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AR

AMERICAN REALTY INVESTORS INC (ARL)·Q4 2024 Earnings Summary

Executive Summary

  • ARL’s Q4 2024 printed a small net loss of $0.2M (−$0.01 EPS) as operating expenses declined and losses on real estate transactions were far lower than the prior year; total revenue was $12.0M, up sequentially but down YoY (from $14.0M to $12.0M) . Q3 2024 was heavily impacted by the $23.4M Clapper settlement accrual, producing a −$17.5M net loss (−$1.08 EPS) .
  • Commercial leasing showed progress: total occupancy improved to 81% (multifamily 94%, commercial 53%) at 12/31/24 vs 79% total (multifamily 95%, commercial 48%) at 9/30/24, aided by a 45k sq ft lease at Stanford Center commencing April 2025 .
  • The company obtained a $27.5M construction loan for the 234‑unit Mountain Creek multifamily project (SOFR+3.45%, maturing Oct 20, 2026), targeting completion in 2026; it also sold 30 single‑family lots for $1.4M, realizing a $1.1M gain .
  • No formal financial guidance or earnings call transcript was provided/found; Wall Street consensus (S&P Global) for EPS and revenue was unavailable for Q4 2024, so beat/miss cannot be assessed. Results context below relies on company filings and S&P Global data availability notes .

What Went Well and What Went Wrong

What Went Well

  • Occupancy improved to 81% at year‑end, driven by commercial recovery (53% vs 48% in Q3) while multifamily remained high (94%) .
  • New 45k sq ft lease at Stanford Center (first since major renovation) lifts property occupancy by 14 pts and rent per sq ft by 20% vs recent expirations; lease starts April 2025, a positive forward demand signal .
  • Operating discipline: net operating loss narrowed to $(1.8)M from $(2.2)M YoY on lower operating expenses, primarily depreciation; net loss attributable to common narrowed sharply to $(0.2)M from $(2.1)M YoY .

What Went Wrong

  • Revenue pressure persisted YoY: total revenue fell to $12.0M from $14.0M in Q4 2023 on weaker commercial occupancy; rental revenue declined to $11.2M from $12.8M YoY .
  • Profitability still negative at the operating line (net operating loss $(1.8)M), and commercial occupancy remains structurally low (53%), underscoring continued work to stabilize the office/commercial portfolio .
  • Litigated matters influenced 2024 results: the Clapper settlement was paid on Oct 31, 2024 ($23.4M), with the associated loss on real estate transactions reflected across the year (notably Q3); Q4 still recorded a $(0.6)M loss on real estate transactions .

Financial Results

Headline P&L (USD)

MetricQ4 2023Q3 2024Q4 2024
Total revenue ($M)$14.047 $11.607 $12.039
Rental revenues ($M)$12.787 $11.074 $11.222
Net operating (loss) ($M)$(2.191) $(2.063) $(1.784)
Interest income ($M)$1.646 $5.506 $3.940
Interest expense ($M)$(1.928) $(2.123) $(1.880)
(Loss) on real estate transactions ($M)$(2.079) $(23.400) $(0.589)
Net income (loss) attrib. to common ($M)$(2.123) $(17.460) $(0.161)
Diluted EPS ($)$(0.13) $(1.08) $(0.01)

Notes: Q4 2024 sequential improvement in revenue (+3.7% QoQ from $11.607M to $12.039M) and much smaller loss vs Q3 2024, which was dominated by the $23.4M Clapper settlement accrual .

Margins (S&P Global)

MetricQ4 2023Q3 2024Q4 2024
EBITDA Margin %15.05%*13.94%*9.30%*
EBIT Margin %−13.21%*−13.63%*−14.42%*
Net Income Margin %−14.80%*−145.14%*−1.33%*

Values marked with * retrieved from S&P Global.

Revenue Composition (USD)

MetricQ4 2023Q3 2024Q4 2024
Rental revenues ($M)$12.787 $11.074 $11.222
Other income ($M)$1.260 $0.533 $0.817
Total revenue ($M)$14.047 $11.607 $12.039

KPIs

KPIQ2 2024Q3 2024Q4 2024
Total occupancy78% 79% 81%
Multifamily occupancy93% 95% 94%
Commercial occupancy49% 48% 53%
Major lease (Stanford Center)—45k sq ft signed Oct 18, 2024; starts Apr 2025 As left; +14 pts property occupancy; +20% rent psf vs recent expirations

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q1‑Q2 2025——No formal guidance issued
Margins/OpEx/OI&E/Tax———No formal guidance issued
Segment‑specific———No formal guidance issued
Dividends———No updates disclosed

Earnings Call Themes & Trends

No earnings call transcript found for Q4 2024; themes below reflect disclosures across company press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Occupancy trajectoryTotal 78%; MF 93%; Commercial 49% Total 79%; MF 95%; Commercial 48% Total 81%; MF 94%; Commercial 53% Improving overall; commercial recovering
Leasing – Stanford Center—45k sq ft lease signed; start Apr 2025 Same; +14 pts occupancy and +20% rent psf vs recent expirations Positive, supports 2025 rent roll
Development – Mountain Creek—$27.5M construction loan secured (SOFR+3.45%, matures Oct 20, 2026) Reiterated; 234 units; completion targeted 2026 On track; financed
Legal/Litigation—Clapper settlement accrued $23.4M Settlement paid Oct 31, 2024; FY loss on real estate transactions $(24.0)M; Q4 $(0.6)M Resolved; earnings drag largely in Q3
Balance sheet/Financing—Forest Grove loan refi ($6.6M, SOFR+1.85%, matures 2031) Construction loan for Mountain Creek noted again Active, terming out liabilities

Management Commentary

  • “Total occupancy was 81% at December 31, 2024, which includes 94% at our multifamily properties and 53% at our commercial properties.” (Press release/EX‑99.1)
  • “We completed a 45,000 square foot lease at Stanford Center… [resulting in] a 14% increase in occupancy to the property and a 20% increase in rent per square foot over recent expired leases… expected to commence in April 2025.”
  • “We obtained a $27.5 million construction loan to finance the development of a 234 unit multifamily property in Dallas, Texas ("Mountain Creek")… bears interest at SOFR plus 3.45% and matures on October 20, 2026.”
  • “We paid $23.4 million to resolve all claims litigation with David Clapper… As a result of the settlement, we accrued a loss on real estate transactions of $23.4 million during the three and nine months ended December 31, 2024.” (Note: The Q3 release had stated the accrual occurred in Q3.)
  • “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.”

Q&A Highlights

No earnings call transcript was available for Q4 2024; no Q&A highlights to report. Disclosures above are based on the 8‑K/press release filings .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue was unavailable for ARL; therefore, we cannot assess a beat/miss versus Street expectations. Actuals reported: revenue $12.039M and EPS $(0.01) . Values referenced for consensus availability are from S&P Global.

Key Takeaways for Investors

  • Sequential stabilization with improving occupancy and a much smaller quarterly loss post‑Clapper settlement; commercial occupancy’s rise to 53% is a tangible positive into 2025 .
  • The 45k sq ft Stanford Center lease, commencing April 2025, should support rent growth (20% higher rent psf vs recent expirations) and lift property‑level NOI; watch for additional leasing momentum as a catalyst .
  • Development pipeline is funded: Mountain Creek’s $27.5M construction loan (SOFR+3.45%) positions ARL to add 234 units in 2026; leasing/absorption risk remains, but financing risk is largely addressed .
  • YoY revenue headwinds persist due to commercial softness (Q4 rental revenue down to $11.2M from $12.8M), but expense reductions (notably depreciation) helped narrow the operating loss .
  • Legal overhang resolved with the Oct 31, 2024 payment; FY impact was concentrated in Q3 (−$23.4M), with only $(0.6)M in Q4 on real estate transactions .
  • Absence of formal guidance and lack of Street coverage (no S&P Global consensus) may limit near‑term estimate‑revision catalysts; focus near‑term on leasing updates (commercial occupancy trajectory) and Mountain Creek execution .
  • Near‑term trading set‑ups likely hinge on incremental leasing at Stanford Center and broader commercial re‑tenanting pace; any additional asset sales (e.g., lots) could provide modest non‑recurring gains .

Additional detail and cross‑references:

  • Q4 2024 statement of operations (total revenue, operating expenses, interest income/expense, losses, EPS) are in the 8‑K EX‑99.1 and press release tables .
  • Q3 2024 figures and Clapper accrual are in the November 7, 2024 press release/8‑K .
  • Q2 2024 occupancy and P&L context are in the August 8, 2024 press release .