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American Realty Investors Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 17, 2010 07:16PM
American Realty Investors Inc. (ARL) filed Quarterly Report for the period ended 2010-03-31. American Realty Investors Inc. has a market cap of $94.17 million; its shares were traded at around $8.38 with and P/S ratio of 0.51.
Highlight of Business Operations:
For the three months ended March 31, 2010, we reported a net loss applicable to common shares of ($12.5) million or ($1.09) per diluted earnings per share, as compared to a net loss applicable to common shares of ($7.2) million or ($0.63) per diluted earnings per share for the same period ended 2009.
Rental and other property revenues were $44.8 million for the three months ended March 31, 2010. This represents a decrease of $0.7 million, as compared to the prior period revenues of $45.5 million. This change, by segment, is an increase in the apartment portfolio of $0.8 million and an increase in the other portfolio of $0.9 million, offset by a decrease in the commercial portfolio of $1.2 million, a decrease in the hotel portfolio of $1.0 million and a decrease in the land portfolio of $0.2 million. Within the apartment portfolio, there was an increase of $1.4 million due to the developed properties in the lease up phase, and a $2.1 million increase was due to recognition of rental income from insurance proceeds received in a prior year, related to the properties damaged in Galveston, Texas by Hurricane Ike, offset by a $2.7 million decrease in the same property portfolio. Within the commercial portfolio the decrease was attributable to a $1.5 million decrease from the same properties offset by a $0.3 million increase from newly acquired properties. Revenues from our same hotel portfolio are down due to decreased stays, which we attribute to the current state of the economy.
Property operating expenses were $26.3 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million, as compared to the prior period operating expenses of $28.7 million. This change, by segment, is a decrease in our apartments of $2.4 million, a decrease in our commercial properties of $0.1 million and a decrease in our hotels of $0.3 million, offset by an increase in our land and other segments of $0.4 million. Within the apartment portfolio, the same apartment properties decreased $0.9 million due to a decrease in overall costs and additional repairs and maintenance. The developed apartments increased expenses by $0.5 million. There was a decrease of $2.0 million in operating expenses related to the properties damaged in Galveston, Texas by Hurricane Ike. We have directed our efforts to apartment development and put some additional land projects on hold until the economic conditions turn around. The decrease in our hotel portfolio is due to the decrease in variable costs that are directly associated with stays within the hotel.
Interest income was $1.5 million for the three months ended March 31, 2010. This represents a decrease of $1.1 million, as compared to the prior period interest income of $2.6 million. This decrease is due to the accrued interest recognition on the cash flow notes from Unified Housing Foundation, Inc. On cash flow notes where payments are based upon surplus cash from operations, accrued but unpaid interest income is only recognized to the extent that cash is received. Less cash was received in the current period as compared to the prior period.
Other income was $0.9 million for the three months ended March 31, 2010. This represents a decrease of $2.4 million, as compared to the prior period other income of $3.3 million. The majority of the decrease was due to $2.3 million recorded, in the prior period, as a gain on the disposition of our investment in the Korean REIT.
There were no gains recorded on the sale of real estate for the three months ended March 31, 2010, as compared to the gains recorded in the prior period of $4.8 million. Due to the related party nature of the sale that occurred during the first three months of the current period, there was no gain recognized on the sale of Villager apartments. The gain on the sale of $0.4 million was deferred in the current period and will be recognized upon the sale of the property to third party. In the prior period, the sale of Chateau Bayou apartments generated a $4.2 million gain on sale and we recognized the deferred gain on the sale of the Hartford building sold in 2002 in accordance with the requirements per ASC Topic 360-20 Property, Plant, and Equipment Real Estate Sales.
Stocks Discussed: ARL,