TRANSCONTINENTAL REALTY INVESTORS INC
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
TCI$49.83-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000733590-24-000020
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0000733590-25-000010
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 72 current paragraphs.
50 unchanged; 8 reworded; 14 added; 23 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Acquisitions and Dispositions
Current report
•On December 13, 2024, we sold 30 single family lots from our holdings in Windmill Farms for $1.4 million, resulting in a gain on sale of $1.1 million.
Current report
•On March 25, 2025, we received $3.5 million in proceeds from the condemnation settlement that provided for the conveyance of 11.2 acres from our holdings in Windmill Farms, resulting in a gain on sale of $3.1 million.
Current report
Our development activities include the development of Windmill Farms and the construction of four multifamily properties.
Current report
Windmill Farms is a collection of freshwater districts ("Districts") in Kaufman County Texas that is being developed into single family lots, multifamily properties and retail properties. In connection with the project, we develop the infrastructure in Windmill Farms in order for the land to appreciate and to sell land units (“lots”) to home builders for construction of single family homes. We receive reimbursement of the infrastructure costs ("District Receivables") through the issuance of municipal bonds by the Districts. As of March 31, 2025, we have $55.2 million in District Receivables.
Current report
We have entered into development agreements with Pillar to develop multifamily properties. Each of these development projects is being funded in part by a construction loan.
Current report
The following is a summary of construction costs (dollars in thousands) incurred as of March 31, 2025:
Current report
During the three months ended March 31, 2025, we incurred $26.3 million in development costs, which were funded in part by $17.1 million in borrowing from our construction loans.
Current report
Other Developments
Current report
On December 16, 2024, we announced an offer ("Tender Offer") to purchase up to 100,000 shares of the outstanding common shares of IOR at a price of $18 per share, subject to certain conditions. The Tender Offer was completed on January 29, 2025, which resulted in our acquisition of 21,678 shares for a total cost of$0.5 million.
Current report
As provided in amendment number 31 to the Schedule 13D we filed with the SEC subsequent to the completion of the Tender Offer, if the appropriate opportunity exists at attractive prices, we may acquire additional shares of IOR. During thethree months ended March 31, 2025, we purchased an additional 12,680 common share of IOR in the market for a total cost of$0.2 million.
Current report
•The increase in gain on sale of assets is primarily due to the $3.1 million condemnation settlement in 2025 (See "Acquisitions and Dispositions" in Management's Overview).
Current report
The $11.3 million increase in cash used in operating activities is primarily due to a $5.2 million decrease inaccounts payable and other liabilities and the $3.1 million increase inother assets.
Current report
The $17.1 million increase in cash provided by financing activities was due to the borrowings on our construction loans in connection with the development of Alera, Bandera Ridge and Merano.
Removed paragraphs (23)
Previous report
•On January 31, 2023, we paid off our $67.5 million of Series C bonds.
Previous report
•On February 28, 2023, we extended the maturity of our loan on Windmill Farms until February 28, 2024 at a revised interest rate of 7.75%.
Previous report
•On March 15, 2023, we entered into a$33.0 million construction loan to finance the development of Alera (See "Development Activities") that bears interest at SOFR plus 3% and matures on March 15, 2026, with two one-year extension options.
Previous report
•On May 4, 2023, we paid off the remaining $14.0 million of our Series A Bonds and $28.9 million of our Series B Bonds, which resulted in a loss on early extinguishment of debt of $1.7 million.
Previous report
•On August 28, 2023, we paid off our $1.2 million loan on Athens.
Previous report
•On October 1, 2023, we amended the terms of our UHF notes receivable. As a result, the interest rates on the notes were amended from a fixed rate of 12.0% to a floating rate indexed to SOFR. In connection with the amendment, accrued interest of$3.6 million was forgiven in exchange for participation in the proceeds from any future sale or refinancing of the underlying properties.
Previous report
•On November 6, 2023, we entered into a$25.4 million construction loan to finance the development of Merano (See "Development Activities") that bears interest at prime plus 0.25% and matures on November 6, 2028.
Previous report
•On December 15, 2023, we entered into a$23.5 million construction loan to finance the development of Bandera Ridge (See "Development Activities") that bears interest at SOFR plus 3% and matures on December 15, 2028.
Previous report
We have agreements to develop two parcels of land ("PODs")from our land holdings in Windmill Farms. The agreements provide for the development of 125 acres of raw land into approximately 470 land lots to be used for single family homes for a total of $24.3 million. We estimate that we will complete the development of these PODs over a two-year period starting during the fourth quarter of 2024. During 2024, we spent $3.3 million on reimbursable infrastructure investments.
Previous report
On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida ("Alera") that is expected to be completed in 2025 for a total cost of approximately $55.3 million. The cost of construction will be funded in part by a $33.0 million construction loan(See "Financing Activities"). The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $31.9 million in development costs.
Previous report
On November 6, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in McKinney, Texas ("Merano") that is expected to be completed in 2025 for a total cost of approximately $51.9 million. The cost of construction will be funded in part by a $25.4 million construction loan (See "Financing Activities"). The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $15.6 million in development costs.
Previous report
On December 15, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in Temple, Texas ("Bandera Ridge") that is expected to be completed in 2025 for a total cost of approximately $49.6 million. The cost of construction will be funded in part by a $23.5 million construction loan (See "Financing Activities"). The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $11.1 million in development costs.
Previous report
On October 21, 2024, we entered into a development agreement with Pillar to build a 234 unit multifamily property in Dallas, Texas ("Mountain Creek") that is expected to be completed in 2026 for a total cost of approximately $49.8 million. The cost of construction will be funded in part by a $27.5 million construction loan(See "Financing Activities"). The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of September 30, 2024, we have incurred a total of $0.6 million in development costs.
Previous report
For the comparison of the three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2023, the Redevelopment Property is Landing on Bayou Cane (See "Development Activities" in Management's Overview). The change in revenues and expenses of the Redevelopment Property from 2023 to 2024 is primarily due to the lease-up of the property in 2023 as the restored units were placed in service. There were no Acquisition Properties or Disposition Properties for the comparison of the three and nine months ended September 30, 2024 to the three and nine months ended September 30, 2023.
Previous report
•The decrease in general, administrative and advisory expenses is primarily due to a reduction in legal, auditing and other administrative expenses associated with the bonds payable, which were repaid in 2023.
Previous report
•The increase in other income is primarily due to the $0.8 million decrease in income tax provision as a result of the sale of the VAA Portfolio in 2022.
Previous report
Comparison of the nine months ended September 30, 2024 to the nine months ended September 30, 2023:
Previous report
•The increase in profit from the multifamily segment is primarily due to an increase of $0.7 million from the Redevelopment Property due to the lease up of the property in 2023. The decrease in profit from the commercial segment is primarily due to a decrease in revenue as a result of a decline in occupancy at Browning Place and Stanford Center.
Previous report
•The $4.4 million decrease in general, administrative and advisory expenses is primarily due to a reduction in legal cost associated with the Nixdorf litigation in 2023 and due to auditing and other administrative expenses associated with the bonds payable, which were repaid in 2023.
Previous report
•The $8.1 million decrease in interest income, net is due to a $9.8 million decrease in interest income offset in part by a $1.6 million decrease in interest expense. The decrease in interest income is primarily due to a decrease in interest rates on the UHF notes in 2023 and a decrease in interest rates on the Pillar Receivable in 2024. The decrease in interest expense is primarily due to the repayment of the bonds payable in 2023 (See "Financing Activities" in Management's Overview).
Previous report
•The loss from early extinguishment of debt and the gain on foreign currency transactions are due to the bonds payable that were outstanding in 2023.
Previous report
The increase in cash provided by operating activities is primarily due to a decrease in interest payments and insurance cost in comparison to prior year.
Previous report
The $137.4 million decrease in cash used in financing activities is primarily due to the $131.2 million repayment of our bonds in 2023.
Reworded paragraphs (8)
Previous wording
•On July 10, 2024, we replaced the existing loan on Forest Grove with a$6.6 million loan that bears interest at SOFR plus 1.85% and matures on August 1, 2031.
Current wording
•On July 10, 2024, we replaced the existing loan on Forest Grove with a$6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031.
Previous wording
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or leased-up (“Redevelopment Property”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties"). A developed property is considered leased-up, when it achieves occupancy of 80% or more. We move a property in and out of Same Properties based on whether the property is substantially leased-up and in operation for the entirety of both periods of the comparison.
Current wording
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or leased-up (“Redevelopment Property”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties"). A developed property is considered leased-up, when it achieves occupancy of 80% or more. We move a property in and out of Same Properties based on whether the property is substantially leased-up and in operation for the entirety of both periods of the comparison. There were no Acquisition Properties, Development Activities or Disposition Properties for the comparison of the three months ended March 31, 2025 to the three months ended March 31, 2024.
Previous wording
The following table summarizes our results of operations for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following table (dollars in thousands) summarizes our results of operations for the three months ended March 31, 2025 and 2024:
Previous wording
Our $2.9 million decrease in net income is primarily attributed to the following:
Current wording
Our $2.0 million increase in net income is primarily attributed to the following:
Previous wording
•The increase in profit from the multifamily segment is primarily due to an increase of $0.2 million from the Redevelopment Property due to the lease up of the property in 2023. The decrease in profit from the commercial segment is primarily due to a decrease in revenue as a result of a decline in occupancy at Browning Place and Stanford Center.
Current wording
•The increase in profit from the multifamily segment is primarily due to an increase in rents and the increase in profit from the commercial segment is primarily due to a decrease in the cost of insurance and property taxes.
Previous wording
•The $3.9 million decrease in interest income, net is due to a $3.8 million decrease in interest income, which was primarily due to a decrease in interest rates on the UHF notes in 2023 and a decrease in interest rates on the Pillar Receivable in 2024.
Current wording
•The $1.4 million decrease in interest income, net is due to a $1.5 million decrease in interest income offset in part by a $0.1 million decrease in interest expense. The decrease in interest income is primarily due to a decrease in the average balance of our short term investments and interest rates.
Previous wording
The $17.5 million increase in cash used in investing activities is primarily due to the $21.1 million increase indevelopment and renovation of real estate and the $20.9 million decrease in distribution from joint venture offset in part by the $12.8 million increase in net redemption of short-term investments, the $6.5 million decrease inoriginations and advances on notes receivable and the $5.2 million increase incollection of notes receivable. The increase indevelopment and renovation of real estate relates to the construction start of Merano and Bandera Ridge in 2024. The distribution from joint venture in 2023 relates to the final distribution of proceeds from the sale of the VAA Sale Portfolio in 2022.
Current wording
The $28.2 million increase in cash used in investing activities is primarily due to the $20.7 million increase in development and renovation of real estate and the $9.4 million increase in net redemption of short-term investments. The increase in development and renovation of real estate relates to the construction of Alera, Bandera Ridge and Merano. The increase in net redemption of short-term investments was due to the increase in funding of development and renovation of real estate.
Previous wording
The following table reconciles net income attributable to the Company to FFO and FFO adjusted for the three and nine months ended September 30, 2024 and 2023 (dollars and shares in thousands):
Current wording
The following table reconciles net income attributable to the Company to FFO and FFO adjusted for the three months ended March 31, 2025 and 2024 (dollars and shares in thousands):
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Our $3.0 million decrease in net income is primarily attributed to the following: