<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1997
Commission File Number 1-9240
TRANSCONTINENTAL REALTY INVESTORS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Nevada 94-6565852
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, Texas 75231
- -------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
(214) 692-4700
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
- ------------------------------ ----------------------------
<S> <C>
Common Stock, $.01 par value New York Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of March 6, 1998, the Registrant had 3,889,200 shares of Common Stock
outstanding. Of the total shares outstanding 2,128,945 were held by other than
those who may be deemed to be affiliates, for an aggregate value of $33,531,000
based on the last trade as reported on the New York Stock Exchange on March 6,
1998. The basis of this calculation does not constitute a determination by the
Registrant that all of such persons or entities are affiliates of the
Registrant as defined in Rule 405 of the Securities Act of 1933, as amended.
Documents Incorporated by Reference:
Consolidated Financial Statements of Income Opportunity Realty Investors, Inc.
Commission File No. 1-9525
1
<PAGE> 2
This Form 10-K/A Amendment No. 1 amends the Registrant's annual report on Form
10-K for the year ended December 31, 1997 as follows:
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS - RESULTS OF OPERATIONS - page 34.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - CONSOLIDATED BALANCE
SHEETS - page 38; CONSOLIDATED STATEMENT OF OPERATIONS - page 39; CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY - page 40; CONSOLIDATED STATEMENTS OF CASH
FLOWS - page 41 and 42. NOTE 14. EXTRAORDINARY GAIN - page 60; SCHEDULE III -
REAL ESTATE AND ACCUMULATED DEPRECIATION - pages 65 and 66.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K -
EXHIBIT 27.0 - page 91.
<PAGE> 3
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS (Continued)
On December 5, 1989, the Company's Board of Directors approved a share
repurchase program. The Company's Board of Directors authorized the Company to
repurchase a total of 687,000 shares of the Company's Common Stock pursuant to
such program. Through December 31, 1997, the Company had repurchased 387,815
shares of its Common Stock pursuant to such program at a cost to the Company of
$3.0 million. In 1997, the Company repurchased 37,227 shares at a cost of
$445,000.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
EARNINGS DATA (dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
Revenues .................... $ 55,961 $ 46,878 $ 48,272 $ 37,983 $ 32,242
Expenses .................... 65,578 56,499 58,174 47,154 42,168
----------- ----------- ----------- ----------- -----------
(Loss) from operations ...... (9,617) (9,621) (9,902) (9,171) (9,926)
Equity in income (loss)
of investees ............... 812 (20) (1,083) (90) (262)
Gain on sale of partner-
ship interests ............. -- -- -- 2,514 --
Gain on sale of
real estate ................ 21,404 1,579 5,822 2,153 24
Extraordinary gain .......... -- 256 1,437 1,189 1,594
----------- ----------- ----------- ----------- -----------
Net income (loss) ........... $ 12,599 $ (7,806) $ (3,726) $ (3,405) $ (8,570)
=========== =========== =========== =========== ===========
PER SHARE DATA
Income (loss) before
extraordinary gain ......... $ 3.22 $ (2.02) $ (1.29) $ (1.15) $ (2.52)
Extraordinary gain .......... -- -- .32 .30 .40
----------- ----------- ----------- ----------- -----------
Net income (loss) ........... $ 3.22 $ (2.02) $ (.97) $ (.85) $ (2.12)
=========== =========== =========== =========== ===========
Dividends per share ......... $ .28 $ .28 $ .07 $ -- $ --
Weighted average Common
shares outstanding ......... 3,907,221 3,994,687 4,012,275 4,012,275 4,033,332
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
BALANCE SHEET DATA (dollars in thousands, except per share)
<S> <C> <C> <C> <C> <C>
Notes and interest
receivable, net ............ $ 3,947 $ 8,606 $ 10,017 $ 11,201 $ 12,447
Real estate held for
sale, net
Foreclosed ................. 1,356 910 2,460 8,032 11,277
Other ...................... 3,630 2,089 3,415 341 596
Real estate held for
investment, net ............ 269,845 217,010 220,105 213,445 178,857
Total assets ................ 319,535 244,971 260,036 247,964 221,095
Notes and interest
payable .................... 222,029 158,692 159,889 145,514 116,024
Stockholders' equity ........ 86,133 78,959 89,040 93,177 96,582
Book value per share ........ $ 22.15 $ 20.10 $ 22.19 $ 23.22 $ 23.95
</TABLE>
27
<PAGE> 4
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
first lien mortgage also by NIA. The Company's equity share of the loss on the
note modification was $127,000 and its equity share of the note writedown was
$901,000. See NOTE 5. "INVESTMENT IN EQUITY METHOD REAL ESTATE ENTITIES."
In 1995, the Company recognized extraordinary gains totaling $1.3 million on the
payoff of the mortgage debt secured by the Fountain Village Apartments. The
Company had no such gains in 1996.
In 1996, the Company recognized gains of $218,000, $1.4 million and $56,000
from the sales of Cheyenne Mountain land, Park Forest Apartments and Moss Creek
land. In September 1996, the Company recognized a loss of $63,000 from the
sale of Byron land. In 1995, the Company recognized a gain of $1.6 million on
the collection of the note receivable secured by the Maumelle land and a gain
of $4.1 million on the sale of the Summerchase Apartments. See NOTE 3. "REAL
ESTATE AND DEPRECIATION."
Environmental Matters
Under various federal, state and local environmental laws, ordinances and
regulations, the Company may be potentially liable for removal or remediation
costs, as well as certain other potential costs relating to hazardous or toxic
substances (including governmental fines and injuries to persons and property)
where property-level managers have arranged for the removal, disposal or
treatment of hazardous or toxic substances. In addition, certain environmental
laws impose liability for release of asbestos-containing materials into the
air, and third parties may seek recovery from the Company for personal injury
associated with such materials.
The Company's management is not aware of any environmental liability relating
to the above matters that would have a material adverse effect on the Company's
business, assets or results of operations.
Inflation
The effects of inflation on the Company's operations are not quantifiable.
Revenues from property operations fluctuate proportionately with inflationary
increases and decreases in housing costs. Fluctuations in the rate of
inflation also affect sale values of properties, and correspondingly, the
ultimate realizable value of the Company's real estate and notes receivable
portfolios. Inflation also has an effect on the Company's earnings from
short-term investments.
34
<PAGE> 5
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
--------- ---------
(dollars in thousands)
<S> <C> <C>
Assets
Notes and interest receivable
Performing ....................................... $ 4,388 $ 9,075
Nonperforming, nonaccruing ....................... 450 457
--------- ---------
4,838 9,532
Less - allowance for estimated losses .............. (891) (926)
--------- ---------
3,947 8,606
Foreclosed real estate held for sale ............... 1,356 910
Real estate held for sale, net of accumulated
depreciation ($1,350 in 1997 and $76 in 1996) .... 3,630 2,089
--------- ---------
4,986 2,999
Real estate held for investment, net of
accumulated depreciation ($55,487 in 1997 and
$50,310 in 1996) ................................. 269,845 217,010
Investment in real estate entities ................. 4,333 4,578
Cash and cash equivalents .......................... 24,733 960
Other assets (including $497 in 1997 and $960 in
1996 from affiliates) ............................ 11,291 10,818
--------- ---------
$ 319,135 $ 244,971
========= =========
Liabilities and Stockholders' Equity
Liabilities
Notes and interest payable ......................... $ 222,029 $ 158,692
Other liabilities (including $1,157 in 1997 and $535
in 1996 to affiliates) ........................... 10,973 7,320
--------- ---------
233,002 166,012
Commitments and contingencies
Stockholders' equity
Common Stock, $.01 par value; authorized, 10,000,000
shares; issued and outstanding 3,889,200 shares
in 1997 and 3,926,445 shares in 1996 ............. 39 39
Paid-in capital .................................... 217,688 218,133
Accumulated distributions in excess of accumulated
earnings ......................................... (131,594) (139,213)
--------- ---------
86,133 78,959
--------- ---------
$ 319,135 $ 244,971
========= =========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
38
<PAGE> 6
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------
1997 1996 1995
----------- ----------- -----------
(dollars in thousands, except per share)
<S> <C> <C> <C>
Revenues
Rents ............................... $ 54,462 $ 45,405 $ 46,770
Interest ............................ 1,499 1,473 1,502
----------- ----------- -----------
55,961 46,878 48,272
Expenses
Property operations (including
$2,262 in 1997, $1,879 in 1996
and $2,928 in 1995 to affiliates) 32,424 28,491 30,211
Interest .......................... 16,765 14,999 16,114
Depreciation ...................... 9,578 8,461 8,619
Advisory fee to affiliate ......... 1,807 1,784 1,770
Net income fee to affiliate ....... 1,022 -- --
General and administrative
(including $1,187 in 1997, $1,047
in 1996 and $877 in 1995 to
affiliates) ..................... 2,645 2,685 1,960
Litigation settlement ............. -- (1,500) (500)
Provision for losses .............. 1,337 1,579 --
----------- ----------- -----------
65,578 56,499 58,174
----------- ----------- -----------
(Loss) from operations .............. (9,617) (9,621) (9,902)
Equity in income (loss) of investees 812 (20) (1,083)
Gain on sale of real estate ......... 21,404 1,579 5,822
----------- ----------- -----------
Income (loss) before extraordinary
gain .............................. 12,599 (8,062) (5,163)
Extraordinary gain .................. -- -- 1,293
----------- ----------- -----------
Net income (loss) ................... $ 12,599 $ (8,062) $ (3,870)
=========== =========== ===========
Earnings per share
Income (loss) before extraordinary
gain .............................. $ 3.22 $ (2.02) $ (1.29)
Extraordinary gain .................. -- -- .32
----------- ----------- -----------
Net income (loss) ................... $ 3.22 $ (2.02) $ (.97)
=========== =========== ===========
Weighted average Common shares used
in computing earnings per share ..... 3,907,221 3,994,687 4,012,275
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
39
<PAGE> 7
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Distributions
Common Stock in Excess of
------------------------ Paid-in Accumulated Stockholders'
Shares Amount Capital Earnings Equity
--------- ------------ ------------ ------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 ..... 4,012,275 $ 40 $ 219,036 $ (125,899) $ 93,177
Dividends ($.07 per
share) ..................... -- -- -- (267) (267)
Net (loss) ................... -- -- -- (3,870) (3,870)
--------- ------------ ------------ ------------ ------------
Balance, December 31, 1995 ... 4,012,275 40 219,036 (130,036) 89,040
Repurchase of Common
Stock ...................... (85,830) (1) (903) -- (904)
Dividends ($.28 per
share) ..................... -- -- -- (1,115) (1,115)
Net (loss) ................... -- -- -- (8,062) (8,062)
--------- ------------ ------------ ------------ ------------
Balance, December 31, 1996 ... 3,926,445 39 218,133 (139,213) 78,959
Fractional shares ............ (18) -- -- -- --
Repurchase of Common Stock ... (37,227) -- (445) -- (445)
Dividends ($.28 per
share) ..................... -- -- -- (1,090) (1,090)
Special dividend ($1.00
per share) declared ........ -- -- -- (3,890) (3,890)
Net income ................... -- -- -- 12,599 12,599
--------- ------------ ------------ ------------ ------------
Balance, December 31, 1997 ... 3,889,200 $ 39 $ 217,688 $ (131,594) $ 86,133
========= ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
40
<PAGE> 8
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Years Ended December 31,
--------------------------------------------
1997 1996 1995
------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Rents collected ............................... $ 57,144 $ 43,401 $ 46,511
Interest collected ............................ 1,098 1,232 1,256
Interest paid ................................. (16,016) (14,167) (14,676)
Payments for property operations
(including $2,262 in 1997, $1,879 in
1996 and $2,928 in 1995 to affiliates) ...... (40,984) (30,738) (31,171)
Advisory and net income fee paid to
affiliate ................................... (1,807) (1,784) (1,770)
General and administrative expenses paid
(including $1,187 in 1997, $1,047 in
1996 and $877 in 1995 to affiliates) ........ (2,457) (2,785) (1,216)
Distributions from operating cash flow of
equity investees ............................ 687 649 666
Insurance/Litigation settlement ............... 9,633 1,500 500
Other ......................................... 1,119 (498) 1,266
------------ ------------ ------------
Net cash provided by (used in) operating
activities ............................... 8,417 (3,190) 1,366
Cash Flows from Investing Activities
Collections on notes receivable ............... 5,048 952 2,851
Real estate improvements ...................... (5,767) (3,406) (8,024)
Proceeds from sale of real estate ............. 29,081 8,922 24,445
Acquisitions of real estate (including
$2,966 in 1997, $339 in 1996 and $56 in
1995 to affiliates) ......................... (46,433) (7,689) (1,339)
Acquisition of partnership interests .......... -- -- (50)
Contributions to equity investees ............. (731) (161) (443)
------------ ------------ ------------
Net cash provided by (used in) investing
activities .................................... (18,802) (1,382) 17,440
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
41
<PAGE> 9
TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1997 1996 1995
------------ ------------ ------------
(dollars in thousands)
<S> <C> <C> <C>
Cash Flows from Financing Activities
Distributions from financing cash flow of
equity investees ............................... $ 1,101 $ -- $ 853
Payments on notes payable ....................... (37,095) (14,545) (35,205)
Proceeds from notes payable ..................... 73,817 13,550 26,072
Dividends paid .................................. (1,090) (1,115) (267)
Shares of Common Stock repurchased .............. (445) (904) --
Deferred financing costs ........................ (2,130) (818) (1,058)
------------ ------------ ------------
Net cash provided by (used in)
financing activities ....................... 34,158 (3,832) (9,605)
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents .................................... 23,773 (8,660) 9,057
Cash and cash equivalents, beginning of year ..... 960 9,620 563
------------ ------------ ------------
Cash and cash equivalents, end of year ........... $ 24,773 $ 960 $ 9,620
============ ============ ============
Reconciliation of net income (loss) to net
cash provided by (used in) operating
activities
Net income (loss) ............................. $ 12,599 $ (7,806) $ (3,726)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Depreciation and amortization ............ 10,005 8,857 9,180
Provision for losses ..................... 1,337 1,579 --
Extraordinary gain ....................... -- -- (1,293)
Equity in (income) loss of equity
investees .............................. (812) 20 1,083
Gain on sale of real estate .............. (21,404) (1,579) (5,822)
Distributions from operating cash flow
of equity investees .................... 687 649 666
(Increase) in interest receivable ........ (244) (5) (4)
Decrease in other assets ................. 3,740 1,759 1,098
Increase in interest payable ............. 165 200 635
(Decrease) in other liabilities .......... 2,344 (6,864) (451)
------------ ------------ ------------
Net cash provided by (used in) operating
activities ..................................... $ 8,417 $ (3,190) $ 1,366
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
42
<PAGE> 10
TRANSCONTINENTAL REALTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 13. INCOME TAXES (Continued)
As a result of the Company's election to be treated as a REIT for income tax
purposes and of its intention to distribute its taxable income, if any, in
future years, no deferred tax asset, liability or valuation allowance was
recorded.
NOTE 14. EXTRAORDINARY GAIN
In 1995, the Company recognized extraordinary gains totaling $1.4 million on the
payoff of the mortgage debt secured by the Fountain Village Apartments.
NOTE 15. COMMITMENTS AND CONTINGENCIES
Olive Litigation. In February 1990, the Company, together with CMET, IORI and
National Income Realty Trust, three real estate entities with, at the time, the
same officers, directors or trustees and advisor as the Company, entered into a
settlement of a class and derivative action entitled Olive et al. v. National
Income Realty Trust et al., relating to the operation and management of each of
such entities. On April 23, 1990, the Court granted final approval of the terms
of the settlement.
On May 4, 1994, the parties entered into a Modification of Stipulation of
Settlement dated April 27, 1994 (the "Olive Modification") that settled
subsequent claims of breaches of the settlement that were asserted by the
plaintiffs and modified certain provisions of the April 1990 settlement. The
Olive Modification was preliminarily approved by the Court on July 1, 1994 and
final Court approval was entered on December 12, 1994. The effective date of the
Olive Modification was January 11, 1995.
The Court retained jurisdiction to enforce the Olive Modification, and during
August and September 1996, the Court held evidentiary hearings to assess
compliance with the terms of the Olive Modification by the various parties. The
Court issued no ruling or order with respect to the matters addressed at the
hearings.
Separately, in 1996, legal counsel for the plaintiffs notified the Company's
Board of Directors that he intended to assert that certain actions taken by the
Board of Directors breached the terms of the Olive Modification. On January 27,
1997, the parties entered into an Amendment to the Olive Modification effective
January 9, 1997 (the "Olive Amendment"), which was submitted to the Court for
approval on January 29, 1997. The Olive Amendment provides for the settlement of
60
<PAGE> 11
TRANSCONTINENTAL REALTY INVESTORS, INC. SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Cost
Capitalized Subsequent Gross Amounts of Which Carried
Initial Cost to Acquisition at End of Year
--------------------- ------------------- ------------------------------
Buildings & Buildings & (1)
Property/Location Encumbrances Land Improvements Improvements Other Land Improvements Total
- -------------------- ------------ ----- ------------ ------------ ----- ------- ------------ --------
INVESTMENT PROPERTIES - CONTINUED (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
APARTMENTS - CONTINUED
Woods Edge .............. $ 6,158 $ 1,015 $ 7,812 $ 143 $ -- $ 1,466 $ 7,504 $ 8,970
Rockville, MD
OFFICE BUILDINGS
74 New Montgomery ....... 6,256 2,277 9,105 3,829 (336)(2) 2,210 12,665 14,875
San Francisco, CA
Bonita Plaza ............ 3,995 1,168 4,670 -- -- 1,168 4,670 5,838
Bonita, CA
Chesapeake Ridge ........ 5,348 3,663 4,098 1,571 -- 3,681 5,651 9,332
San Diego, CA
Corporate Pointe ........ 4,020 830 3,321 351 -- 830 3,672 4,502
Chantilly, VA
Forum ................... 5,525 1,360 5,439 589 -- 1,360 6,028 7,388
Richmond, VA
Hartford ................ 2,236 630 2,520 400 -- 630 2,920 3,550
Dallas, TX
Institute Place Lofts ... 6,058 665 7,057 155 -- 665 7,212 7,877
Chicago, IL
Lexington Center ........ 4,000 1,103 4,413 -- -- 1,103 4,413 5,516
Colorado Springs, CO
One Steeplechase ........ 8,213 1,380 5,520 2,807 72 (4) 1,391 8,388 9,779
Sterling, VA
Plaza Towers ............ 4,774 1,760 12,617 6,573 (4,379)(2) 1,246 15,325 16,571
St. Petersburg, FL
Savings of America ...... 1,285 338 1,353 169 -- 338 1,522 1,860
Houston, TX
Town & Country .......... -- 108 432 470 -- 108 902 1,010
Houston, TX
Venture Center .......... 1,132 411 2,746 182 -- 411 2,928 3,339
Atlanta, GA
Waterstreet ............. 8,114 2,605 10,420 927 -- 2,605 11,347 13,952
Boulder, CO
INDUSTRIAL WAREHOUSES
Corporate Center ........ 7,000 1,259 5,038 1,096 -- 1,264 6,129 7,393
Ashburn, VA
Denton Drive ............ 341 414 527 -- -- 414 527 941
Dallas, TX ...........
Encon ................... 3,500 984 3,935 -- -- 984 3,935 4,919
Fort Worth, TX
Parke Long .............. 7,759 1,838 7,361 748 -- 1,838 8,109 9,947
Chantilly, VA
Technology Trading ...... 4,158 1,199 4,796 96 -- 1,222 4,869 6,091
Sterling, VA
Texstar ................. 1,150 333 1,331 141 -- 333 1,472 1,805
Arlington, TX
Tricon .................. 4,848 2,761 6,442 796 -- 2,774 7,225 9,999
Atlanta, GA ..........
SHOPPING CENTERS
Dunes Plaza ............. 3,856 1,230 5,430 1,172 (482)(5) 1,529 5,821 7,350
Michigan City, IN
Northtown ............... 2,500 1,786 7,143 1,484 -- 2,103 8,310 10,413
Dallas, TX
Life on Which
Date Depreciation
of in Latest
Con- Statement
Accumulated struc- Date of Operation
Property/Location Depreciation tion Acquired is Computed
- -------------------- ------------ ------ -------- -----------
INVESTMENT PROPERTIES - CONTINUED (dollars in thousands)
<S> <C> <C> <C> <C>
APARTMENTS - CONTINUED
Woods Edge .............. $ 3,296 1965 01/01/95 5 - 40 years
Rockville, MD
OFFICE BUILDINGS
74 New Montgomery ....... 3,982 1914 09/21/90 4 - 40 years
San Francisco, CA
Bonita Plaza ............ 39 1991 09/16/97 40 years
Bonita, CA
Chesapeake Ridge ........ 3,041 1985 06/30/85 5 - 40 years
San Diego, CA
Corporate Pointe ........ 450 1992 10/28/94 5 - 40 years
Chantilly, VA
Forum ................... 1,041 1987 10/30/92 3 - 40 years
Richmond, VA
Hartford ................ 286 1980 11/10/94 4 - 40 years
Dallas, TX
Institute Place Lofts ... 3,350 1910 01/01/93 2 - 40 years
Chicago, IL
Lexington Center ........ 9 1986 12/30/97 40 years
Colorado Springs, CO
One Steeplechase ........ 1,924 1987 12/22/92 5 - 40 years
Sterling, VA
Plaza Towers ............ 8,310 1979 11/14/85 3 - 40 years
St. Petersburg, FL
Savings of America ...... 37 1979 03/31/97 5 - 40 years
Houston, TX
Town & Country .......... 395 1982 05/01/92 3 - 40 years
Houston, TX
Venture Center .......... 676 1981 07/04/89 3 - 40 years
Atlanta, GA
Waterstreet ............. 2,341 1988 09/30/91 3 - 40 years
Boulder, CO
INDUSTRIAL WAREHOUSES
Corporate Center ........ 811 1989 04/28/94 3 - 40 years
Ashburn, VA
Denton Drive ............ 61 1948- 05/13/93 40 years
Dallas, TX ........... 1952
Encon ................... 25 1958 10/01/97 40 years
Fort Worth, TX
Parke Long .............. 863 1989 06/16/94 3 - 40 years
Chantilly, VA
Technology Trading ...... 530 1987 12/21/93 3 - 40 years
Sterling, VA
Texstar ................. 138 1967 12/16/93 5 - 40 years
Arlington, TX
Tricon .................. 1,268 1971- 02/11/93 3 - 40 years
Atlanta, GA .......... 1975
SHOPPING CENTERS
Dunes Plaza ............. 1,147 1978 03/17/92 5 - 40 years
Michigan City, IN
Northtown ............... 1,402 1967 02/25/92 5 - 40 years
Dallas, TX
</TABLE>
65
<PAGE> 12
TRANSCONTINENTAL REALTY INVESTORS, INC. SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Cost
Capitalized Subsequent
Initial Cost to Acquisition
------------------------ -------------------------
Buildings &
Property/Location Encumbrances Land Improvements Improvements Other
- -------------------- ------------ ------- ------------ ----------- ---------
INVESTMENT PROPERTIES - CONTINUED (dollars in thousands)
<S> <C> <C> <C> <C> <C>
SHOPPING CENTERS - CONTINUED
Parkway Center ............ $ 1,796 $ 273 $ 1,876 $ 405 $ --
Dallas, TX
Sadler Square ............. 2,415 679 2,715 65 --
Amelia Island, FL
Sheboygan ................. 864 242 1,371 17 --
Sheboygan, WI
HOTEL
Majestic Inn .............. 5,700 1,139 4,555 808 --
San Francisco, CA
LAND
Las Colinas ............... -- 995 -- 5 --
Las Colinas, TX
West End .................. 8,784 11,405 -- -- --
Dallas, TX
--------- --------- --------- --------- ---------
INVESTMENT PROPERTIES ..... 215,680 67,050 231,489 33,911 (7,118)
--------- --------- --------- --------- ---------
PROPERTIES HELD FOR SALE
SHOPPING CENTERS
Shaw Plaza ................ 2,579 1,066 4,262 1,098 (1,446)(6)
Sharon, MA
LAND
Fiesta .................... -- 44 -- -- --
San Angelo, TX
Fruitland ................. -- 253 -- -- (100)(7)
Fruitland Park, FL
Moss Creek ................ -- 85 -- -- --
Greensboro, NC
Republic Tower ............ -- 1,074 -- -- --
Dallas, TX
--------- --------- --------- --------- ---------
PROPERTIES HELD FOR
SALE ................... 2,579 2,522 4,262 1,098 (1,546)
--------- --------- --------- --------- ---------
$ 218,259 $ 69,572 $ 235,751 $ 35,009 $ (8,664)
========= ========= ========= ========= =========
Life on Which
Gross Amounts of Which Carried Date Depreciation
at End of Year of in Latest
------------------------ Con- Statement
Buildings & (1) Accumulated struc- Date of Operation
Property/Location Land Improvements Total Depreciation tion Acquired is Computed
- -------------------- ------- ------------ -------- ------------ ------ -------- ------------
INVESTMENT PROPERTIES - CONTINUED (dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTERS - CONTINUED
Parkway Center ............ $ 273 $ 2,281 $ 2,554 $ 701 1979 11/01/91 1 - 40 years
Dallas, TX
Sadler Square ............. 679 2,780 3,459 347 1987 11/22/93 3 - 40 years
Amelia Island, FL
Sheboygan ................. 259 1,371 1,630 191 1977 05/21/92 40 years
Sheboygan, WI
HOTEL
Majestic Inn .............. 1,139 5,363 6,502 1,026 1902 12/31/90 2 - 40 years
San Francisco, CA
LAND
Las Colinas ............... 1,000 -- 1,000 -- -- 01/25/96 --
Las Colinas, TX
West End .................. 11,405 -- 11,405 -- -- 08/05/97 --
Dallas, TX
--------- --------- --------- ---------
INVESTMENT PROPERTIES ..... 68,608 256,724 325,332 55,487
--------- --------- --------- ---------
PROPERTIES HELD FOR SALE
SHOPPING CENTERS
Shaw Plaza ................ 813 4,167 4,980 1,350 1978 12/13/91 5 - 40 years
Sharon, MA
LAND
Fiesta .................... 44 -- 44 -- -- 12/31/91 --
San Angelo, TX
Fruitland ................. 153 -- 153 -- -- 05/01/92 --
Fruitland Park, FL
Moss Creek ................ 85 -- 85 -- -- 12/31/96 --
Greensboro, NC
Republic Tower ............ 1,074 -- 1,074 -- -- 11/27/92 --
Dallas, TX
--------- --------- --------- ---------
PROPERTIES HELD FOR
SALE ................... 2,169 4,167 6,336 1,350
--------- --------- --------- ---------
$ 70,777 $ 260,891 $ 331,668 $ 56,837
========= ========= ========= =========
</TABLE>
- ------------------
(1) The aggregate cost for federal income tax purposes is $338.0 million.
(2) Writedown of property to estimated net realizable value.
(3) Escrow deposits deducted from the basis of the property.
(4) Construction period interest and taxes.
(5) Cash received deducted from the basis of the property, offset by land
acquired in 1992 and debt forgiveness in 1995 and 1996.
(6) Adjustment to purchase price and 1997 writedown of property to estimated
net realizable value.
(7) Cash received for easement deducted from the basis of the property.
66
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TRANSCONTINENTAL REALTY INVESTORS, INC.
Dated: February 16, 1999 By: /s/ Randall M. Paulson
--------------------- ----------------------------------
Randall M. Paulson
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
By: /s/ Ted P. Stokely
----------------------------------
Ted P. Stokely
Chairman of the Board
and Director
By: /s/ Richard W. Douglas By: /s/ Murray Shaw
--------------------------- -------------------------
Richard W. Douglas Murray Shaw
Director Director
By: /s/ Larry E. Harley By: /s/ Martin L. White
--------------------------- -------------------------
Larry E. Harley Martin L. White
Director Director
By: /s/ R. Douglas Leonhard By: /s/ Edward G. Zampa
--------------------------- -------------------------
R. Douglas Leonhard Edward G. Zampa
Director Director
Dated: February 16, 1999 By: /s/ Thomas A. Holland
------------------------ -------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
89
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> DEC-31-1997
<CASH> 24,733
<SECURITIES> 0
<RECEIVABLES> 4,838
<ALLOWANCES> 891
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 331,668
<DEPRECIATION> 56,837
<TOTAL-ASSETS> 319,135
<CURRENT-LIABILITIES> 0
<BONDS> 222,029
0
0
<COMMON> 39
<OTHER-SE> 86,094
<TOTAL-LIABILITY-AND-EQUITY> 319,135
<SALES> 0
<TOTAL-REVENUES> 54,462
<CGS> 0
<TOTAL-COSTS> 32,424
<OTHER-EXPENSES> 9,578
<LOSS-PROVISION> 1,337
<INTEREST-EXPENSE> 16,765
<INCOME-PRETAX> 12,599
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,599
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,599
<EPS-PRIMARY> 3.22
<EPS-DILUTED> 3.22
</TABLE>
