American Realty Investors, Inc. (‘ARL’) operates as a fully integrated externally managed real estate company.
The company operates high-quality multifamily and commercial properties throughout the Southern United States. It also invests in mortgage notes receivable, and in land that is either held for appreciation, or development.
Portfolio Composition
As of December 31, 2024, the company’s property portfolio consisted of commercial properties, consisting of four office buildings with an agg...
American Realty Investors, Inc. (‘ARL’) operates as a fully integrated externally managed real estate company.
The company operates high-quality multifamily and commercial properties throughout the Southern United States. It also invests in mortgage notes receivable, and in land that is either held for appreciation, or development.
Portfolio Composition
As of December 31, 2024, the company’s property portfolio consisted of commercial properties, consisting of four office buildings with an aggregate of approximately 1,060,236 rentable square feet; fourteen multifamily properties in operation, comprising 2,328 units; four multifamily properties under development, comprising 906 units; and approximately 1,804 acres of developed and undeveloped land.
On December 13, 2024, the company sold 30 single-family lots from its holdings in Windmill Farms.
Development Activities
On October 21, 2024, the company entered into a development agreement with Pillar to build a 234-unit multifamily property in Dallas, Texas (‘Mountain Creek’), that is expected to be completed in 2026.
Business Plan
The company’s business strategy is to maximize long-term value for its stockholders by the acquisition, development, and ownership of income-producing multifamily properties in the secondary markets of the Southern United States. It generally holds its investments in real estate for the long term.
The company’s income-producing real estate is managed by external management companies. The company’s multifamily properties, and one of its commercial properties, are managed by third-party companies, and three of its commercial properties are managed by Regis Realty Prime, LLC (‘Regis’), collectively referred to as the ‘management companies’. The management companies conduct all of the administrative functions associated with the company’s property operations, including billing, collections, and response to tenant inquiries. Regis receives property management fees, construction management fees, and leasing commissions in accordance with the terms of its property-level management agreement, and is also entitled to receive real estate brokerage commissions in accordance with the terms of a non-exclusive brokerage agreement.
The company also invests in notes receivable that are collateralized by investments in land and/or multifamily properties. These investments have included notes receivable from Unified Housing Foundation, Inc. (‘UHF’). Due to the company’s ongoing relationship, and significant investment in the performance of the collateral secured under the notes receivable, it considers UHF to be a related party.
The company finances its acquisitions through operating cash flow, proceeds from the sale of land and income-producing properties, and debt, which is financing primarily in the form of property-specific, first-lien mortgage loans from commercial banks and institutional lenders. Most of the mortgage notes payable on the company’s multifamily properties are insured with the Department of Housing and Urban Development (‘HUD’). HUD-backed mortgage notes payable generally provide for lower interest rates, and longer terms than conventional debt. However, HUD-insured mortgage notes payable are subject to extensive regulations over the origination, and transfers of mortgage notes payable, as well as restrictions on the amount and timing of distribution of cash flows from the underlying real estate. When the company sells properties, it may carry a portion of the sales price, generally in the form of a short-term, interest-bearing seller-financed note receivable, secured by the property being sold.
Historically, the company has previously increased its portfolio of multifamily properties by partnering with third-party developers (‘Developers’) to construct multifamily properties on its behalf. In these instances, it worked with the Developer on the location, design, construction budget, and initial lease plan for a potential development project (‘Development Project’). The company has also used Pillar as the Developer for its land development projects, including Windmill Farms, and has elected to use Pillar as the Developer for its current portfolio multifamily development projects.
Government Regulations
The company’s properties are subject to various covenants, laws, ordinances, and regulations, including regulations relating to common areas, fire and safety requirements, various environmental laws, HUD, the Americans with Disabilities Act, and rent control laws.
Segments
The company operates two business segments: the acquisition, development, ownership, and management of multifamily properties, and the acquisition, development, ownership, and management of commercial properties, which are primarily office properties. The services for the company’s commercial segment include primarily rental of office space, and other tenant services, including parking and storage space rental. The services for the company’s multifamily segment include primarily rental of apartments, and other tenant services, including parking and storage space rental.
History
American Realty Investors, Inc. was founded in 1999. The company was incorporated in 1999.
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