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TRANSCONTINENTAL REALTY INVESTORS INC

TRANSCONTINENTAL REALTY INVESTORS INCTCI财报

NYSE · 金融 · 房地产投资信托

Transcontinental Realty Investors Inc. (TCI) is a U.S.-based real estate investment firm that owns, operates and develops a diversified portfolio of residential, commercial and mixed-use properties across core U.S. regional markets. It pursues long-term value growth via strategic property acquisitions, efficient asset management and tailored leasing solutions for individual and business tenants.

What changed in TRANSCONTINENTAL REALTY INVESTORS INC's 10-K — 2024 vs 2025

Top changes in TRANSCONTINENTAL REALTY INVESTORS INC's 2025 10-K

102 paragraphs added · 110 removed · 71 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Our multifamily properties and one of our commercial properties are managed by third-party companies and three of our commercial properties are managed by Regis Realty Prime, LLC (“Regis"), collectively the "management companies". The management companies conduct all of the administrative functions associated with our property operations (including billing, collections, and response to tenant inquiries).
All of our multifamily properties and one of our commercial properties are managed by third-party companies and three of our commercial properties are managed by Regis Realty Prime, LLC (“Regis"), collectively the "Management Companies". The Management Companies conduct all of the administrative functions associated with our property operations (including billing, collections, and response to tenant inquiries).
To ensure that the Development Project was constructed on plan, on time and on budget, we entered into a convertible loan arrangement with the Developer, whereby we advanced the out-of-pocket capital to the developer at nominal rate of interest with an option to convert the loan into a 100% ownership interest in the entity that holds the Development Project for a price equal to development cost.
To ensure that a Development Project was constructed on plan, on time and on budget, we often entered into a convertible loan arrangement with the Developer, whereby we advanced the out-of-pocket capital to the developer at nominal rate of interest with an option to convert the loan into a 100% ownership interest in the entity that held the Development Project for a price equal to development cost.
To the extent that we seek to sell any properties, the sales prices for the properties may be affected by competition from other real estate owners and financial institutions also attempting to sell properties in areas where our properties are located, as well as aggressive buyers attempting to dominate or penetrate a particular market.
“Risk Factors”. 5 To the extent that we seek to sell any properties, the sales prices for the properties may be affected by competition from other real estate owners and financial institutions also attempting to sell properties in areas where our properties are located, as well as aggressive buyers attempting to dominate or penetrate a particular market.
We may also from time to time enter into partnerships or joint ventures with various investors to acquire land or income-producing properties, or to sell interests in some of our properties. Historically, we have previously increased our portfolio of multifamily properties by partnering with third-party developers (“Developers”) to construct multifamily properties on our behalf.
We may also from time to time enter into partnerships or joint ventures with various investors to acquire land or income-producing properties, or to sell interests in some of our properties. We have increased our portfolio of multifamily properties by partnering with third-party developers (“Developers”) to construct the properties on our behalf.
We believe that beyond general economic circumstances and trends, the degree to 5 which properties are renovated or new properties are developed in the competing submarket are also competitive factors. Refer to Part I, Item1A. “Risk Factors”.
We believe that beyond general economic circumstances and trends, the degree to which properties are renovated or new properties are developed in the competing submarket are also competitive factors. Refer to Part I, Item1A.
HUD back mortgage notes payable generally provides for lower interest rates and longer term than conventional debt. However, HUD insured mortgage notes payable are subject to extensive regulations over the origination and transfers of mortgage notes payable and restrictions on the amount and timing of distribution of cash flows from the underlying real estate.
HUD back mortgage loans generally provides for lower interest rates and longer term than conventional loans. However, HUD insured mortgage loans are subject to extensive regulations over the origination and transfers of mortgage loans and restrictions on the amount and timing of distribution of cash flows from the underlying real estate.
We finance our 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 our multifamily properties are insured with the Department of Housing and Urban Development ("HUD").
We finance our business activities from 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 loans on our multifamily properties are insured with the Department of Housing and Urban Development ("HUD").
In these instances, we worked with the Developer on the location, design, construction budget and initial lease plan for a potential development project (“Development Project”). The construction cost included a development fee paid to the Developer.
In these instances, we determined the location, design, construction budget and initial lease plan for a potential development project (“Development Project”). The cost of the Development Project included a development fee paid to the Developer.
Government Regulations Our 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.
Government Regulations Our 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 American Disabiltities Act ("ADA") and rent control laws.
In determining whether a particular investment opportunity will be allocated to ARL or us, management considers the respective investment objectives of each company and the appropriateness of a particular investment in light of each company’s existing real estate and mortgage notes receivable portfolio.
Our officers and directors owe fiduciary duties to both ARL and us under applicable law. In determining whether a particular investment opportunity will be allocated to ARL or us, management considers the respective investment objectives of each company and the appropriateness of a particular investment in light of each company’s existing real estate and mortgage notes receivable portfolio.
“Certain Relationships and Related Transactions, and Director Independence”, we compete with related parties of Pillar having similar investment objectives related to the acquisition, development, disposition, leasing and financing of real estate and real estate-related investments. In resolving any potential conflicts of interest which may arise.
“Certain Relationships and Related Transactions, and Director Independence”, we compete with related parties of Pillar having similar investment objectives related to the acquisition, development, disposition, leasing and financing of real estate and real estate-related investments.
In addition, we also opportunistically acquire land for future development. From time to time and when we believe it appropriate to do so, we sell land and income-producing properties. We also invest in mortgage receivables. Our income producing real estate is managed by external management companies.
In addition, we also opportunistically acquire land for future development. From time to time and when we believe it appropriate to do so, we sell land and income-producing properties. We also invest in mortgage receivables.
Regis receives property management fees in accordance with the terms of its property-level management agreement. Refer to Part III, Item 10. “Directors, Executive Officers and Corporate Governance – Property Management and Real Estate Brokerage”. We also invest in notes receivables that are collateralized by investments in land and/or multifamily properties.
Regis receives property management fees in accordance with the terms of its property-level management agreement. Refer to Part III, Item 10. "Directors, Executive Officers and Corporate Governance – Property Management". We also invest in notes receivables that are collateralized by investments in land and/or multifamily properties. These investments include notes receivables from Unified Housing Foundation, Inc. ("UHF").
Pillar has informed us that it intends to exercise its best judgment as to what is fair and reasonable under the circumstances in accordance with applicable law.
In resolving any potential conflicts of interest which may arise, Pillar has informed us that it intends to exercise its best judgment as to what is fair and reasonable under the circumstances in accordance with applicable law.
These investments have included notes receivables from Unified Housing Foundation, Inc. ("UHF"). Due to our ongoing relationship and significant investment in the performance of the collateral secured under the notes receivable, we consider UHF to be a related party.
Due to our ongoing relationship and significant investment in the performance of the collateral secured under the notes receivable, we consider UHF to be a related party.
As of December 31, 2024, we owned approximately 83.2% of the common stock of Income Opportunity Realty Investors, Inc. (“IOR”), a Nevada Corporation, whose common stock is listed and traded on the NYSE American under the symbol “IOR”. Accordingly, we include IOR’s financial results in our consolidated financial statements. IOR’s primary business is investing in mortgage loans and real estate.
Accordingly, we include IOR’s financial results in our consolidated financial statements. IOR’s primary business is investing in mortgage loans and real estate. Controlling Stockholder American Realty Investors, Inc. (“ARL”), a Nevada Corporation, whose common stock is listed and traded on the New York Stock Exchange ("NYSE") under the symbol “ARL”, owns approximately 78.4% of our common stock.
Portfolio Composition At December 31, 2024, our property portfolio consisted of: • Commercial pr operties , 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.
Portfolio Composition At December 31, 2025, our property portfolio consisted of: • Thirteen multifamily properties in operation, comprising 2,128 units; • Three multifamily properties in lease-up, comprising 672 units; • One multifamily property under development, comprising 234 units; • Commercial pr operties , consisting of four office buildings with an aggregate of approximately 1,001,549 rentable square feet; and • Approximately 1,792 acres of developed and undeveloped land.
We have also used Pillar as the Developer for our land development projects, including Windmill Farms and have elected to use Pillar as the Developer for our current portfolio multifamily development projects. We believe direct involvement through Pillar enables us to achieve higher construction quality, greater control over construction schedules and cost savings.
We have also contracted Pillar to construct multifamily properties on our behalf and to manage land development projects, including Windmill Farms. We believe direct involvement through Pillar enables us to achieve higher construction quality, greater control over construction schedules and cost savings.
As of December 31, 2024, we have incurred a total of $5.0 million in development costs. 4 Business Plan and Investment Policy Our business strategy is to maximize long-term value for our stockholders by the acquisition, development and ownership of income-producing multifamily properties in the secondary markets of the Southern United States.
We substantially completed the construction of Alera , Bandera Ridge and Merano in 2025, and expect to complete Mountain Creek in 2026. 4 Business Plan and Investment Policy Our business strategy is to maximize long-term value for our stockholders by the acquisition, development and ownership of income-producing multifamily properties in the secondary markets of the Southern United States.
“Certain Relationships and Related Transactions, and Director Independence”, our officers and directors also serve as officers and directors of ARL. ARL has business objectives similar to ours. Our officers and directors owe fiduciary duties to both ARL and us under applicable law.
Accordingly, our financial results are included in the consolidated financial statements of ARL’s Form 10-K and tax filings. As described in Part III, Item 13. “Certain Relationships and Related Transactions, and Director Independence”, our officers and directors also serve as officers and directors of ARL. ARL has business objectives similar to ours.
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As used herein, the terms “TCI”, “the Company”, “We”, “Our”, or “Us” refer to the Company. Corporate Structure Substantially all of our assets are held by our wholly-owned subsidiary, Southern Properties Capital Ltd. (“SPC”), which was formed to raise funds by issuing non-convertible bonds that were listed and traded on the Tel-Aviv Stock Exchange ("TASE").
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As used herein, the terms “TCI”, “the Company”, “We”, “Our”, or “Us” refer to the Company. Corporate Structure As of December 31, 2025, we owned approximately 84.6% of the common stock of Income Opportunity Realty Investors, Inc. (“IOR”), a Nevada Corporation, whose common stock is listed and traded on the New York Stock Exchange American under the symbol “IOR”.
Removed
Controlling Stockholder American Realty Investors, Inc. (“ARL”), a Nevada Corporation, whose common stock is listed and traded on the NYSE under the symbol “ARL”, and its affiliates own approximately 90.8% of our common stock. Accordingly, our financial results are included in the consolidated financial statements of ARL’s Form 10-K and tax filings. As described in Part III, Item 13.
Added
Recent Activity Disposition Activities • On March 25, 2025 , we received $3.5 million in proceeds from a condemnation settlement that provided for the conveyance of 11.2 acres from our holdings in Windmill Farms, resulting in a gain on sale of $3.1 million. • On October 10, 2025, we sold Villas at Bon Secour , a 200 unit multifamily property in Gulf Shores, Alabama, for $28.0 million (See " Financing Activities "), resulting in a gain on sale of $12.2 million . • During the year ended December 31, 2025, we sold 72 single family lots from our holdings in Windmill Farms for $3.3 million, resulting in a gain on sale of $2.6 million.
Removed
Recent Activity Acquisitions and Dispositions • On December 13, 2024 , we sold 30 single family lots from our holdings in Windmill Farms for $1.4 million, resulting in a gain on sale of $1.1 million. Financing Activities • On January 1, 2024, we amended our cash management agreement with Pillar .
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Financing Activities • On May 30, 2025, we paid off the $10.8 million loan on 770 South Post Oak with cash on hand. • On October 10, 2025, we paid off the $18.8 million loan on Villas at Bon Secour in connection with the sale of the underlying property (See "Disposition Activities").
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As a result, the interest rate on the related party receivable (" Pillar Receivable ") changed from prime plus one to the Secured Overnight Financing Rate (" SOFR"). • On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%. • On July 10, 2024, we replaced the existing loan on Forest Grove with a $6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031. • On October 21, 2024 , we entered into a $27.5 million construction loan to finance the development of Mountain Creek (See "Development Activities") that bears interest at SOFR plus 3.45% and matures on October 20, 2026.
Added
Development Activities During the year ended December 31, 2025, we expended $69.0 million in the construction of Alera , a 240 unit multifamily property in Lake Wales , Florida ; Bandera Ridge , a 216 unit multifamily property in Temple , Texas ; Merano , a 216 unit multifamily property in McKinney , Texas , and Mountain Creek , a 234 unit multifamily property in Dallas , Texas; which were funded in part by $63.8 million in borrowing from our construction loans.
Removed
Development Activities On October 21, 2024, we 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 for a total cost of approximately $49.8 million. The cost of construction will be funded in part by a $27.5 million construction loan.
Removed
The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The degree of 11 indebtedness could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, or other corporate purposes and make us more vulnerable to a down turn in business or the economy in general. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
The degree of indebtedness could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, or other corporate purposes and make us more vulnerable to a down turn in business or the economy in general. 11 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
A significant portion of the costs of owning property, such as real estate taxes, insurance, and debt service payments, are not necessarily reduced or able to be recouped when circumstances cause a decrease in rental income from the properties. Our reliance on third-party management companies to operate certain of our properties may harm our business.
A significant portion of the costs of owning property, such as real estate taxes, insurance, and debt service payments, are not necessarily reduced or able to be recouped when circumstances cause a decrease in rental income from the properties. 8 Our reliance on third-party management companies to operate certain of our properties may harm our business.
In addition, we might not have access to funds on a timely basis to pay for the unexpected expenditures. Properties may need to be sold from time to time for cash flow purposes. Because of the lack of liquidity of real estate investments generally, our ability to respond to changing circumstances may be limited.
In addition, we might not have access to funds on a timely basis to pay for the unexpected expenditures. 10 Properties may need to be sold from time to time for cash flow purposes. Because of the lack of liquidity of real estate investments generally, our ability to respond to changing circumstances may be limited.
We have in the past, and may in the future, develop and/or acquire properties in partnerships and similar joint ventures, including those in which we may own a preferred interest, when we believe circumstances warrant this type of investment.
We have in the past, and may in the future, develop and/or acquire properties in partnerships and joint ventures, including those in which we may own a preferred interest, when we believe circumstances warrant this type of investment.
FACTORS AFFECTING OUR ASSETS Adverse events concerning our existing tenants or negative market conditions affecting our existing tenants could have an adverse impact on our ability to attract new tenants, release space, collect rent or renew leases, and thus could adversely affect cash flow from operations and inhibit growth.
FACTORS AFFECTING OUR COMPANY Adverse events concerning our existing tenants or negative market conditions affecting our existing tenants could have an adverse impact on our ability to attract new tenants, release space, collect rent or renew leases, and thus could adversely affect cash flow from operations and inhibit growth.
HUD insured loans allow Lenders to extend loans at a relatively low interest rate for terms of up to 40 years for properties under new construction, or up to 35 years 10 for acquisition or refinancing of existing properties. In return for lower interest rates and favorable terms, HUD loans involve extensive regulatory compliance.
HUD insured loans allow Lenders to extend loans at a relatively lower interest rate for terms of up to 40 years for properties under new construction, or up to 35 years for acquisition or refinancing of existing properties. In return for lower interest rates and favorable terms, HUD loans involve extensive regulatory compliance.
These events include, but are not limited to: • adverse changes in international, national or local economic conditions; • inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options; • adverse changes in financial conditions of actual or potential investors, buyers, sellers or tenants; • inability to collect rent from tenants; • competition from other real estate investors, including other real estate operating companies, publicly-traded REITs and institutional investment funds; • reduced tenant demand for office space and residential units from matters such as: (i) trends in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we lease, (iv) purchasing versus leasing, (v) increasing crime or homelessness in our submarkets or (vi) economic recessions; • increases in the supply of office space and residential units; • fluctuations in interest rates and the availability of credit, which could adversely affect our ability to obtain financing on favorable terms or at all; • increases in operating costs, including: (i) insurance costs, (ii) labor costs, (iii) energy prices, (iv) property taxes, and (v) costs of compliance with laws, regulations and governmental policies; • utility disruptions; • changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the ADA; • difficulty in operating properties effectively; • acquiring undesirable properties; and • inability to dispose of properties at appropriate times or at favorable prices. 7 We may not be able to compete successfully with other entities that operate in our industry.
These events include, but are not limited to: • adverse changes in international, national or local economic conditions; • inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options; • adverse changes in financial conditions of actual or potential investors, buyers, sellers or tenants; • inability to collect rent from tenants; • competition from other real estate investors, including other real estate operating companies, publicly-traded real estate investment trusts ("REITs") and institutional investment funds; • reduced tenant demand for office space and residential units from matters such as: (i) trends in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we lease, (iv) purchasing versus leasing, (v) increasing crime or homelessness in our submarkets or (vi) economic recessions; • increases in the supply of office space and residential units; • fluctuations in interest rates and the availability of credit, which could adversely affect our ability to obtain financing on favorable terms or at all; • increases in operating costs, including: (i) insurance costs, (ii) labor costs, (iii) energy prices, (iv) property taxes, and (v) costs of compliance with laws, regulations and governmental policies; • utility disruptions; • changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the ADA; • difficulty in operating properties effectively; • acquiring undesirable properties; and • inability to dispose of properties at appropriate times or at favorable prices.
Unbudgeted capital expenditures or cost overruns could adversely affect business operations and cash flow. If capital expenditures for ongoing or planned development projects or renovations exceed expectations, the additional cost of these expenditures could have an adverse effect on business operations and cash flow.
If capital expenditures for ongoing or planned development projects or renovations exceed expectations, the additional cost of these expenditures could have an adverse effect on business operations and cash flow.
We could be adversely affected by various facts and events over which we have limited or no control, such as: • lack of demand for space in areas where the properties are located; • inability to retain existing tenants and attract new tenants; • oversupply of or reduced demand for space and changes in market rental rates; • defaults by tenants or failure to pay rent on a timely basis; • the need to periodically renovate and repair marketable space; • physical damage to properties; • economic or physical decline of the areas where properties are located; and • potential risk of functional obsolescence of properties over time. 8 If tenants do not renew their leases as they expire, we may not be able to rent the space.
We could be adversely affected by various facts and events over which we have limited or no control, such as: • lack of demand for space in areas where the properties are located; • inability to retain existing tenants and attract new tenants; • oversupply of or reduced demand for space and changes in market rental rates; • defaults by tenants or failure to pay rent on a timely basis; • the need to periodically renovate and repair marketable space; • physical damage to properties; • economic or physical decline of the areas where properties are located; and • potential risk of functional obsolescence of properties over time.
These borrowings increase the risk of loss because they represent a prior claim on assets and most require fixed payments regardless of profitability. Our leveraged position makes us vulnerable to declines in the general economy and may limit our ability to pursue other business opportunities in the future.
These borrowings increase the risk of loss because they represent a prior claim on assets and most require fixed payments regardless of profitability. Our leveraged position makes us vulnerable to declines in the general economy and may limit our ability to pursue other business opportunities in the future. A significant portion of our debt is insured with HUD.
We are leveraged and may not be able to meet our debt service obligations. We had total indebtedness at December 31, 2024 of approximately $181.9 million. Substantially all of our multifamily real estate has been pledged to secure debt.
We are leveraged and may not be able to meet our debt service obligations. We had total indebtedness at December 31, 2025 of approximately $266.4 million. Substantially all of our multifamily real estate has been pledged to secure debt.
ITEM 1A. RISK FACTORS The following discusses risk factors that could affect our business, operations and financial condition. If any of these risks, as well as other risks and uncertainties that we have not yet identified or that we currently believe are not material, become realized, we could be materially adversely affected and the value of our securities could decline.
ITEM 1A. RISK FACTORS The following discusses those risk factors that we believe could have a material effect on our business, operations and financial condition. If any of these risks, as well as other risks and uncertainties that we have not yet identified or that we currently believe are not material, become realized, we could be materially adversely affected.
In addition, provisions of the Internal Revenue Code may limit our ability to sell properties (without incurring significant tax costs) in some situations when it may be otherwise economically advantageous to do so, thereby adversely affecting returns to stockholders and adversely impacting our ability to meet our obligations. Our business may be impacted as a result of any health emergency.
In addition, provisions of the Internal Revenue Code may limit our ability to sell properties (without incurring significant tax costs) in some situations when it may be otherwise economically advantageous to do so, thereby adversely affecting returns to stockholders and adversely impacting our ability to meet our obligations.
We face risks associated with property acquisitions. We have acquired individual properties and various portfolios of properties in the past and intend to continue to do so.
We have acquired individual properties and various portfolios of properties in the past and intend to continue to do so.
We may experience increased operating costs which could adversely affect our financial results and the value of our properties. Our properties are subject to increases in operating expenses such as insurance, cleaning, maintenance, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping, repairs, and maintenance of the properties.
Our properties are subject to increases in operating expenses such as insurance, cleaning, maintenance, electricity, heating, ventilation and air conditioning, administrative costs and other costs associated with security, landscaping, repairs, and maintenance of the properties.
Accordingly, if interest rates increase, so will the interest costs, which could adversely affect cash flow and the ability to pay principal and interest on our debt and the ability to make distributions to shareholders. Further, rising interest rates could limit our ability to refinance existing debt when it matures.
If interest rates increase, so may our interest costs, which could adversely affect cash flow and the ability to pay principal and interest on our debt. Further, rising interest rates could limit our ability to refinance existing debt when it matures. Unbudgeted capital expenditures or cost overruns could adversely affect business operations and cash flow.
We may acquire properties subject to liabilities and without any recourse, or with limited recourse, with respect to unknown liabilities. However, if an unknown liability was later asserted against the acquired properties, we might be required to pay substantial sums to settle it, which could adversely affect cash flow.
However, if an unknown liability was later asserted against the acquired properties, we might be required to pay substantial sums to settle it, which could adversely affect cash flow. 9 We engage in development and redevelopment activities with respect to certain of our properties.
If operating expenses increase in our markets, we may not be able to increase rents or reimbursements in all of these markets to offset the increased expenses, without at the same time decreasing occupancy rates. If this occurs, our ability to make distributions to shareholders and service indebtedness could be adversely affected.
If operating expenses increase in our markets, we may not be able to increase rents or reimbursements in all of these markets to offset the increased expenses, without at the same time decreasing occupancy rates. We face risks associated with property acquisitions.
Real estate investments are illiquid, and we may not be able to sell properties if and when it is appropriate to do so. Real estate generally cannot be sold quickly. We may not be able to dispose of properties promptly in response to economic or other conditions.
Some of these competitors may be able to offer prospective tenants more attractive financial terms than we are able to offer. Real estate investments are illiquid, and we may not be able to sell properties if and when it is appropriate to do so. Real estate generally cannot be sold quickly.
We experience a great deal of competition in attracting tenants for the properties and in locating land to develop and properties to acquire. In our effort to lease properties, we compete for tenants with a broad spectrum of other landlords in each of the markets.
We may not be able to compete successfully with other entities that operate in our industry. We experience a great deal of competition in attracting tenants for the properties and in locating land to develop as well as properties to acquire.
We face risks associated with and have been the target of security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems. The phenomenon of cyber-attacks in general, and cyber-attacks against databases in particular, have become a risk to all companies.
If these risks materialize, our business, financial condition, and results of operations could be materially adversely affected. We face risks associated with and have been the target of security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our information technology (IT) networks and related systems.
These third parties may fail to manage our properties effectively or in accordance with their agreements with us, may be negligent in their performance and may engage in criminal or fraudulent activity. If any of these events occur, we could incur losses or face liabilities from the loss or injury to our property or to persons at our properties.
Thus, any adversity experienced by our property managers could adversely impact the operation and profitability of our properties. These third parties may fail to manage our properties effectively or in accordance with their agreements with us, may be negligent in their performance and may engage in unprofessional activity.
These competitors include, among others, publicly-held REITs, privately-held entities, individual property owners and tenants who wish to sublease their space. Some of these competitors may be able to offer prospective tenants more attractive financial terms than we are able to offer.
In our effort to lease properties, we compete for tenants with a broad spectrum of other landlords in each of the markets. These competitors include, among others, publicly-held REITs, privately-held entities, individual property owners and tenants who wish to sublease their space.
A significant portion of our debt is insured with HUD As of December 31, 2024, we had $126.3 million in mortgage notes payable insured by the U.S. Department of Housing and Urban Development ("HUD"), which represented 69.5% of our total indebtedness.
As of December 31, 2025, we had $123.6 million in mortgage notes payable insured by HUD, which represented 58.6% of our total mortgage notes payable.
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Considerable uncertainty still surrounds the recent Covid-19 pandemic, including its conclusion, the availability of and effectiveness of vaccines, the potential short-term and long term effects, including but not limited to shifts in consumer housing demand based on geography, affordability, housing type (e.g., multi-family vs. single family) and unit type (e.g., office studio vs. multi-bedroom), mainly resulting from the paradigm shift of work culture, the decentralization of corporate headquarters and the success of “work from home” models.
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We may not be able to dispose of properties promptly in response to economic or other conditions.
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Moreover, local, state and national measures taken to limit the spread of the recent pandemic have already resulted in significant economic impacts and mortality rates, the duration and scope of which cannot currently be predicted.
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Our business may be impacted as a result of any health emergency. 7 Epidemics, pandemics or other outbreaks of an illness, disease or virus, such as COVID-19, can severely disrupt general economic activities in a variety of ways that are difficult to predict.
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The extent to which our financial condition or operating results will be effected in the future by any future pandemic will largely depend on future demand and developments, which are highly uncertain and cannot be accurately predicted with any degree of accuracy.
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For example, governments and businesses may take actions to mitigate the public health crisis, including quarantines, stay-at-home orders, density limitations, social distancing measures, and/or restrictions on types of business that may continue to operate.
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Thus, the success of our business may depend in large part on the ability of our third-party property managers to manage the day-to-day operations, and any adversity experienced by our property managers could adversely impact the operation and profitability of our properties.
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The extent to which an outbreak could impact our business will depend on factors such as the duration and spread, its severity, the actions taken to contain the virus, the emergence and impact of future virus variants, and how quickly and to what extent normal economic and operating conditions resume.
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Our ability to achieve growth in operating income depends in part on its ability to develop additional properties or acquire and redevelop or renovate existing properties. We intend to continue to develop properties where warranted by market conditions. We have a number of ongoing development and land projects being readied for commencement.
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The impacts to our business could impact our financial condition, results of operations, cash flows, liquidity and our ability to meet our debt service obligations. A shift toward remote or hybrid work could reduce demand for office space and adversely affect our office portfolio and financial performance.
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Additionally, general construction and development activities include the following risks: • construction and leasing of a property may not be completed on schedule, which could result in increased expenses and construction costs, and would result in reduced profitability for that property; • construction costs may exceed original estimates due to increases in interest rates and increased cost of materials, labor or other costs, possibly making the property less profitable because of inability to increase rents to compensate for the increase in construction costs; • some developments may fail to achieve expectations, possibly making them less profitable; • we may be unable to obtain, or face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project; • we may abandon development opportunities after the initial exploration, which may result in failure to recover costs already incurred.
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The continued adoption of remote and hybrid work arrangements may reduce long-term demand for traditional office space. If tenants reduce their office footprints, do not renew leases, or seek more flexible terms, we could experience higher vacancy rates, lower rental income, increased leasing concessions, and longer lease-up periods across our office portfolio.
Removed
If we determine to alter or discontinue its development efforts, future costs of the investment may be expensed as incurred rather than capitalized and we may determine the investment is impaired resulting in a loss; • we may expend funds on and devote management’s time to projects which will not be completed; and 9 • occupancy rates and rents at newly-completed properties may fluctuate depending on various factors including market and economic conditions, and may result in lower than projected rental rates and reduced income from operations.
Added
These conditions could negatively impact our net operating income, cash flows, and property values, potentially requiring additional capital expenditures, impairments of office assets, or dispositions at unfavorable prices. Declines in asset values or cash flows could also increase leverage, limit access to capital, or adversely affect our ability to refinance existing indebtedness.
Removed
We engage in development and redevelopment activities with respect to certain of our properties.
Added
The phenomenon of cyber-attacks in general, and cyber-attacks against databases in particular, have become a risk to all companies.
Removed
Our organizational documents do not limit the amount of available funds that we can invest in partnerships or other joint venture structures. As of December 31, 2024, we had no active joint ventures with any investment funds at risk.
Added
If tenants do not renew their leases as they expire, we may not be able to rent the space.
Added
If any of these events occur, we could incur losses or face liabilities from the injury to persons at our properties.
Added
Our property insurance coverage is limited, and any uninsured losses could cause us to lose part or all of our investment in our insured properties.
Added
We carry property and general liability insurance on all of our properties with coverage limits that we deem adequate and appropriate under the circumstances (certain policies subject to deductibles) to insure against property restoration and liability claims, which include the cost of legal defense.
Added
There are, however, certain types of extraordinary losses that either may be uninsurable or are not generally insured because it is not economically feasible to insure against those losses. Should any uninsured loss occur, we could lose our investment in, and anticipated revenues from, a property, and these losses could have a material adverse effect on our operations.
Added
The occurrence of storm damage, flood or other natural disaster or personal injury on our properties in excess of our insured limits may materially and adversely affect our business, financial condition and results of operations. We may experience increased operating costs which could adversely affect our financial results and the value of our properties.
Added
We may acquire properties subject to liabilities and without any recourse, or with limited recourse, with respect to unknown liabilities.

Item 2. Properties

Properties — owned and leased real estate

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PROPERTIES Residential Properties in Operation Count Property Location Year Constructed Units Occupancy 1 Blue Lake Villas Waxahachie, TX 2002 186 96.2 % 2 Blue Lake Villas Phase II Waxahachie, TX 2004 70 95.7 % 3 Chelsea Beaumont, TX 1999 144 93.8 % 4 Forest Grove Bryan, TX 2020 84 97.6 % 5 Landing on Bayou Cane Houma, LA 2005 240 94.2 % 6 Legacy at Pleasant Grove Texarkana, TX 2006 208 94.2 % 7 Northside on Travis Sherman, TX 2008 200 91.5 % 8 Parc at Denham Springs Denham Spring, LA 2007 224 96.4 % 9 Parc at Denham Springs Phase II Denham Springs, LA 2010 144 93.8 % 10 Residences at Holland Lake Weatherford, TX 2004 208 95.7 % 11 Villas at Bon Secour Gulf Shores, AL 2007 200 88.5 % 12 Villas of Park West I Pueblo, CO 2005 148 96.2 % 13 Villas of Park West II Pueblo, CO 2010 112 94.6 % 14 Vista Ridge Tupelo, MS 2009 160 93.8 % 2,328 Residential Properties in Construction Count Property Location Units 1 Alera Lake Wales, FL 240 2 Bandera Ridge Temple, TX 216 3 Merano McKinney, TX 216 4 Mountain Creek Dallas, TX 234 906 13 Commercial Properties Count Property Location Year Constructed Rentable Square Feet Occupancy 1 770 South Post Oak Houston, TX 1970 95,528 55.7 % 2 Browning Place Dallas, TX 1984 626,529 54.3 % 3 Senlac Dallas, TX 1971 2,812 100.0 % 4 Stanford Center Dallas, TX 2007 335,367 50.5 % 1,060,236 The following table summarizes our commercial lease expirations as of December 31, 2024: Year of Lease Expiration Number of Leases Expiring Square Foot ("SF") of Leases Expiring % of Total Leased SF by Expiring Leases Ending Rent/SF of Expiring Leases % of Total Rent Represented by Expiring Leases 2025 7 29,913 5 % 20.77 4.2 % 2026 5 23,668 4 % 23.86 3.8 % 2027 6 16,906 3 % 26.07 3.0 % 2028 7 37,360 7 % 24.46 6.2 % 2029 11 109,678 19 % 21.59 16.0 % Thereafter 26 348,171 62 % 23.20 66.8 % 62 565,696 100 % 100.0 % 14 Land Investments Project Location Acres Held for development Athens Athens, AL 33 EQK Portage Kent, OH 49 McKinney 36 Collin County, TX 18 Ocean Estates Gulfport, MS 12 Willowick Pensacola, FL 40 Mercer Crossing Commercial Farmers Branch, TX 19 Windmill Farms Kaufman County, TX 1,488 Other Various 36 1,695 Held subject to sales contract Windmill Farms Kaufman County, TX 109 1,804
PROPERTIES Residential Properties in Operation Count Property Location Year Constructed Units Occupancy 1 Blue Lake Villas Waxahachie, TX 2002 186 89.8 % 2 Blue Lake Villas Phase II Waxahachie, TX 2004 70 95.7 % 3 Chelsea Beaumont, TX 1999 144 97.9 % 4 Forest Grove Bryan, TX 2020 84 91.7 % 5 Landing on Bayou Cane Houma, LA 2005 240 92.5 % 6 Legacy at Pleasant Grove Texarkana, TX 2006 208 94.2 % 7 Northside on Travis Sherman, TX 2008 200 84.0 % 8 Parc at Denham Springs Denham Spring, LA 2007 224 94.6 % 9 Parc at Denham Springs Phase II Denham Springs, LA 2010 144 92.4 % 10 Residences at Holland Lake Weatherford, TX 2004 208 98.6 % 11 Villas of Park West Phase I Pueblo, CO 2005 148 96.6 % 12 Villas of Park West Phase II Pueblo, CO 2010 112 94.6 % 13 Vista Ridge Tupelo, MS 2009 160 94.4 % 2,128 Residential Properties in Lease-Up Count Property Location Year Constructed Units Occupancy 1 Alera Lake Wales, FL 2025 240 12.9 % 2 Bandera Ridge Temple, TX 2025 216 16.7 % 3 Merano McKinney, TX 2025 216 11.1 % 672 Residential Properties in Construction Count Property Location Units 1 Mountain Creek Dallas, TX 234 234 13 Commercial Properties Count Property Location Year Constructed Rentable Square Feet Occupancy 1 770 South Post Oak Houston, TX 1970 95,528 61.7 % 2 Browning Place Dallas, TX 1984 626,529 55.4 % 3 Senlac Dallas, TX 1971 2,812 100.0 % 4 Stanford Center Dallas, TX 2007 276,680 64.9 % 1,001,549 The following table summarizes our commercial lease expirations as of December 31, 2025: Year of Lease Expiration Number of Leases Expiring Square Foot ("SF") of Leases Expiring % of Total Leased SF by Expiring Leases Ending Rent/SF of Expiring Leases % of Total Rent Represented by Expiring Leases 2026 4 20,856 4 % 27.07 3.6 % 2027 7 17,224 3 % 25.59 2.8 % 2028 12 52,272 9 % 24.53 8.1 % 2029 8 102,764 17 % 16.79 10.9 % 2030 8 106,707 18 % 29.01 19.5 % Thereafter 24 288,362 49 % 30.30 55.1 % 63 588,185 100 % 100.0 % 14 Land Investments Project Location Acres Held for development Athens Athens, AL 33 EQK Portage Kent, OH 49 McKinney 36 Collin County, TX 18 Ocean Estates Gulfport, MS 12 Willowick Pensacola, FL 40 Mercer Crossing Commercial Farmers Branch, TX 19 Windmill Farms Kaufman County, TX 1,482 Other Various 38 1,691 Held subject to sales contract Windmill Farms Kaufman County, TX 101 1,792

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS We are defendants in litigation related to a property sale ("Nixdorf") that was completed in 2008, which was tried to a jury in March 2023. On March 18, 2023, the jury in the case returned a “Plaintiff take nothing” verdict in our favor.
ITEM 3. LEGAL PROCEEDINGS We are defendants in litigation related to a property sale that was completed in 2008, which was tried to a jury in March 2023. On March 18, 2023, the jury in the case returned a “Plaintiff take nothing” verdict in our favor.
Removed
On January 7, 2025, the Fifth District Court of Appeals at Dallas reversed the trial court's judgement and remanded the case to the trial court. We intend to challenge the ruling by filing a writ of mandamus. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 15 PART II
Added
The trial court granted the Plaintiffs a new trial, and we challenged that order by mandamus. On January 14, 2026, the Dallas Court of Appeals granted our petition and ordered the trial court to (1) vacate its new-trial order and (2) enter judgment in our favor on the jury’s verdict.
Added
We have tendered the proposed order and judgment and await their entry by the trial court. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 15 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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We have a stock repurchase program that allows for the repurchase of up to 1,637,000 shares of our common stock. This repurchase program has no termination date. There were no shares repurchased in 2024 and the program has 650,250 shares remaining that can be repurchased as of December 31, 2024 . ITEM 6. [RESERVED]
We have a stock repurchase program that allows for the repurchase of up to 1,637,000 shares of our common stock. This repurchase program has no termination date. There were no shares repurchased in 2025 and the program has 650,250 shares remaining that can be repurchased as of December 31, 2025 . ITEM 6. [RESERVED]
Our Board of Directors established a policy that dividend declarations on common stock would be determined on an annual basis following the end of each year. In accordance with that policy, the board determined not to pay any dividends on common stock in December 31, 2024, 2023 or 2022.
Our Board of Directors established a policy that dividend declarations on common stock would be determined on an annual basis following the end of each year. In accordance with that policy, the board determined not to pay any dividends on common stock in December 31, 2025, 2024 or 2023.
The following table sets forth the high and low sales prices as reported in the consolidated reporting system of the NYSE for the quarters ended: 2024 2023 High Low High Low First Quarter $ 43.40 $ 34.17 $ 47.35 $ 40.12 Second Quarter $ 37.51 $ 27.04 $ 41.99 $ 34.96 Third Quarter $ 31.92 $ 26.91 $ 36.99 $ 27.52 Fourth Quarter $ 31.47 $ 26.29 $ 36.16 $ 27.23 On March 19, 2025, the closing price of our common stock as reported on the NYSE was $28.12 per share, and was held by 1,583 holders of record.
The following table sets forth the high and low sales prices as reported in the consolidated reporting system of the NYSE for the quarters ended: 2025 2024 High Low High Low First Quarter $ 30.40 $ 25.50 $ 43.40 $ 34.17 Second Quarter $ 46.74 $ 26.96 $ 37.51 $ 27.04 Third Quarter $ 48.00 $ 39.09 $ 31.92 $ 26.91 Fourth Quarter $ 59.65 $ 42.72 $ 31.47 $ 26.29 On March 10, 2026, the closing price of our common stock as reported on the NYSE was $36.31 per share, and was held by 1,463 holders of record.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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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.
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. 18 Related Parties We apply ASC Topic 805, “Business Combinations”, to evaluate business relationships.
Our results of operations for the year ended December 31, 2024 were affected by the acquisitions and disposition, refinancing activity, development activity as discussed below. Management's Overview We are an externally advised and managed real estate investment company that owns a diverse portfolio of income-producing properties and land held for development throughout the Southern United States.
Our results of operations for the year ended December 31, 2025 were affected by the acquisitions and disposition, refinancing activity, development activity as discussed below. Management's Overview We are an externally advised and managed real estate investment company that owns a diverse portfolio of income-producing properties and land held for development throughout the Southern United States.
Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. We also present FFO excluding the impact of the effects of foreign currency translation. 22 FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods.
Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis. We also present FFO excluding the impact of the effects of foreign currency translation. 21 FFO and FFO on a diluted basis are useful to investors in comparing operating and financial results between periods.
Results of Operations Many of the variations in the results of operations, discussed below, occurred because of the transactions affecting our properties described above, including those related to the Redevelopment Property, the Acquisition Properties and the Disposition Properties (each as defined below).
Results of Operations Many of the variations in the results of operations, discussed below, occurred because of the transactions affecting our properties described above, including those related to the Same Properties, Development Properties, the Acquisition Properties and the Disposition Properties (each as defined below).
Development Activities We have agreements to develop two parcels of land (" PODs") from our land holdings in Windmill Farms . The agreements provide for the development of 125 acres of raw land into approximately 470 land lots to be used for single family homes for a total of $24.3 million.
Development Activities We have agreements to develop two parcels of land from our land holdings in Windmill Farms . The agreements provide for the development of 125 acres of raw land into approximately 470 land lots to be used for single family homes.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Optional and not included. 23
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Optional and not included. 22
We anticipate that our cash, cash equivalents and short-term investments as of December 31, 2024, along with cash that will be generated in 2025 from notes and interest receivables, will be sufficient to meet all of our cash requirements.
We anticipate that our cash, cash equivalents and short-term investments as of December 31, 2025, along with cash that will be generated in 2026 from operations, notes receivable and construction loans, will be sufficient to meet all of our cash requirements.
Fluctuations in the rate of inflation also affect sales values of properties and the ultimate gain to be realized from property sales. To the extent that inflation affects interest rates, our earnings from short-term investments, the cost of new financings and the cost of variable interest rate debt will be affected.
To the extent that inflation affects interest rates, our earnings from short-term investments, the cost of new financings and the cost of variable interest rate debt will be affected.
Financing Activities • On January 14, 2022, we paid off the $14.7 million loan on Toulon in connection with the sale of the underlying property (See "Acquisitions and Dispositions"). • On March 3, 2022 , we extended the loan on Stanford Center t o February 26, 2023 . • On September 1, 2022 , we extended our loan on Athens to August 28, 2023. • On September 16, 2022 , we paid off the $9.6 million loan on Sugar Mill Phase III in connection with the sale of the underlying property (See "Acquisitions and Dispositions"). • On October 21, 2022, we paid off the $38.5 million loan on Stanford Center from a portion of our share of the proceeds from sale of the VAA Sale Portfolio (See "Other Developments"). • On November 1, 2022, we agreed to assume the $70.3 million mortgage notes payable on the VAA Holdback Portfolio in connection with the distribution of the underlying properties from VAA (See "Other Developments"). • On January 31, 2023 , we paid off our $67.5 million of Series C bonds. • On February 28, 2023 , we extended the maturity of our loan on Windmill Farms until February 28, 2024 at a revised interest rate of 7.75%. • On March 15, 2023 , we entered into a $33.0 million construction loan to finance the development of Alera (See "Development Activities") that bears interest at SOFR plus 3% and matures on March 15, 2026 , with two one-year extension options. • On May 4, 2023, we paid off the remaining $14.0 million of our Series A Bonds and $28.9 million of our Series B Bonds, which resulted in a loss on early extinguishment of debt of $1.7 million. • On August 28, 2023, we paid off our $1.2 million loan on Athens . • On November 6, 2023 , we entered into a $25.4 million construction loan to finance the development of Merano (See "Development Activities") that bears interest at prime plus 0.25% and matures on November 6, 2028 . • On December 15, 2023 , we entered into a $23.5 million construction loan to finance the development of Bandera Ridge (See "Development Activities") that bears interest at SOFR plus 3% and matures on December 15, 2028 . • On January 1, 2024, we amended our cash management agreement with Pillar .
Financing Activities • On January 31, 2023 , we paid off our $67.5 million of Series C bonds. • On February 28, 2023 , we extended the maturity of our loan on Windmill Farms until February 28, 2024 at a revised interest rate of 7.75%. • On March 15, 2023 , we entered into a $33.0 million construction loan to finance the development of Alera (See "Development Activities") that bears interest at the Secured Overnight Financing Rate ("SOFR") plus 3% and matures on March 15, 2026 , with two one-year extension options. • On May 4, 2023, we paid off the remaining $14.0 million of our Series A Bonds and $28.9 million of our Series B Bonds, which resulted in a loss on early extinguishment of debt of $1.7 million. • On August 28, 2023, we paid off our $1.2 million loan on Athens . • On November 6, 2023 , we entered into a $25.4 million construction loan to finance the development of Merano (See "Development Activities") that bears interest at prime plus 0.25% and matures on November 6, 2028 . • On December 15, 2023 , we entered into a $23.5 million construction loan to finance the development of Bandera Ridge (See "Development Activities") that bears interest at SOFR plus 3% and matures on December 15, 2028 . • On January 1, 2024, we amended our Cash Management Agreement with Pillar .
The following reconciles our net income attributable to FFO and FFO-basic and diluted, excluding the loss from foreign currency transactions and the loss on extinguishment of debt for the years ended December 31, 2024, 2023 and 2022 (dollars and shares in thousands): For the Year Ended December 31, 2024 2023 2022 Net income attributable to the Company $ 5,862 $ 5,937 $ 468,262 Depreciation and amortization on consolidated assets 12,276 13,646 9,686 Loss (gain) on sale, remeasurement or write down of assets 589 1,891 (89,196) Gain on sale of land 1,095 188 4,752 Gain on sale of assets from unconsolidated joint venture at our pro rata share — — (367,772) Depreciation and amortization on unconsolidated joint venture at our pro rata share — — 8,229 FFO-Basic and Diluted 19,822 21,662 33,961 Loss on early extinguishment of debt — 1,710 2,805 Loss on early extinguishment of debt from unconsolidated joint venture at our pro rata share — — 15,254 Gain on foreign currency transactions — (993) (20,067) FFO-adjusted $ 19,822 $ 22,379 $ 31,953 ITEM 7A.
The following reconciles our net income attributable to FFO and FFO-basic and diluted, excluding the loss from foreign currency transactions and the loss on extinguishment of debt for the years ended December 31, 2025, 2024 and 2023 (dollars and shares in thousands): For the Year Ended December 31, 2025 2024 2023 Net income attributable to the Company $ 13,803 $ 5,862 $ 5,937 Depreciation and amortization on consolidated assets 12,577 12,276 13,646 (Gain) loss on sale, remeasurement or write down of assets (17,670) 589 1,891 Gain on sale of land 4,720 1,095 188 FFO-Basic and Diluted 13,430 19,822 21,662 Loss on early extinguishment of debt 284 — 1,710 Gain on foreign currency transactions — — (993) FFO-adjusted $ 13,714 $ 19,822 $ 22,379 ITEM 7A.
We used our share of the proceeds from the sale of the VAA Sale Portfolio to invest in short-term investments and real estate, pay down our debt and for general corporate purposes. 18 Critical Accounting Policies The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical Accounting Policies The preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or leased-up (“Redevelopment Property”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties"). A developed property is considered leased-up, when it achieves occupancy of 80% or more.
For purposes of the discussion below, we define "Same Properties" as all of our properties with the exception of those properties that have been recently constructed or are in lease-up (“Development Properties”), properties that have recently been acquired ("Acquisition Properties") and properties that have been disposed ("Disposition Properties").
There were no Acquisition Properties or Disposition Properties f or the comparison of the year ended December 31, 2024 to the year ended December 31, 2023 . 20 The following table (amounts in thousands) provides a summary of the results of operations of 2024 and 2023: For the Years Ended December 31, 2024 2023 Variance Multifamily Segment Revenue $ 34,103 $ 34,962 $ (859) Operating expenses (18,252) (17,749) (503) 15,851 17,213 (1,362) Commercial Segment Revenue 12,967 14,943 (1,976) Operating expenses (8,811) (10,147) 1,336 4,156 4,796 (640) Segment operating income 20,007 22,009 (2,002) Other non-segment items of income (expense) Depreciation and amortization (12,276) (13,646) 1,370 General, administrative and advisory (13,505) (18,355) 4,850 Interest income, net 14,244 20,729 (6,485) Loss on early extinguishment of debt — (1,710) 1,710 Gain on foreign currency transactions — 993 (993) Loss on sale, remeasurement or write down of assets (589) (1,891) 1,302 Income from joint venture 708 1,060 (352) Other (expense) income (1,930) (1,939) 9 Net income $ 6,659 $ 7,250 $ (591) Comparison of the year ended December 31, 2024 to the year ended December 31, 2023: Our $0.6 million decrease in net income in 2024 is primarily attributed to the following: • The $1.4 million decrease in profit from the multifamily properties is due to a $1.0 million decrease from the Redevelopment Property.
There were no Acquisition Properties . 19 The following table (amounts in thousands) provides a summary of the results of operations of 2025 and 2024: For the Years Ended December 31, 2025 2024 Variance Multifamily Segment Revenue $ 34,128 $ 34,103 $ 25 Operating expenses (19,304) (18,252) (1,052) 14,824 15,851 (1,027) Commercial Segment Revenue 14,932 12,967 1,965 Operating expenses (8,581) (8,811) 230 6,351 4,156 2,195 Segment operating income ("NOI") 21,175 20,007 1,168 Other non-segment items of income (expense) Depreciation and amortization (12,577) (12,276) (301) General, administrative and advisory (14,942) (13,505) (1,437) Interest income, net 10,454 14,244 (3,790) Loss on early extinguishment of debt (284) — (284) Gain (loss) on sale or write down of assets 17,670 (589) 18,259 Income from joint venture — 708 (708) Other expense (7,064) (1,930) (5,134) Net income $ 14,432 $ 6,659 $ 7,773 Comparison of the year ended December 31, 2025 to the year ended December 31, 2024: Our $7.8 million increase in net income is primarily attributed to the following: • Our multifamily segment had a $1.0 million decrease in NOI, which was attributed to a decrease of $1.3 million from the Development Properties and $0.5 million from the Disposition Property offset in part by an increase of $0.8 million increase from Same Properties .
In addition, certain environmental laws impose liability for release of asbestos-containing materials into the air, and third parties may seek recovery for personal injury associated with such materials.
In addition, certain environmental laws impose liability for release of asbestos-containing materials into the air, and third parties may seek recovery for personal injury associated with such materials. We are not aware of any environmental liability relating to the above matters that would have a material adverse effect on our business, assets or results of operations.
We move a property in and out of Same Properties based on whether the property is substantially leased-up and in operation for the entirety of both periods of the comparison. For the comparison of the year ended December 31, 2024 to the year ended December 31, 2023 , the Redevelopment Property is Landing on Bayou Cane.
A developed property is considered substantially complete or leased-up, when it achieves occupancy of 80% or more. We move a property in and out of Same Properties based on whether the property is substantially complete or in operation for the entirety of both periods of comparison.
On March 23, 2023, we received $18.0 million from VAA, which represented the remaining distribution of the proceeds from the sale of the VAA Sale Portfolio. In December 2024, we dissolved VAA.
Other Developments On March 23, 2023, we received $18.0 million from our joint venture in Victory Abode Apartments, LLC ("VAA") , which represented the remaining distribution of proceeds from the sale of the 45 properties in September 2022 that had been held by VAA. We dissolved VAA in 2024.
As a result, the interest rate on the related party receivable (" Pillar Receivable ") changed from prime plus one to SOFR. • On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%. • On July 10, 2024, we replaced the existing loan on Forest Grove with a $6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031. 17 • On October 21, 2024 , we entered into a $27.5 million construction loan to finance the development of Mountain Creek (See "Development Activities") that bears interest at SOFR plus 3.45% and matures on October 20, 2026.
As a result, the interest rate on our related party receivable (" Pillar Receivable ") changed from prime plus one to SOFR. • On February 8, 2024, we extended the maturity of our loan on Windmill Farms to February 28, 2026 at an interest rate of 7.50%.
“Consolidated Financial Statements and Supplementary Data” and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (dollars in thousands): Year Ended December 31, 2024 2023 Variance Net cash provided by (used in) operating activities $ 1,310 $ (31,073) $ 32,383 Net cash (used in) provided by investing activities $ (41,524) $ 26,813 $ (68,337) Net cash provided by (used in) financing activities $ 1,659 $ (139,020) $ 140,679 The increase in cash provided by operating activities is primarily due to a decrease in interest payments and insurance cost in comparison to prior year.
“Consolidated Financial Statements and Supplementary Data” and is not meant to be an all-inclusive discussion of the changes in our cash flows for the periods presented below (dollars in thousands): Year Ended December 31, 2025 2024 Variance Net cash (used in) provided by operating activities $ (2,886) $ 1,310 $ (4,196) Net cash used in investing activities $ (35,828) $ (41,524) $ 5,696 Net cash provided by financing activities $ 27,546 $ 1,659 $ 25,887 The $5.7 million increase in cash used in investing activities is primarily due to the $33.5 million increase in proceeds from sale of assets offset in part by the $21.6 million increase in development and renovation of real estate and the $5.8 million increase in net purchase of short-term investments.
We are not aware of any environmental liability relating to the above matters that would have a material adverse effect on our business, assets or results of operations. 19 Inflation The effects of inflation on our operations are not quantifiable. Revenues from property operations tend to fluctuate proportionately with inflationary increases and decreases in housing costs.
Inflation The effects of inflation on our operations are not quantifiable. Revenues from property operations tend to fluctuate proportionately with inflationary increases and decreases in housing costs. Fluctuations in the rate of inflation also affect sales values of properties and the ultimate gain to be realized from property sales.
Pillar is considered to be a related party due to its common ownership with ARL, who is our controlling stockholder. 16 The following is a summary of our recent acquisition, disposition, financing and development activities: Acquisitions and Dispositions • On January 14, 2022, we sold Toulon, a 240 unit multifamily property in Gautier, Mississippi for $26.8 million, resulting in a gain on sale of $9.4 million.
Pillar is considered to be a related party due to its common ownership with ARL, our controlling stockholder. 16 The following is a summary of our recent disposition, financing and development activities: Disposition Activities • On December 13, 2024 , we sold 30 single family lots from our holdings in Windmill Farms for $1.4 million, resulting in a gain on sale of $1.1 million. • On March 25, 2025 , we received $3.5 million in proceeds from the condemnation settlement that provided for the conveyance of 11.2 acres from our holdings in Windmill Farms, resulting in a gain on sale of $3.1 million. • On October 10, 2025, we sold Villas at Bon Secour , a 200 unit multifamily property in Gulf Shores, Alabama, for $28.0 million (See " Financing Activities "), resulting in a gain on sale of $12.2 million . • During the year ended December 31, 2025, we sold 72 lots from our holdings in Windmill Farms for $3.3 million, resulting in a gain on sale of $2.6 million.
The decrease in interest income is primarily due to a decrease in interest rates on the UHF notes in 2023 and a decrease in interest rates on the Pillar Receivable in 2024 (See " Financing Activities " in Management's Overview).
The decrease in interest income was primarily due to a decrease in funds available for investments and a decline in interest rates.
Dollar and the New Israeli Shekel conversion rate in connection with the bonds that were listed on the Tel-Aviv Stock Exchange (See "Financing Activities") . 21 Comparison of the year ended December 31, 2023 to the year ended December 31, 2022: See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 21, 2024 for a discussion of our results of operations for the year ended December 31, 2023.
Our decrease in interest expense is primarily due to the pay off of the loan on 770 South Post Oak in 2025 and the refinance of Forest Grove in 2024 (See " Financing Activities " in Management's Overview). • The $18.3 million increase in gain on sale or write down of assets, net is primarily due to the sale of Villas at Bon Secour in 2025 (See "Disposition Activities" in Management's Overview), an increase in dispositions of land at Windmill Farms (See "Disposition Activities" in Management's Overview) and decrease in write off of development costs. • The increase in other expense is primarily due to an increase in income tax provision as a result of the sale of Villas at Bon Secour (See "Disposition Activities" in Management's Overview) in 2025 and a change in the estimate of tax liability in connection with the VAA properties sold in 2022. 20 Comparison of the year ended December 31, 2024 to the year ended December 31, 2023: See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 21, 2025 for a discussion of our results of operations for the year ended December 31, 2024.
Removed
We used the proceeds from the sale to pay off the $14.7 million mortgage note payable on the property and for general corporate purposes. • On May 17, 2022 , we sold Fruitland Park, a 6,722 square foot commercial building in Fruitland Park, Florida for $0.8 million , resulting in a gain on sale of $0.7 million .
Added
We subsequently paid off the loan on November 24, 2025. • On July 10, 2024, we replaced the existing loan on Forest Grove with a $6.6 million loan that bears interest at SOFR plus 2.15% and matures on August 1, 2031. • On October 21, 2024, we entered into a $27.5 million construction loan to finance the development of Mountain Creek (See "Development Activities") that bears interest at SOFR plus 3.45% and matures on June 17, 2027. • On May 30, 2025, we paid off the $10.8 million loan on 770 South Post Oak with cash on hand. • On October 10, 2025, we paid off the $18.8 million loan on Villas at Bon Secour in connection with the sale of the underlying property (See "Disposition Activities"), resulting in a loss on early extinguishment of debt of $0.3 million .
Removed
We used the proceeds from the sale for general corporate purposes. • On September 16, 2022, we sold Sugar Mill Phase III, a 72 unit multifamily property in Baton Rouge , Louisiana for $11.8 million in connection with the sale of properties by VAA (See "Other Developments"), resulting in a gain on sale of $1.9 million.
Added
During 2025, we spent $1.8 million on reimbursable infrastructure investments. 17 During the year ended December 31, 2025, we expended $69.0 million in the construction of four multifamily development projects ("Development Projects"), which was funded in part by $63.8 million in borrowing from property construction loans.
Removed
We used the proceeds from the sale to pay off the $9.6 million mortgage note payable on the property and for general corporate purposes. • On November 1, 2022, we acquired the seven multifamily properties from VAA (See "Other Developments") with a fair value of $219.5 million . • During the year ended December 31, 2022 , we sold a total of 26.9 acres of land from our holdings in Windmill Farms for $5.1 million in aggregate, resulting in gains on sale of $4.2 million.
Added
The following is a summary of the total projected and incurred costs (dollars in thousands) for the Development Projects as of December 31, 2025 : Project Units Location Total Projected Cost Total Project Cost Incurred Alera 240 Lake Wales, FL $ 55,330 $ 55,394 Bandera Ridge 216 Temple, TX 49,603 48,082 Merano 216 McKinney, TX 51,910 48,971 Mountain Creek 234 Dallas, TX 49,971 9,268 906 $ 206,814 $ 161,715 As of December 31, 2025, we have substantially completed the construction of the units from Alera , Bandera Ridge and Merano , and expect to complete construction of Mountain Creek in 2026.
Removed
In addition, we sold 0.9 acres of land from our holdings in Mercer Crossing for $0.7 million, resulting in a gain on sale of $0.2 million. • On December 13, 2024 , we sold 30 single family lots from our holdings in Windmill Farms for $1.4 million, resulting in a gain on sale of $1.1 million.
Added
For the comparison of the year ended December 31, 2025 to the year ended December 31, 2024 , the Development Properties were Alera, Bandera Ridge and Merano (See " Development Activities " in Management's Overview); and the Disposition Property was Villas at Bon Secour.
Removed
We estimate that we will complete the development of these PODs over a two-year period starting during the fourth quarter of 2024. During 2024, we spent $3.6 million on reimbursable infrastructure investments.
Added
The decrease in NOI from the Disposition Property is primarily due to the lease-up of newly constructed properties in 2025 ( See " Development Activities " in Management's Overview ). • The $2.2 million increase in NOI from our commercial segment is primarily due to an increase in occupancy at Stanford Center. • The $1.4 million increase in general, administrative and advisory expenses is primarily due to a $1.1 million increase in advisory fees and a $0.4 million increase in pillar reimbursements.
Removed
On March 15, 2023, we entered into a development agreement with Pillar to build a 240 unit multifamily property in Lake Wales, Florida (" Alera ") that is expected to be completed in 2025 for a total cost of approximately $55.3 million.
Added
The increase in advisory fees is due to an increase in net income and asset value in 2025.
Removed
The cost of construction will be funded in part by a $33.0 million construction loan (See "Financing Activities") . The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period.
Added
The increase in value of the assets is primarily due to the Development Projects ( See " Development Activities " in Management's Overview). • The $3.8 million decrease in our interest income, net is due to a $4.8 million decrease in interest income offset in part by a $1.0 million decrease in interest expense.
Removed
In connection with the closing of the loan, we purchased the land and certain entitlement costs from a related party at an appraised value of $6.1 million. As of December 31, 2024, we have incurred a total of $36.6 million in development costs.
Added
The increase in proceeds from sale of assets is primarily due to the sale of Villas at Bon Secour in 2025 (See " Disposition Activities " in Management's Overview). The increase in development and renovation of real estate relates to the Development Projects (See " Development Activities " in Management's Overview).
Removed
On November 6, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in McKinney , Texas (" Merano ") that is expected to be completed in 2025 for a total cost of approximately $51.9 million.
Added
The increase in net redemption of short-term investments provided additional funds for the development and renovation of real estate and the repayment of the mortgage note on 770 South Post Oak in 2025.
Removed
The cost of construction will be funded in part by a $25.4 million construction loan (See "Financing Activities") . The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of December 31, 2024, we have incurred a total of $24.8 million in development costs.
Added
The $25.9 million increase in cash provided by financing activities was due to the $48.7 million increase in borrowings on our construction loans in connection with our development projects (See "Development Activities" in Management's Overview) offset in part by a $22.7 million increase in payments of mortgages and other notes payable (See " Financing Activities " in Management's Overview).
Removed
On December 15, 2023, we entered into a development agreement with Pillar to build a 216 unit multifamily property in Temple , Texas (" Bandera Ridge ") that is expected to be completed in 2025 for a total cost of approximately $49.6 million.
Removed
The cost of construction will be funded in part by a $23.5 million construction loan (See "Financing Activities") . The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of December 31, 2024, we have incurred a total of $26.3 million in development costs.
Removed
On October 21, 2024, we 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 for a total cost of approximately $49.8 million.
Removed
The cost of construction will be funded in part by a $27.5 million construction loan (See "Financing Activities") . The development agreement provides for a $1.6 million fee that will be paid to Pillar over the construction period. As of December 31, 2024, we have incurred a total of $5.0 million in development costs.
Removed
Other Developments On September 16, 2022, VAA sold 45 properties (“VAA Sale Portfolio”) for $1.8 billion, resulting in a gain on sale of $738.4 million to the joint venture. In connection with the sale, we received an initial distribution of $182.8 million from VAA.
Removed
On November 1, 2022, we received an additional distribution from VAA, which included the full operational control of the remaining seven properties (collectively referred to herein as the “VAA Holdback Portfolio”) and a cash payment of $204.0 million.
Removed
The VAA Holdback Portfolio consists of Blue Lake Villas , a 186 unit multifamily property in Waxahachie , Texas ; Blue Lake Villas Phase II , a 70 unit multifamily property in Waxahachie , Texas ; Northside on Travis , a 200 unit multifamily property in Sherman , Texas ; Parc at Denham Springs , a 224 unit multifamily property in Denham Spring , Louisiana ; Residences at Holland Lake , a 208 unit multifamily property in Weatherford , Texas ; Villas of Park West I , a 148 unit multifamily property in Pueblo , Colorado; and Villas of Park West II , a 112 unit multifamily property in Pueblo , Colorado.
Removed
The change in revenues and expenses of the Redevelopment Property from 2023 to 2024 is primarily due to the lease-up of the property in 2023 as the restored units were placed in service.
Removed
The decrease in profit from the Redevelopment property is due to the receipt of $1.3 million of business interruption insurance proceeds in 2023. • The $0.4 million decrease in profit from the commercial properties is primarily due to a decline in occupancy. • The $4.9 million decrease in general, administrative and advisory expenses is primarily due to a reduction in legal cost associated with the Nixdorf litigation in 2023 and due to auditing and other administrative expenses associated with the bonds payable, which were repaid in 2023. • The $6.5 million decrease in interest income, net is due to a $8.1 million decrease in interest income offset in part by a $1.6 million decrease in interest expense.
Removed
The decrease in interest expense is primarily due to the repayment of the bonds payable in 2023 (See " Financing Activities " in Management's Overview). • The loss from early extinguishment of debt and the gain on foreign currency transactions are due to the bonds payable that were outstanding in 2023. • The decrease in gain on foreign currency transactions is due to the change in the U.S.
Removed
The $68.3 million increase in cash used in investing activities is primarily due to the $39.5 million increase in development and renovation of real estate, the $21.4 million decrease in distribution from joint venture and the $18.7 million decrease in net redemption of short-term investments offset in part by the $6.5 million decrease in originations and advances on notes receivable and the $3.6 million increase in collection of notes receivable .
Removed
The increase in development and renovation of real estate relates to the construction start of Merano and Bandera Ridge in 2024. The distribution from joint venture in 2023 relates to the final distribution of proceeds from the sale of the VAA Sale Portfolio in 2022.
Removed
The $140.7 million decrease in cash used in financing activities is primarily due to the $131.2 million repayment of our bonds in 2023.

Other TCI 10-K year-over-year comparisons