31, 2007. The Company is aware of the challenges that are currently facing the real estate industry. Despile these issues, given the quality of the underlying assets and our attention to details, management remains highly focused on its operations, development projects and investment strategy.
ARJ announced today that the Company reported net income applicable to common shares of $24.1 million or $2.35 per diluted share as compared to $10.6 million or $1.04 per diluted share for the twelve months ended December 31, 2007 and 2006, respectively.
In addition, income applicable to common shares for the three months ended December 31, 2007 was $60.6 million or $4.49 per diluted share as compared to income applicable to common shares of $28.8 million or $2.20 per diluted share for the same period ended 2006.
Results for the year ended December 31, 2007:
     Rents and other property revenues were $176.9 million in 2007 as compared to $147.6 million in 2006 and an increase of $29.3 million. A majority of the increase was due to revenues associated with the acquisition of commercial (ParkWest I & II) in January of 2007.
     Property operations expenses were $112.5 million in 2007 as compared to $98.6 million in 2006, an increase of $13.9 million. A majority of the increase was due to revenues associated with the acquisition of commercial (ParkWest I & II) in January of 2007.
     Depreciation and amortization expenses were $24.4 million in 2007 as compared to $21.9 million in 2006, an increase of $2.5 million. Again, a majority of the increase was due to the acquisition of ParkWest I & II.
     General and administrative expenses were $15.9 million in 2007 as compared to $9.3 million in 2006, an increase of $6.6 million. The increase is due to higher legal and consulting fees in the current year. In addition, the prior year amount includes credits for litigation reimbursements of approximately $3.3 million.
     Advisory fees to affiliate were $14.9 million in 2007 as compared to $12.7 million in 2006, an increase of $2.2 million. The increase was due to was due to higher gross assets in 2007 than 2006.
     Gain on foreign currency translation was $2.4 million in 2007 as compared to $2,000 in 2006, an increase of $2.4 million. The increase was due to the currency translation associated with our hotel in Poland.
     Mortgage loan interest expenses were $89.8 million in 2007, as compared to $67.9 million in 2006, an increase of $21.9 million. The increase is due increase in debt due to refinancings, new loans on acquisitions (mainly ParkWest I & II), and construction draws.
     Gain on involuntary conversion of $34.7 million in 2007 and $20.5 million in 2006, represents the insurance proceeds related to Hurricane Katrina.
     In 2007, we took an impairment charge of $1.0 million to write down the Executive Court and the Encon Warehouse.
     In 2007, we paid $1.3 million in expense towards the settlement of the Sunset litigation that were not previously accrued. There were no significant litigation settlement expenses in 2006.
     Gain on land sales was $20.5 million in 2007 as compared to $24.0 million in 2006. In 2007, we sold 252 acres of land in 18 separate transactions with an aggregate sales price of $36.0 million. The average sales price was $142,000 per acre. In 2006, we sold 317 acres of land in 19 separate transactions for at an average sales price of $195,000 per acre.
     Net income from discontinued operations was $29.2 million in 2007 as compared $13.5 in 2006, For 2007 and 2006, income from discontinued operations relates to 59 properties of which 20 were sold in 2006, 18 sold in 2007 and 21 were held for sale and subsequently sold in 2008.

 

 

Results for the quarter ended December 31, 2007:
Rents and other property revenues were $46.1 million for the quarter ended December 31, 2007 as compared to $39.4 million for the same period ended 2006. The increase was mainly due to our acquisition of ParkWest I & II in January of 2007, along with the continued lease-up of our developed property apartments. This also accounts for our increased operating expenses of $43.2 million for the quarter ended December 31, 2007 as compared to $37.8 for the same period ended 2006.
Other income was $11.1 million for the quarter ended December 31, 2007 as compared to $3.1 million for the same period ended 2006. A majority of the increase is due to the receipt of the remaining insurance proceeds related to hurricane Katrina, offset by an increase in mortgage interest expense.
Gain on land sales for the quarter ended were $8.8 million for the quarter ended December 31, 2007 as compared to $2.0 million for the same period ended 2006. During the fourth quarter, we sold 140 acres of land at a gross sales price of $11.9 million, receiving cash proceeds of $6.5 million.
Income from discontinued operations was $25.9 million for the quarter ended December 31, 2007 as compared to $13.2 million for the same period in 2006. During the fourth quarter, we sold 5 apartments, 1 hotel, and 1 commercial building for a gross sales price of $80.3 million, receiving cash proceeds of $32.1 million. In addition, subsequent to year end 21 properties were repositioned as held for sale and included in income from discontinued operations.
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. We invest in real estate through direct equity ownership and partnerships nationwide. For more information, go to ARI’s web site at www.amrealtytrust.com.

 

 

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                         
    Years Ended December 31, 2007  
    2007     2006     2005  
    (dollars in thousands)  
Revenues:
                        
 
                        
Rental and other property revenues
   $ 176,930     $ 147,563     $ 123,147  
 
                        
Expenses:
                        
Property operating expenses
     112,454       98,649       82,638  
Depreciation and amortization
     24,430       21,949       17,421  
General and administrative
     15,966       9,321       14,040  
Advisory fee to affiliate
     14,898       12,678       9,336  
 
                  
Total operating expenses
     167,748       142,597       123,435  
 
                  
Operating income (loss)
     9,182       4,966       (288 )
 
                        
Other income (expense):
                        
Interest income
     6,156       6,000       5,439  
Gain on foreign currency transaction
     2,368       2       292  
Other income
     8,406       6,181       2,652  
Mortgage and loan interest
     (89,848 )     (67,904 )     (50,663 )
Net income fee to affiliate
     514       (972 )     (3,712 )
Incentive fee to affiliate
     (5,599 )     (1,490 )     (1,128 )
Discount on notes receivable
     —       (1,170 )     (15 )
Gain on involuntary conversion
     34,771       20,479       —  
Provision for impairment
     (1,003 )     —       —  
Litigation settlement
     (1,354 )     15       (130 )
 
                  
Total other income (expense)
     (45,589 )     (38,859 )     (47,265 )
 
                  
Loss before gain on land sales, minority interest, and equity in earnings of investees
     (36,407 )     (33,893 )     (47,553 )
Gain on land sales
     20,468       23,973       39,926  
Minority interest
     (2,652 )     672       (3,056 )
Equity in income (loss) of investees
     286       1,540       397  
 
                  
Income (loss) from continuing operations before income tax benefit
     (18,305 )     (7,708 )     (10,286 )
Income tax benefit (expense)
     15,703       7,271       20,196  
 
                  
Net income (loss) from continuing operations
     (2,602 )     (437 )     9,910  
 
                  
Income from discontinued operations before tax expense
     44,867       20,774       57,703  
Income tax benefit (expense)
     (15,703 )     (7,271 )     (20,196 )
 
                  
Net income (loss) from discontinuing operations
     29,164       13,503       37,507  
 
                  
Net income
     26,562       13,066       47,417  
Preferred dividend requirement
     (2,490 )     (2,491 )     (2,572 )
 
                  
Net income applicable to common shares
   $ 24,072     $ 10,575     $ 44,845  
 
                  
 
                        
Earnings per share — basic
                        
Income (loss) from continuing operations
   $ (0.50 )   $ (0.29 )   $ 0.72  
Discontinued operations
     2.85       1.33       3.70  
 
                  
Net income applicable to common shares
   $ 2.35     $ 1.04     $ 4.42  
 
                  
 
                        
Earnings per share — diluted
                        
Income (loss) from continuing operations
   $ (0.50 )   $ (0.29 )   $ 0.56  
Discontinued operations
     2.85       1.33       2.86  
 
                  
Net income applicable to common shares
   $ 2.35     $ 1.04     $ 3.42  
 
                  
Weighted average common share used in computing earnings per share
     10,227,593       10,149,000       10,149,000  
Weighted average common share used in computing diluted earnings per share
     10,227,593       10,149,000       13,106,000  

 

 

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
                 
    December 31,     December 31,  
    2007     2006  
    (dollars in thousands)  
Assets
Real estate held for investment
   $ 1,508,815     $ 1,249,833  
Less—accumulated depreciation
     (148,404 )     (178,029 )
 
            
 
     1,360,411       1,071,804  
Real estate held for sale, net of depreciation
     61,128       134,593  
Real estate subject to sales contracts
     64,320       66,027  
Notes and interest receivable
                
Performing
     69,977       50,668  
Non-performing
     16,468       2,963  
 
            
 
     86,445       53,631  
Less—allowance for estimated losses
     (2,978 )     (1,000 )
 
            
 
     83,467       52,631  
Marketable securities, at market value
     13,157       9,038  
Cash and cash equivalents
     11,560       7,035  
Restricted cash
     2,556       6,000  
Investments in equity investees
     23,867       25,056  
Other assets
     157,388       121,487  
 
            
 
   $ 1,777,854     $ 1,493,671  
 
            
Liabilities and Stockholders’ Equity
Liabilities:
                
Notes and interest payable
   $ 1,221,987     $ 1,022,370  
Liabilities related to assets held-for-sale
     116,377       43,579  
Liabilities subject to sales contracts
     62,513       58,816  
Stock-secured notes payable
     17,546       22,452  
Accounts payable and other liabilities
     104,884       107,771  
 
            
 
     1,523,307       1,254,988  
 
                
Commitments and contingencies
                
Minority interest
     62,161       78,194  
Stockholders’ equity
                
Preferred Stock, $2.00 par value, authorized 15,000,000 shares, issued and outstanding Series A, 3,390,316 shares in 2007 and 2006 (liquidation preference $33,909), including 900,000 shares in 2007 and 2006 held by subsidiaries
     4,979       4,979  
Common Stock, $.01 par value, authorized 100,000,000 shares; issued 11,592,272 shares in 2007 and 2006
     114       114  
Treasury stock, at cost; 1,129,530 and 1,443,272 shares in 2007 and 2006, respectively
     (12,664 )     (15,146 )
Paid-in capital
     100,277       93,378  
Retained earnings
     99,452       75,380  
Accumulated other comprehensive income (loss)
     228       1,784  
 
            
 
     192,386       160,489  
 
            
 
   $ 1,777,854     $ 1,493,671