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                                                                    EXHIBIT 99.1



                              TREEHOUSE APARTMENTS

                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          YEAR ENDED NOVEMBER 30, 1996



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                          Independent Auditors' Report



To the Board of Trustees
Transcontinental Realty Investors, Inc.

We have audited the accompanying statement of revenues and direct operating
expenses of Treehouse Apartments for the year ended November 30, 1996. This
statement of revenues and direct operating expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating expenses based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of revenues and direct operating expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
presentation. We believe that our audit provides a reasonable basis for our
opinion.

The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Transcontinental Realty Investors, Inc.) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.

In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of Treehouse Apartments for the year ended November 30, 1996,
in conformity with generally accepted accounting principles.




                                            Farmer, Fuqua, Hunt & Munselle, P.C.

Dallas, Texas
April 10, 1997


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                              TREEHOUSE APARTMENTS
                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          Year Ended November 30, 1996




                                                       
REVENUES
         Net rental revenues                         $937,480
         Other revenues                                44,420
                                                     --------

               Total revenues                         981,900

DIRECT OPERATING EXPENSES
         Repairs and maintenance                      237,458
         Utilities                                    142,140
         Salaries and benefits                        112,019
         Property taxes                                63,952
         Insurance                                     22,752
                                                     --------

               Total direct operating expenses        578,321
                                                     --------

REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES      $403,579
                                                     ========





         The accompanying notes are an integral part of this statement.


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                              TREEHOUSE APARTMENTS
                         NOTES TO STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                                November 30, 1996


NOTE 1:  ORGANIZATION AND BASIS OF PRESENTATION

         The Treehouse Apartments is a 160-unit apartment complex located in
         Irving, Texas. During 1996, the property was owned by Lennar Treehouse
         Limited Partnership.

         The accompanying financial statement does not include a provision for
         depreciation and amortization, bad debt expense, interest expense or
         income taxes. Accordingly, this statement is not intended to be a
         complete presentation of the results of operations.

NOTE 2:  ACCOUNTING ESTIMATES

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of revenues and
         expenses during the reporting period. Actual results could differ from
         those estimates.

NOTE 3:  OTHER REVENUES

         Other revenues consist of the following:



                                                            
               Late and NSF charges                        $18,450
               Vending and cleaning revenue                 13,210
               Miscellaneous                                12,760
                                                           -------

                                                           $44,420
                                                           =======



NOTE 4:  SUBSEQUENT EVENT

         The property was sold to Transcontinental Realty Investors, Inc., a
         Nevada corporation, on May 1, 1997.