AP NEWS

American Realty Investors, Inc. Reports Third Quarter 2018 Results

November 13, 2018

DALLAS--(BUSINESS WIRE)--Nov 13, 2018--American Realty Investors, Inc. (NYSE:ARL), a Dallas-based real estate investment company, today reported results of operations for the third quarter ended September 30, 2018. For the three months ended September 30, 2018, we reported a net income applicable to common shares of $20.1 million or $1.26 per diluted loss per share compared to a net income applicable to common shares of $9.1 million or $0.59 per diluted loss per share for the same period ended 2017.

The results demonstrate the Company’s overall focus on growing its portfolio as it continues working on several strategic initiatives that were previously announced earlier this year. Overall, management remains very encouraged about the overall performance of the company; especially tied to the quality of our assets in our portfolio, and the new multifamily apartment projects under various stages of development.

Revenues

Rental and other property revenues were $33.5 million for the three months ended September 30, 2018. This represents an increase of $1.6 million compared to revenues in the same period in 2017 of $31.8 million. The increase is driven primarily by an increase in revenues of $2.0 million from our apartment-operating segment, offset by a decrease of $0.2 million from our commercial segment, and $0.2 million from our land segment.

Expense

Property operating expenses were $15.9 million for the three months ended September 30, 2018. This represents an increase of $0.5 million compared to property operating expenses in the same period in 2017 of $15.4 million. This increase is due to correlating increase in property operating expenses in the apartment portfolio of $0.3 million and in the commercial portfolio of $0.2 million as occupancy revenue continues to rise.

Depreciation and amortization expense was $6.9 million for the three months ended September 30, 2018, as compared to $6.4 million in the same period of 2017. This increase was due primarily to the growth in our apartment portfolio, which resulted in a $0.3 million increase in the expense year over year.

General and Administrative expenses was $2.1 million for the three months ended September 30, 2018. This represents an increase of $0.3 million compared to general and administrative expenses in the same period in 2017 of $1.8 million. The increase is primarily due to $1.8 million of transaction costs.

Other income (expense)

Other income was $18.8 million for the three months ended September 30, 2018. This represents an increase of $18.6 million compared to other expenses in the same period in 2017 of $0.2 million. The increase is primarily the result of a $17.6 million gain recognized in September 2018 for deferred income associated with the IOR sale of assets.

Mortgage and loan interest expense was $17.4 million for the three months ended September 30, 2018. This represents an increase of $1.7 million compared to mortgage and loan interest expense in the same period in 2017 of $15.7 million. The change by segment represents an increase in the other portfolio of $3.9 million and in the commercial portfolio of $0.5 million, offset by decreases in the land portfolio of $9.9 million and in the apartment portfolio of $3.8 million.

Foreign currency transaction was a loss of $1.3 million for the three months ended September 30, 2018. This represents a decrease of $3.2 million compared to foreign currency transaction gain for the same period in 2017 of $1.9 million. The increase is the result of a gain in foreign currency exchange as a result of the favorable exchange rate between the Israel Shekels and the U.S. Dollar related to our Bond program.

There was no sale of income-producing properties during the three months ended September 30, 2018. For the same period in 2017, we recognized a gain on sale of income-producing properties of $12.8 million as a result of a deferred gain from property sales of two apartment communities.

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. For more information, visit the Company’s website at www.americanrealtyinvest.com.

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