American Realty Investors(US:ARL)2020-03-30 15:58Financial Performance - Rental and other property revenues for 2019 were $47.97 million, a decrease from $120.96 million in 2018[119] - Total operating expenses in 2019 were $59.38 million, compared to $107.07 million in 2018[119] - The net loss income from continuing operations for 2019 was $(21.74) million, significantly down from $182.69 million in 2018[119] - For the year ended December 31, 2019, the company reported a net loss applicable to common shares of $15.9 million, or ($1.00) diluted earnings per share, compared to a net income of $172.8 million, or $10.35 diluted earnings per share for 2018[170] - Rental and other property revenues decreased to $47.9 million for the year ended December 31, 2019, down from $121.0 million in 2018, primarily due to the deconsolidation of 49 residential apartment properties[171] - Property operating expenses decreased by $33.9 million to $25.7 million for the year ended December 31, 2019, compared to $59.6 million in 2018, mainly due to the deconsolidation of residential apartment properties[172] - Depreciation and amortization expenses decreased by $9.3 million to $13.4 million for the year ended December 31, 2019, compared to $22.7 million in 2018, attributed to the deconsolidation of residential apartments[173] - Interest income increased to $25.9 million for the year ending December 31, 2019, compared to $21.6 million in 2018, driven by higher receivables from advisors[177] - Other income decreased to $11.0 million for the year ending December 31, 2019, down from $28.9 million in 2018, primarily due to lower gains from property sales[178] - Mortgage and loan interest expense decreased by $26.2 million to $39.9 million for the year ending December 31, 2019, compared to $66.1 million in 2018, due to the deconsolidation of residential properties[180] - Loss from unconsolidated investments was $2.3 million for the year ending December 31, 2019, compared to net earnings of $1.5 million in 2018, primarily due to losses from the VAA joint venture[183] - Gain on land sales decreased by $2.1 million to $15.3 million for the year ending December 31, 2019, compared to $17.4 million in 2018, with land sales totaling $30.0 million[185] Assets and Liabilities - The total assets of the company as of December 31, 2019, were $830.64 million, slightly up from $826.15 million in 2018[119] - As of December 31, 2019, the company owned 1,657 units in ten residential apartment communities and seven commercial properties, totaling approximately 1.7 million rentable square feet[128] - The company has a total of approximately 1,951 acres of land held for development across eight states[128] - As of December 31, 2019, the company consolidated ten multifamily residential properties with total assets of approximately $478 million, compared to $464 million for nine properties at December 31, 2018[136] - As of December 31, 2019, outstanding notes payable amounted to approximately $261.4 million, with a weighted average interest rate of 5.04%[218] - The company has total contractual obligations of $619,545 thousand as of December 31, 2019, including notes and bonds payable[213] Cash Flow and Financing - Net cash used in operating activities for the year ended December 31, 2019 was $(40,641) thousand, an increase of $131,691 thousand compared to $(172,332) thousand in 2018[205] - During the year ended December 31, 2019, the company advanced $21.4 million toward various notes receivable and invested approximately $33.7 million for construction and development[206] - Aggregate sales proceeds from the sale of land and income-producing properties in 2019 totaled $27.3 million, compared to $11.9 million in 2018[207] - For the year ended December 31, 2019, cash flow from financing activities increased due to proceeds from borrowings of $25.7 million and $78.1 million from the sale of nonconvertible Series C Bonds[208] Interest Rates and Risk - If market interest rates for variable-rate debt increase by 100 basis points in 2020, interest expense would increase and net income would decrease by approximately $0.002 million[221] - The company has not anticipated future capital market exposures that could affect interest rate risk[223] - The fair value of variable rate notes payable was $3,908,000 with an average interest rate of 9.75%[223] - The fair value of fixed interest rate notes payable was $257,528,000, with total interest payments amounting to $81,118,000[223] - The average interest rate for fixed interest rate notes payable was 8.51%[223] - The maturities of fixed interest rate instruments included $30,396,000 due within one year and $119,537,000 due in five to ten years[223] - Total interest for fixed rate notes payable included $10,712,000 for the first year and $47,954,000 over the life of the instruments[223] - The interest rates on variable rate notes payable were equal to the variable rates in effect on December 31, 2019[223] Property Transactions and Investments - The company sold 105.1 acres of land for an aggregate sales price of $30.0 million during the year ended December 31, 2019[125] - The company purchased an option to buy 37.8 acres of land for $2.0 million from a third-party land developer[126] - The company advanced $21.4 million to several developers with the option to purchase residential properties under construction[127] - The company accounts for investments in unconsolidated real estate ventures under the equity method, adjusting for equity in earnings and cash contributions[148] - The company recognizes rental revenue from multi-family real estate property leases when due from residents, with an allowance for doubtful accounts for past due rents[151] - The company evaluates long-lived assets for impairment when events indicate a change in circumstances, with fair value determined by appraisals or comparable sales[144] - The company did not record any impairment charges for the years ended December 31, 2019, and 2018, indicating stable asset valuations[144] - Properties classified as held for sale are reported at the lower of carrying amount or estimated fair value, with no real estate assets classified as held for sale at December 31, 2019, or 2018[145] Management and Related Party Transactions - The company has engaged in related party transactions, which may not always be favorable and cannot be presumed to be on an arm's length basis[130] - The company received $19.8 million in payments from related party note receivables during the year ended December 31, 2019[207] - Management anticipates that cash generated in 2020 will be sufficient to meet all cash requirements[202]