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SEC filingTranscontinental Realty Investors, Inc. reported net income attributable to the Company of $13.8 million for FY 2025, a significant increase from $5.9 million in FY 2024. This improvement was primarily driven by a $17.7 million gain on the sale of assets, notably the Villas at Bon Secour multifamily property. Despite this, the company reported a net operating loss of $6.3 million, widening from a $5.8 million loss in FY 2024, as total operating expenses of $55.4 million exceeded total revenue of $49.1 million. The company's balance sheet remained strong with total assets of $1.13 billion and total equity of $866.2 million, though cash flow from operations was negative $2.9 million due to significant investing activities in development projects and short-term investments.
Transcontinental Realty Investors reported FY 2025 net income of $14.4 million, more than double the $6.7 million reported in FY 2024. Net income attributable to the Company was $13.8 million ($1.60 per share), compared to $5.9 million ($0.68 per share) in the prior year. This significant improvement was primarily due to a $17.7 million gain on sale or write down of assets, including a $12.2 million gain from the sale of Villas at Bon Secour. However, the company continued to report a net operating loss of $6.3 million, which widened from $5.8 million in FY 2024, as operating expenses of $55.4 million exceeded total revenue of $49.1 million. Interest income contributed $17.1 million to results, though this declined from $21.9 million in the prior year.
Total revenue increased 4.2% to $49.1 million in FY 2025, with rental revenues comprising $46.4 million (94.5% of total) and other income contributing $2.7 million. The company operates in two reportable segments: Residential (multifamily properties) generated $34.1 million in revenue, essentially flat compared to FY 2024, while Commercial (office properties) generated $14.9 million, a 15.2% increase from $13.0 million in the prior year. The residential portfolio consisted of 13 operating properties (2,128 units), 3 properties in lease-up (672 units), and 1 property under development (234 units). Commercial properties included four office buildings totaling approximately 1,001,549 rentable square feet.
The company's net operating loss margin was -12.9% in FY 2025, compared to -12.3% in FY 2024, indicating continued operational challenges. Property operating expenses totaled $27.9 million (56.9% of revenue), while depreciation and amortization was $12.6 million (25.7% of revenue). General and administrative expenses were $5.8 million, and advisory fees to related parties were $9.1 million. The residential segment generated net operating income of $14.8 million (43.4% margin), while the commercial segment generated $6.4 million (42.5% margin). Interest income of $17.1 million provided significant offset to operating losses, though this declined 21.8% from the prior year.
Cash flow from operating activities was negative $2.9 million in FY 2025, compared to positive $1.3 million in FY 2024. Investing activities consumed $35.8 million, primarily for development and renovation of real estate ($79.5 million) and purchase of short-term investments ($84.6 million), partially offset by proceeds from asset sales ($34.8 million) and redemption of short-term investments ($89.4 million). Financing activities provided $27.5 million, mainly from proceeds on mortgages and other notes payable. The balance sheet showed total assets of $1.13 billion, including real estate of $602.4 million, notes receivable of $123.7 million, and receivable from related parties of $169.7 million. Total liabilities were $266.4 million, with mortgages and other notes payable of $210.8 million.
The company faces risks associated with the real estate industry, including adverse economic conditions, competition, interest rate fluctuations, and potential declines in office space demand due to remote work trends. Management intends to sell income-producing assets, refinance real estate, and obtain additional borrowings primarily secured by real estate to meet liquidity requirements. The company continues development activities, including Windmill Farms and several multifamily projects, with total projected costs of $206.8 million for development projects. As of December 31, 2025, the company had $123.6 million in HUD-insured mortgage notes payable (58.6% of total mortgage notes payable), which provide favorable terms but involve extensive regulatory compliance.