American Realty Investors, Inc. (ARL): ANSOFF MATRIX [Dec-2025 Updated]

You're looking at American Realty Investors, Inc. (ARL)'s growth trajectory, and honestly, the Ansoff Matrix is the defintely right tool to map out their next steps. Their Q3 2025 numbers-revenue at $12.8 million and a net income turnaround to $0.1 million-show they've got some momentum, but that 58% commercial occupancy is a clear drag we have to fix. As a seasoned analyst, I see four distinct paths forward, ranging from shoring up what they have to making bold, new market bets, all while keeping an eye on that recent performance. Dive in below to see the precise actions we need to consider for Market Penetration, Product Development, and beyond, because knowing the options is the first step to making the right call.

American Realty Investors, Inc. (ARL) - Ansoff Matrix: Market Penetration

You're looking at how American Realty Investors, Inc. (ARL) plans to squeeze more revenue from the markets it already serves. This is about maximizing what you already own, which is generally the lowest-risk path for growth. We need to look at the current performance metrics to see where the real work is happening in the existing portfolio.

For the three months ended September 30, 2025, the total occupancy across all properties stood at 82%. This overall figure is a blend of the residential and commercial segments, both of which have specific penetration targets and current realities.

The commercial segment is definitely the area needing the most immediate focus for market penetration. As of September 30, 2025, the commercial property occupancy was reported at 58%. That's a long way from the internal goal of 75%, but we did see progress, as the increase in commercial property revenue of $1.0 million for the quarter was primarily due to improved occupancy at the Stanford Center asset.

The multifamily portfolio, on the other hand, is performing very well, showing strong market penetration already. For the same period ending September 30, 2025, the multifamily properties were 94% occupied. This high rate supports the strategy to execute above-inflation rental rate increases, though the specific percentage of those increases isn't detailed in the latest filings.

Here's a quick look at the current state versus the penetration goal for the commercial side:

The strategy also involves aggressive marketing for new lease-up units, which is a form of immediate market penetration for recently completed assets. During the three months ended September 30, 2025, American Realty Investors, Inc. received its initial tranche of completed units from the Alera, Bandera Ridge, and Merano properties, which allowed the company to start the lease-up process for these new multifamily units.

The financial impact of current operations shows the revenue lift from these efforts, even with rising costs. Total revenues for the quarter increased by $1.2 million year-over-year, moving from $11.6 million in Q3 2024 to $12.8 million in Q3 2025. However, operating expenses also rose by $1.0 million, largely due to the cost of the lease-up properties and general and administrative expenses.

Regarding property upgrades and tenant retention, the focus is on justifying higher rents and reducing turnover costs in existing Southern US properties. While the specific dollar amount for additional property upgrades isn't confirmed in the latest report, the increase in operating expenses suggests capital deployment is occurring. The tenant retention program is a necessary action given the competitive environment in the Southern US, where American Realty Investors, Inc. concentrates its operations.

The company is also actively managing its asset base, which impacts the overall penetration picture. For instance, on October 10, 2025, American Realty Investors, Inc. sold Villas at Bon Secour, a 200 unit multifamily property, for $28,000, using proceeds to pay off the associated loan of $18,767.

To execute on the market penetration strategy, the focus areas for the existing portfolio include:

• Drive commercial occupancy from 58% to 75%.
• Maintain or exceed the current 94% multifamily occupancy.
• Begin generating rental income from Alera, Bandera Ridge, and Merano.
• Address operating expense increases tied to new lease-up costs.

Finance: draft variance analysis on Q3 operating expense increase by Friday.

American Realty Investors, Inc. (ARL) - Ansoff Matrix: Market Development

Acquire stabilized multifamily assets in new, high-growth Sun Belt states like Arizona or Nevada.

The Phoenix, Arizona, multifamily outlook for 2025 anticipates another record year for rental units opening, with new conventional apartments and build-to-rent (BTR) homes expected to match or exceed the 21,000 units delivered in 2024. National asking rent reached $1,845 in Q3 2024, though rent growth is expected to be modest in Sun Belt metros due to elevated supply levels. American Realty Investors, Inc. (ARL) can look at this high-demand environment as it seeks new markets, noting that multifamily investment volume in Phoenix reached nearly $1.9 billion in the first half of 2025.

Establish a small regional office in a key Western US city to manage new property acquisitions.

This expansion requires establishing a physical presence outside the current Southern United States focus. The capital base supporting this move is substantial, with American Realty Investors, Inc. (ARL) reporting total assets of $1.09 billion as of September 30, 2025. The company's debt-to-equity ratio stood at 0.27, suggesting capacity for new financing or deployment of existing capital.

Pilot a commercial property acquisition strategy in the Mid-Atlantic region, leveraging existing segment expertise.

The broader U.S. commercial real estate outlook for 2025 is largely optimistic, with industrial remaining strong and retail steady. The office sector is showing signs of stabilization, though the national vacancy rate hit a record 20.4% in Q1 2025. American Realty Investors, Inc. (ARL) reported Q3 2025 revenue of $12.84 million, which provides a baseline for assessing the scale of new commercial operations.

Form joint ventures with local developers in major Texas and Florida secondary markets outside current footprint.

While American Realty Investors, Inc. (ARL) has existing activity in Florida, targeting secondary markets requires specific partnership structures. The company is already heavily invested in development, reporting $59.2 million in development costs for four active multifamily projects for the first nine months of 2025.

Allocate a portion of the $1.09 billion in total assets to fund initial out-of-region property purchases.

The Market Development strategy is directly supported by the balance sheet. The allocation decision hinges on available liquidity and the required investment size for stabilized assets in new regions.

The potential funding pool for new, out-of-region acquisitions must be weighed against ongoing commitments. For instance, the Windmill Farms project alone has $55.7 million in District Receivables as of September 30, 2025.

• Multifamily asset sales volume nationally rose almost 20 percent year-over-year in H1 2025 to $35 billion.
• Commercial real estate investment activity nationally is expected to grow by 10% in 2025 to $437 billion.
• The company recently executed a sale in Alabama for $28,000 on October 10, 2025, paying off a $18,767 loan.
• The company reported net income attributable to common shares of $0.1 million for Q3 2025.

American Realty Investors, Inc. (ARL) - Ansoff Matrix: Product Development

You're looking at the $\mathbf{58\%}$ occupancy rate in your commercial properties as of September 30, 2025. That figure, compared to the $\mathbf{94\%}$ occupancy in your multifamily segment, clearly signals a need for new product offerings within the existing commercial space. Nationally, office property vacancy rates reached $\mathbf{19.6\%}$ in Q1 2025, with projections suggesting a $\mathbf{23\%}$ rate for 2025. This market reality supports converting underperforming commercial office space into flexible co-working or medical office facilities. Furthermore, $\mathbf{65\%}$ of investors globally expect demand for flexible workspaces to rise by $\mathbf{2025}$.

For land holdings, you already have approximately $\mathbf{1,797}$ acres of developed and undeveloped land as of March 31, 2025. You've already shown success here, selling $\mathbf{30}$ single-family lots from Windmill Farms for $\mathbf{\$1.4}$ million in Q1 2025. This supports developing specialized build-to-rent single-family communities on existing land. For context on development scale, the Merano multifamily property, expected to be completed in $\mathbf{2025}$, has a total estimated cost of approximately $\mathbf{\$51.9}$ million.

Your multifamily segment is performing well, with $\mathbf{94\%}$ occupancy, and Q1 2025 rental revenues increased by $\mathbf{\$0.1}$ million year-over-year, primarily due to rent increases. To further boost revenue per unit, you could introduce new tenant services. While specific revenue uplift per unit isn't public, consider the scale: you owned $\mathbf{2,328}$ units directly as of March 31, 2025.

American Realty Investors, Inc. (ARL) already invests in mortgage notes receivable. A new product development could be introducing a dedicated commercial bridge lending product focused on small businesses in the Southern US. This is a move into a new financial product line, distinct from existing note receivables.

Retail repurposing counters e-commerce impact. Nationally, retail sector foot traffic is only $\mathbf{3\%}$ below pre-pandemic levels, signaling some consumer recovery. However, the national vacancy rate for retail hit $\mathbf{4.2\%}$ (lowest since $\mathbf{2007}$), suggesting that even in better-performing retail segments, experience-based centers could capture greater consumer spend.

Here are the key operational metrics grounding these potential product shifts:

Consider the following areas for new service implementation:

• Offer smart home tech integration for $\mathbf{2,328}$ existing multifamily units.
• Implement premium package locker systems across all $\mathbf{14}$ owned multifamily properties.
• Target commercial spaces with $\mathbf{58\%}$ occupancy for immediate conversion planning.
• Develop build-to-rent lots from the $\mathbf{1,797}$ total acres of land.
• Structure commercial bridge notes to finance small business expansion in the Southern US.

The loan maturity for Windmill Farms is set for February 28, 2026, at an interest rate of $\mathbf{7.50\%}$.

American Realty Investors, Inc. (ARL) - Ansoff Matrix: Diversification

You're looking at how American Realty Investors, Inc. (ARL) might move beyond its core Southern US multifamily and office focus, which is a smart way to think about growth when your existing portfolio shows mixed results. For instance, as of September 30, 2025, total occupancy was 82%, but that hides a 94% rate in multifamily versus only 58% in commercial properties. That gap suggests a need to either fix the commercial side or find new, more stable asset classes.

The company generated \$12.8 million in total revenues for the third quarter of 2025, up \$1.2 million year-over-year, and reported a net income of \$0.1 million for that quarter. Plus, the first quarter of 2025 showed a net income of \$3.96 million on \$12 million in total revenues, with \$26.3 million in development costs incurred during that period. These figures give you a baseline for the capital structure you'd be working with.

Here's a look at the current financial context before mapping out these diversification moves:

The capital generated from asset sales, like the \$1.4 million gain on the sale of 30 single-family lots from Windmill Farms in late 2024, or the recent \$28,000 sale price of the Villas at Bon Secour in October 2025, could be redeployed. That \$28,000 sale was used to pay off a \$18,767 loan and for general corporate purposes, showing a pattern of asset recycling.

Considering these diversification avenues, here are the strategic thrusts:

• Enter the self-storage market in the Northeast US, a new product in a new, dense geographic market.
• Develop and sell single-family housing lots in new markets, replicating the Windmill Farms model outside the Southern US.
• Acquire and manage specialized real estate, like cold storage or data centers, in new Western US hub cities.
• Launch a small-cap real estate private equity fund to invest in distressed assets outside core segments and regions.
• Utilize the recent \$28,000 property sale proceeds for initial seed capital in a new, non-core property type.

The success of the land sales, where 30 lots yielded \$1.4 million in proceeds and a \$1.1 million gain, validates the model for lot development and sale, suggesting this could be scaled geographically. That's a concrete example of a successful, though localized, non-multifamily/office venture.

For the private equity fund idea, remember that institutional investors are active; for example, one investor recently lifted its position by 44.9%, holding 2,825 shares worth about \$31,000 as of the end of the most recent quarter. This shows external capital interest, which a fund structure could tap into more formally.

If American Realty Investors, Inc. (ARL) were to pursue these, the current stock price range of \$9.43 to \$18.00 over the last 52 weeks provides a market valuation context for any equity issuance related to a new fund or major acquisition. Finance: draft a pro-forma capital allocation plan for the \$28,000 proceeds by next Tuesday.