SCHEDULE: Transcontinental Realty Investors: Major Shareholder Boosts Stake

American Realty Investors, Inc. increased its beneficial ownership in Transcontinental Realty Investors Inc. to 62.6% through a recent acquisition, further consolidating control.

Summary

• American Realty Investors, Inc. (ARL) acquired an additional 70,023 shares of Transcontinental Realty Investors Inc. (TCI) common stock on January 12, 2026.
• The acquisition was a privately negotiated transaction with ABC Land & Development, Inc. (ABCLD) at a price of $55.50 per share.
• This transaction increased ARL's direct ownership to 5,408,515 shares, representing 62.6% of TCI's outstanding common stock.
• Including shares held by its wholly-owned subsidiary, Transcontinental Realty Acquisition Corporation (TRAC), ARL's beneficial ownership totals 6,791,741 shares, or 78.6% of TCI.
• May Realty Holdings, Inc. (MRHI), which indirectly controls ARL through its subsidiary Realty Advisors, Inc. (RAI), beneficially owns 7,487,737 shares, representing 86.7% of TCI.
• ARL utilized its own working capital for the acquisition.
• EQK Holdings, Inc. ceased to be a reporting person as of December 31, 2023, after transferring its 5,300 shares to ARL.

Sentiment

Score: 6

Explanation: The increased stake by the controlling entity is generally positive for stability and long-term strategy alignment. However, the significant portion of shares pledged as collateral introduces a notable risk, preventing a higher score.

Positives

• Increased ownership by a major shareholder (ARL) indicates continued confidence in Transcontinental Realty Investors Inc.
• The acquisition price of $55.50 per share is significantly higher than ARL's previous average acquisition price of $31.99 for shares acquired prior to April 29, 2025, potentially signaling a higher valuation perception.

Negatives

• A significant portion of shares held by Reporting Persons are subject to accommodation pledges for loans to others or may be collateral for margin arrangements, which could pose a risk in adverse market conditions.
• Realty Advisors, Inc. has 102,369 shares pledged to ABC Land & Development, Inc. in connection with a loan.
• American Realty Investors, Inc. has 846,202 shares pledged to ABC Land & Development, Inc. and 813,663 shares pledged to RCM HC for loans to others.

Risks

• Shares held by Reporting Persons are subject to accommodation pledges and may be collateral for borrowings, which could lead to forced sales if loan covenants are breached or margin calls are not met.
• The concentration of ownership by a few related entities (May Realty Holdings, Inc. and its subsidiaries) could limit liquidity for minority shareholders and influence corporate decisions.

Future Outlook

The Reporting Persons currently have no specific plans or proposals for major corporate actions such as mergers, liquidations, or significant changes to the Issuer's business. However, they may consider purchasing or selling additional shares in the future if attractive opportunities arise.

Management Comments

• The Reporting Persons have no present plans or proposals which would result in any of the actions or matters described in (b) through (j) above, but some of the Reporting Persons may, if the opportunity becomes available at attractive prices, purchase or sell Shares in the future.

Industry Context

This filing reflects a continued consolidation of ownership within the real estate investment sector, where major shareholders often increase stakes in their controlled entities. The transaction highlights the strategic importance of Transcontinental Realty Investors Inc. to its parent and affiliated companies, American Realty Investors, Inc. and May Realty Holdings, Inc., reinforcing their long-term commitment to the asset.

Comparison to Industry Standards

• N/A

Legal Proceedings

• ABC Land & Development, Inc. previously acquired the 70,023 shares through a resolution/settlement of litigation in October 2025.

Related Party Transactions

• American Realty Investors, Inc. (ARL) acquired shares from ABC Land & Development, Inc. (ABCLD).
• Realty Advisors, Inc. (RAI) has shares pledged to ABCLD in connection with a loan to RAI.
• ARL has shares pledged to ABCLD and RCM HC for loans to others.
• ARL, TRAC, EQK, RAI, and MRHI are all related entities, with MRHI indirectly controlling ARL.

Stakeholder Impact

• Shareholders: Increased control by the majority shareholder group may reduce liquidity for minority shareholders and could influence future corporate decisions, potentially limiting the influence of independent shareholders. The pledged shares introduce a risk of market overhang if forced sales occur.
• Creditors: The pledging of shares as collateral for loans could impact the creditworthiness of the entities involved, depending on the terms and conditions of the loans and the financial health of the borrowers.

Next Steps

• Reporting Persons may purchase or sell additional shares of Transcontinental Realty Investors Inc. in the future, depending on market opportunities.

Key Dates

Recommendation

The filing indicates a further consolidation of ownership by the controlling group, which can provide stability but also reduce liquidity for minority shareholders. The acquisition price of $55.50 per share is higher than previous purchases, suggesting a potentially increased valuation perception by the controlling entity. However, the significant portion of shares pledged as collateral introduces a notable risk. Given the high concentration of ownership and the existing pledges, a 'hold' recommendation is appropriate for existing shareholders to monitor the implications of increased control and potential risks from pledged shares, while new investors should exercise caution due to limited float and potential governance implications.

Keywords

Transcontinental Realty Investors, TCI, American Realty Investors, ARL, Schedule 13D, Share Acquisition, Beneficial Ownership, Real Estate Investment, Corporate Control, SEC Filing