SCHEDULE: Transcontinental Realty Investors Ownership Update

American Realty Investors and affiliates increase their beneficial ownership in Transcontinental Realty Investors, reaching 87.2% control.

Summary

• This is Amendment No. 58 to the Schedule 13D filing for Transcontinental Realty Investors Inc (TCI), correcting certain matters from a prior filing and reflecting recent share acquisitions.
• American Realty Investors, Inc. (ARL) acquired 70,023 shares (0.81%) of TCI common stock from ABC Land & Development, Inc. on January 12, 2026, in a privately negotiated transaction at $55.50 per share.
• Realty Advisors, Inc. (RAI) acquired 75,068 shares (0.89694%) between October 4, 2023, and April 29, 2025, at an average price of $31.99 per share.
• ARL now beneficially owns 5,458,515 shares (63.18%) of TCI.
• Transcontinental Realty Acquisition Corporation (TRAC) beneficially owns 1,383,226 shares (16.01%) of TCI.
• RAI beneficially owns 695,996 shares (8.06%) of TCI.
• May Realty Holdings, Inc. (MRHI), the ultimate parent, beneficially owns an aggregate of 7,537,737 shares (87.2%) of TCI, which includes shares held by ARL, TRAC, and RAI.
• EQK Holdings, Inc. ceased to be a Reporting Person on December 31, 2023, after transferring its 5,300 shares to ARL.
• The total number of TCI shares issued and outstanding is believed to be 8,639,316.

Sentiment

Score: 6

Explanation: The filing indicates a consolidation of control by related entities, which can be seen as a positive for stability but also highlights significant related-party transactions and pledges, introducing some risk. The higher recent acquisition price by ARL is a positive signal for TCI's valuation.

Positives

• Increased beneficial ownership by key entities (ARL, RAI, MRHI) demonstrates continued commitment to TCI.
• ARL's recent acquisition price of $55.50 per share is significantly higher than RAI's average acquisition price of $31.99, potentially indicating a higher perceived value for TCI shares.

Negatives

• A significant portion of shares held by RAI and ARL are subject to accommodation pledges for loans, which could pose a risk if loan terms are not met.
• The complex ownership structure and related party transactions (e.g., pledges to ABCLD) could raise corporate governance concerns.

Risks

• 102,369 shares owned by Realty Advisors, Inc. are subject to an accommodation pledge to ABC Land & Development, Inc. in connection with a loan to Realty Advisors, Inc.
• 846,202 shares held by American Realty Investors, Inc. are subject to accommodation pledges to ABC Land & Development, Inc. for loans to others.
• 813,663 shares held by American Realty Investors, Inc. are subject to accommodation pledges to RCM HC for loans to others.
• Remaining shares held by American Realty Investors, Inc., Transcontinental Realty Acquisition Corporation, and Realty Advisors, Inc. may be deemed 'collateral' for borrowings via margin or other account arrangements, which could lead to forced sales if margin calls are not met.

Future Outlook

The Reporting Persons currently have no present plans or proposals for major corporate actions but may purchase or sell additional shares in the future if attractive opportunities arise.

Industry Context

This filing reflects an internal restructuring and increased control within a group of related real estate investment entities. The continued consolidation of ownership by American Realty Investors and its affiliates in Transcontinental Realty Investors suggests a long-term strategic alignment within their real estate portfolio, rather than a response to broader industry trends or competitive pressures.

Corporate Governance

Legal Proceedings

• ABC Land & Development, Inc. acquired 70,023 shares of TCI in the fourth quarter of 2025 pursuant to a resolution/settlement of litigation.

Related Party Transactions

• American Realty Investors, Inc. (ARL) acquired 70,023 shares from ABC Land & Development, Inc. (ABCLD), which is also a party to accommodation pledges involving ARL and Realty Advisors, Inc. (RAI).
• RAI is an indirect subsidiary of May Realty Holdings, Inc. (MRHI) and owns over 80% of ARL. Transcontinental Realty Acquisition Corporation (TRAC) and EQK Holdings, Inc. (EQK) are wholly-owned subsidiaries of ARL, indicating a highly intertwined group of entities.
• Accommodation pledges exist between RAI and ABCLD, and ARL and ABCLD/RCM HC, for loans to others or RAI itself.

Stakeholder Impact

• Shareholders: Increased control by the Reporting Persons (87.2% aggregate ownership by MRHI and its subsidiaries) reduces the public float and liquidity for minority shareholders. The significant number of pledged shares could introduce volatility if loans are called or defaults occur.
• Creditors: The pledges of TCI shares as collateral for loans to related parties (RAI, ABCLD, RCM HC) directly impact the security available to these creditors.

Next Steps

• Reporting Persons may purchase or sell additional shares of TCI in the future if opportunities become available at attractive prices.

Key Dates

Recommendation

The filing indicates a further consolidation of control by American Realty Investors and its affiliates, with May Realty Holdings, Inc. now beneficially owning 87.2% of Transcontinental Realty Investors. While the recent acquisition price by ARL at $55.50 per share suggests a positive valuation, the substantial portion of shares pledged as collateral for various loans introduces a notable risk factor. The high level of insider ownership and related-party transactions, coupled with the potential for forced sales due to pledges, creates a complex risk/reward profile. Given the existing high control and the disclosed risks, a 'hold' recommendation is appropriate for existing shareholders, while new investors should exercise caution due to limited liquidity and governance complexities.

Keywords

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