American Realty Investors (ARL) 10-Q13 Nov 142014 Q3 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2014	Nov. 05, 2014
Document and Entity Information	'	'
Entity Registrant Name	'AMERICAN REALTY INVESTORS INC	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Amendment Flag	'false	'
Entity Central Index Key	'0001102238	'
Current Fiscal Year End Date	'--12-31	'
Entity Common Stock, Shares Outstanding	'	14,027,619
Entity Filer Category	'Smaller Reporting Company	'
Entity Current Reporting Status	'Yes	'
Entity Voluntary Filers	'No	'
Entity Well-known Seasoned Issuer	'No	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q3	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSET	'	'
Real estate, at cost	$745,544	$799,698
Real estate held for sale at cost, net of depreciation ($2,066 for 2014 and $2,390 for 2013)	44,288	16,427
Real estate subject to sales contracts at cost, net of depreciation ($2,212 for 2014 and $1,949 for 2013)	19,594	27,598
Less accumulated depreciation	-125,352	-143,429
Total real estate	684,074	700,294
Notes and interest receivable	'	'
Performing (including $147,978 in 2014 and $145,754 in 2013 from related parties)	163,335	153,275
Non-performing	3,151	3,140
Less allowance for doubtful accounts (including $15,537 in 2014 and $15,809 in 2013 from related parties)	-18,279	-19,600
Total notes and interest receivable	148,207	136,815
Cash and cash equivalents	4,383	16,437
Restricted cash	28,813	32,929
Investments in unconsolidated subsidiaries and investees	4,137	3,789
Receivable from related party	22,930	14,086
Other assets	43,442	38,972
Total assets	935,986	943,322
Liabilities:	'	'
Notes and interest payable	597,469	618,930
Notes related to assets held for sale	42,883	17,100
Notes related to subject to sales contracts	18,769	23,012
Deferred revenue (including $74,303 in 2014 and 2013 from sales to related parties)	76,148	76,148
Accounts payable and other liabilities (including $10,634 in 2014 and $15,394 in 2013 to related parties)	55,917	73,271
Total Liabilities	791,186	808,461
Shareholders' equity:	'	'
Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 2,461,252 shares in 2014 and 3,353,954 shares in 2013 (liquidation preference $10 per share), including 900,000 shares in 2014 and 2013 held by ARL or subsidiaries. Series K: $2.00 par value, authorized, issued and outstanding 0 shares in 2014 and 135,000 shares in 2013 (liquidation preference $22 per share)	3,126	4,908
Common stock, $0.01 par value, authorized 100,000,000 shares; issued 14,443,404 shares in 2014 and 11,941,174 shares in 2013; outstanding 14,027,619 shares in 2014 and 11,525,389 shares in 2013; including 140,000 shares held by TCI (consolidated) in 2014 and 229,214 shares held by TCI (consolidated) in 2013.	141	115
Treasury stock at cost; 415,785 shares in 2014 and 2013	-6,395	-6,395
Paid-in capital	108,844	102,974
Retained earnings	-8,046	-11,795
Total American Realty Investors, Inc. shareholders' equity	97,670	89,807
Non-controlling interest	47,130	45,054
Total equity	144,800	134,861
Total liabilities and equity	$935,986	$943,322

CONSOLIDATED_BALANCE_SHEETS_PA

CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
PARENTHETICALS	'	'
Depreciation of Real Estate held for sale at cost	$2,066	$2,390
Depreciation of Real Estate subject to sales contracts at cost	2,212	1,949
Performing from related parties	147,978	145,754
Non-performing allowance for doubtful accounts	15,537	15,809
Deferred revenue from sales to related parties	74,303	74,303
Accounts payable and other liabilities to related parties	$10,634	$15,394
Preferred stock Series A, par value	$2	$2
Preferred stock Series A, shares authorized	15,000,000	15,000,000
Preferred stock Series A, shares issued	2,461,252	3,353,954
Preferred stock Series A, shares outstanding	2,461,252	3,353,954
Preferred stock Series A, liquidation preference per share	$10	$10
Preferred stock Series A, liquidation preference shares	900,000	900,000
Preferred stock Series K, par value	$2	$2
Preferred stock Series K, shares issued	0	135,000
Preferred stock Series K, shares outstanding	0	135,000
Preferred stock Series K, liquidation preference per share	$22	$22
Common stock, par value	$0.01	$0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	14,443,404	11,941,174
Common stock, shares outstanding	14,027,619	11,525,389
Shares held by TCI	140,000	229,214
Treasury stock, shares	415,785	415,785

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:	'	'	'	'
Rental and other property revenues (including $175 and $165 for the three months and $525 and $497 for the nine months ended 2014 and 2013, respectively, from related parties)	$19,326	$19,530	$57,986	$57,810
Expenses:	'	'	'	'
Property operating expenses (including $171 and $178 for the three months and $484 and $550 for the nine months ended 2014 and 2013, respectively, from related parties)	10,766	10,387	30,677	29,107
Depreciation and amortization	4,463	4,053	13,099	11,820
General and administrative (including $926 and $878 for the three months and $2,686 and $2,765 for the nine months ended 2014 and 2013, respectively, from related parties)	1,590	1,867	6,770	5,911
Provision on impairment of notes receivable and real estate assets	0	1,125	0	1,926
Net income fee to related party	-186	55	514	159
Advisory fee to related party	2,225	2,584	6,670	7,625
Total operating expenses	18,858	20,071	57,730	56,548
Operating income (loss)	468	-541	256	1,262
Other income (expenses):	'	'	'	'
Interest income (including $4,699 and $3,718 for the three months and $14,693 and $10,574 for the nine months ended 2014 and 2013, respectively, from related parties)	5,106	3,778	15,264	10,831
Other income	1,332	59	1,738	2,734
Mortgage and loan interest (including $978 and $1,168 for the three months and $2,709 and $2,849 for the nine months ended 2014 and 2013, respectively, from related parties)	-9,053	-9,130	-26,573	-27,152
Deferred borrowing costs amortization	-848	-247	-2,078	-2,672
Loan charges and prepayment penalties	-1,044	-49	-2,626	-4,166
Loss on sale of investments	0	-275	0	-283
Earnings from unconsolidated subsidiaries and investees	320	69	266	256
Litigation settlement	-86	-2,739	3,666	-2,727
Total other expenses	-4,273	-8,534	-10,343	-23,179
Loss before gain on land sales, non-controlling interest, and taxes	-3,805	-9,075	-10,087	-21,917
Gain on land sales	40	598	634	563
Net loss from continuing operations before taxes	-3,765	-8,477	-9,453	-21,354
Income tax benefit	786	402	5,030	8,561
Net loss from continuing operations	-2,979	-8,075	-4,423	-12,793
Net income (loss) from discontinued operations	477	1,021	-454	-970
Gain on sale of real estate from discontinued operations	1,769	127	14,826	25,429
Income tax expense from discontinued operations	-786	-402	-5,030	-8,561
Net income from discontinued operations	1,460	746	9,342	15,898
Net income (loss)	-1,519	-7,329	4,919	3,105
Net (income) loss attributable to non-controlling interest	200	903	-1,170	-803
Net income (loss) attributable to American Realty Investors, Inc.	-1,319	-6,426	3,749	2,302
Preferred dividend requirement	-427	-613	-1,653	-1,839
Net income (loss) applicable to common shares	-1,746	-7,039	2,096	463
Earnings per share - basic	'	'	'	'
Net loss from continuing operations	($0.24)	($0.68)	($0.59)	($1.34)
Net income from discontinued operations	$0.11	$0.06	$0.76	$1.38
Net income (loss) applicable to common shares	($0.13)	($0.62)	$0.17	$0.04
Earnings per share - diluted	'	'	'	'
Net loss from continuing operations	($0.24)	($0.68)	($0.59)	($1.34)
Net income from discontinued operations	$0.11	$0.06	$0.76	$1.38
Net income (loss) applicable to common shares	($0.13)	($0.62)	$0.17	$0.04
Weighted average common shares used in computing earnings per share	13,619,647	11,525,389	12,231,146	11,525,389
Weighted average common shares used in computing diluted earnings per share	13,619,647	11,525,389	12,231,146	11,525,389
Amounts attributable to American Realty Investors, Inc.	'	'	'	'
Net loss from continuing operations	-2,779	-7,172	-5,593	-13,596
Net income from discontinued operations	1,460	746	9,342	15,898
Net income (loss) applicable to American Realty Investors, Inc.	($1,319)	($6,426)	$3,749	$2,302

CONSOLIDATED_STATEMENTS_OF_OPE1

CONSOLIDATED STATEMENTS OF OPERATIONS PARENTHETICALS (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
OPERATIONS PARENTHETICALS	'	'	'	'
Rental and other property revenues, affiliates and related parties	$175	$165	$525	$497
Property operating expenses from related parties	171	178	484	550
General and administrative expenses from related parties	926	878	2,686	2,765
Interest income from related parties	4,699	3,718	14,693	10,574
Mortgage and loan interests from related parties	$978	$1,168	$2,709	$2,849

CONSOLIDATED_STATEMENTS_OF_SHA

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $)	Total Equity	Comprehensive Income (Loss)	Preferred Stock	Common Stock Shares	Common Stock Amount	Treasury Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non - controlling Interest
In Thousands	USD ($)	USD ($)	USD ($)	Common Stock Shares	USD ($)	USD ($)	USD ($)	USD ($)	USD ($)	USD ($)
Balance at Dec. 31, 2013	134,861	-93,213	4,908	11,941,174	115	-6,395	102,974	-11,795	0	45,054
Net income	$4,919	$4,919	$0	'	$0	$0	$0	$3,749	$0	$1,170
Distribution to non-controlling interests	-257	0	0	'	0	0	-226	0	0	-31
Sale of non-controlling interests	-289	0	0	'	0	0	-289	0	0	0
Conversion of preferred stock into common stock	7,219	0	-1,782	2,502,230	26	0	8,038	0	0	937
Series A preferred stock dividend ($1.00 per share)	($1,653)	$0	$0	'	$0	$0	($1,653)	$0	$0	$0
Balance at Sep. 30, 2014	144,800	-88,294	3,126	14,443,404	141	-6,395	108,844	-8,046	0	47,130

CONSOLIDATED_STATEMENTS_OF_COM

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
COMPREHENSIVE INCOME (LOSS) DURING	'	'
Net income (loss)	$4,919	$3,105
Other comprehensive income (loss)	0	0
Total comprehensive income	4,919	3,105
Comprehensive income attributable to non-controlling interest	-1,170	-803
Comprehensive income attributable to American Realty Investors, Inc.	$3,749	$2,302

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash Flow From Operating Activities:	'	'
Net income (loss)	$4,919	$3,105
Adjustments to reconcile net income applicable to common shares to net cash flow from operating activities:	'	'
Gain on sale of land	-634	-563
Gain on sale of income-producing properties	-14,826	-25,429
Depreciation and amortization	13,763	16,120
Provision on impairment of notes receivable and real estate assets	0	1,926
Amortization of deferred borrowing costs	2,415	3,705
(Earnings) losses from unconsolidated subsidiaries and investees	54	-256
Decrease (increase) in assets:	'	'
Accrued interest receivable	10,727	-3,260
Other assets	2,002	-17
Prepaid expense	-2,318	-1,937
Escrow	3,556	6,074
Earnest money	-5	1,545
Rent receivables	-15	-676
Increase (decrease) in liabilities:	'	'
Accrued interest payable	43	-1,752
Payable to related parties	-8,844	-2,492
Other liabilities	-17,294	-9,027
Net cash used in operating activities	-6,457	-12,934
Cash Flow From Investing Activities:	'	'
Proceeds from notes receivable	0	2,855
Origination or advances of notes receivable	-20,798	-38
Acquisition of land held for development	-3,425	-7
Acquisition of income producing properties	-19,534	0
Proceeds from sale of income-producing properties	41,666	73,621
Proceeds from sale of land	6,252	3,664
Investment in unconsolidated real estate entities	-402	-1,911
Improvement of land held for development	-1,654	-373
Improvement of income-producing properties	-3,625	-6,396
Acquisition of non-controlling interest	0	-77
Sale of non-controlling interest	-289	0
Sale of controlling interest	0	50
Construction and development of new properties	-1,026	-327
Net cash provided by (used in) investing activities	-2,835	71,061
Cash Flow From Financing Activities:	'	'
Proceeds from notes payable	110,308	142,802
Recurring amortization of principal on notes payable	-14,540	-13,401
Payments on maturing notes payable	-97,564	-191,291
Stock-secured borrowings	-568	-411
Deferred financing costs	-5,707	-1,524
Distributions to non-controlling interests	-257	-179
Preferred stock dividends - Series A	-1,653	-1,839
Conversion of preferred stock into common stock	7,219	0
Net cash used in financing activities	-2,762	-65,843
Net decrease in cash and cash equivalents	-12,054	-7,716
Cash and cash equivalents, beginning of period	16,437	17,141
Cash and cash equivalents, end of period	4,383	9,425
Supplemental disclosures of cash flow information:	'	'
Cash paid for interest	$28,004	$22,659

ORGANIZATION_AND_BASIS_OF_PRES

ORGANIZATION AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2014
ORGANIZATION AND BASIS OF PRESENTATION	'
ORGANIZATION AND BASIS OF PRESENTATION	'
	NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION

	Organization

	As used herein, the terms “ARL”, “the Company”, “we”, “our” or “us” refer to American Realty Investors, Inc., a Nevada corporation, which was formed in November 1999. In August 2000, the Company acquired American Realty Trust, Inc. (“ART”), a Georgia corporation and National Realty, L.P. (“NRLP”), a Delaware partnership.

	The Company is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“ARL”). Approximately 86.8% of ARL’s stock is owned by related parties. Subsidiaries of ARL own approximately 80.9% of the outstanding shares of common stock of Transcontinental Realty Investors, Inc. (“TCI”), a Nevada corporation, which has its common stock listed and traded on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). ARL is a “C” corporation for U.S. federal income tax purposes and has consolidated TCI’s accounts and operations since March 2003. During the third quarter 2012, May Realty Holdings, Inc. (“MRHI”), formerly known as Realty Advisors Management, Inc., subsidiaries acquired more than 80% of ARL stock and as a result, ARL joined the MRHI consolidated group for federal income tax reporting. We have no employees.

	TCI, a subsidiary of ARL, owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (“IOT”). Effective July 17, 2009, IOT’s financial results were consolidated with those of ARL and TCI and their subsidiaries. Shares of IOT are traded on the NYSE MKT under the symbol (“IOT”).

	ARL invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (“Pillar”) is the Company’s external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of ARL, and for setting the policies which guide it, the day-to-day operations of ARL are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with ARL’s business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to TCI and IOT.

	Regis Realty Prime, LLC (“Regis”) manages our commercial properties and provides brokerage services. ARL engages third-party companies to lease and manage its apartment properties. TCI also has a development agreement with Unified Housing Foundation, Inc. (“UHF”) a non-profit corporation that provides management services for the development of residential apartment projects in the future. This development agreement was terminated December 31, 2013.

	Properties

	We own or had interests in a total property portfolio of 45 income-producing properties as of September 30, 2014. The properties consisted of:

		•	Eight commercial properties consisting of four office buildings, one industrial warehouse, and three retail centers comprising in aggregate approximately 2.1 million rentable square feet;

		•	37 apartment communities totaling 6,382 units, excluding apartments being developed; and

		•	4,130 acres of developed and undeveloped land.

	We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities but have not yet begun construction. At September 30, 2014, we had no apartment projects in development. The third-party developer typically holds a general partner as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all required equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our consolidated financial statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developer’s partnership interests in exchange for any remaining unpaid developer fees.

	Basis of Presentation

	The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

	The year-end Consolidated Balance Sheet at December 31, 2013 was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Certain 2013 financial statement amounts have been reclassified to conform to the 2014 presentation, including adjustments for discontinued operations.

	Principles of Consolidation

	The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (“VIE”), in accordance with the provisions and guidance of ASC Topic 810, “Consolidation”, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (“EITF”) Issue 04-5, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary generally is the entity that provides financial support and bears a majority of the financial risks, authorizes certain capital transactions, or makes operating decisions that materially affect the entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation.

	In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions.

	For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in Gruppa Florentina, LLC is accounted for under the equity method.

	Real Estate, Depreciation and Impairment

	Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements – 10-40 years; furniture, fixtures and equipment – 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360, “Property, Plant and Equipment”. Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under ASC Topic 360, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value.

	Real Estate Held For Sale

	We periodically classify real estate assets as “held for sale”. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations.

	Cost Capitalization

	Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity.

	We capitalize leasing costs which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term.

	Fair Value Measurement

	We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data.

	The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows:

	Level 1 –	Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets.
	Level 2 –	Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	Level 3 –	Unobservable inputs that are significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Related Parties

We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity.

Newly Issued Accounting Standards

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our Consolidated Financial Statements, including that which we have not yet adopted. We do not believe that any such guidance will have a material effect on our financial position or results of operations.

REAL_ESTATE_ACTIVITY

REAL ESTATE ACTIVITY	9 Months Ended
	Sep. 30, 2014
REAL ESTATE ACTIVITY	'
REAL ESTATE ACTIVITY	'
	NOTE 2. REAL ESTATE ACTIVITY

	Below is a summary of the real estate owned as of September 30, 2014 (dollars in thousands):

	Apartments	$	409,430
	Commercial properties		178,824
	Land held for development		157,290
	Real estate held for sale		46,354
	Real estate subject to sales contract		21,806
	Total real estate	$	813,704
	Less accumulated depreciation		(129,630	)
	Total real estate, net of depreciation	$	684,074

	The highlights of our significant real estate transactions for the nine months ended September 30, 2014 are listed below:

	On February 6, 2014, TCI sold a 232-unit apartment complex known as Pecan Pointe, located in Temple, Texas, to an independent third party, for a sales price of $23.1 million. The buyer assumed the existing debt of $16.5 million secured by the property. A gain of $6.1 million was recorded on the sale.

	On March 26, 2014, TCI sold 6.314 acres of land known as McKinney Ranch land, located in McKinney, Texas, to an independent third party, for a sales price of $1.7 million. TCI paid $1.5 million on the existing mortgage to satisfy a portion of the multi-tract collateral debt of $6.6 million, secured by various land parcels located in McKinney, Texas. A gain of $0.8 million was recorded on the sale.

	On March 31, 2014, the Company purchased 16.87 acres of land known as Valwood Acres, located in Farmers Branch, Texas, from an independent third party, for a purchase price of $3.2 million.

	On April 3, 2014, TCI sold a 512,593 square foot commercial building known as 1010 Common, located in New Orleans, Louisiana, to an independent third party, for a sales price of $16.6 million. A gain of $7.0 million was recorded on the sale.

	On July 25, 2014, TCI sold 24.498 acres of land known as Stanley Tools and Kelly Lots, located in Farmers Branch, Texas, to an independent third party, for a sales price of $4.3 million. TCI paid off the existing mortgage of $1.7 million in addition to making a $0.2 million payment on an existing mortgage related to another parcel of land located in McKinney, Texas. A nominal gain was recorded on the sale.

	On August 12, 2014, TCI sold a 20,715 square foot commercial building known as Sesame Square, located in Anchorage, Alaska, to an independent party, for a sales price of $2.6 million. TCI paid off the existing mortgage of $0.8 million. A gain of $1.8 million was recorded on the sale.

	On September 19, 2014, TCI acquired 100% ownership of Summer Breeze I-V, LLC, from an independent third party, which resulted in the acquisition of Sunset Lodge, a 216-unit complex located in Odessa, Texas. In exchange for the acquisition, TCI forgave the existing receivable and all accrued interest in the amount of $3.5 million.

	On September 23, 2014, TCI sold a 106-unit complex known as Bridgewood Ranch, located in Kaufman, Texas, to an independent third party, for a sales price of $8.0 million. TCI paid off the existing mortgage of $4.5 million and the buyer obtained a new mortgage of $6.6 million. TCI did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement as a result of having the option to repurchase the sold property at a later date. The exercise of the option is subject to the approval of the U.S. Department of Housing and Urban Development. TCI determined a sale had not occurred for financial reporting purposes and therefore the asset remains on their books.

	As of September 30, 2014, there is one apartment complex, one commercial building and 110 acres of land that TCI has sold to a related party and has deferred the recognition of the sale. These are treated as “subject to sales contract” on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. TCI has reviewed each asset and taken impairment to the extent it feels the value of the property was less than its current basis. TCI did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement, which included the potential payment of cash shortfalls, future obligations under the existing mortgage and guaranty, the buyer’s inadequate initial investment and TCI’s questionable recovery of investment cost. TCI determined that no sale had occurred for financial reporting purposes and therefore the asset remained on the books and continued to record operating expenses and depreciation as a period cost until a sale occurred that met the requirements of ASC 360-20. The buyers received no compensation for the facilitation of the bankruptcy or debt restructuring process.

	We continue to invest in the development of apartment projects. During the nine months ended September 30, 2014, we have expended $1.0 million related to the construction or predevelopment of various apartment complexes.

NOTES_AND_INTEREST_RECEIVABLE

NOTES AND INTEREST RECEIVABLE

9 Months Ended

Sep. 30, 2014

NOTES AND INTEREST RECEIVABLE

NOTE 3. NOTES AND INTEREST RECEIVABLE

A portion of our assets are invested in mortgage notes receivable, principally secured by real estate. We may originate mortgage loans in conjunction with providing purchase money financing of property sales. Notes receivable are generally collateralized by real estate or interests in real estate and personal guarantees of the borrower and, unless noted otherwise, are so secured. Management intends to service and hold for investment the mortgage notes in our portfolio. A majority of the notes receivable provide for principal to be paid at maturity. Our mortgage notes receivable consist of first, wraparound and junior mortgage loans (dollars in thousands):

Maturity

Interest

Borrower

Date

Rate

Amount

Security

Performing loans:

Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)

19-Mar

12.00%

$ 1,810

Secured

Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)

17-Mar

12.00%

1,156

Secured

Foundation for Better Housing, Inc. (Vista Ridge) (1)

19-Apr

12.00%

3,923

Secured

Foundation for Better Housing, Inc. (Vista Ridge) (1)

17-Jun

12.00%

1,492

Secured

HGH Residential, Inc. (Park West I Apts)

19-Jul

12.00%

1,102

Secured

HGH Residential, Inc. (Park West II Apts)

19-Jul

12.00%

4,771

Secured

HGH Residential, Inc. (Tradewinds Dev)

19-Jul

12.00%

6,131

Secured

One Realco Corporation (1) (2)

17-Jan

3.00%

7,000

Unsecured

Realty Advisors Management, Inc. (1)

16-Dec

2.20%

20,387

Unsecured

Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)

Dec-32

12.00%

2,097

100% Membership Interest in Unified Housing of McKinney, LLC

Unified Housing Foundation, Inc. (Echo Station) (1)

Dec-32

12.00%

1,481

100% Membership Interest in Unified Housing of Temple, LLC

Unified Housing Foundation, Inc. (Inwood on the Park) (1)

Dec-32

12.00%

5,059

100% Membership Interest in Unified Housing Inwood, LLC

Unified Housing Foundation, Inc. (Kensington Park) (1)

Dec-32

12.00%

3,936

100% Membership Interest in Unified Housing Kensington, LLC

Unified Housing Foundation, Inc. (Lakeshore Villas) (1)

Dec-32

12.00%

2,000

Secured

Unified Housing Foundation, Inc. (Lakeshore Villas) (1)

Dec-32

12.00%

9,096

Membership interest in Housing for Seniors of Humble, LLC

Unified Housing Foundation, Inc. (Limestone Canyon) (1)

Dec-32

12.00%

3,057

100% Membership Interest in Unified Housing of Austin, LLC

Unified Housing Foundation, Inc. (Limestone Canyon) (1)

Dec-32

12.00%

4,663

100% Membership Interest in Unified Housing of Austin, LLC

Unified Housing Foundation, Inc. (Limestone Ranch) (1)

Dec-32

12.00%

2,250

100% Membership Interest in Unified Housing of Vista Ridge, LLC

Unified Housing Foundation, Inc. (Limestone Ranch) (1)

Dec-32

12.00%

6,000

100% Membership Interest in Unified Housing of Vista Ridge, LLC

Unified Housing Foundation, Inc. (Parkside Crossing) (1)

Dec-32

12.00%

2,272

100% Membership Interest in Unified Housing of Parkside Crossing, LLC

Unified Housing Foundation, Inc. (Sendero Ridge) (1)

Dec-32

12.00%

5,174

100% Membership Interest in Unified Housing of Sendero Ridge, LLC

Unified Housing Foundation, Inc. (Sendero Ridge) (1)

Dec-32

12.00%

4,812

100% Membership Interest in Unified Housing of Sendero Ridge, LLC

Unified Housing Foundation, Inc. (Timbers at the Park) (1)

Dec-32

12.00%

1,323

100% Membership Interest in Unified Housing of Terrell, LLC

Unified Housing Foundation, Inc. (Tivoli) (1)

Dec-32

12.00%

7,966

100% Membership Interest in Unified Housing of Tivoli, LLC

Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1)

Dec-32

12.00%

2,485

100% Membership Interest in Unified Housing of Harvest Hill I, LLC

Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1)

Dec-32

12.00%

2,555

100% Membership Interest in Unified Housing of Harvest Hill, LLC

Unified Housing Foundation, Inc. (Trails at White Rock) (1)

Dec-32

12.00%

3,815

100% Membership Interest in Unified Housing of Harvest Hill III, LLC

Unified Housing Foundation, Inc. (1)

17-Mar

5.00%

6,000

Unsecured

Unified Housing Foundation, Inc. (1)

17-Jun

12.00%

1,261

Unsecured

Unified Housing Foundation, Inc. (1)

15-Dec

12.00%

17,928

Unsecured

Unified Housing Foundation, Inc. (1)

16-Dec

12.00%

3,657

Unsecured

Other non-related party notes

Various

3,007

Various secured interests

Other related party notes (1)

Various

2,117

Various secured interests

Other related party notes (1)

Various

3,568

Various unsecured interests

Accrued interest

7,984

Total Performing

$ 163,335

Non-Performing loans:

Leman Development, Ltd (2)

11-Jul

7.00%

$ 1,500

Unsecured

Tracy Suttles (2)

11-Dec

0.00%

1,077

Unsecured

Other non-related party notes

Various

507

Secured

Accrued interest

Total Non-Performing

$ 3,151

Allowance for doubtful accounts

$ ( 18,279 )

Total

$ 148,207

(1) Related party notes

(2) An allowance was taken for estimated losses at full value of note

At September 30, 2014, we had junior mortgage loans and accrued interest receivable from related parties, net of allowances, totaling $132.4 million. We recognized interest income of $12.1 million related to these notes receivables.

The Company has various notes receivable from Unified Housing Foundation, Inc. (“UHF”) and Foundation for Better Housing, Inc. (“FBH”). UHF and FBH are determined to be related parties due to our significant investment in the performance of the collateral secured under the notes receivable. Payments are due from surplus cash flow of operations of the properties. A sale or refinance of any of the properties underlying these notes will be used to repay outstanding interest and principal for the remaining notes for the specific borrower. These notes are cross-collateralized for the specific borrower, but to the extent cash is received from a specific UHF or FBH property, it is applied first against any outstanding interest for the related-property note. The allowance on the UHF notes was a purchase allowance that was netted against the notes when acquired.

In the 1st quarter of 2014, TCI obtained $3.2 million in notes and accrued interest receivable from Realty Advisors Inc. (“RAI”), a related party. These notes are due from FBH, a related party. The notes accrue interest at 12% and mature at various times.

In the 2nd quarter of 2014, TCI obtained $4.0 million in a note receivable from RAI. This note is due from FBH. The note accrues interest at 12% and matures in April, 2019.

In the 3rd quarter of 2014, TCI obtained $3.4 million in notes receivable from RAI. $2.8 million of the notes are due from UHF and $0.6 million are due from FBH, both are related parties. These notes accrue interest at 12% and have various maturity dates in 2017.

In the 3rd quarter of 2014, TCI obtained $1.5 million in a note receivable from Regis, a related party. This note is due from FBH. The note accrues interest at 12% and matures in June, 2017.

In the 3rd quarter of 2014, TCI obtained $0.5 million in a note and accrued interest receivable from Basic Capital Management, Inc. (“Basic”), a related party. The note is due from UHF, The note accrues interest at 5.25% until August, 2015 then at 12% until maturity in December, 2027.

INVESTMENT_IN_UNCONSOLIDATED_I

INVESTMENT IN UNCONSOLIDATED INVESTEES	9 Months Ended
INVESTMENT IN UNCONSOLIDATED INVESTEES	Sep. 30, 2014
INVESTMENT IN UNCONSOLIDATED INVESTEES	'
INVESTMENT IN UNCONSOLIDATED INVESTEES	'
	NOTE 4. INVESTMENT IN UNCONSOLIDATED INVESTEES

	Investments in unconsolidated investees in which we have a 20% to 50% interest or otherwise exercise significant influence are carried at cost and adjusted for the Company’s proportionate share of their undistributed earnings or losses under the equity method of accounting.

	Investments in unconsolidated investees consist of the following:

		Percentage ownership as of
		30-Sep-14			30-Sep-13
	Gruppa Florentina, LLC		20	%		20	%


	Gruppa Florentina, LLC is the sole member of Milano Restaurants International Corporation, (“Milano”) which operates 35 pizza parlors under the trade name “Me-N-Ed’s Pizza Parlors” located primarily in Central and Northern California. Milano has a 100% ownership interest in SienaCorp, which operates two grills under the trade names “Me-N-Ed’s Victory Grill” and “Me-N-Ed’s Coney Island Grill”. Milano has a 100% ownership interest in Piazza del Pane, Inc., which operates two restaurants located in Central California. Milano also has 23 franchised locations, including two operating, under the trade name Angelo & Vito’s Pizzerias.

	The following is a summary of the financial position and results of operations from our investees (dollars in thousands):

	As of September 30,	2014			2013
	Real estate, net of accumulated depreciation	$	11,014		$	11,006
	Notes receivable		7,122			6,321
	Other assets		30,398			31,683
	Notes payable		(10,521	)		(11,735	)
	Other liabilities		(6,386	)		(7,473	)
	Shareholders' equity		(31,627	)		(29,802	)

	For the Nine Months Ended September 30,		2014			2013
	Revenue	$	36,197		$	34,286
	Depreciation		(863	)		(879	)
	Operating expenses		(33,438	)		(31,385	)
	Interest expense		(661	)		(787	)
	Income from continuing operations		1,235			1,235
	Income from discontinued operations		-			-
	Net income	$	1,235		$	1,235

	Company's proportionate share of earnings (1)	$	247		$	247

	(1) Earnings represents continued and discontinued operations

NOTES_PAYABLE

NOTES PAYABLE	9 Months Ended
NOTES PAYABLE	Sep. 30, 2014
NOTES PAYABLE	'
NOTES PAYABLE	'
	NOTE 5. NOTES PAYABLE

	Below is a summary of our notes and interest payable as of September 30, 2014 (dollars in thousands):

		Notes Payable		Accrued Interest		Total Debt
	Apartments	$	384,445	$	1,051	$	385,496
	Commercial		100,329		437		100,766
	Land		87,526		117		87,643
	Real estate held for sale		42,783		100		42,883
	Real estate subject to sales contract		17,164		1,605		18,769
	Other		23,412		152		23,564

	Total	$	655,659	$	3,462	$	659,121

	The segment labeled as “Other” consists of unsecured or stock-secured notes payable.

	With respect to the additional notes payable due to the acquisition of properties or refinancing of existing mortgages, a summary of some of the more significant transactions is discussed below:

	On February 10, 2014, a subsidiary of the Company paid off an existing margin loan and entered into a $4 million promissory note with a third party, secured by TCI stock. The note matures on February 10, 2016 and has an interest rate of 6%.

	On February 12, 2014, TCI exercised the first prepayment option on the settlement relating to the Amoco Building and paid $1.2 million to settle all obligations. The remaining balance of the note in the amount of $3.5 million, along with accrued interest, was forgiven. The 135,000 shares of Series K Convertible Preferred Stock of ARL that was pledged to the lender has been released to TCI. The Series K preferred stock was cancelled May 7, 2014.

	On February 14, 2014, the Company entered into a settlement and loan modification agreement with the lender regarding EQK Portage land. The new loan is for $1.6 million, matures on February 6, 2017, and has an interest rate of one-month LIBOR plus 5%. The Company paid $200,000 at close which was used to adjust the current outstanding loan balance to the newly stated loan balance and the remainder was used to pay down interest that had been accruing under the prior agreement. The rest of the unpaid interest that accrued under the prior agreement was waived. Per the agreement, the Company was also required to pay off the property tax note of $257,000.

	On February 28, 2014, TCI refinanced the existing mortgage on Parc at Denham Springs apartments, a 224-unit complex located in Denham Springs, Louisiana, for a new mortgage of $19.2 million. TCI paid off the existing mortgage of $19.2 million and $1.6 million in closing costs. The note accrues interest at 3.75% and payments of interest and principal are due monthly, maturing April 1, 2051.

	On March 25, 2014, TCI exercised its lender granted option under the settlement agreement relating to the Galleria East Center Retail / Showcase Chevrolet land which was transferred to the existing lender on February 4, 2011. TCI paid the balance of the notes along with all accrued and unpaid interest and received a reduction in price of $0.4 million.

	On March 28, 2014, TCI secured financing of $40.0 million from an independent third party. The note has a term of five years at an interest rate of 12.0%. The note is interest only for the first year with quarterly principal payments due of $500,000 starting April 1, 2015. The loan is secured by various equity interests in residential apartments and can be prepaid at a penalty rate of 4% for year 1 with the penalty declining by 1% each year thereafter.

	On March 31, 2014, TCI entered into a settlement agreement relating to the Fenton Centre building which was transferred to the existing lender on June 7, 2011. The total amount of the settlement was $7.0 million, $5.0 million was paid at the time of the settlement and the remaining $2.0 million will be paid out in equal monthly installments through November 5, 2015.

	On May 28, 2014, a $1.5 million principal payment was made to the existing Realty Advisors, Inc. mortgage and two additional land parcels, including 8.0 acres of Ladue land owned by TCI and 16.75 acres of Valwood land owned by ARL, were substituted as collateral under the note in exchange for a release of a $4 million deposit account. The principal balance is allocated based on the land valuation.

	On July 31, 2014, TCI refinanced the existing mortgage on Desoto Ranch apartments, a 248-unit complex located in Desoto, Texas, for a new mortgage of $15.7 million. TCI paid off the existing mortgage of $15.7 million and $0.5 million in closing costs. The note accrues interest at 3.50% and payments of interest and principal are due monthly, maturing June 1, 2050.

	On August 28, 2014, TCI refinanced the existing mortgage on Treehouse apartments, a 160-unit complex located in Irving, Texas, for a new mortgage of $5.8 million. TCI paid off the existing mortgage of $4.7 million and $1.1 million in closing costs and escrows. The note accrues interest at 3.55% and payments of interest and principal are due monthly, maturing September 1, 2044.

	On September 23, 2014, TCI sold a 106-unit complex known as Bridgewood Ranch, located in Kaufman, Texas, to an independent third party, for a sales price of $8.0 million. TCI paid off the existing mortgage of $4.5 million and the buyer obtained a new mortgage of $6.6 million. TCI did not recognize or record the sale in accordance with ASC 360-20 due to our continuing involvement as a result of having the option to repurchase the sold property at a later date. The exercise of the option is subject to the approval of the U.S. Department of Housing and Urban Development. TCI determined a sale had not occurred for financial reporting purposes and therefore the asset remains on their books.

	There are various land mortgages, secured by the property, that are in the process of a modification or extension to the original note due to expiration of the loan. We are in constant contact with these lenders, working together in order to modify the terms of these loans and we anticipate a timely resolution that is similar to the existing agreement or subsequent modification.

	The properties that we have sold to a related party and have deferred the recognition of the sale are treated as “subject to sales contract” on the Consolidated Balance Sheets. These properties were sold to a related party in order to help facilitate an appropriate debt or organizational restructure and may or may not be transferred back to the seller upon resolution. These properties have mortgages that are secured by the property and many have corporate guarantees. According to the loan documents, the maker is currently in default on these mortgages primarily due to lack of payment and is actively involved in discussions with every lender in order to settle or cure the default situation. We have reviewed each asset and taken impairment to the extent we feel the value of the property was less than our current basis.

RELATED_PARTY_TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
RELATED PARTY TRANSACTIONS	Sep. 30, 2014
RELATED PARTY TRANSACTIONS	'
RELATED PARTY TRANSACTIONS	'
	NOTE 6. RELATED PARTY TRANSACTIONS

	The following table reconciles the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2014 (dollars in thousands):

		Pillar
	Related party receivable, December 31, 2013	$	14,086
	Cash transfers		39,452
	Advisory fees		(6,670	)
	Fees and commissions		(1,699	)
	Cost reimbursements		(2,550	)
	Interest (to) from advisor		801
	Notes receivable purchased		(19,915	)
	Net income fee		(514	)
	Expenses paid by Advisor		(1,789	)
	Financing (mortgage payments)		1,378
	Sales/purchases transactions		350
	Related party receivable, September 30, 2014	$	22,930

	During the ordinary course of business, we have related party transactions that include, but are not limited to, rent income, interest income, interest expense, general and administrative costs, commissions, management fees and property expenses. In addition, we have assets and liabilities that include related party amounts. The related party amounts included in assets and liabilities, and the related party revenues and expenses received/paid are shown on the face of the financial statements.

OPERATING_SEGMENTS

OPERATING SEGMENTS	9 Months Ended
OPERATING SEGMENTS	Sep. 30, 2014
OPERATING SEGMENTS	'
OPERATING SEGMENTS	'
	NOTE 7. OPERATING SEGMENTS

	Our segments are based on our method of internal reporting which classifies our operations by property type. Our property types are grouped into commercial, apartments, hotels, land and other operating segments. Significant differences among the accounting policies of the operating segments as compared to the Consolidated Financial Statements principally involve the calculation and allocation of administrative and other expenses. Management evaluates the performance of each of the operating segments and allocates resources to them based on their net operating income and cash flow.

	Items of income that are not reflected in the segments are interest, other income, gain on debt extinguishment, gain on condemnation award, equity in partnerships, and gains on sale of real estate. Expenses that are not reflected in the segments are provision for losses, advisory, net income and incentive fees, general and administrative, non-controlling interests and net loss from discontinued operations before gains on sale of real estate.

	The segment labeled as “Other” consists of revenue and operating expenses related to the notes receivable and corporate debt.


	Presented below is our reportable segments’ operating income for the three and nine months ended September 30, 2014 and 2013, including segment assets and expenditures (dollars in thousands):

			Commercial
	For the Three Months Ended September 30, 2014		Properties				Apartments				Hotels			Land				Other				Total
	Rental and other property revenues		$	4,609			$	14,704			$	-		$	-			$	13			$	19,326
	Property operating expenses			2,890				7,284				-			585				7				10,766
	Depreciation			1,944				2,537				-			-				(18	)			4,463
	Mortgage and loan interest			1,310				3,768				-			1,058				2,917				9,053
	Deferred borrowing costs amortization			15				540				-			106				187				848
	Loan charges and prepayment penalties			-				1,026				-			18				-				1,044
	Interest income			-				-				-			-				5,106				5,106
	Gain on land sales			-				-				-			40				-				40
	Segment operating income (loss)		$	(1,550	)		$	(451	)		$	-		$	(1,727	)		$	2,026			$	(1,702	)
	Capital expenditures			486				38				-			1,435				-				1,959
	Real estate assets			129,361				345,281				-			165,144				-				639,786

	Property Sales
	Sales price		$	2,582			$	-			$	-		$	4,269			$	-			$	6,851
	Cost of sale			813				-				-			4,229				-				5,042
	Gain on sale		$	1,769			$	-			$	-		$	40			$	-			$	1,809


			Commercial
	For the Three Months Ended September 30, 2013		Properties				Apartments				Hotels			Land				Other				Total
	Rental and other property revenues		$	5,162			$	14,226			$	-		$	45			$	97			$	19,530
	Property operating expenses			3,067				6,784				-			514				22				10,387
	Depreciation			1,541				2,551				-			-				(39	)			4,053
	Mortgage and loan interest			1,330				3,958				-			1,653				2,189				9,130
	Deferred borrowing costs amortizaion			17				(10	)			-			34				206				247
	Loan charges and prepayment penalties			-				-				-			-				49				49
	Interest income			-				-				-			-				3,778				3,778
	Gain on land sales			-				-				-			598				-				598
	Segment operating income (loss)		$	(793	)		$	943			$	-		$	(1,558	)		$	1,448			$	40
	Capital expenditures			2,955				37				-			83				-				3,075
	Real estate assets			140,616				355,251				-			209,788				-				705,655

	Property Sales
	Sales price		$	-			$	-			$	-		$	1,187			$	-			$	1,187
	Cost of sale			-				(127	)			-			589				-				462
	Gain on sale		$	-			$	127			$	-		$	598			$	-			$	725


	The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations:

			For the Three Months Ended
			September 30,
			2014				2013
	Segment operating income (loss)		$	(1,702	)		$	40
	Other non-segment items of income (expense)
	General and administrative			(1,590	)			(1,867	)
	Net income fee to related party			186				(55	)
	Advisory fee to related party			(2,225	)			(2,584	)
	Other income			1,332				59
	Loss on sale of investments			-				(275	)
Provision on impairment of notes receivable and real estate assets			-				(1,125	)
Earnings from unconsolidated investees			320				69
Litigation settlement			(86	)			(2,739	)
Income tax benefit			786				402
Net loss from continuing operations		$	(2,979	)		$	(8,075	)

The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets:

		September 30,
		2014				2013
Segment assets		$	639,786			$	705,655
Investments in unconsolidated investees			4,137				10,337
Notes and interest receivable			148,207				105,139
Other assets			143,856				244,245
Total assets		$	935,986			$	1,065,376


		Commercial
For the Nine Months Ended September 30, 2014		Properties				Apartments				Hotels			Land				Other				Total
Rental and other property revenues		$	14,166			$	43,779			$	-		$	-			$	41			$	57,986
Property operating expenses			9,206				20,284				-			1,175				12				30,677
Depreciation			5,515				7,656				-			-				(72	)			13,099
Mortgage and loan interest			4,424				11,433				-			3,520				7,196				26,573
Deferred borrowing costs amortization			36				1,480				-			187				375				2,078
Loan charges and prepayment penalties			9				2,599				-			18				-				2,626
Interest income			-				-				-			-				15,264				15,264
Gain on land sales			-				-				-			634				-				634
Segment operating income (loss)		$	(5,024	)		$	327			$	-		$	(4,266	)		$	7,794			$	(1,169	)
Capital expenditures			3,476				137				-			1,586				-				5,199
Real estate assets			129,361				345,281				-			165,144				-				639,786

Property Sales
Sales price		$	19,182			$	23,131			$	-		$	4,986			$	-			$	47,299
Cost of sale			10,410				17,077				-			4,352				-				31,839
Gain on sale		$	8,772			$	6,054			$	-		$	634			$	-			$	15,460


		Commercial
For the Nine Months Ended September 30, 2013		Properties				Apartments				Hotels			Land				Other				Total
Rental and other property revenues		$	15,545			$	42,053			$	-		$	101			$	111			$	57,810
Property operating expenses			8,660				19,176				-			1,240				31				29,107
Depreciation			4,318				7,639				-			-				(137	)			11,820
Mortgage and loan interest			4,317				12,261				-			4,692				5,882				27,152
Deferred borrowing costs amortizaion			60				2,233				-			131				248				2,672
Loan charges and prepayment penalties			-				3,937				-			-				229				4,166
Interest income			-				-				-			-				10,831				10,831
Gain on land sales			-				-				-			563				-				563
Segment operating income (loss)		$	(1,810	)		$	(3,193	)		$	-		$	(5,399	)		$	4,689			$	(5,713	)
Capital expenditures			5,869				147				-			364				-				6,380
Real estate assets			140,616				355,251				-			209,788				-				705,655

Property Sales
Sales price		$	26,974			$	50,122			$	-		$	3,437			$	-			$	80,533
Cost of sale			14,914				36,753				-			2,874				-				54,541
Gain on sale		$	12,060			$	13,369			$	-		$	563			$	-			$	25,992

The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations:

		For the Nine Months Ended
		September 30,
		2014				2013
Segment operating loss		$	(1,169	)		$	(5,713	)
Other non-segment items of income (expense)
General and administrative			(6,770	)			(5,911	)
Net income fee to related party			(514	)			(159	)
Advisory fee to related party			(6,670	)			(7,625	)
Other income			1,738				2,734
Loss on sale of investments			-				(283	)
Provision on impairment of notes receivable and real estate assets			-				(1,926	)
Earnings from unconsolidated investees			266				256
Litigation settlement			3,666				(2,727	)
Income tax benefit			5,030				8,561
Net loss from continuing operations		$	(4,423	)		$	(12,793	)

The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets:

		September 30,
		2014				2013
Segment assets		$	639,786			$	705,655
Investments in unconsolidated investees			4,137				10,337
Notes and interest receivable			148,207				105,139
Other assets			143,856				244,245
Total assets		$	935,986			$	1,065,376

DISCONTINUED_OPERATIONS

DISCONTINUED OPERATIONS	9 Months Ended
DISCONTINUED OPERATIONS	Sep. 30, 2014
DISCONTINUED OPERATIONS	'
DISCONTINUED OPERATIONS	'
	NOTE 8. DISCONTINUED OPERATIONS

	We apply the provisions of ASC Topic 360, “Property, Plant and Equipment”. ASC Topic 360 requires that long-lived assets that are to be disposed of by sale be measured at the lesser of (1) book value or (2) fair value less cost to sell. In addition, it requires that one accounting model be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions.

	Discontinued operations relates to properties that were either sold or held for sale as of the period ended September 30, 2014. Included in discontinued operations are a total of five and 20 properties for 2014 and 2013, respectively. Properties sold in 2014 have been reclassified to discontinued operations for current and prior year reporting periods. In 2014, we sold one apartment complex (Pecan Pointe), two commercial properties (1010 Common and Sesame Square) and have two apartment complexes held for sale (Blue Ridge and Sunset Lodge). In 2013, we sold 11 apartment complexes (Dorado Ranch, Huntington Ridge, Laguna Vista, Legends of El Paso, Mariposa Villas, Paramount Terrace, River Oaks, Savoy of Garland, Stonebridge at City Park, Verandas at City View and Vistas of Pinnacle Park) and four commercial properties (225 Baronne, Amoco, Ergon and Eton Square). The gain on sale of the properties is also included in discontinued operations for those years. The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands):

		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2014			2013			2014			2013
	Revenues:
	Rental and other property revenues	$	1,416		$	7,945		$	5,328		$	27,405
			1,416			7,945			5,328			27,405
	Expenses:
	Property operating expenses		326			3,729			2,201			12,237
	Depreciation		155			1,251			664			4,300
	General and administrative		65			254			378			803
	Total operating expenses		546			5,234			3,243			17,340

	Other income (expense):
	Other income		(36	)		5			(522	)		35
	Mortgage and loan interest		(351	)		(1,598	)		(1,431	)		(6,623	)
	Deferred borrowing costs amortization		(6	)		(17	)		(336	)		(1,032	)
	Loan charges and prepayment penalties		-			-			-			(3,245	)
	Litigation settlement		-			(80	)		(250	)		(170	)
	Total other expenses		(393	)		(1,690	)		(2,539	)		(11,035	)

	Gain (loss) from discontinued operations before gain on sale of real estate and tax		477			1,021			(454	)		(970	)
	Gain on sale of real estate from discontinued operations		1,769			127			14,826			25,429
	Income tax expense		(786	)		(402	)		(5,030	)		(8,561	)
	Income from discontinued operations	$	1,460		$	746		$	9,342		$	15,898

	Our application of ASC Topic 360 results in the presentation of the net operating results of these qualifying properties sold or held for sale during 2014 as income from discontinued operations. This does not have an impact on net income available to common shareholders and only impacts the presentation of these properties within the Consolidated Statements of Operations.

COMMITMENTS_AND_CONTINGENCIES_

COMMITMENTS AND CONTINGENCIES AND LIQUIDITY	9 Months Ended
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY	Sep. 30, 2014
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY	'
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY	'
	NOTE 9. COMMITMENTS AND CONTINGENCIES AND LIQUIDITY

	LK-FOUR HICKORY, LLC

	In conjunction with its sale of Four Hickory in November 2007, the Company agreed to fund amounts to satisfy its commitment to compensate LK-Four Hickory, LLC for move-in discounts and other concessions to existing tenants at the time of sale. The Company also has various agreements with LK-Four Hickory, LLC related to the funding of projection shortfalls, which, to date, they have not had to provide any additional funding. In addition, related parties of the Company have active lease agreements with LK-Four Hickory, LLC and the Company has since guaranteed amounts related to certain of these leases.

	On December 17, 2007, both Limkwang Nevada, Inc., the majority owner of LK-Four Hickory, LLC and ARL unconditionally guaranteed the punctual payment when due, whether at stated maturity, by acceleration or hereafter, including all fees and expenses incurred by the bank on collection of a $28.0 million note payable for LK-Four Hickory, LLC which has a current outstanding balance of $22.4 million.

	The Company’s investment in LK-Four Hickory, LLC at January 17, 2012 was sold and the Company has additional reserves for estimated potential amounts it could be liable for if various related parties are not able to meet their obligations to LK-Four Hickory, LLC. The Company will continue to evaluate these potential estimates and also the likelihood of having to fund any of these and adjust their reserves accordingly.

	Liquidity. Management believes that ARL will generate excess cash flow from property operations in 2014; such excess, however, will not be sufficient to discharge all of ARL’s obligations as they became due. Management intends to sell land and income- producing real estate, refinance real estate and obtain additional borrowings primarily secured by real estate to meet its liquidity requirements.

	Partnership Buyouts. ARL is the limited partner in various partnerships related to the construction of residential properties. As permitted in the respective partnership agreements, ARL intends to purchase the interests of the general and any other limited partners in these partnerships subsequent to the completion of these projects. The amounts paid to buy out the non-affiliated partners are limited to development fees earned by the non-affiliated partners, and are set forth in the respective partnership agreements.

	Litigation. The ownership of property and provision of services to the public as tenants entails an inherent risk of liability. Although the Company and its subsidiaries are involved in various items of litigation incidental to and in the ordinary course of its business, in the opinion of management, the outcome of such litigation will not have a material adverse impact upon the Company’s financial condition, results of operation or liquidity, unless noted otherwise below.

	The Company is involved in, and vigorously defending against, a number of deficiency claims with respect to assets that have been foreclosed by various lenders. Such claims are generally against a consolidated subsidiary as the borrower or the Company as a guarantor of indebtedness or performance. Some of these proceedings may ultimately result in an unfavorable determination for the Company and/or one of its consolidated subsidiaries. While we cannot predict the final result of such proceedings, management believes that the maximum exposure to the Company and its consolidated subsidiaries, if any, will not exceed approximately $20.0 million in the aggregate and will occur, if at all, in future years.

	DISPOSED OF ENTITIES:

	ART and ART Midwest, Inc.

	While the Company and all entities in which the Company has a direct or indirect equity interest are not parties to or obligated in any way for the outcome, a formerly owned entity (American Realty Trust, Inc.) and its former subsidiary (ART Midwest, Inc.) have been engaged since 1999 in litigation with Mr. David Clapper and entities related to Mr. Clapper (collectively, the “Clapper Parties”). The matter originally involved a transaction in 1998 in which ART Midwest, Inc. was to acquire eight residential apartment complexes from the Clapper Parties. Through the years, a number of rulings, both for and against American Realty Trust, Inc. (“ART”) and ART Midwest, Inc., were issued. In October 2011, a ruling was issued under which the Clapper Parties received a judgment for approximately $74 million, including $26 million in actual damages and $48 million interest. The ruling was against ART and ART Midwest, Inc., but no other entity. During February 2014, the court of Appeals affirmed a portion of the judgment in favor of the Clapper Parties, but also ruled that a double counting of a significant portion of the damages had occurred and remanded the case back to the trial court to recalculate the damage award, as well as pre and post-judgment interest thereon. ART was also a significant owner of a partnership interest in the partnership that was awarded the initial damages in this matter.

	In 2005, ART filed suit against a major national law firm over the initial transaction. That action was initially abated while the principal case with the Clapper Parties was pending, but the abatement was recently lifted and the action against the law firm is expected to move forward. The only defendants in the litigation involving the Clapper Parties are ART and ART Midwest, Inc., which, together, had total assets and net worth, as of December 31, 2012, of approximately $10 million. In January 2012, the Company sold all of the issued and outstanding stock of ART to an unrelated party for a promissory note in the amount of $10 million. At December 31, 2012, the Company fully reserved and valued such note at zero.

	Subsequent to the sale of the ART stock in January 2012, ART instituted a Chapter 11 bankruptcy proceeding in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. In March 2014, the bankruptcy court dismissed the proceeding.

	Management of the Company believes that the Company has no liability for any ultimate judgment in the proceeding involving the Clapper Parties; however, Management of the Company has serious reservations about the current collectability of the $10 million note and, accordingly, continues to maintain a full reservation of the value of such note at zero.

	Port Olpenitz

	ARL, through a foreign subsidiary, was involved in developing a maritime harbor town on the 420 acre site of the former naval base of Olpenitz in Kappeln, Germany. Disputes with the local partner related to his mismanagement of the project resulted in his being replaced as the managing partner which was followed by a filing for bankruptcy protection in Germany to completely remove him from the project. An insolvency manager was placed in control of the project in order to protect the creditors and as of December 31, 2013, had sold the vast majority of assets (almost all land) of the project. The Company no longer has any financial responsibility for the obligations of the creditors related to the project and has claims filed for loans relating to our investment in the project. Due to the questionable collectability of these loans from the proceeds of the project, the Company has written off the unreserved balance of $5.3 million in the project. As of December 13, 2013, ARL had filed two lawsuits in Germany to recover funds invested in the project. The lawsuits are against: 1) the former German partner and his company, and 2) against the law firm in Hamburg originally hired to protect ARL’s investment in the project. At this time it is unknown how much can be recovered or how successful the litigation will be.

	DYNEX CAPITAL, INC.

	On February 13, 2013, the Court of Appeals, Fifth District of Texas at Dallas (the “Fifth Court of Appeals”) rendered an opinion involving TCI in Case No. 05-04-01358-CV styled Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. v. Dynex Commercial, Inc. and Dynex Capital, Inc. The case was on appeal from the 68th Judicial District Court of Dallas County, Texas, had previously been appealed to the Fifth Court of Appeals and further appealed to the Supreme Court of the State of Texas which had remanded the instant case back to the Fifth Court of Appeals to address certain issues. The case had its origin with Dynex Commercial making loans to Continental Poydras Corp., Continental Common, Inc. and Continental Baronne, Inc. (subsidiaries of Continental Mortgage & Equity Trust (“CMET”), an entity which merged into TCI in 1999 after the original suit was filed). Under the original loan commitment, $160,000,000 in loans were to be made to the entities. The loans were conditioned on the execution of a commitment between Dynex Commercial and Basic Capital Management, Inc. (“Basic”).

	An original trial to a jury resulted in the jury awarding significant damages to Basic for “lost opportunity,” awarding damages in “increased costs” and “lost opportunity” damages to ART and damages of $960,646.28 in “increased costs” and $11,161,520 for “lost opportunity’ damages in favor of TCI and its subsidiaries (a total of $12,122,166.28). The original Trial Court ignored the jury’s findings and entered a “Judgment Notwithstanding the Verdict” (“JNOV”) in Dynex’s favor; the Fifth Court of Appeals has now ruled that the JNOV was improper because there was sufficient evidence to support the jury’s findings. As a result, the Fifth Court of Appeals ordered the Trial Court to enter a new judgment consistent with the jury’s original findings.

	The Fifth Court of Appeals also determined that TCI was entitled to damages for “lost opportunities” relating to tenant improvements and awarded TCI an additional $252,577. Issues relating to attorney’s fees were also addressed with the Fifth Court of Appeals ordering the Trial Court to “re-try” the issue of attorney’s fees to determine the amount of fees to which TCI would be entitled on a “breach of commitment” claim. In addition, as a result of the changes in amounts awarded and passage of time, the Fifth Court of Appeals also ordered the Trial Court to recalculate the correct amounts of pre and post-judgment interest owed to Appellants.

	While the fifteen year old controversy is not yet fully resolved, the Fifth Court of Appeals opinion is favorable to TCI, but TCI expects continued challenges by Dynex to the Fifth Court of Appeals opinion and any ultimate award of damages by the Trial Court.

	During the third quarter of the fiscal year covered by this Report, no proceeding previously reported was terminated.

EARNINGS_PER_SHARE

EARNINGS PER SHARE	9 Months Ended
EARNINGS PER SHARE	Sep. 30, 2014
EARNINGS PER SHARE	'
EARNINGS PER SHARE	'
	NOTE 10. EARNINGS PER SHARE

	Earnings per share (“EPS”) have been computed pursuant to the provisions of ASC Topic 260, “Earnings Per Share”. The computation of basic EPS is calculated by dividing net income available to common shareholders from continuing operations, adjusted for preferred dividends, by the weighted-average number of common shares outstanding during the period. Shares issued during the period shall be weighted for the portion of the period that they were outstanding.

	As of September 30, 2014, we have 2,461,252 shares of Series A 10.0% cumulative convertible preferred stock, which are outstanding. These shares may be converted into common stock at 90% of the average daily closing price of the common stock for the prior 20 trading days. These are considered in the computation of diluted earnings per share if the effect of applying the if-converted method is dilutive.

	Of the outstanding 2,461,252 shares of Series A 10.0% cumulative convertible preferred stock, 300,000 shares are owned by ART Edina, Inc. and 600,000 shares are owned by ART Hotel Equities, Inc., both wholly owned subsidiaries of ARL. Dividends are not paid on the shares owned by ARL subsidiaries. As of May 30, 2014, the shares were transferred to ARL.

	Prior to July 17, 2014, RAI owned 2,451,435 shares of the outstanding Series A convertible preferred stock and had accrued dividends unpaid of $15.1 million. On July 17, 2014, RAI converted 890,797 shares, including $6.3 million in accumulated dividends unpaid for these shares, into the requisite number of shares of common stock. This conversion resulted in the issuance of 2,502,230 new shares of ARL common stock. As of September 30, 2014, RAI owns 1,560,638 shares of the outstanding Series A convertible preferred stock and has accrued dividends unpaid of $9.3 million.

	The Company had 135,000 shares of Series K convertible preferred stock, which were held by TCI and used as collateral on a note. The note has been paid in full and the Series K preferred stock was cancelled May 7, 2014.

	As of September 30, 2014, we have 1,000 shares of stock options outstanding, which will expire January 1, 2015, if not exercised. The outstanding options are considered in the computation of diluted earnings per share if the effect of applying the “treasury stock” method is dilutive.

	As of September 30, 2014, the preferred stock and the stock options were anti-dilutive and thus not included in the EPS calculation.

SUBSEQUENT_EVENTS

SUBSEQUENT EVENTS	9 Months Ended
SUBSEQUENT EVENTS	Sep. 30, 2014
SUBSEQUENT EVENTS	'
SUBSEQUENT EVENTS	'
	NOTE 11. SUBSEQUENT EVENTS

	On November 4, 2014, TCI sold a 290-unit complex known as Blue Ridge, located in Midland, Texas, to an independent third party, for a sales price of $52.8 million. We paid off the existing mortgage of $23.7 million. A gain of $26.7 million was recorded on the sale.

	Sunset Lodge, a 216-unit complex located in Odessa, Texas, is under contract to an independent third party, with an anticipated sales price of $39.4 million. The purchaser will buy the property subject to the existing mortgage of $19.0 million. A gain of $19.7 million will be recorded on the sale.

	5.98 acres of land known as Sunset Lodge land, located in Odessa, Texas, is under contract to an independent third party, for an anticipated sales price of $1.2 million. A gain of $0.6 million will be recorded on the sale.

SIGNIFICANT_ACCOUNTING_POLICIE

SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2014
SIGNIFICANT ACCOUNTING POLICIES	'
Organization	'
	Organization

	As used herein, the terms “ARL”, “the Company”, “we”, “our” or “us” refer to American Realty Investors, Inc., a Nevada corporation, which was formed in November 1999. In August 2000, the Company acquired American Realty Trust, Inc. (“ART”), a Georgia corporation and National Realty, L.P. (“NRLP”), a Delaware partnership.

	The Company is headquartered in Dallas, Texas and its common stock trades on the New York Stock Exchange (“NYSE”) under the symbol (“ARL”). Approximately 86.8% of ARL’s stock is owned by related parties. Subsidiaries of ARL own approximately 80.9% of the outstanding shares of common stock of Transcontinental Realty Investors, Inc. (“TCI”), a Nevada corporation, which has its common stock listed and traded on the New York Stock Exchange (“NYSE”) under the symbol (“TCI”). ARL is a “C” corporation for U.S. federal income tax purposes and has consolidated TCI’s accounts and operations since March 2003. During the third quarter 2012, May Realty Holdings, Inc. (“MRHI”), formerly known as Realty Advisors Management, Inc., subsidiaries acquired more than 80% of ARL stock and as a result, ARL joined the MRHI consolidated group for federal income tax reporting. We have no employees.

	TCI, a subsidiary of ARL, owns approximately 81.1% of the common stock of Income Opportunity Realty Investors, Inc. (“IOT”). Effective July 17, 2009, IOT’s financial results were consolidated with those of ARL and TCI and their subsidiaries. Shares of IOT are traded on the NYSE MKT under the symbol (“IOT”).

	ARL invests in real estate through direct ownership, leases and partnerships and also invests in mortgage loans on real estate. Pillar Income Asset Management, Inc. (“Pillar”) is the Company’s external Advisor and Cash Manager. Although the Board of Directors is directly responsible for managing the affairs of ARL, and for setting the policies which guide it, the day-to-day operations of ARL are performed by Pillar, as the contractual Advisor, under the supervision of the Board. Pillar’s duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities and arranging debt and equity financing for the Company with third party lenders and investors. Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with ARL’s business plan and investment policy. Pillar also serves as an Advisor and Cash Manager to TCI and IOT.

	Regis Realty Prime, LLC (“Regis”) manages our commercial properties and provides brokerage services. ARL engages third-party companies to lease and manage its apartment properties. TCI also has a development agreement with Unified Housing Foundation, Inc. (“UHF”) a non-profit corporation that provides management services for the development of residential apartment projects in the future. This development agreement was terminated December 31, 2013.
Properties	'
	Properties

	We own or had interests in a total property portfolio of 45 income-producing properties as of September 30, 2014. The properties consisted of:

		•	Eight commercial properties consisting of four office buildings, one industrial warehouse, and three retail centers comprising in aggregate approximately 2.1 million rentable square feet;

		•	37 apartment communities totaling 6,382 units, excluding apartments being developed; and

		•	4,130 acres of developed and undeveloped land.

	We join with various third-party development companies to construct residential apartment communities. We are in the predevelopment process on several residential apartment communities but have not yet begun construction. At September 30, 2014, we had no apartment projects in development. The third-party developer typically holds a general partner as well as a majority limited partner interest in a limited partnership formed for the purpose of building a single property while we generally take a minority limited partner interest in the limited partnership. We may contribute land to the partnership as part of our equity contribution or we may contribute the necessary funds to the partnership to acquire the land. We are required to fund all required equity contributions while the third-party developer is responsible for obtaining construction financing, hiring a general contractor and for the overall management, successful completion and delivery of the project. We generally bear all the economic risks and rewards of ownership in these partnerships and therefore include these partnerships in our consolidated financial statements. The third-party developer is paid a developer fee typically equal to a percentage of the construction costs. When the project reaches stabilized occupancy, we acquire the third-party developer’s partnership interests in exchange for any remaining unpaid developer fees.
Basis of Presentation	'
	Basis of Presentation

	The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted in accordance with such rules and regulations, although management believes the disclosures are adequate to prevent the information presented from being misleading. In the opinion of management, all adjustments (consisting of normal recurring matters) considered necessary for a fair presentation have been included. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

	The year-end Consolidated Balance Sheet at December 31, 2013 was derived from the audited financial statements at that date, but does not include all of the information and disclosures required by GAAP for complete financial statements. For further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Certain 2013 financial statement amounts have been reclassified to conform to the 2014 presentation, including adjustments for discontinued operations.
Principles of Consolidation	'
	Principles of Consolidation

	The accompanying Consolidated Financial Statements include the accounts of the Company, its subsidiaries, generally all of which are wholly-owned, and all entities in which we have a controlling interest. Arrangements that are not controlled through voting or similar rights are accounted for as a Variable Interest Entity (“VIE”), in accordance with the provisions and guidance of ASC Topic 810, “Consolidation”, whereby we have determined that we are a primary beneficiary of the VIE and meet certain criteria of a sole general partner or managing member as identified in accordance with Emerging Issues Task Force (“EITF”) Issue 04-5, Investor’s Accounting for an Investment in a Limited Partnership when the Investor is the Sole General Partner and the Limited Partners have Certain Rights (“EITF 04-5”). VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders as a group lack adequate decision making ability, the obligation to absorb expected losses or residual returns of the entity, or have voting rights that are not proportional to their economic interests. The primary beneficiary generally is the entity that provides financial support and bears a majority of the financial risks, authorizes certain capital transactions, or makes operating decisions that materially affect the entity’s financial results. All significant intercompany balances and transactions have been eliminated in consolidation.

	In determining whether we are the primary beneficiary of a VIE, we consider qualitative and quantitative factors, including, but not limited to: the amount and characteristics of our investment; the obligation or likelihood for us or other investors to provide financial support; our and the other investors’ ability to control or significantly influence key decisions for the VIE; and the similarity with and significance to the business activities of us and the other investors. Significant judgments related to these determinations include estimates about the current future fair values and performance of real estate held by these VIEs and general market conditions.

	For entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary, the entities are accounted for using the equity method of accounting. Accordingly, our share of the net earnings or losses of these entities is included in consolidated net income. Our investment in Gruppa Florentina, LLC is accounted for under the equity method.
Real Estate, Depreciation and Impairment.	'
	Real Estate, Depreciation and Impairment

	Real estate assets are stated at the lower of depreciated cost or fair value, if deemed impaired. Major replacements and betterments are capitalized and depreciated over their estimated useful lives. Depreciation is computed on a straight-line basis over the useful lives of the properties (buildings and improvements – 10-40 years; furniture, fixtures and equipment – 5-10 years). The Company continually evaluates the recoverability of the carrying value of its real estate assets using the methodology prescribed in ASC Topic 360, “Property, Plant and Equipment”. Factors considered by management in evaluating impairment of its existing real estate assets held for investment include significant declines in property operating profits, annually recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Under ASC Topic 360, a real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of an asset (both the annual estimated cash flow from future operations and the estimated cash flow from the theoretical sale of the asset) over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. If any real estate asset held for investment is considered impaired, a loss is provided to reduce the carrying value of the asset to its estimated fair value.
Real Estate Held For Sale Policy	'
	Real Estate Held For Sale

	We periodically classify real estate assets as “held for sale”. An asset is classified as held for sale after the approval of our Board of Directors, after an active program to sell the asset has commenced and if the sale is probable. One of the deciding factors in determining whether a sale is probable is whether the firm purchase commitment is obtained and whether the sale is probable within the year. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset. Subsequent to the classification of assets as held for sale, no further depreciation expense is recorded. Real estate assets held for sale are stated separately on the accompanying Consolidated Balance Sheets. Upon a decision that the sale is no longer probable, the asset is classified as an operating asset and depreciation expense is reinstated. The operating results of real estate assets held for sale and sold are reported as discontinued operations in the accompanying Consolidated Statements of Operations. Income from discontinued operations includes the revenues and expenses, including depreciation and interest expense, associated with the assets. This classification of operating results as discontinued operations applies retroactively for all periods presented. Additionally, gains and losses on assets designated as held for sale are classified as part of discontinued operations.
Cost capitalization	'
	Cost Capitalization

	Costs related to planning, developing, leasing and constructing a property are capitalized and classified as Real Estate in the Consolidated Balance Sheets. We capitalize interest to qualifying assets under development based on average accumulated expenditures outstanding during the period. In capitalizing interest to qualifying assets, we first use the interest incurred on specific project debt, if any, and next use the weighted average interest rate of non-project specific debt. We capitalize interest, real estate taxes and certain operating expenses until building construction is substantially complete and the building is ready for its intended use, but no later than one year from the cessation of major construction activity.

	We capitalize leasing costs which include commissions paid to outside brokers, legal costs incurred to negotiate and document a lease agreement and any internal costs that may be applicable. We allocate these costs to individual tenant leases and amortize them over the related lease term.
Fair value measurement	'
	Fair Value Measurement

	We apply the guidance in ASC Topic 820, “Fair Value Measurements and Disclosures”, to the valuation of real estate assets. These provisions define fair value as the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date, establish a hierarchy that prioritizes the information used in developing fair value estimates and require disclosure of fair value measurements by level within the fair value hierarchy. The hierarchy gives the highest priority to quoted prices in active markets (Level 1 measurements) and the lowest priority to unobservable data (Level 3 measurements), such as the reporting entity’s own data.

	The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and includes three levels defined as follows:

	Level 1 –	Unadjusted quoted prices for identical and unrestricted assets or liabilities in active markets.
	Level 2 –	Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
	Level 3 –	Unobservable inputs that are significant to the fair value measurement.

	A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Related Parties Policy	'
	Related Parties

	We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships. Related parties are persons or entities who have one or more of the following characteristics, which include entities for which investments in their equity securities would be required, trust for the benefit of persons including principal owners of the entities and members of their immediate families, management personnel of the entity and members of their immediate families and other parties with which the entity may deal if one party controls or can significantly influence the decision making of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests, or affiliates of the entity.
Newly Issued Accounting Standards	'
	Newly Issued Accounting Standards

	We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our Consolidated Financial Statements, including that which we have not yet adopted. We do not believe that any such guidance will have a material effect on our financial position or results of operations.

REAL_ESTATE_ACTIVITY_Tables

REAL ESTATE ACTIVITY (Tables)	9 Months Ended
REAL ESTATE ACTIVITY (Tables)	Sep. 30, 2014
Schedule of summary of the real estate owned	'
Schedule of summary of the real estate owned	'
	Below is a summary of the real estate owned as of September 30, 2014 (dollars in thousands):

	Apartments	$	409,430
	Commercial properties		178,824
	Land held for development		157,290
	Real estate held for sale		46,354
	Real estate subject to sales contract		21,806
	Total real estate	$	813,704
	Less accumulated depreciation		(129,630	)
	Total real estate, net of depreciation	$	684,074

NOTES_AND_INTEREST_RECEIVABLE_

NOTES AND INTEREST RECEIVABLE (Tables)

9 Months Ended

Sep. 30, 2014

NOTES AND INTEREST RECEIVABLE {2}

NOTES AND INTEREST RECEIVABLES

Maturity

Interest

Borrower

Date

Rate

Amount

Security

Performing loans:

Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)

19-Mar

12.00%

$ 1,810

Secured

Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)

17-Mar

12.00%

1,156

Secured

Foundation for Better Housing, Inc. (Vista Ridge) (1)

19-Apr

12.00%

3,923

Secured

Foundation for Better Housing, Inc. (Vista Ridge) (1)

17-Jun

12.00%

1,492

Secured

HGH Residential, Inc. (Park West I Apts)

19-Jul

12.00%

1,102

Secured

HGH Residential, Inc. (Park West II Apts)

19-Jul

12.00%

4,771

Secured

HGH Residential, Inc. (Tradewinds Dev)

19-Jul

12.00%

6,131

Secured

One Realco Corporation (1) (2)

17-Jan

3.00%

7,000

Unsecured

Realty Advisors Management, Inc. (1)

16-Dec

2.20%

20,387

Unsecured

Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)

Dec-32

12.00%

2,097

100% Membership Interest in Unified Housing of McKinney, LLC

Unified Housing Foundation, Inc. (Echo Station) (1)

Dec-32

12.00%

1,481

100% Membership Interest in Unified Housing of Temple, LLC

Unified Housing Foundation, Inc. (Inwood on the Park) (1)

Dec-32

12.00%

5,059

100% Membership Interest in Unified Housing Inwood, LLC

Unified Housing Foundation, Inc. (Kensington Park) (1)

Dec-32

12.00%

3,936

100% Membership Interest in Unified Housing Kensington, LLC

Unified Housing Foundation, Inc. (Lakeshore Villas) (1)

Dec-32

12.00%

2,000

Secured

Unified Housing Foundation, Inc. (Lakeshore Villas) (1)

Dec-32

12.00%

9,096

Membership interest in Housing for Seniors of Humble, LLC

Unified Housing Foundation, Inc. (Limestone Canyon) (1)

Dec-32

12.00%

3,057

100% Membership Interest in Unified Housing of Austin, LLC

Unified Housing Foundation, Inc. (Limestone Canyon) (1)

Dec-32

12.00%

4,663

100% Membership Interest in Unified Housing of Austin, LLC

Unified Housing Foundation, Inc. (Limestone Ranch) (1)

Dec-32

12.00%

2,250

100% Membership Interest in Unified Housing of Vista Ridge, LLC

Unified Housing Foundation, Inc. (Limestone Ranch) (1)

Dec-32

12.00%

6,000

100% Membership Interest in Unified Housing of Vista Ridge, LLC

Unified Housing Foundation, Inc. (Parkside Crossing) (1)

Dec-32

12.00%

2,272

100% Membership Interest in Unified Housing of Parkside Crossing, LLC

Unified Housing Foundation, Inc. (Sendero Ridge) (1)

Dec-32

12.00%

5,174

100% Membership Interest in Unified Housing of Sendero Ridge, LLC

Unified Housing Foundation, Inc. (Sendero Ridge) (1)

Dec-32

12.00%

4,812

100% Membership Interest in Unified Housing of Sendero Ridge, LLC

Unified Housing Foundation, Inc. (Timbers at the Park) (1)

Dec-32

12.00%

1,323

100% Membership Interest in Unified Housing of Terrell, LLC

Unified Housing Foundation, Inc. (Tivoli) (1)

Dec-32

12.00%

7,966

100% Membership Interest in Unified Housing of Tivoli, LLC

Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1)

Dec-32

12.00%

2,485

100% Membership Interest in Unified Housing of Harvest Hill I, LLC

Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1)

Dec-32

12.00%

2,555

100% Membership Interest in Unified Housing of Harvest Hill, LLC

Unified Housing Foundation, Inc. (Trails at White Rock) (1)

Dec-32

12.00%

3,815

100% Membership Interest in Unified Housing of Harvest Hill III, LLC

Unified Housing Foundation, Inc. (1)

17-Mar

5.00%

6,000

Unsecured

Unified Housing Foundation, Inc. (1)

17-Jun

12.00%

1,261

Unsecured

Unified Housing Foundation, Inc. (1)

15-Dec

12.00%

17,928

Unsecured

Unified Housing Foundation, Inc. (1)

16-Dec

12.00%

3,657

Unsecured

Other non-related party notes

Various

3,007

Various secured interests

Other related party notes (1)

Various

2,117

Various secured interests

Other related party notes (1)

Various

3,568

Various unsecured interests

Accrued interest

7,984

Total Performing

$ 163,335

Non-Performing loans:

Leman Development, Ltd (2)

11-Jul

7.00%

$ 1,500

Unsecured

Tracy Suttles (2)

11-Dec

0.00%

1,077

Unsecured

Other non-related party notes

Various

507

Secured

Accrued interest

Total Non-Performing

$ 3,151

Allowance for doubtful accounts

$ ( 18,279 )

Total

$ 148,207

(1) Related party notes

(2) An allowance was taken for estimated losses at full value of note

INVESTMENT_IN_UNCONSOLIDATED_I1

INVESTMENT IN UNCONSOLIDATED INVESTEES (Tables)	9 Months Ended
INVESTMENT IN UNCONSOLIDATED INVESTEES (Tables)	Sep. 30, 2014
SCHEDULE OF INVESTMENT IN UNCONSOLIDATED INVESTEES	'
Schedule Of The Financial Position And Results Of Operations	'
	The following is a summary of the financial position and results of operations from our investees (dollars in thousands):

	As of September 30,	2014			2013
	Real estate, net of accumulated depreciation	$	11,014		$	11,006
	Notes receivable		7,122			6,321
	Other assets		30,398			31,683
	Notes payable		(10,521	)		(11,735	)
	Other liabilities		(6,386	)		(7,473	)
	Shareholders' equity		(31,627	)		(29,802	)

	For the Nine Months Ended September 30,		2014			2013
	Revenue	$	36,197		$	34,286
	Depreciation		(863	)		(879	)
	Operating expenses		(33,438	)		(31,385	)
	Interest expense		(661	)		(787	)
	Income from continuing operations		1,235			1,235
	Income from discontinued operations		-			-
	Net income	$	1,235		$	1,235

	Company's proportionate share of earnings (1)	$	247		$	247

	(1) Earnings represents continued and discontinued operations

Summary_Of_Notes_And_Interest_

Summary Of Notes And Interest Payable (Tables)	9 Months Ended
Summary Of Notes And Interest Payable (Tables)	Sep. 30, 2014
Summary Of Notes And Interest Payable	'
Schedule Of Notes And Interest Payable	'
	Below is a summary of our notes and interest payable as of September 30, 2014 (dollars in thousands):

		Notes Payable		Accrued Interest		Total Debt
	Apartments	$	384,445	$	1,051	$	385,496
	Commercial		100,329		437		100,766
	Land		87,526		117		87,643
	Real estate held for sale		42,783		100		42,883
	Real estate subject to sales contract		17,164		1,605		18,769
	Other		23,412		152		23,564

	Total	$	655,659	$	3,462	$	659,121

Reconciles_of_the_related_part

Reconciles of the related party receivable from payable due to Pillar (Tables)	9 Months Ended
	Sep. 30, 2014
Reconciles of the related party receivable from payable due to Pillar	'
Reconciles of the related party receivable from payable due to Pillar	'
	The following table reconciles the beginning and ending balances of accounts receivable from and (accounts payable) to related parties as of September 30, 2014 (dollars in thousands):

		Pillar
	Related party receivable, December 31, 2013	$	14,086
	Cash transfers		39,452
	Advisory fees		(6,670	)
	Fees and commissions		(1,699	)
	Cost reimbursements		(2,550	)
	Interest (to) from advisor		801
	Notes receivable purchased		(19,915	)
	Net income fee		(514	)
	Expenses paid by Advisor		(1,789	)
	Financing (mortgage payments)		1,378
	Sales/purchases transactions		350
	Related party receivable, September 30, 2014	$	22,930

OPERATING_SEGMENTS_Tables

OPERATING SEGMENTS (Tables)	9 Months Ended
OPERATING SEGMENTS (Tables)	Sep. 30, 2014
SCHEDULE OF OPERATING SEGMENTS	'
SCHEDULE OF OPERATING SEGMENTS	'
	Presented below is our reportable segments’ operating income for the three and nine months ended September 30, 2014 and 2013, including segment assets and expenditures (dollars in thousands):

			Commercial
	For the Three Months Ended September 30, 2014		Properties				Apartments				Hotels			Land				Other				Total
	Rental and other property revenues		$	4,609			$	14,704			$	-		$	-			$	13			$	19,326
	Property operating expenses			2,890				7,284				-			585				7				10,766
	Depreciation			1,944				2,537				-			-				(18	)			4,463
	Mortgage and loan interest			1,310				3,768				-			1,058				2,917				9,053
	Deferred borrowing costs amortization			15				540				-			106				187				848
	Loan charges and prepayment penalties			-				1,026				-			18				-				1,044
	Interest income			-				-				-			-				5,106				5,106
	Gain on land sales			-				-				-			40				-				40
	Segment operating income (loss)		$	(1,550	)		$	(451	)		$	-		$	(1,727	)		$	2,026			$	(1,702	)
	Capital expenditures			486				38				-			1,435				-				1,959
	Real estate assets			129,361				345,281				-			165,144				-				639,786

	Property Sales
	Sales price		$	2,582			$	-			$	-		$	4,269			$	-			$	6,851
	Cost of sale			813				-				-			4,229				-				5,042
	Gain on sale		$	1,769			$	-			$	-		$	40			$	-			$	1,809


			Commercial
	For the Three Months Ended September 30, 2013		Properties				Apartments				Hotels			Land				Other				Total
	Rental and other property revenues		$	5,162			$	14,226			$	-		$	45			$	97			$	19,530
	Property operating expenses			3,067				6,784				-			514				22				10,387
	Depreciation			1,541				2,551				-			-				(39	)			4,053
	Mortgage and loan interest			1,330				3,958				-			1,653				2,189				9,130
	Deferred borrowing costs amortizaion			17				(10	)			-			34				206				247
	Loan charges and prepayment penalties			-				-				-			-				49				49
	Interest income			-				-				-			-				3,778				3,778
	Gain on land sales			-				-				-			598				-				598
	Segment operating income (loss)		$	(793	)		$	943			$	-		$	(1,558	)		$	1,448			$	40
	Capital expenditures			2,955				37				-			83				-				3,075
	Real estate assets			140,616				355,251				-			209,788				-				705,655

	Property Sales
	Sales price		$	-			$	-			$	-		$	1,187			$	-			$	1,187
	Cost of sale			-				(127	)			-			589				-				462
	Gain on sale		$	-			$	127			$	-		$	598			$	-			$	725

			Commercial
	For the Nine Months Ended September 30, 2014		Properties				Apartments				Hotels			Land				Other				Total
	Rental and other property revenues		$	14,166			$	43,779			$	-		$	-			$	41			$	57,986
	Property operating expenses			9,206				20,284				-			1,175				12				30,677
	Depreciation			5,515				7,656				-			-				(72	)			13,099
	Mortgage and loan interest			4,424				11,433				-			3,520				7,196				26,573
	Deferred borrowing costs amortization			36				1,480				-			187				375				2,078
	Loan charges and prepayment penalties			9				2,599				-			18				-				2,626
	Interest income			-				-				-			-				15,264				15,264
	Gain on land sales			-				-				-			634				-				634
	Segment operating income (loss)		$	(5,024	)		$	327			$	-		$	(4,266	)		$	7,794			$	(1,169	)
	Capital expenditures			3,476				137				-			1,586				-				5,199
	Real estate assets			129,361				345,281				-			165,144				-				639,786

	Property Sales
	Sales price		$	19,182			$	23,131			$	-		$	4,986			$	-			$	47,299
	Cost of sale			10,410				17,077				-			4,352				-				31,839
	Gain on sale		$	8,772			$	6,054			$	-		$	634			$	-			$	15,460


			Commercial
	For the Nine Months Ended September 30, 2013		Properties				Apartments				Hotels			Land				Other				Total
Rental and other property revenues		$	15,545			$	42,053			$	-		$	101			$	111			$	57,810
Property operating expenses			8,660				19,176				-			1,240				31				29,107
Depreciation			4,318				7,639				-			-				(137	)			11,820
Mortgage and loan interest			4,317				12,261				-			4,692				5,882				27,152
Deferred borrowing costs amortizaion			60				2,233				-			131				248				2,672
Loan charges and prepayment penalties			-				3,937				-			-				229				4,166
Interest income			-				-				-			-				10,831				10,831
Gain on land sales			-				-				-			563				-				563
Segment operating income (loss)		$	(1,810	)		$	(3,193	)		$	-		$	(5,399	)		$	4,689			$	(5,713	)
Capital expenditures			5,869				147				-			364				-				6,380
Real estate assets			140,616				355,251				-			209,788				-				705,655

Property Sales
Sales price		$	26,974			$	50,122			$	-		$	3,437			$	-			$	80,533
Cost of sale			14,914				36,753				-			2,874				-				54,541
Gain on sale		$	12,060			$	13,369			$	-		$	563			$	-			$	25,992

The_Table_Below_Reconciles_Seg

The Table Below Reconciles Segment Information To Consolidated Statements Of Operations (Tables)	9 Months Ended
	Sep. 30, 2014
The Table Below Reconciles Segment Information To Consolidated Statements Of Operations	'
The Table Below Reconciles Segment Information To Consolidated Statements Of Operations	'
	The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations:

		For the Three Months Ended
		September 30,
		2014			2013
	Segment operating income (loss)	$	(1,702	)	$	40
	Other non-segment items of income (expense)
	General and administrative		(1,590	)		(1,867	)
	Net income fee to related party		186			(55	)
	Advisory fee to related party		(2,225	)		(2,584	)
	Other income		1,332			59
	Loss on sale of investments		-			(275	)
	Provision on impairment of notes receivable and real estate assets		-			(1,125	)
	Earnings from unconsolidated investees		320			69
	Litigation settlement		(86	)		(2,739	)
	Income tax benefit		786			402
	Net loss from continuing operations	$	(2,979	)	$	(8,075	)

Reconciles_the_segment_informa

Reconciles the segment information to corresponding amounts in the Consolidated Balance Sheets (Tables)	9 Months Ended
	Sep. 30, 2014
Reconciles the segment information to corresponding amounts in the Consolidated Balance Sheets:	'
Reconciles the segment information to corresponding amounts in the Consolidated Balance Sheets	'
	The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets:

		September 30,
		2014		2013
	Segment assets	$	639,786	$	705,655
	Investments in unconsolidated investees		4,137		10,337
	Notes and interest receivable		148,207		105,139
	Other assets		143,856		244,245
	Total assets	$	935,986	$	1,065,376

The_table_below_reconciles_the

The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations (Tables)	9 Months Ended
	Sep. 30, 2014
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations	'
The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations	'
	The table below reconciles the segment information to the corresponding amounts in the Consolidated Statements of Operations:

		For the Nine Months Ended
		September 30,
		2014			2013
	Segment operating loss	$	(1,169	)	$	(5,713	)
	Other non-segment items of income (expense)
	General and administrative		(6,770	)		(5,911	)
	Net income fee to related party		(514	)		(159	)
	Advisory fee to related party		(6,670	)		(7,625	)
	Other income		1,738			2,734
	Loss on sale of investments		-			(283	)
	Provision on impairment of notes receivable and real estate assets		-			(1,926	)
	Earnings from unconsolidated investees		266			256
	Litigation settlement		3,666			(2,727	)
	Income tax benefit		5,030			8,561
	Net loss from continuing operations	$	(4,423	)	$	(12,793	)

Reconciles_the_segment_informa1

Reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets (Tables)	9 Months Ended
	Sep. 30, 2014
Reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets	'
Reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets	'
	The table below reconciles the segment information to the corresponding amounts in the Consolidated Balance Sheets:

		September 30,
		2014		2013
	Segment assets	$	639,786	$	705,655
	Investments in unconsolidated investees		4,137		10,337
	Notes and interest receivable		148,207		105,139
	Other assets		143,856		244,245
	Total assets	$	935,986	$	1,065,376

DISCONTINUED_OPERATIONS_Tables

DISCONTINUED OPERATIONS (Tables)	9 Months Ended
DISCONTINUED OPERATIONS (Tables)	Sep. 30, 2014
The following table summarizes revenue and expense information for these properties sold and held for sale	'
The following table summarizes revenue and expense information for these properties sold and held for sale	'
	The following table summarizes revenue and expense information for the properties sold and held for sale (dollars in thousands):

		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2014			2013			2014			2013
	Revenues:
	Rental and other property revenues	$	1,416		$	7,945		$	5,328		$	27,405
			1,416			7,945			5,328			27,405
	Expenses:
	Property operating expenses		326			3,729			2,201			12,237
	Depreciation		155			1,251			664			4,300
	General and administrative		65			254			378			803
	Total operating expenses		546			5,234			3,243			17,340

	Other income (expense):
	Other income		(36	)		5			(522	)		35
	Mortgage and loan interest		(351	)		(1,598	)		(1,431	)		(6,623	)
	Deferred borrowing costs amortization		(6	)		(17	)		(336	)		(1,032	)
	Loan charges and prepayment penalties		-			-			-			(3,245	)
	Litigation settlement		-			(80	)		(250	)		(170	)
	Total other expenses		(393	)		(1,690	)		(2,539	)		(11,035	)

	Gain (loss) from discontinued operations before gain on sale of real estate and tax		477			1,021			(454	)		(970	)
	Gain on sale of real estate from discontinued operations		1,769			127			14,826			25,429
	Income tax expense		(786	)		(402	)		(5,030	)		(8,561	)
	Income from discontinued operations	$	1,460		$	746		$	9,342		$	15,898

ORGANIZATION_AND_BASIS_OF_PRES1

ORGANIZATION AND BASIS OF PRESENTATION (Details)	Sep. 30, 2014
ORGANIZATION AND BASIS OF PRESENTATION CONSISTS OF THE FOLLOWING:	'
Percentage of common stock owned by related parties	86.80%
Percentage of common stock owned by ARL of Transcontinental Realty Investors Inc.	80.90%
Owned percentage of subsidiary TCI in Income Opportunity Realty Investors	81.10%
Number of interests in a total property portfolio of income producing properties	45
Number of commercial properties	8
Number of office buildings	4
Number of industrial warehouses	1
Number of retailcenters	3
Area of rental square feet (In Millions)	2.1
Number of apartment communities	37
Apartment communities units total	6,382
Area of acres of developed and undeveloped land	4,130

Summary_of_real_estate_owned_D

Summary of real estate owned (Details) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified	Sep. 30, 2014
Summary of real estate owned details:	'
Apartments	$409,430
Commercial properties	178,824
Land held for development	157,290
Real estate held for sale	46,354
Real estate subject to sales contract	21,806
Total real estate	813,704
Less accumulated deprecation	-129,630
Total real estate, net of depreciation	$684,074

Significant_real_estate_transa

Significant real estate transactions (Details) (USD $)	Sep. 30, 2014	Sep. 23, 2014	Aug. 12, 2014	Jul. 25, 2014	Apr. 03, 2014	Mar. 31, 2014	Mar. 26, 2014	Feb. 06, 2014
In Millions, unless otherwise specified	Sep. 30, 2014	Sep. 23, 2014	Aug. 12, 2014	Jul. 25, 2014	Apr. 03, 2014	Mar. 31, 2014	Mar. 26, 2014	Feb. 06, 2014
Significant real estate transactions	'	'	'	'	'	'	'	'
TCI sold apartment complex (No of units)	'	106	'	'	'	'	'	232
TCI sold acres of land	'	'	'	24.498	'	'	6.314	'
Sale price	'	$8	$2.60	$4.30	$16.60	'	$1.70	$23.10
TCI sold commercial building (square foot)	'	'	20,715	'	512,593	'	'	'
Existing debt secured by the property	'	4.5	'	0.2	'	'	6.6	16.5
Recorded a gain on the sale	'	'	1.8	'	7	'	0.8	6.1
Acres of Land Valwood (Acers)	'	'	'	'	'	16.87	'	'
Purchase price	'	'	'	'	'	3.2	'	'
Sold to related parties acres of land	110	'	'	'	'	'	'	'
Sold to related party apartment complex	1	'	'	'	'	'	'	'
Sold to related party commercial building	1	'	'	'	'	'	'	'
Expendedrelated to the construction or predevelopment of various apartment complexes	$1	'	'	'	'	'	'	'

NOTES_AND_INTEREST_RECEIVABLE_1

NOTES AND INTEREST RECEIVABLE CONSISTS OF THE FOLLOWING (Details) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified	Sep. 30, 2014
Performing loans As Of:	'
Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)	$1,810
Foundation for Better Housing, Inc. (Preserve at Prairie Pointe) (1)	1,156
Foundation for Better Housing, Inc. (Vista Ridge) (1)	3,923
Foundation for Better Housing, Inc. (Vista Ridge) (1)	1,492
HGH Residential, Inc. (Park West I Apts)	1,102
HGH Residential, Inc. (Park West II Apts)	4,771
HGH Residential, Inc. (Tradewinds Dev)	6,131
One Realco Corporation (1) (2)	7,000
Realty Advisors Management, Inc. (1)	20,387
Unified Housing Foundation, Inc. (Cliffs of El Dorado) (1)	2,097
Unified Housing Foundation, Inc. (Echo Station) (1)	1,481
Unified Housing Foundation, Inc. (Inwood on the Park) (1)	5,059
Unified Housing Foundation, Inc. (Kensington Park) (1)	3,936
Unified Housing Foundation, Inc. (Lakeshore Villas) (1)	2,000
Unified Housing Foundation, Inc. (Lakeshore Villas) (2)	9,096
Unified Housing Foundation, Inc. (Limestone Canyon) (1)	3,057
Unified Housing Foundation, Inc. (Limestone Canyon)	4,663
Unified Housing Foundation, Inc. (Limestone Ranch) (1)	2,250
Unified Housing Foundation, Inc. (Limestone Ranch)	6,000
Unified Housing Foundation, Inc. (Parkside Crossing) (1)	2,272
Unified Housing Foundation, Inc. (Sendero Ridge) (1)	5,174
Unified Housing Foundation, Inc. (Sendero Ridge)	4,812
Unified Housing Foundation, Inc. (Timbers at the Park) (1)	1,323
Unified Housing Foundation, Inc. (Tivoli) (1)	7,966
Unified Housing Foundation, Inc. (Reserve at White Rock Phase I) (1)	2,485
Unified Housing Foundation, Inc. (Reserve at White Rock Phase II) (1)	2,555
Unified Housing Foundation, Inc. (Trails at White Rock) (1)	3,815
Unified Housing Foundation, Inc. (1)	6,000
Unified Housing Foundation, Inc. (1)	1,261
Unified Housing Foundation, Inc	17,928
Unified Housing Foundation, Inc	3,657
Other non-related party notes	3,007
Other related party notes (1)	2,117
Other related party notes (1)	3,568
Accrued interest:	7,984
Total Performing	163,335
Leman Development, Ltd (2)	1,500
Tracy Suttles (2)	1,077
Other non-related party notes	507
Accrued interest	67
Total Non-Performing	3,151
Allowance for estimated losses	-18,279
Total Non-Performing loans:	$148,207
(1) Related Party Notes	'
(2) An allowance was taken for estimated losses at full value of note	'

Investment_In_UnConsolidated_J

Investment In UnConsolidated Joint Ventures And Investees consists of the following (Details)	Sep. 30, 2014	Sep. 30, 2013
Investment In UnConsolidated Joint Ventures And Investees consists of the following:	'	'
Gruppa Florentina, LLC	20.00%	20.00%

Summary_of_the_unconsolidated_

Summary of the unconsolidated subsidiaries and investees as follows (Details) (USD $)	Sep. 30, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Summary of the unconsolidated subsidiaries and investees as follows:	'	'
Real estate, net of accumulated depreciation	$11,014	$11,006
Notes receivable	7,122	6,321
Other assets	30,398	31,683
Notes payable	-10,521	-11,735
Other liabilities	-6,386	-7,473
Shareholders' equity	($31,627)	($29,802)

Summary_of_the_results_of_oper

Summary of the results of operations from unconsolidated subsidiaries and investees as follows (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Summary of the results of operations from unconsolidated subsidiaries and investees as follows:	'	'
Revenue	$36,197	$34,286
Depreciation	-863	-879
Operating expenses	-33,438	-31,385
Interest expense	-661	-787
Income from continuing operations	1,235	1,235
Income from discontinued operations	0	0
Net income	1,235	1,235
Company's proportionate share of earnings (losses)	$247	$247

Recovered_Sheet1

Summary of notes and interest payable as follows (Details) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified	Sep. 30, 2014
Notes Payable:	'
Apartments	$384,445
Commercial	100,329
Land held for development	87,526
Real estate held for sale	42,783
Real estate subject to sales contract	17,164
Other	23,412
Total	655,659
Accrued Interest:	'
Apartments	1,051
Commercial	437
Land held for development	117
Real estate held for sale	100
Real estate subject to sales contract	1,605
Other	152
Total	3,462
Total Debt:	'
Apartments	385,496
Commercial	100,766
Land held for development	87,643
Real estate held for sale	42,883
Real estate subject to sales contract	18,769
Other	23,564
Total	$659,121

RELATED_PARTY_TRANSACTIONS_rel

RELATED PARTY TRANSACTIONS related party receivable from and payable to Pillar (Details) (Pillar, USD $)	Pillar
In Thousands	USD ($)
Related party receivable, at Dec. 31, 2013	$14,086
Cash transfers	39,452
Advisory fees	-6,670
Fees and commissions	-1,699
Cost reimbursements	-2,550
Interest (to) from advisor	801
Notes receivable purchased	-19,915
Net income fee	-514
Expenses paid by Advisor	-1,789
Financing (mortgage payments)	1,378
Sales/purchases transactions	350
Related party receivable, at Sep. 30, 2014	$22,930

Reconciles_the_segment_informa2

Reconciles the segment information to the corresponding amounts during the period (Details) (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Reconciles the segment information to the corresponding amounts during the period:	'	'
Segment operating loss	($1,169)	($5,713)
Other non-segment items of income (expense):	'	'
General and administrative	-6,770	-5,911
Net income fee to related party	-514	-159
Advisory fee to related party	-6,670	-7,625
Other income	1,738	2,734
Loss on sale of investments	0	-283
Provision on impairment of notes receivable and real estate assets	0	-1,926
Earnings from unconsolidated investees	266	256
Litigation settlement	3,666	-2,727
Income tax benefit	5,030	8,561
Net income (loss) from continuing operations	($4,423)	($12,793)

Operating_Segments_to_the_corr

Operating Segments to the corresponding amounts Narrative (Details) (USD $)	Sep. 30, 2014	Sep. 30, 2013
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Operating Segments to the corresponding amounts in narrative:	'	'
Segment assets	$639,786	$705,655
Investments in unconsolidated investees	4,137	10,337
Notes and interest receivable	148,207	105,139
Other assets	143,856	244,245
Total Assets	$935,986	$1,065,376

DISCONTINUED_OPERATIONS_Detail

DISCONTINUED OPERATIONS (Details) (USD $)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues:	'	'	'	'
Rental and other property revenues	$1,416	$7,945	$5,328	$27,405
Total Revenues	1,416	7,945	5,328	27,405
Expenses:	'	'	'	'
Property operating expenses	326	3,729	2,201	12,237
Depreciation	155	1,251	664	4,300
General and administrative	65	254	378	803
Total operating expenses	546	5,234	3,243	17,340
Other income (expense):	'	'	'	'
Other income	-36	5	-522	35
Mortgage and loan interest	-351	-1,598	-1,431	-6,623
Deferred borrowing costs amortization	-6	-17	-336	-1,032
Loan charges and prepayment penalties	0	0	0	-3,245
Litigation settlement	0	-80	-250	-170
Total other expenses	-393	-1,690	-2,539	-11,035
Gain (loss) from discontinued operations before gain on sale of real estate and taxs	477	1,021	-454	-970
Gain on sale of real estate from discontinued operations	1,769	127	14,826	25,429
Income tax expense	-786	-402	-5,030	-8,561
Income from discontinued operations	$1,460	$746	$9,342	$15,898

COMMITMENTS_AND_CONTINGENCIES_1

COMMITMENTS AND CONTINGENCIES AND LIQUIDITY AS FOLLOWS (Details) (USD $)	Dec. 31, 2013	Feb. 13, 2013	Dec. 31, 2012	Jan. 31, 2012	Oct. 31, 2011	Dec. 17, 2007
COMMITMENTS AND CONTINGENCIES AND LIQUIDITY AS FOLLOWS:	'	'	'	'	'	'
Notes payable for LK Four Hickory, LLC	'	'	'	'	'	$28,000,000
Notes payable current outstanding balance	'	'	'	'	'	22,400,000
Total awarded including damages and interest awarded to the Clapper Entities	'	'	'	'	74,000,000	'
Damages awarded to the clapper entities	'	'	'	'	26,000,000	'
Interest awarded to the clapper entities	'	'	'	'	48,000,000	'
Total assets and net worth	'	'	10,000,000	'	'	'
Reserved value represents 100% of both assets and book value	'	'	0	'	'	'
Sold ART and subsidiaries for note	'	'	10,000,000	10,000,000	'	'
Written off the unreserved balance	5,300,000	'	'	'	'	'
Original Loan Commitment Were To Be Made To The Entities	'	160,000,000	'	'	'	'
Damages to TCI increased costs	'	960,646	'	'	'	'
Damages to TCI loss opportunity	'	11,161,520	'	'	'	'
TCI was entitled to damages for "lost opportunities" relating to tenant improvements and awarded	'	$252,577	'	'	'	'

EARNINGS_PER_SHARE_Details

EARNINGS PER SHARE (Details)	Sep. 30, 2014
EARNINGS PER SHARE DETAILS:	'
Series A 10% Cumulative Convertible Preferred stock shares outstanding	2,461,252
Shares converted to Common Stock of the average daily closing price percent	90.00%
Preferred Stock held by ART Edina owned subsidiaries	300,000
Preferred Stock held by ART Hotel Equities owned subsidiaries	600,000
Series A Convertible Preferred stock owned by RAI	2,451,435
Seies A Shares converted to Common Stock	890,797
Issuance of new shares of common stock ARI	2,502,230
Series A Convertible Preferred stock shares outstanding	1,560,638
Shares of Series K convertible preferred stock, which are outstanding	135,000
Stock Options Outstanding	1,000

SUBSEQUENT_EVENTS_TRANSACTIONS

SUBSEQUENT EVENTS TRANSACTIONS (Details) (USD $)	Sep. 30, 2014
In Millions, unless otherwise specified	Sep. 30, 2014
SUBSEQUENT EVENTS TRANSACTIONS:	'
TCI sold apartment complex (units)	290
Commercial building sales price	$52.80
Recorded a gain on the sale	26.7
Sales contract to sell Apartment complex (units)	216
Sunset Lodge, for a sales price to an independent third party (million)	39.4
Recordred gain on sale in millions	19.7
Acres of Land Sunset Lodge land	5.98
Sale price	1.2
Recorded a gain on the sale	$0.60