AMERICAN REALTY INVESTORS INC
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
ARL$22.47+4.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001102238-25-000027
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001628280-26-031837
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 69 current paragraphs.
37 unchanged; 23 reworded; 8 added; 24 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Disposition Activities
Current report
•On April 30, 2026, we extended the loan on Alera to September 15, 2026. The loan contains two one-year extension options.
Current report
We have agreements to develop two parcels of land from our land holdings in Windmill Farms. The agreements provide for the development of 125 acres of raw land into approximately 470 land lots to be used for single family homes. During the three months ended March 31, 2026, we spent $0.4 million on reimbursable infrastructure investments.
Current report
For the comparison of three months ended March 31, 2026 to the three months ended March 31, 2025, the Development Properties were Alera, Bandera Ridge and Merano(See "Development Activities" in Management's Overview); and the Disposition Property was Villas at Bon Secour. There were no Acquisition Properties.
Current report
•Our multifamily segment had a $1.7 million decrease in NOI, which was attributed to decreases of $0.7 million from the Development Properties, $0.6 million from the Same Properties and $0.4 million from the Disposition Property. The decrease in NOI from the Development Properties is primarily due to the lease-up of newly constructed properties in 2025 (See "Development Activities" in Management's Overview).
Current report
•The $3.5 million decrease in gain on sale or write down of assets, net is primarily due to the gain on condemnation of land at Windmill Farms in 2025 (See "Disposition Activities" in Management's Overview).
Current report
•The change in other income (expense) is primarily attributed to the decrease in the tax provision, which was due to the gain on real estate transactions in 2025.
Current report
The $18.4 million decrease in cash provided by financing activities was primarily due to the $15.4 million decrease in borrowings on the Alera, Bandera Ridge and Merano construction loans in 2025 (See "Development Activities" in Management's Overview) and the $3.9 million purchase of additional shares of TCI in 2026.
Removed paragraphs (24)
Previous report
•risks associated with our dependence on key personnel whose continued service is not guaranteed.
Previous report
Acquisitions and Dispositions
Previous report
•On January 1, 2024, we amended our cash management agreement with Pillar. As a result, the interest rate on the related party receivable changed from prime plus one to SOFR.
Previous report
•On February 8, 2024, we extended the maturityof our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.
Previous report
•On June 6, 2024, we extended the maturity of our New Concept Energy loan to September 30, 2027 with an interest rate at SOFR.
Previous report
•On July 10, 2024, we replaced the existing loan on Forest Grove with a$6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031.
Previous report
•On October 21, 2024, we entered into a$27.5 million construction loan to finance the development of Mountain Creek (See "Development Activities") that bears interest at SOFR plus 3.45% and matures on June 17, 2027.
Previous report
Our development activities include the development of Windmill Farms and the construction of four multifamily properties.
Previous report
Windmill Farms is a collection of freshwater districts ("Districts") in Kaufman County Texas that is being developed into single family lots, multifamily properties and retail properties. In connection with the project, we develop the infrastructure in Windmill Farms in order for the land to appreciate and to sell land units (“lots”) to home builders for construction of single family homes. We receive reimbursement of the infrastructure costs ("District Receivables") through the issuance of municipal bonds by the Districts. As of September 30, 2025, we have $55.7 million in District Receivables.
Previous report
The following is a summary of construction costs (dollars in thousands) incurred as of September 30, 2025:
Previous report
During the nine months ended September 30, 2025, we incurred $59.2 million in development costs, which were funded in part by $54.9 million in borrowing from our construction loans. All four of these development projects are garden style apartments, which allows for construction to be completed in phases. During thethree months ended September 30, 2025, we received our initial tranche of completed units from Alera, Bandera Ridge and Merano, which allows us to start the lease-up process.
Previous report
Other Developments
Previous report
On October 31, 2024, we 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 regarding a 1998 multifamily property transaction. In connection with the Settlement Agreement we paid Clapper$23.4 million, which we accrued during the three and nine months ended September 30, 2024..
Previous report
On December 16, 2024, TCI announced an offer ("Tender Offer") to purchase up to 100,000 shares of the outstanding common shares of IOR at a price of $18 per share, subject to certain conditions. The Tender Offer was completed on January 29, 2025, which resulted in TCI's acquisition of 21,678 shares for a total cost of$0.5 million.
Previous report
As provided in amendment number 31 to the Schedule 13D that TCI filed with the SEC subsequent to the completion of the Tender Offer, if the appropriate opportunity exists at attractive prices, TCI may acquire additional shares of IOR. During thenine months ended September 30, 2025, TCI purchased an additional 32,845 common share of IOR in the market for a total cost of$0.6 million.
Previous report
Comparison of thethree months ended September 30, 2025 to the three months ended September 30, 2024:
Previous report
•The $0.2 million decrease in multifamily NOI is due to a $0.4 million decrease from the Development Properties offset in part by a$0.2 million increase from the Same Properties.
Previous report
•The $24.2 million decrease in loss on real estate transaction is primarily due to the $23.4 million settlement of the Clapper matter in 2024 (See "Other Developments" in Management's Overview).
Previous report
•The increase in other income, net is primarily due to an increase in income tax benefit as a result of the sale of the VAA Portfolio in 2022.
Previous report
Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024:
Previous report
•Our multifamily segment had a $0.4 million increase in NOI from Same Properties that was offset by a $0.4 million decrease from our Development Properties.
Previous report
•The $29.0 million decrease in loss on real estate transaction is primarily due to the $23.4 million settlement of the Clapper matter in 2024 (See "Other Developments" in Management's Overview).
Previous report
•The increase in gain on sale of assets is primarily due to the $3.1 million condemnation settlement and the sale of land parcels in 2025 (See "Acquisitions and Dispositions" in Management's Overview).
Previous report
The $40.5 million increase in cash provided by financing activities was due to the $44.2 million increase in borrowings on our construction loans in connection with our development projects (See "Development Activities" in Management's Overview) offset in part by a $3.7 million increase inpayments of mortgages and other notes payable (See "Financing Activities" in Management's Overview).
Reworded paragraphs (23)
Previous wording
•demand for apartments and commercial properties in our markets and the effect on occupancy and rental rates;
Current wording
•demand for multifamily and commercial properties in our markets and the effect on occupancy and rental rates;
Previous wording
•costs of compliance with the Americans with Disabilities Act and other similar laws and regulations;
Current wording
•costs of compliance with the Americans with Disabilities Act and other similar laws and regulations; and
Previous wording
•potential liability for uninsured losses and environmental contamination; and
Current wording
•potential liability for uninsured losses and environmental contamination.
Previous wording
We are an externally advised and managed real estate investment company that owns a diverse portfolio of income-producing properties and land held for development throughout the Southern United States. Our portfolio of income-producing properties includes residential apartment communities ("multifamily properties"), office buildings and retail properties ("commercial properties"). Our investment strategy includes acquiring existing income-producing properties as well as developing new properties on land already owned or acquired for a specific development project.
Current wording
We are an externally advised and managed real estate investment company that owns a diverse portfolio of income-producing properties and land held for development throughout the Southern United States. Our portfolio of income-producing properties includes residential apartment communities ("multifamily properties"), office buildings and retail properties ("commercial properties"). Our investment strategy includes acquiring existing income-producing properties as well as developing new properties on land already owned or acquired for specific development projects.
Previous wording
The following is a summary of our recent acquisition, disposition, financing and development activities:
Current wording
The following is a summary of our recent disposition, financing and development activities:
Previous wording
•On October 10, 2025, we sold Villas at Bon Secour, a 200 unit multifamily property in Gulf Shores, Alabama, for$28.0 million (See "Financing Activities").
Current wording
•On October 10, 2025, we sold Villas at Bon Secour, a 200 unit multifamily property in Gulf Shores, Alabama, for$28.0 million. We used the proceeds from the sale to pay off the loan on the property (See "Financing Activities") and for general corporate purposes.
Previous wording
•On December 13, 2024, 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.
Current wording
•During the year ended December 31, 2025, we sold 72 lots from our holdings in Windmill Farms for $3.3 million, resulting in a gain on sale of $2.6 million.
Previous wording
•During thenine months ended September 30, 2025, we sold 51 lots from our holdings in Windmill Farms for $2.3 million, resulting in a gain on sale of $1.8 million.
Current wording
•During the three months ended March 31, 2026, we sold 21 lots from our holdings in Windmill Farms for $1.0 million, resulting in a gain on sale of $0.8 million.
Previous wording
•On October 10, 2025, we paid off the$18.8 million loan on Villas at Bon Secour in connection with the sale of the underlying property (See "Acquisitions and Dispositions").
Current wording
•On October 10, 2025, we paid off the$18.8 million loan on Villas at Bon Secour in connection with the sale of the underlying property (See "Disposition Activities").
Previous wording
We have entered into development agreements with Pillar to develop multifamily properties. Each of these development projects is being funded in part by a construction loan.
Current wording
We have entered into development agreements with Pillar to develop multifamily properties. Each of these development projects is being funded in part by a construction loan. In 2025, we completed the construction of Alera, a 240 unit multifamily property in Lake Wales, Florida; Bandera Ridge, a 216 unit multifamily property in Temple, Texas; and Merano, a 216 unit multifamily property in McKinney, Texas. All three of these properties are currently in lease-up, which are expected to stabilize in 2026. We are currently constructing Mountain Creek, a 234 unit multifamily property in Dallas, Texas, which is expected to becompleted in 2027. As of March 31, 2026, we've incurred a total of $12.6 million in the construction of Mountain Creek and expect to expend an additional $37.4 million to complete the project, which will be funded in part by a construction loan that allows for borrowings of up to $27.5 million.
Previous wording
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or leased-up (“Development Properties”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties"). A developed property is considered leased-up, when it achieves occupancy of 80% or more. We move a property in and out of Same Properties based on whether the property is substantially leased-up and in operation for the entirety of both periods of the comparison. The Development Activities for thecomparison of the three and nine months ended September 30, 2025 to the three and nine months ended September 30, 2024 were Alera, Bandera Ridge and Merano(See "Development Activities" in Management's Overview). There were no Acquisition Properties or Disposition Properties for the comparison of the three and nine months ended September 30, 2025 to the three and nine months ended September 30, 2024.
Current wording
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or are in lease-up (“Development Properties”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties"). A developed property is considered substantially complete or leased-up, when it achieves occupancy of 80% or more. We move a property in and out of Same Properties based on whether the property is substantially complete or in operation for the entirety of both periods of comparison.
Previous wording
The following table (dollars in thousands) summarizes our results of operations for the three and nine months ended September 30, 2025 and 2024:
Current wording
The following table (dollars in thousands) summarizes our results of operations for the three months ended March 31, 2026 and 2025:
Previous wording
Our $17.3 million increase in net income is primarily attributed to the following:
Current wording
Our $4.5 million decrease in net income is primarily attributed to the following:
Previous wording
•The $0.9 million increase in NOI from our commercial segment is primarily due to an increase in occupancy at Stanford Center.
Current wording
•The $0.7 million increase in NOI from our commercial segment is primarily due to an increase in occupancy at Browning Place and Stanford Center.
Previous wording
•The $1.0 million decrease in interest income, net is due to a $1.4 million decrease in interest income offset in part by a $0.4 million decrease in interest expense. The decrease in interest income was primarily due to a decrease in funds available for investments and a decline in interest rates. Our decrease in interest expense is primarily due to the pay off of the loan on 770 South Post Oak in 2025 and refinancing Forest Grove in 2024.
Current wording
•The $1.3 million decrease in interest income, net is due to a $0.2 million decrease in interest income and a $1.1 million increase in interest expense. The decrease in interest income was primarily due to a decrease in funds available for investments and a decline in interest rates. The increase in interest expense is primarily due the interest on the Development Properties that were placed in service in the fourth quarter of 2025 (See "Development Activities" in Management's Overview).
Previous wording
Our principal sources of cash have been, and will continue to be, property operations; proceeds from land and income-producing property sales; collection of notes receivable; refinancing of existing mortgage notes payable; and additional borrowings, including mortgage and other notes payable.
Current wording
Our principal sources of cash have been, and will continue to be, property operations; proceeds from land and income-producing property sales; collection of notes receivable;redemption of short-term investments; refinancing of existing mortgage notes payable; and additional borrowings, including mortgage and other notes payable.
Previous wording
We anticipate that our cash and cash equivalents as of September 30, 2025, along with cash that will be generated from notes related party receivables and investment in cash equivalents and short-term investments, will be sufficient to meet all of our cash requirements. We may selectively sell land and income-producing assets, refinance or extend real estate debt and seek additional borrowings secured by real estate to meet our liquidity requirements. Although history cannot predict the future, historically, we have been successful at refinancing and extending a portion of our current maturity obligations.
Current wording
We anticipate that our cash and cash equivalents as of March 31, 2026, along with cash that will be generated from notes related party receivables and investment in short-term investments, will be sufficient to meet all of our cash requirements. We may selectively sell land and income-producing assets, refinance or extend real estate debt and seek additional borrowings secured by real estate to meet our liquidity requirements. Although history cannot predict the future, historically, we have been successful at refinancing and extending a portion of our current maturity obligations.
Previous wording
The $19.2 million increase in cash used in operating activities is primarily due to a $1.3 million increase in other assets, a $9.0 million decrease in accounts payable and other liabilities, a decrease in interest income and an increase in our tax provision.
Current wording
The $8.3 million decrease in cash used in operating activities is primarily due to a $2.0 million increase in other assets, a $3.7 million decrease in accounts payable and other liabilities, a decrease in interest income and an increase in our tax provision.
Previous wording
The $22.1 million increase in cash used in investing activities is primarily due to the $37.2 million increase in development and renovation of real estate offset in part by the $10.6 million increase in net redemption of short-term investments and a $5.8 million increase in proceeds from the real estate transactions. The increase in development and renovation of real estate relates to the construction of development projects (See "Development Activities" in Management's Overview). The increase in net redemption of short-term investments was to provide additional funds for the development and renovation of real estate and the repayment of the mortgage on 770 South Post Oak in 2025.
Current wording
The $12.2 million decrease in cash used in investing activities is primarily due to the $21.8 million decrease in development and renovation of real estate offset in part by the $8.6 million decrease in net redemption of short-term investments. The decrease in development and renovation of real estate is primarily due to the completion of the construction of Alera, Bandera Ridge and Merano in 2025 (See "Development Activities" in Management's Overview). The decrease in net redemption of short-term investments was due to the repayment of the mortgage on 770 South Post Oak in 2025.
Previous wording
We use FFO in addition to net income to report our operating and financial results and consider FFO and FFO-diluted as supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts ("Nareit") defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains or (losses) from sales of properties, plus real estate related depreciation and amortization, impairment write-downs of real estate and write-downs of investments in an affiliate where the write-downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis.
Current wording
We use FFO in addition to net income to report our operating and financial results and consider FFO as supplemental measures for the real estate industry and a supplement to GAAP measures. The National Association of Real Estate Investment Trusts ("Nareit") defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains or (losses) from sales of properties, plus real estate related depreciation and amortization, impairment write-downs of real estate and write-downs of investments in an affiliate where the write-downs have been driven by a decrease in the value of real estate held by the affiliate and after adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis.
Previous wording
FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods. This is especially true since FFO excludes real estate depreciation and amortization, as we believe real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. We believe that such a presentation also provides investors with a meaningful measure of our operating results in comparison to the operating results of other real estate companies.
Current wording
FFO is useful to investors in comparing operating and financial results between periods. This is especially true since FFO excludes real estate depreciation and amortization, as we believe real estate values fluctuate based on market conditions rather than depreciating in value ratably on a straight-line basis over time. We believe that such a presentation also provides investors with a meaningful measure of our operating results in comparison to the operating results of other real estate companies.
Previous wording
We compensate for the limitations of FFO by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of FFO and a reconciliation of net income to FFO and FFO-diluted. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.
Current wording
We compensate for the limitations of FFO by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of FFO and a reconciliation of net income to FFO. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements.
Previous wording
The following table reconciles net income attributable to the Company to FFO and FFO adjusted for the three and nine months ended September 30, 2025 and 2024 (dollars and shares in thousands):
Current wording
The following table reconciles net income attributable to the Company to FFO for the three months ended March 31, 2026 and 2025 (dollars and shares in thousands):
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Comparison of the three months ended March 31, 2026 to the three months ended March 31, 2025:
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Our $20.4 million increase in net income is primarily attributed to the following:
Previous report — wording carried elsewhere
•The $1.4 million increase in NOI from our commercial segment is primarily due to an increase in occupancy at Stanford Center.
Previous report — wording carried elsewhere
•The $3.9 million decrease in interest income, net is due to a $4.6 million decrease in interest income offset in part by a $0.7 million decrease in interest expense. The decrease in interest income was primarily due to a decrease in funds available for investments and a decline in interest rates. Our decrease in interest expense is primarily due to the pay off of the loan on 770 South Post Oak in 2025 and refinancing Forest Grove in 2024.