AMERICAN REALTY INVESTORS INC

On October 31, 2024, the Company and other parties executed a Settlement Agreement and General Release (the “Settlement Agreement”) covering litigation that was instituted by David M. Clapper and related entities (collectively “Clapper”) in the U.S. District Court for the Northern District of Texas (the “Trial Court”) regarding a 1998 multifamily property transaction. The litigation resulted in a $148 million judgment in 2011 against ARL, one of its wholly-owned subsidiaries and other related entities. The case was subsequently reversed by the U. S. Court of Appeals for the Fifth Circuit (the “Appeals Court”) and remanded to the Trial Court for further proceedings which resulted in a contrary decision of no liability of the ARL related entities in May 2021. The case was again appealed to the Appeals Court, which on March 8, 2024, reversed and remanded the case back to the Trial Court for a new trial. The Settlement Agreement required the Company to pay to Clapper the sum of$23.4 million by October 31, 2024, which has been completed. Under the Settlement Agreement, all parties released each other and will file a Motion to Dismiss with Prejudice in the Trial Court on or prior to November 10, 2024. We accrued the settlement as a loss on real estate transactions during the three and nine months ended September 30, 2024.