Transcontinental Realty Investors, Inc. Reports Fourth Quarter 2007 Results

DALLAS--(Business Wire)--
Transcontinental Realty Investors, Inc. (NYSE: TCI), a
Dallas-based real estate investment company, today reported net income
for the year ended December 31, 2007. The Company is aware of the
challenges that are currently facing the real estate industry. Despite
these issues, given the quality of the underlying assets and our
attention to details, management remains highly focused on its
operations, development projects and investment strategy.

TCI reported net income applicable to common shares of $10.2
million, or $1.24 per diluted share for the Year ended December 31,
2007, compared to net income of $3.3 million, or $.40 per diluted
share for the year ended December 31, 2006.

TCI also reported net income applicable to common shares of $34.7
million or $4.17 per diluted share for the quarter ended December 2007
as compared to $11.6 million or $1.42 per diluted share for the
quarter ended December 2006.

Results for the year ended December 31, 2007:

We had net income applicable to common shares of $10.2 million in
2007, which includes gains of land sales of $12.0 million, and net
income from discontinued operations of $10.2 million, compared to net
income applicable to common shares of $3.3 million in 2006, including
gains on land sales totaling $11.4 million and net income from
discontinued operations of $3.3 million.

Rental and other property revenues were $134.5 million in 2007 as
compared to $105.4 million in 2006 an increase of $29.1 million. A
majority of the increase was due to the acquisition of the ParkWest I
& II in the current year.

Operating expenses from property operations were $80.6 million in
2007, compared to $65.0 million in 2006 an increase of $15.6 million.
A majority of the increase was due to the acquisition of the ParkWest
I & II in the current year.

Depreciation and amortization expense was $22.6 million in 2007,
compared to $20.0 million in 2006 and increase of $2.6 million. A
majority of the increase was due to the acquisition of the ParkWest I
& II.

General and administrative expenses were $9.8 million in 2007 as
compared to $4.0 million in 2006, an increase of $5.8 million due to
increased legal and consulting fees.

Advisory fee to affiliate was $10.7 million in 2007 as compared to
$8.6 million in 2006, an increase of $2.1 million. The increase was
due to higher gross assets in 2007 as compared to 2006. Our Advisory
fee is based in part on gross assets.

Gain on foreign currency transaction was $2.4 million in 2007 as
compared to $2,000 in 2006, an increase of $2.4 million. This increase
was due to the exchange rate conversion on the Poland Hotel.

Mortgage and loan interest expense was $67.0 million in 2007 as
compared to $47.5 million in 2006, an increase of $19.5 million. The
increase the debt is due to the purchase of Park West I & II,
refinancings of existing mortgages and acquisitions in the current
year.

We recorded an asset impairment charge of $3.7 million in the
current year, related to the write down of three properties; Foxwood
apartments for $1.7 million; Executive Court Office building, for $1.2
million; and the Encon Warehouse for $800,000.

Gain on involuntary conversion was $34.8 million in 2007 as
compared to $20.5 million in 2006. This represents the insurance
proceeds from the New Orleans properties that suffered damage from
Hurricane Katrina in 2005.

Incentive sales fee to affiliate was $2.6 million in 2007 as
compared to $1.5 million in 2006, an increase of $1.1 million. The
increase is due to the increased sales of properties in the current
year.

Gain on land sales was 12.0 million in 2007 as compared to 11.4
million in 2006, an increase of $600,000. In 2007, we sold 127.7 acres
of land in nine separate transactions with an aggregate sales price of
$20.8 million. In 2006, we sold 192.6 acres of land in seven separate
transactions, at an average sales price of $196,000 per acre.

Income from discontinued operations was $10.2 million in 2007 as
compared to $3.3 million in 2006, an increase of $6.9 million. In
2007, we sold 5 Apartments, and subsequent to year end, we sold 15
apartments, 3 hotels and 1 commercial building, In 2006, 4 apartment
communities were sold and 4 apartment communities were repositioned as
held for sales, which are included in discontinued operations.

Results for the quarter ended December 31, 2007

Total operating revenues were $36.3 million for the three months
ended December 2007 as compared to 30.4 million for the same period in
2006, an increase of $5.9 million. The increase was primarily due to
the acquisition of Commercial buildings (mainly ParkWest I & II) in
2007.

Total operating expenses were $34.2 million for the three months
ended December 31, 2007 as compared to $29.7 for the same period ended
2006, an increase of $4.5 million. The increase was primarily due to
the acquisition of ParkWest I & II in 2007.

Other income was $16.5 million for the three months ended December
2007, as compared to $5.7 million for the same period ended 2006, an
increase of $10.8 million. A majority of the increase is from the
receipt of insurance proceeds in the fourth quarter, offset by the
additional mortgage interest expense from refinancings and new debt
obligations.

Gain on sales for the three months ended December 31, 2007 was
$5.1 million. During the fourth quarter, we sold 93 acres of land for
a gross sales price of $7.2 million, receiving cash proceeds of $4.5
million.

Income discontinued operations was $4.5 million for the three
months ended December 31, 2007 as compared to $864,000 for the same
period ended 2006. During the fourth quarter ended 2007, 2 apartments
were sold for a gross sales price of $11.0 million. We recorded a gain
on sales from income producing properties of $7.4 million. In
addition, subsequent to year end, 15 apartments, 1 commercial
building, and 3 hotels were sold. These properties were repositioned
to discontinued operations in the fourth quarter of 2007.

About Transcontinental Realty Investors, Inc.

Transcontinental Realty Investors, Inc., a Dallas-based real
estate investment company, holds a diverse portfolio of equity real
estate located across the U.S., including office buildings,
apartments, hotels, shopping centers and developed and undeveloped
land. We invest in real estate through direct equity ownership and
partnerships nationwide. For more information, visit the Company's web
site at www.transconrealty-invest.com.

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TRANSCONTINENTAL REALTY INVESTORS INC
CONSOLIDATED BALANCE SHEET

December 31, December 31,
2007 2006
------------ ------------
(dollars in thousands)
Assets
Real Estate held for investment $1,327,913 $1,089,995
Less-accumulated depreciation (97,368) (97,541)
----------- ------------
1,230,545 992,454

Real estate held for sale 69,561 54,935
Real estate subject to sales contracts 64,320 66,027
Notes and interest receivable
Performing 34,677 39,566
Allowance for losses (1,978) -
----------- ------------
32,699 39,566
Investment in unconsolidated real estate
entities 27,569 30,573
Marketable equity securities, at market value 13,157 9,038
Cash and cash equivalents 11,239 4,803
Other Assets 72,099 52,771
----------- ------------
$1,521,189 $1,250,167
=========== ============

Liabilities and Stockholders' Equity
Notes and interest payable $1,007,226 $ 799,069
Liabilities related to assets held for sale 107,847 43,579
Liabilities related to assets subject to
sales contract 62,513 58,816
Other Liabilities 56,501 66,608
----------- ------------
1,234,087 968,072
Commitments and contingencies
Minority Interest 1,621 16,166
Stockholders' Equity:
Common Stock, $.01 par value; authorized,
10,000,000 shares; issued and outstanding
8,078,966 and 7,900,869 shares at December
31, 2007 and 2006 81 81
Preferred Stock
Series C: $.01 par value; authorized
10,000,000 shares; issued and outstanding
30,000 shares at December 31, 2007 and
2006 respectively (liquidation preference
$100 per share). - -
Series D: $.01 par value; authorized,
issued and outstanding 100,000 shares at
December 31, 2007 and 2006 (liquidation
preference $100 per share) 1 1
Paid-in capital 274,733 266,206
Treasury Stock (577) (3,086)
Accumulated distributions in excess of
accumulated earnings 12,771 1,660
Other Comprehensive Income/(Loss) (1,528) 1,067
----------- ------------
285,481 265,929
----------- ------------
$1,521,189 $1,250,167
=========== ============
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TRANSCONTINENTAL REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

2007 2006 2005
---------- --------- ---------
(dollars in thousands)
Property Revenue:
Rents and other property revenues $134,490 $105,421 $81,630

Operating expenses:
Property operating expenses 80,624 65,030 49,859
Depreciation and amortization 22,623 19,951 14,243
General and administrative 9,793 3,979 8,078
Advisory fee to affiliate 10,704 8,626 4,736
---------- --------- ---------
Total operating expenses 123,744 97,586 76,916
Operating income 10,746 7,835 4,714

Other income (expense)
Interest income 2,257 2,698 3,671
Gain on foreign currency
transaction 2,368 2 292
Other income 1,805 928 370
Mortgage and loan interest
expense (67,044) (47,481) (32,816)
Net income fee to affiliate 514 (972) (522)
Impairment (3,686) - (1,840)
Gain on involuntary conversion 34,771 20,479 -
Incentive fee to affiliate (2,564) (1,490) -
---------- --------- ---------
Total other income (expense) (31,579) (25,836) (30,845)
Loss before gain on land sales,equity in
earnings (loss) of investee and
minority interest (20,833) (18,001) (26,131)
Gain on land sales 11,956 11,421 7,702
Minority interest 50 393 (112)
Equity in income of investees 1,502 890 968
---------- --------- ---------
Loss from continuing operations before
income taxes (7,325) (5,297) (17,573)
Income tax benefit 8,250 5,533 9,049
---------- --------- ---------
Net Income (loss) from continuing
operations 925 236 (8,524)

Income from discontinued operations
before income taxes 15,670 5,032 27,066
Income tax expense (5,484) (1,762) (9,473)
---------- --------- ---------
Net Income from discontinuing operations 10,186 3,270 17,593

Net income 11,111 3,506 9,069
Preferred dividend requirement (925) (210) (210)
---------- --------- ---------
Net income applicable to Common shares $10,186 $3,296 $8,859
========== ========= =========

Earnings Per Share
Basic earning per share
Net Income (Loss) from continued
operations - $0.01 $(1.11)
Discontinued operations 1.28 0.41 2.23
---------- --------- ---------
Net Income applicable to common shares $1.28 $0.42 $1.12
========== ========= =========

Diluted earnings per share
Net Income (Loss) from continued
operations $- $- $(1.11)
Discontinued operations 1.24 0.40 2.23
---------- --------- ---------
Net Income applicable to common shares $1.24 $0.40 $1.12
========== ========= =========

Weighted average common shares used in computing
earnings per share:
Basic 7,953,676 7,900,869 7,900,869
Diluted 8,188,602 8,180,401 7,900,869
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Transcontinental Realty Investors, Inc.
Investors Relations, 800-400-6407
investor.relations@primeasset.com

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