American Realty Investors, Inc. (ARL) Bundle
A Brief History of American Realty Investors, Inc.
Company Overview
American Realty Investors, Inc. (ARI) is a publicly traded real estate investment company focused on the acquisition, development, and management of multifamily and commercial properties. As of 2024, the company is primarily engaged in the operation of a diversified real estate portfolio.
Financial Performance
As of September 30, 2024, the financial performance of ARI is summarized as follows:
| Financial Metrics | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Total Revenue | $11,607,000 | $12,526,000 | $35,279,000 | $36,453,000 |
| Total Operating Expenses | $13,670,000 | $14,630,000 | $40,136,000 | $45,502,000 |
| Net Operating Loss | $(2,063,000) | $(2,104,000) | $(4,857,000) | $(9,049,000) |
| Net (Loss) Income | $(17,016,000) | $4,025,000 | $(13,223,000) | $8,547,000 |
| Earnings per Share - Basic and Diluted | $(1.08) | $0.18 | $(0.90) | $0.38 |
Revenue Breakdown
Revenue for the multifamily and commercial segments is detailed below:
| Segment | Revenue (2024) | Revenue (2023) |
|---|---|---|
| Multifamily Segment | $7,967,000 | $7,899,000 |
| Commercial Segment | $3,107,000 | $3,939,000 |
Real Estate Activity
As of September 30, 2024, ARI's real estate portfolio is valued as follows:
| Asset Type | Value |
|---|---|
| Land | $104,156,000 |
| Building and Improvements | $374,892,000 |
| Total Real Estate Value | $527,562,000 |
Future Rental Payments
Future rental payments from non-cancelable leases are expected as follows:
| Year | Future Rental Payments |
|---|---|
| 2024 | $11,754,000 |
| 2025 | $11,241,000 |
| 2026 | $10,810,000 |
| 2027 | $10,430,000 |
| 2028 | $8,542,000 |
| Thereafter | $13,299,000 |
Development Projects
As of 2024, ARI is engaged in several development projects, including:
- Construction of a 240-unit multifamily property in Lake Wales, Florida ("Alera") expected to be completed in 2025 with an estimated total cost of $55.3 million.
- Development of a 216-unit multifamily property in McKinney, Texas ("Merano") expected to be completed in 2025 with an estimated total cost of $51.9 million.
- Construction of another 216-unit multifamily property in Temple, Texas ("Bandera Ridge") projected to be completed in 2025 with a total cost of $49.6 million.
- New project in Dallas, Texas ("Mountain Creek") with an expected completion in 2026 and a total cost of $49.8 million.
Recent Litigation and Settlements
In 2024, ARI incurred a loss of $23.4 million related to the settlement of litigation involving claims dating back to a 1998 multifamily property transaction.
A Who Owns American Realty Investors, Inc. (ARL)
Ownership Structure
As of 2024, American Realty Investors, Inc. (ARL) is predominantly owned by related party entities. Specifically, May Realty Holdings, Inc. ("MRHI") owns approximately 90.8% of the Company.
Shareholder Breakdown
| Shareholder | Ownership Percentage | Type of Ownership |
|---|---|---|
| May Realty Holdings, Inc. (MRHI) | 90.8% | Publicly Traded |
| Other Individual and Institutional Investors | 9.2% | Publicly Traded |
Financial Performance Overview
For the nine months ended September 30, 2024, American Realty Investors reported a net income attributable to common shares of $(14,542,000), with earnings per share (EPS) of $(0.90).
Recent Financial Highlights
| Financial Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Income | $(13,223,000) | $8,547,000 |
| Total Revenue | $35,279,000 | $36,453,000 |
| Total Operating Expenses | $40,136,000 | $45,502,000 |
| Net Operating Loss | $(4,857,000) | $(9,049,000) |
Recent Developments
On October 31, 2024, the Company settled litigation with David M. Clapper, resulting in a payment of $23.4 million to resolve claims. This settlement was reflected as a loss on real estate transactions in the financial statements for the period ending September 30, 2024.
Property Portfolio Overview
As of September 30, 2024, ARL's portfolio included:
- Four office buildings totaling approximately 1,056,793 square feet.
- Fourteen multifamily properties comprising 2,328 units.
- Approximately 1,843 acres of developed and undeveloped land.
Cash Flow Summary
| Cash Flow Activity | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Cash Provided by Operating Activities | $16,859,000 | $7,846,000 |
| Net Cash Used in Investing Activities | $(26,898,000) | $(9,566,000) |
| Net Cash Provided by (Used in) Financing Activities | $93,000 | $(137,260,000) |
Consolidated Financial Position
As of September 30, 2024, the consolidated financial position of American Realty Investors is summarized as follows:
| Assets | Value ($) |
|---|---|
| Total Real Estate | $527,562,000 |
| Cash and Cash Equivalents | $39,533,000 |
| Restricted Cash | $29,588,000 |
| Total Assets | $802,486,000 |
Debt Obligations
As of September 30, 2024, the Company had various debt obligations, including:
- Construction loans totaling approximately $25,407,000 for the development of Merano.
- Construction loans totaling approximately $23,500,000 for the development of Bandera Ridge.
American Realty Investors, Inc. (ARL) Mission Statement
Overview of Mission Statement
The mission of American Realty Investors, Inc. (ARL) revolves around the acquisition, development, ownership, and management of multifamily and commercial properties. The company emphasizes its commitment to delivering long-term value to its shareholders through strategic investments and operational excellence.
Financial Performance
As of September 30, 2024, American Realty Investors reported the following key financial metrics:
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenue | $11,607,000 | $12,526,000 | $35,279,000 | $36,453,000 |
| Net Operating Loss | $(2,063,000) | $(2,104,000) | $(4,857,000) | $(9,049,000) |
| Net Income (Loss) | $(17,016,000) | $4,025,000 | $(13,223,000) | $8,547,000 |
| Earnings Per Share (Basic and Diluted) | $(1.08) | $0.18 | $(0.90) | $0.38 |
Operational Focus
American Realty Investors is focused on enhancing its portfolio through strategic acquisitions and developments. The company has ongoing projects aimed at expanding its multifamily housing offerings, which include:
- 240-unit multifamily property in Lake Wales, Florida ("Alera") - Total cost: $55.3 million
- 216-unit multifamily property in McKinney, Texas ("Merano") - Total cost: $51.9 million
- 216-unit multifamily property in Temple, Texas ("Bandera Ridge") - Total cost: $49.6 million
- 234-unit multifamily property in Dallas, Texas ("Mountain Creek") - Total cost: $49.8 million
Future Rental Income
The projected rental income from non-cancelable leases is as follows:
| Year | Future Rental Payments ($) |
|---|---|
| 2024 | $11,754,000 |
| 2025 | $11,241,000 |
| 2026 | $10,810,000 |
| 2027 | $10,430,000 |
| 2028 | $8,542,000 |
| Thereafter | $13,299,000 |
| Total Future Rental Payments | $66,076,000 |
Development and Construction
As of September 30, 2024, the total cost incurred for development projects is significant, including:
- Alera: $31.9 million
- Merano: $15.6 million
- Bandera Ridge: $11.1 million
- Mountain Creek: $0.6 million
Debt and Financing
American Realty Investors has several construction loans in place to finance its development projects:
| Project | Loan Amount ($) | Interest Rate | Maturity Date |
|---|---|---|---|
| Alera | $33,000,000 | SOFR + 3% | March 15, 2026 |
| Merano | $25,407,000 | Prime + 0.25% | November 6, 2028 |
| Bandera Ridge | $23,500,000 | SOFR + 3% | December 15, 2028 |
| Mountain Creek | $27,500,000 | SOFR + 3.45% | October 20, 2026 |
Shareholder Equity
As of September 30, 2024, the company's shareholder equity is structured as follows:
| Equity Component | Amount ($) |
|---|---|
| Preferred Stock | 1,801,000 |
| Common Stock | 162,000 |
| Additional Paid-in Capital | 61,349,000 |
| Retained Earnings | 538,860,000 |
| Total Shareholders' Equity | 602,172,000 |
How American Realty Investors, Inc. (ARL) Works
Financial Performance Overview
As of September 30, 2024, American Realty Investors, Inc. reported total revenues of $11,607,000 for the third quarter, down from $12,526,000 in the same period in 2023. For the nine months ended September 30, 2024, total revenues were $35,279,000, compared to $36,453,000 in 2023.
| Financial Metrics | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenues | $11,607,000 | $12,526,000 | $35,279,000 | $36,453,000 |
| Net Operating Loss | ($2,063,000) | ($2,104,000) | ($4,857,000) | ($9,049,000) |
| Net Loss Attributable to Common Shares | ($17,460,000) | $2,988,000 | ($14,542,000) | $6,091,000 |
| Earnings per Share - Basic and Diluted | ($1.08) | $0.18 | ($0.90) | $0.38 |
Revenue Breakdown
The company generates revenue primarily from rental activities. As of September 30, 2024, rental revenues stood at $11,074,000 for Q3, a decline from $11,838,000 in Q3 2023. The nine-month rental revenues were $33,541,000, down from $34,236,000 in the prior year.
| Rental Revenue Components | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Fixed Component | $10,841,000 | $11,338,000 | $32,667,000 | $32,968,000 |
| Variable Component | $233,000 | $500,000 | $874,000 | $1,268,000 |
Operating Expenses
Total operating expenses for Q3 2024 were $13,670,000, compared to $14,630,000 in Q3 2023. For the nine months, operating expenses decreased to $40,136,000 from $45,502,000.
| Expense Categories | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Property Operating Expenses | $6,989,000 | $7,443,000 | $20,247,000 | $20,580,000 |
| Depreciation and Amortization | $3,120,000 | $3,313,000 | $9,429,000 | $9,615,000 |
| General and Administrative | $1,590,000 | $1,579,000 | $4,550,000 | $8,424,000 |
| Advisory Fee to Related Party | $1,971,000 | $2,295,000 | $5,910,000 | $6,883,000 |
Real Estate Holdings
As of September 30, 2024, American Realty Investors holds real estate assets totaling $527,562,000, an increase from $501,586,000 at the end of 2023. The breakdown is as follows:
| Real Estate Asset Categories | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Land | $104,156,000 | $104,156,000 |
| Building and Improvements | $374,892,000 | $372,399,000 |
| Tenant Improvements | $16,503,000 | $16,286,000 |
| Construction in Progress | $108,112,000 | $76,110,000 |
Debt and Liquidity
The company's total liabilities as of September 30, 2024, amounted to $240,232,000, compared to $206,973,000 at the end of 2023. This includes mortgages and other notes payable of $183,814,000.
| Liabilities Overview | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Mortgages and Other Notes Payable | $183,814,000 | $182,683,000 |
| Accounts Payable and Other Liabilities | $43,545,000 | $11,866,000 |
| Accrued Interest | $3,082,000 | $2,633,000 |
| Deferred Revenue | $9,791,000 | $9,791,000 |
Recent Developments
In 2024, American Realty Investors has engaged in several development projects, including:
- Development of a 240-unit multifamily property in Lake Wales, Florida, with a budget of $55.3 million.
- Development of a 216-unit multifamily property in McKinney, Texas, budgeted at $51.9 million.
- Development of a 216-unit multifamily property in Temple, Texas, with an expected cost of $49.6 million.
- Development of a 234-unit multifamily property in Dallas, Texas, expected to cost $49.8 million.
How American Realty Investors, Inc. (ARL) Makes Money
Revenue Streams
American Realty Investors, Inc. derives its revenue primarily from two segments: multifamily properties and commercial properties. The company generates income through rental revenues from leasing various properties and ancillary services.
Rental Revenues
For the three months ended September 30, 2024, ARL reported total rental revenues of $11,074,000, compared to $11,838,000 in the same period of 2023. For the nine months ended September 30, 2024, the rental revenues were $33,541,000, down from $34,236,000 in 2023. The breakdown of rental revenue components is as follows:
| Component | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Fixed Component | $10,841,000 | $11,338,000 | $32,667,000 | $32,968,000 |
| Variable Component | $233,000 | $500,000 | $874,000 | $1,268,000 |
Other Income
ARL also generates other income, which amounted to $533,000 for the three months ended September 30, 2024, and $688,000 for the same period in 2023. For the nine months ended September 30, 2024, other income was $1,738,000, compared to $2,217,000 in 2023.
Operating Expenses
Operating expenses are a significant factor in determining net income. For the three months ended September 30, 2024, total operating expenses were $13,670,000, compared to $14,630,000 in 2023. For the nine months ended September 30, 2024, total operating expenses were $40,136,000, down from $45,502,000 in 2023. Key components of operating expenses include:
| Expense Type | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|---|---|
| Property Operating Expenses | $6,989,000 | $7,443,000 | $20,247,000 | $20,580,000 |
| Depreciation and Amortization | $3,120,000 | $3,313,000 | $9,429,000 | $9,615,000 |
| General and Administrative | $1,590,000 | $1,579,000 | $4,550,000 | $8,424,000 |
| Advisory Fees to Related Party | $1,971,000 | $2,295,000 | $5,910,000 | $6,883,000 |
Net Income and Loss
Despite the revenue generated, ARL reported a net loss of $17,016,000 for the three months ended September 30, 2024, compared to a net income of $4,025,000 in the same period of 2023. For the nine months ended September 30, 2024, the net loss was $13,223,000, compared to a net income of $8,547,000 in 2023.
Interest Income and Expenses
Interest income for the three months ended September 30, 2024, was $5,506,000, down from $9,008,000 in 2023. For the nine months ended September 30, 2024, interest income totaled $16,033,000 compared to $25,201,000 in the previous year. Interest expenses for the same periods were $2,123,000 for the three months and $5,958,000 for the nine months ended September 30, 2024, compared to $1,954,000 and $7,574,000 in 2023, respectively.
Future Rental Payments
ARL has a significant amount of future rental payments due from non-cancelable leases, excluding multifamily leases. The future rental payments are summarized as follows:
| Year | Future Rental Payments |
|---|---|
| 2024 | $11,754,000 |
| 2025 | $11,241,000 |
| 2026 | $10,810,000 |
| 2027 | $10,430,000 |
| 2028 | $8,542,000 |
| Thereafter | $13,299,000 |
| Total | $66,076,000 |
Real Estate Activity
As of September 30, 2024, ARL's real estate holdings included:
| Asset Type | Value ($) |
|---|---|
| Land | $104,156,000 |
| Buildings and Improvements | $374,892,000 |
| Tenant Improvements | $16,503,000 |
| Construction in Progress | $108,112,000 |
| Total Real Estate | $527,562,000 |
Liquidity and Capital Resources
ARL's principal sources of cash include property operations, land sales, collection of notes receivable, and refinancing existing mortgage notes. The company's liquidity needs focus on funding recurring expenses, meeting debt service obligations, and capital expenditures.
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Resources:
- American Realty Investors, Inc. (ARL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of American Realty Investors, Inc. (ARL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View American Realty Investors, Inc. (ARL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.