American Realty Revenue Rises as Lease-Up Costs Widen Loss
Revenue increased 6% to $12.9 million as development properties added tenants.
American Realty Investors (ARL), the real-estate investor, swung to a quarterly loss as rising property expenses outweighed broader revenue growth.
The results marked a shift from the first quarter, when multifamily revenue had declined. Development-property leasing accelerated in the latest period, though the associated costs deepened the operating loss.
Second-quarter revenue rose $0.7 million from a year earlier and increased from $12.3 million in the first quarter. Net income attributable to common shares swung to a $1.0 million loss, or $0.06 a share, from income of $2.8 million, or $0.18 a share, a year earlier. The first-quarter loss was $0.6 million, or $0.03 a share.
Multifamily revenue increased $0.5 million as development properties leased up, while commercial revenue gained $0.2 million, primarily because of higher occupancy at Stanford Center. Alera occupancy climbed to 86% from 47% sequentially, Bandera Ridge rose to 85% from 44%, and Merano advanced to 77% from 42%.
Overall occupancy remained 81% from the first quarter, with multifamily at 93% and commercial at 58%. Compared with a year earlier, overall and multifamily occupancy each slipped one percentage point, while commercial occupancy increased one point.
The net operating loss widened to $2.5 million from $1.0 million a year earlier and $2.2 million in the first quarter. Property operating expenses climbed 25% to $8.2 million as lease-up properties added $1.6 million of year-over-year costs. Depreciation and amortization also increased to $3.7 million from $3.1 million.
Interest income declined to $2.8 million from $3.4 million a year earlier, while interest expense rose to $2.8 million from $1.8 million, nearly erasing the interest spread. Windmill Farms contributed a $0.8 million gain on 21 lot sales, matching the first quarter but trailing the 30 lots sold a year earlier.
For the first half, American Realty recorded a $1.6 million common-share loss, compared with income of $5.8 million a year earlier. Revenue grew to $25.2 million, but operating expenses reached $29.9 million, leaving the pace of development-property leasing central to narrowing the operating deficit.