American Realty Investors, Inc. (ARL): Business Model Canvas [Dec-2025 Updated]

You're digging into the mechanics of American Realty Investors, Inc. (ARL), and honestly, the story isn't just the real estate; it's the structure holding it all together. As an analyst who's seen a few cycles, I can tell you the critical lens here is the heavy reliance on related parties-that advisory fee paid to Pillar Income Asset Management and their 78% ownership in Transcontinental Realty Investors, Inc. (TCI) are central to both cost and partnership. Still, the underlying assets are performing, evidenced by that 94% multifamily occupancy rate as of Q3 2025 and rental revenue hitting $11.4 million in Q1 2025 from that portfolio valued at $612.1 million. Scroll down to see the full Business Model Canvas breakdown to map out exactly how these internal dealings translate into revenue streams and where the near-term risks lie.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Key Partnerships

You're looking at the core relationships American Realty Investors, Inc. (ARL) depends on to run its day-to-day business and secure its capital structure. These partnerships are deeply intertwined, especially with management and ownership entities.

The structure relies heavily on external management and significant ownership concentration, which defines how operations are executed and strategic direction is set.

• - Pillar Income Asset Management (external advisor for day-to-day operations)
• - Transcontinental Realty Investors, Inc. (TCI) (ARL owns approximately 78% of its common stock)
• - Related parties who own over 80% of ARL's outstanding stock
• - Financial institutions for securing debt and refinancing property loans

Pillar Income Asset Management, Inc. handles the operational heavy lifting for American Realty Investors, Inc. This arrangement means ARL has no employees, relying entirely on Pillar's staff to render services under the Advisory Agreement. Pillar also arranges debt and equity financing with third-party lenders and investors for American Realty Investors, Inc. and Transcontinental Realty Investors, Inc. (TCI).

The relationship with Transcontinental Realty Investors, Inc. (TCI) is central, as American Realty Investors, Inc.'s primary asset and source of operating results is its investment in TCI. American Realty Investors, Inc. and a subsidiary own approximately 78% of TCI's common stock, and TCI's financial results are consolidated into American Realty Investors, Inc.'s statements.

Ownership concentration is a defining feature of this partnership structure. Related parties hold a substantial controlling interest in American Realty Investors, Inc. Specifically, over 80% of American Realty Investors, Inc.'s stock is owned by these related parties. Realty Advisors Inc, an insider entity, is reported as the largest shareholder, holding 66.75M shares, which represents 413.24% of the company based on the filing data, valued at approximately $1.06B as of a recent report. Realty Advisors LLC, another insider, holds 18.21M shares, valued around $288.89M.

Financing for property acquisitions and development projects is secured through external sources. American Realty Investors, Inc. primarily uses operating cash flow, sale proceeds, and debt financing, which comes in the form of property-specific, first-lien mortgage loans from commercial banks and institutional lenders. For development projects, short-term, variable-rate construction loans are used, which are later refinanced.

Here is a look at some key metrics reflecting the scale of these relationships and the company's financial standing as of mid-to-late 2025:

The reliance on Pillar Income Asset Management, Inc. for all operational services and financing arrangements is a critical component of the structure. Furthermore, the high ownership stake by related parties, exceeding 80%, directly influences governance and strategic alignment with the management entities.

• Pillar Income Asset Management arranges debt and equity financing.
• ARL's primary asset is its investment in TCI.
• TCI's financial results are consolidated with ARL's.
• Debt is secured via property-specific, first-lien mortgage loans.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Key Activities

You're looking at the core actions American Realty Investors, Inc. (ARL) takes to run its business as of late 2025. It's all about building, holding, and trading real estate assets.

Acquiring, developing, and owning income-producing real estate is fundamental. As of September 30, 2025, ARL's total assets stood at $1.09 billion, with real estate investments rising to $612.1 million. The company operates through two segments: Residential and Commercial.

The day-to-day work involves managing and leasing multifamily and commercial properties. By March 31, 2025, total occupancy across the portfolio hit 80%. Breaking that down, multifamily properties showed strong performance at 94% occupancy as of both March 31, 2025, and September 30, 2025. Commercial property occupancy was lower, at 53% on March 31, 2025, but improved to 58% by September 30, 2025.

The firm actively pursues development of land projects, such as Windmill Farms single-family lots. This activity generates cash through sales and condemnation proceeds. For instance, in Q1 2025, ARL recorded a $3.1 million gain from a condemnation settlement. Earlier, in Q4 2024, ARL sold 30 single family lots from Windmill Farms for $1.4 million, realizing a $1.1 million gain. By September 30, 2025, infrastructure development at Windmill Farms resulted in $55.7 million in District Receivables.

A key financial activity is capital recycling through strategic asset sales. American Realty Investors, Inc. (ARL) executed a significant disposition in late 2025. Here are the specifics on the Villas at Bon Secour sale:

This sale allowed ARL to pay off the property's loan and use the remainder for general corporate purposes.

Finally, a major ongoing activity is the lease-up of new development properties. ARL had four active construction projects as of Q1 2025: Alera, Bandera Ridge, Merano, and Mountain Creek. Development spending was high, with $26.3 million incurred in Q1 2025 alone, partially covered by $17.1 million in construction loan draws. For the first nine months of 2025, development costs for four multifamily properties totaled $59.2 million, with $54.9 million financed via borrowing. The lease-up phase began in late 2025:

• Initial tranches from Alera, Bandera Ridge, and Merano were completed during Q3 2025.
• The lease-up process started following the completion of these initial units.
• Bandera Ridge had an expected total cost of approximately $49.6 million as of late 2023.
• Merano had an expected total cost of approximately $51.9 million as of late 2023.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Key Resources

You're looking at the core assets that power American Realty Investors, Inc. (ARL)'s operations right now. The foundation of this business is definitely its physical holdings. As of September 30, 2025, the company reported its real estate investments valued at $612.1 million. This figure represents the book value of the properties they own and manage across the Southern United States.

This real estate isn't all the same type of property, though. American Realty Investors, Inc. (ARL) maintains a diverse mix to spread risk and capture different market dynamics. The portfolio is structured around several key real estate classes, which you can see broken down by the latest reported occupancy figures from the third quarter of 2025.

Beyond the income-producing properties, American Realty Investors, Inc. (ARL) holds undeveloped land. These are assets earmarked for future residential and commercial development, giving the company a growth pipeline outside of current operations. Also sitting on the balance sheet are financial assets, specifically mortgage notes receivable and short-term investments, which totaled $74.9 million in the first quarter of 2025. That's a significant chunk of non-real-estate capital supporting liquidity and potential financing activities.

The operational structure itself relies heavily on specialized knowledge, which is sourced externally. A key resource here is the intellectual capital and expertise provided by their external advisor, Pillar Income Asset Management. This arrangement lets American Realty Investors, Inc. (ARL) tap into deep real estate management experience without necessarily carrying the full overhead of a massive internal team. Honestly, for an externally managed entity, this advisory relationship is critical to asset selection and performance.

To be fair, the performance of the commercial side, which includes office and retail, is lagging the residential side significantly, with only 58% occupancy as of September 30, 2025. The action item here is monitoring the lease-up progress at newer developments like Alera, Bandera Ridge, and Merano, as that directly impacts the utilization of these physical assets. Finance: draft a sensitivity analysis on NOI assuming 70% commercial occupancy by Q2 2026 by next Tuesday.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Value Propositions

You're looking at the core benefits American Realty Investors, Inc. (ARL) delivers to its stakeholders, which are rooted in its real estate holdings across the Southern U.S. The value proposition centers on generating reliable income streams from a geographically diverse portfolio while actively growing that base through development.

The stability comes from the rental income generated by its assets, which include multifamily and commercial properties. For the three months ended September 30, 2025, total revenues reached $12.8 million, a clear increase from the $11.6 million reported in the third quarter of 2024. This growth shows the portfolio is performing better year-over-year.

Here's a quick look at where that Q3 2025 revenue growth came from:

A key part of the value proposition is the high utilization of the residential assets. You can see the strength in the apartment side of the business as of the end of Q3 2025:

• Total Occupancy Rate (All Properties): 82% as of September 30, 2025.
• Residential Segment Occupancy: An impressive 94% at multifamily properties.
• Commercial Segment Occupancy: 58% at commercial properties.

American Realty Investors, Inc. is also focused on expanding its asset base, which is a forward-looking value driver. They are developing new, modern residential units and single-family lots. For instance, the company received its initial tranche of completed units from projects like Alera, Bandera Ridge, and Merano, allowing them to start the lease-up process. On the development spending front, for the first nine months of 2025, development costs for four multifamily properties under construction totaled $59.2 million, with $54.9 million of those costs financed through borrowing.

Finally, the company provides comprehensive property management and tenant services, which helps maintain asset quality and tenant satisfaction. This includes leasing apartment units to residents and leasing office, industrial, and retail space to various businesses and agencies. Tenant services offered specifically include parking and storage space rental. Furthermore, the company actively recycles capital to support operations; for example, on October 10, 2025, American Realty Investors, Inc. sold the Villas at Bon Secour, a 200-unit multifamily property, for $28,000, using the proceeds to pay off a related loan of $18,767 and for general corporate purposes. That focus on asset management helps keep the overall operation lean, evidenced by the net operating loss decreasing from $2.1 million in Q3 2024 to $1.6 million in Q3 2025, despite a $1.0 million rise in operating expenses. Finance: draft 13-week cash view by Friday.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Customer Relationships

You're looking at how American Realty Investors, Inc. (ARL) manages its connections across its different customer bases as of late 2025. Since American Realty Investors, Inc. has 0 total employees, these relationships are almost entirely mediated by its external manager, Pillar Income Asset Management, Inc.

For the residential side, the relationship is primarily transactional, focused on leasing and service for apartment units. The performance here is strong, showing high demand for the multifamily assets. As of September 30, 2025, the total occupancy across all properties stood at 82%, but the residential segment was performing much better. Specifically, multifamily properties achieved an occupancy rate of 94% for the quarter ended September 30, 2025. This segment generated revenue of approximately $0.3 million more in the third quarter of 2025 compared to the same period in 2024.

Here's a quick look at the residential tenant relationship metrics from the Q3 2025 report:

The commercial relationships, covering office, retail, and industrial space, are generally structured as longer-term contracts. These relationships are currently under more pressure than the residential side. Commercial property occupancy was only 58% at September 30, 2025. Still, this segment saw a significant revenue increase of $1.0 million for the three months ended September 30, 2025, compared to the prior year, largely attributed to improved occupancy at the Stanford Center.

The management of these property and tenant relations is outsourced, which defines the nature of the relationship with the end-user. You should note the specific roles:

• Day-to-day management is handled by Pillar Income Asset Management, Inc. ("Pillar") under an Advisory Agreement.
• Regis Realty Prime, LLC ("Regis") manages three of the commercial properties, providing leasing and brokerage services.
• Pillar's duties include locating, evaluating, and recommending real estate investment opportunities.

For public shareholders on the NYSE under the symbol ARL, the relationship is purely financial and informational, managed through SEC filings and investor communications. As of November 21, 2025, the stock was trading at $16.20 / share, with a market capitalization of $261.66M based on 16.15M shares outstanding. The ownership structure shows a heavy concentration among insiders, which impacts the nature of public shareholder engagement.

Here's the breakdown of the shareholder base as of late 2025, showing the structure of that investor relationship:

The largest single shareholder, Realty Advisors Inc, holds 66,746,367 shares, valued at approximately $1.06B. The largest institutional holder identified is Wealth Alliance Advisory Group LLC, with 166,770 shares valued at $2.64M.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Channels

Direct property management and leasing offices for tenants use the physical assets American Realty Investors, Inc. owns across its Residential and Commercial segments.

For the three months ended September 30, 2025, total revenues reached $12.8 million.

Occupancy levels as of September 30, 2025, show the direct leasing channel performance:

• - Total occupancy: 82%
• - Multifamily properties occupancy: 94%
• - Commercial properties occupancy: 58%

Corporate website and SEC filings for investor communication serve as the primary digital conduit for regulatory disclosures.

American Realty Investors, Inc. files documents like the 10-Q Quarterly Earnings Report and the 10-K Annual Report with the Securities and Exchange Commission (SEC).

The company operates through two segments: Residential and Commercial, with tenant services like parking and storage space rental also channeled directly to residents and businesses.

Real estate brokers and agents facilitate the sales channel, which includes the disposition of land and properties.

On October 10, 2025, American Realty Investors, Inc. sold Villas at Bon Secour, a 200 unit multifamily property, for $28,000, paying off a loan of $18,767 on that property.

New York Stock Exchange (NYSE) is the exchange where American Realty Investors, Inc. common stock trades under the symbol ARL.

The stock statistics as of the last reported date reflect this trading channel:

For the three months ended September 30, 2025, net income attributable to common shares was $0.1 million.

Balance sheet assets were reported at $1.09 billion as of the Q2 2025 filing.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Customer Segments

American Realty Investors, Inc. (ARL) serves distinct customer groups across its Residential and Commercial real estate operations, alongside its public equity investors.

Multifamily residents seeking apartment rentals in the Southern US represent the core of the Residential segment's customer base. This group drives the majority of the rental revenue.

• Multifamily occupancy stood at 94% as of September 30, 2025.
• Multifamily profit for the three months ended March 31, 2025, was $4.72 million.
• Rental revenues from multifamily properties increased by $0.3 million for the three months ended September 30, 2025, compared to the prior year period.
• As of December 31, 2021, the portfolio included nine communities with 1,492 units and another fifty-two communities with 10,281 units.

The second major customer group consists of for-profit businesses leasing office, industrial, and retail space, which fall under the Commercial segment. These tenants provide contractual rental rate increases annually.

The third group of commercial tenants includes local, state, and federal government agencies leasing space alongside the for-profit businesses.

Finally, American Realty Investors, Inc. (ARL) serves institutional and individual public equity investors (NYSE: ARL). These investors provide capital in exchange for ownership interest in the company's assets and operations.

• The Market Capitalization as of November 21, 2025, was approximately $261.66 million.
• The number of shares of common stock outstanding as of November 6, 2025, was 16,152,043.
• Total Revenue for the three months ended September 30, 2025, was $12.8 million.
• Rhumbline Advisers, an institutional investor, increased its position by 44.9% in the first quarter of 2025.

Overall total portfolio occupancy was reported at 82% at September 30, 2025.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Cost Structure

The Cost Structure for American Realty Investors, Inc. (ARL) is heavily weighted toward property-level expenditures, management fees, and capital deployment for growth projects. As an externally managed real estate investment company, a significant portion of costs flows to related parties for advisory services.

Key cost components for American Realty Investors, Inc. (ARL) as of late 2025 include:

• - Property operating expenses, which contribute to the overall operating expense base that rose in Q3 2025.
• - Advisory fee to related party, which was explicitly reported as $2.469 million in Q1 2025.
• - Interest expense on debt, managed with a debt-to-equity ratio of 0.27 as of Q3 2025.
• - Development and construction costs, totaling $59.2 million for the first nine months of 2025.
• - General and administrative expenses, which saw an increase in Q3 2025, largely due to costs associated with the lease-up of new properties.

You can see how some of these costs trended across recent quarters based on available filings. Note that Total Operating Expenses include property operating expenses, G&A, and the advisory fee.

The development pipeline is a major cash outlay. For the nine months ending September 30, 2025, American Realty Investors, Inc. (ARL) reported development and construction costs of $59.2 million. To be fair, the company financed $54.9 million of these costs through borrowing, which helps manage the immediate cash impact, but still represents a commitment of capital.

The capital structure, which dictates interest expense, shows a relatively conservative leverage profile compared to historical levels. The debt-to-equity ratio stood at 0.27 as of the end of Q3 2025. This low ratio suggests that interest expense on debt, while present, is likely a smaller driver of overall costs compared to operating expenses and development spending, especially when considering the company's focus on asset management and property operations.

The increase in operating expenses in Q3 2025, which partially offset revenue gains, was explicitly linked to lease-up costs for newly completed multifamily units like Alera, Bandera Ridge, and Merano, alongside higher general and administrative expenses. For instance, the General and administrative expense for Q3 2025 was reported at $3.92 million.

For Q1 2025, the Advisory fee to related party was $2.469 million. This is a fixed, recurring cost structure element tied to the external management agreement with Pillar Income Asset Management, which manages ARL's operations.

Finance: review the Q4 2025 operating expense forecast against the Q3 2025 run rate by next Tuesday.

American Realty Investors, Inc. (ARL) - Canvas Business Model: Revenue Streams

You're looking at the actual money American Realty Investors, Inc. (ARL) brought in during 2025, which is key to understanding their operations. Their revenue streams are heavily weighted toward property rentals, but one-off transactions can really move the needle.

For the first quarter ending March 31, 2025, total revenue was reported at $12.0 million. You can see how the rental income breaks down across their property types during that period:

The prompt mentioned rental revenue from multifamily properties increased in Q1 2025. The actual Q1 2025 multifamily revenue was $8,764 thousand.

Looking at the third quarter ending September 30, 2025, total revenues grew to $12.8 million. This growth was driven by specific segments:

• Rental revenue from commercial properties increased by $1.0 million in Q3 2025 compared to Q3 2024, largely due to better occupancy at Stanford Center.
• Rental revenue from multifamily properties saw an increase of $0.3 million in Q3 2025 over the prior year period.

Gains from selling assets are another significant, though less predictable, stream. For the quarter ended March 31, 2025, American Realty Investors, Inc. recorded a $3.89 million gain on real estate transactions, which included a condemnation settlement and prior lot sales. This is a material difference from the example $1.1 million gain mentioned, showing the real-life impact of legal resolutions.

The business model also includes other standard real estate income sources, though specific 2025 figures for these were not detailed in the latest reports I have access to:

• Interest income from mortgage loans and notes receivable.
• Revenue from tenant services, such as parking and storage space rental.

The company also realized proceeds from a property sale on October 10, 2025, when American Realty sold the Villas at Bon Secour for $28,000 thousand (or $28.0 million). Finance: draft 13-week cash view by Friday.