What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-21 compared with 2023-03-23 · 54 added, 58 removed, 377 unchanged (23% of the section changed)

58 unchanged sentences

He holds Series 7 (General Securities Representative), Series 63 (Uniform Securities Agent State Law) and Series 65 (Investment Advisor) licenses issued by Financial Industry Regulatory Authority (“FINRA”).

Hogan was elected as a director of TCI since February 2020.

Hogan has also served as as a Director of TCI since February 2020 .

JAKUSZEWSKI, age 61, Director, Independent, since November 2005

1 unchanged sentence

He was a Medical Specialist from January 2014 to April 2015 for VAYA Pharma, Inc., Senior Medical Liaison from January 2013 to July 2013 for Vein Clinics of America, and the Vice President of Sales and Marketing from September 1998 to December 2012 for New Horizons Communications, Inc.

Jakuszewski has been a Director of the Company since November 2005.

He has also been a Director of TCI since November 2005 and a Director of IOR since March 2004.

Jakuszewski has also served as a Director of TCI since November 2005 and a Director of IOR since March 2004 .

LARA CELIS, age 58, Director, Independent, since October 2023

Lara is an entrepreneur and the General Manager and President of FYA Project, LLC, a Schlotzsky’s Deli Franchisee (Restaurant and Fast Food) which owns and operates seven locations in the North Dallas, Texas area.

He is also the General Manager and President of UDF de Mexico S.de R.L.

de C.V., a Dallas Texas based independent contractor which manages real estate projects Loma Bonita and La Laguna in Tampico, Mexico.

Prior to 2006, Mr.

Lara was employed by the Mexico State Superior Control Authority in Veracruz, Mexico as a General Auditor and/or Information Manager.

He has also served as a Director of TCI and IOR since October 2023.

Lara joined the board on October 11, 2023 to replace Raymond D.

Roberts, Sr., who had resigned from the board.

MUNSELLE, age 68, Director, Independent, since February 2004

3 unchanged sentences

Spindletop’s stock is traded on the Over-the-Counter (OTC) market.

Munselle has been a Director of the Company since February 2004.

He has also served as Director of TCI since February 2004 and Director of IOR since March 2009.

He has also served as Director of TCI since February 2004 and Director of IOR since May 2009 .

Munselle is qualified as an Audit Committee financial expert within the meaning of SEC regulations and the Board of Directors has determined that he has accounting and related financial management expertise within the meaning of the listing standards of the NYSE.

5 unchanged sentences

Phillips holds a number of securities licenses, including the Series 4 (Options Principal), Series 7 (General Securities License), Series 24 (General Securities Principal), Series 27 (Financial and Operations Principal), Series 53 (Municipal Securities Principal), Series 55 (Equity Trading Principal), and Series 63 (Blue Sky Securities License).

He has also been a Director of TCI since March 2021.

ROBERTS, SR., age 91, Director, Independent, since June 2016

Roberts is currently retired.

Roberts has served as Director of the Company since June 2, 2016.

He has also served as Director of TCI and IOR since June 2, 2016.

For more than five years prior to December 31, 2014, he was Director of Aviation of Steller Aviation, Inc., a privately held corporation engaged in the business of aircraft (Boeing 737) and logistical management.

He is also a director of New Concept Energy, Inc.

since June 2015, which has its common stock listed and traded on the NYSE American Exchange.

He has also served as a Director of TCI since March 2021 .

Board Meetings and Committees

The Board of Directors held five meetings during 2022.

The Board of Directors held six meetings during 2023.

For such year, no incumbent director attended fewer than 75% of the aggregate of (1) the total number of meetings held by the Board during the period for which he or she had been a director and (2) the total number of meetings held by all committees of the Board on which he or she served during the period that he served.

5 unchanged sentences

Jakuszewski X Chair X

Lara Celis X X Chair

Munselle Chair X X

11 unchanged sentences

The Committee also prepares and supervises the Board’s annual review of director independence and the Board’s performance self-evaluation.

The Charter of the Governance and Nominating Committee was adopted on March 17, 2004 and is available on our Investor Relations Website.

The Charter of the Governance and Nominating Committee is available on our Investor Relations Website.

The Governance and Nominating Committee met two times during 2023 .

17 unchanged sentences

As a result of these reviews, the Board affirmatively determined of the then directors, Messrs.

Butler, Munselle, Hogan, Jakuszewski and Roberts are each independent of the Company and its Management under the standards set forth in the Corporate Governance Guidelines.

Butler, Hogan, Jakuszewski Lara and Munselle, are each independent of the Company and its Management under the standards set forth in the Corporate Governance Guidelines.

Executive Officers

5 unchanged sentences

No family relationships exist among any of the executive officers or directors of the Company.

Muth has served as the President and Chief Executive Officer of the Company, TCI and IOR since December 16, 2021.

He has also been President and Chief Executive Officer of Pillar since October 18, 2021.

Prior to joining the Company, he served as Senior Managing Director, Capital Markets and Development of ValueRock Realty Partners, a national real estate investment services firm, focusing on value-ad commercial real estate throughout California, Hawaii and Arizona.

Prior thereto, from December 2014 to June 2019, he was Senior Managing Director, Portfolio and Asset Management of Madison Marquette, a leading commercial real estate investment manager, service provider, developer and operator of real property.

From 2012 to 2014, he was Chief Investment Officer of Buckingham Companies, a real estate investment firm engaged in the multifamily sector.

Muth, from 1994 to 2012, was Managing Principal or Senior Managing Partner of ING/Concert Realty Partners, a real estate investment and operations firm.

He is also a CPA.

Johnson has served as the Executive Vice President and Chief Financial Officer of the Company and TCI since August 2020 and Executive Vice President and Chief Financial Officer of IOR since December 2021.

He has also been Chief Financial Officer of Pillar since June 29, 2020.

Johnson has served as Executive Vice President and Chief Financial Officer of the Company and TCI since August 2020.

He has also served Pillar as Chief Financial Officer since June 2020 and as Interim President since April 2023.

In addition, he has served as the Executive Vice President and Chief Financial Officer of IOR since December 2021.

Prior to joining the Company, he served as Vice President of Financial Reporting at Macerich (NYSE:

5 unchanged sentences

He is also a CPA.

In addition to the foregoing executive officers, we have several vice presidents and assistant secretaries that are not listed herein.

Since the April 14, 2023 resignation of Bradley J.

Muth, age 67, the offices of President and Chief Executive Officer has been vacant.

Johnson currently serves as the principal executive officer of the Company.

At the time of his resignation, Mr.

Muth advised that his resignation was not the result of any disagreement with the Company, its management, the Board of Directors, or any committee of the Board with respect to procedure, policies or operations.

Code of Ethics

15 unchanged sentences

We have no employees and as such, employees of Pillar render services to us in accordance with the terms of the Advisory Agreement.

Pillar is a Nevada corporation, the sole stockholder of which is Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is RAI, a Nevada corporation, the sole stockholder of which is MRHI, a Nevada corporation, the sole stockholder of which is a trust known as the May Trust.

Pillar is a Nevada corporation, the sole stockholder of which is Realty Advisors, LLC, a Nevada limited liability company, the sole member of which is RAI, a Nevada corporation, the sole stockholder of which is MRHI, a Delaware corporation, the sole stockholder of which is a trust known as the May Trust.

The beneficiaries of the May Trust are the children of the late Gene E.

7 unchanged sentences

Pillar is a company of which Messrs.

Muth, Johnson and Corna serve as executive officers.

Johnson and Corna serve as executive officers.

The Advisory Agreement provides for Pillar to be responsible for our day-to-day operations and to receive, as compensation for basic management and advisory services, a gross asset fee of 0.0625% per month (0.75% per annum) of the average of the gross asset value (total assets less allowance for amortization, depreciation or depletion and valuation reserves).

9 unchanged sentences

(b) the compensation customarily charged in arm’s-length transactions by others rendering similar property acquisition services as an ongoing public activity in the same geographical location and for comparable property, provided that the aggregate purchase price of each property (including acquisition fees and real estate brokerage commissions) may not exceed such property’s appraised value at acquisition;

(4) a construction fee equal to 6.0% of the so-called “hard costs” only of any costs of construction on a completed basis, based upon amounts set forth as approved on any architect’s certificate issued in connection with such construction, which fee is payable at such time as the applicable architect certifies other costs for payment to third parties.

The phrase “hard costs” means all actual costs of construction paid to contractors, subcontractors and third parties for materials or labor performed as part of the construction but does not include items generally regarded as “soft costs,” which are consulting fees, attorneys’ fees, architectural fees, permit fees and fees of other professionals;

(4) reimbursement of certain expenses incurred by the advisor in the performance of advisory services.

18 unchanged sentences

As discussed below, under “Property Management and Real Estate Brokerage,” Regis Realty Prime, LLC, (“Regis”) manages our commercial properties and provides brokerage services.

We have a Cash Management Agreement with Pillar that provides that all of our funds are delivered to Pillar which has a deposit liability to us and is responsible for payment of all payables and investment of all excess funds which earn interest at the Wall Street Journal prime rate plus 1.0% per annum, as set quarterly on the first day of each calendar quarter.

We have a Cash Management Agreement with Pillar that provides that all of our funds are delivered to Pillar which has a deposit liability to us and is responsible for payment of all payables and investment of all excess funds which earned interest at the Wall Street Journal prime rate plus 1.0% per annum, as set quarterly on the first day of each calendar quarter.

Borrowings for our benefit bear the same interest rate.

11 unchanged sentences

Name Officers

Muth President and Chief Executive Officer

Johnson Executive Vice President and Chief Financial Officer

Johnson Interim President

Corna Executive Vice President and Secretary

Kay Executive Vice President and Chief Accounting Officer

Kyles Executive Vice President

Property Management

16 unchanged sentences

Except for Henry A.

Butler, who is paid a fee per meeting attended, e ach non-affiliated Director is entitled to receive an annual retainer of $12,000, with the Chairman of the Audit Committee to receive a one-time annual fee of $500.

Butler, who is paid a fee per meeting attended, each non-affiliated Director is entitled to receive an annual retainer of $20,000, with the Chairman of the Audit Committee to receive an additional annual fee of $500.

Directors who are also employees of the Company or its advisor receive no additional compensation for service as a Director.

4 unchanged sentences

Jakuszewski, $20,000;

Lara Celis, $5,000;

Munselle, $20,500 and Raymond D.

17 unchanged sentences

** Percentage is based upon 16,152,043 shares of Common stock outstanding at March 19, 2024.

RAI is a wholly owned subsidiary of MRHI, which is wholly owned by the The May Trust.

RAI is a wholly owned subsidiary of MRHI, which is wholly owned by The May Trust.

The beneficiaries of The May Trust are the children of the late Gene E.

6 unchanged sentences

Johnson — — %

Lara Celis — — %

Munselle — — %

19 unchanged sentences

Additionally, Pillar serves as a consultant to the Board with regard to their decisions in connection with our business plan and investment policy.

Pillar also serves as an Advisor and Cash Manager to ARL and IOR.

Pillar also serves as an Advisor and Cash Manager to TCI and IOR.

As the contractual advisor, Pillar is compensated under an Advisory Agreement that is more fully described in Part III, Item 10.

5 unchanged sentences

Phillips, serve as Directors of IOR .

Our executive officers also serve as executive officers of TCI .

Our executive officers also serve as executive officers of TCI and IOR .

As such, they owe fiduciary duties to that entity as well as to Pillar under applicable law.

TCI has the same relationship with Pillar, as does the Company.

Moos is the sole Manager and Class B 2% income Member of Victory Abode Apartments LLC, and until August 2020, was the President of ARL, TCI and IOR.

TCI and IOR have the same relationship with Pillar, as does the Company.

Effective since January 1, 2011, Regis manages our commercial properties for a fee of 3.0% or less of the monthly gross rents collected on the commercial properties it manages, and leasing commissions of 6.0% or less in accordance with the terms of its property-level management agreement.

9 unchanged sentences

Related party transactions may not always be favorable to our business and may include terms, conditions and agreements that are not necessarily beneficial to or in the best interest of our company.

In 2022, we paid Pillar advisory fees of $8.8 million and cost reimbursements of $3.6 million.

We paid property management fees, construction management fees and leasing commissions of $0.4 million to Regis in 2022.

In addition, SPC is part of a management service agreement with the controlling shareholder owned company in which SPC for an annual payment of 0.5% on the value of the investment properties receives from the Advisor office space, administrative and management services.

During 2022, SPC paid management fees to Pillar in the amount of $1.9 million.

In 2023, we paid Pillar advisory fees of $10.2 million and cost reimbursements of $4.0 million and paid Regis property management fees of $0.4 million.

In connection with our ongoing development projects, we paid development fees of $0.4 million to Pillar in 2023.

In 2023, we also acquired parcels land in connection with these projects at aggregate appraised values of $8.8 million from Pillar in exchange for a reduction in our related party receivable with Pillar .

As of December 31, 2023, we had notes and interest receivables of $75.4 million and $2.0 million, respectively, due from related parties.

Refer to Part 2, Item 8.

Note 9 – Notes Receivable of our consolidated financial statements.

During the current period, we recognized interest income of $6.3 million, originated $10.9 million, received $1.3 million principal payments, and received interest payments of $6.8 million from these related party notes receivables.

We were the primary guarantor, on a $24.3 million mezzanine loan between UHF and a lender.

The guarantee was removed on January 29, 2021, concurrent with the repayment of the loan by UHF.

We received rental revenue $0.9 million,for the years ended December 31, 2022 for office space leased to Pillar and Regis.

Refer to Note 9 – Notes Receivable of our consolidated financial statements.

During the current period, we recognized interest income of $3.8 million, received $1.6 million principal payments and received interest payments of $6.4 million from these related party notes receivables.

We received rental revenue of $0.9 million,for the year ended December 31, 2023 for office space leased to Pillar and Regis.

From time to time, we have made advances and/or borrowing to/from other related parties, which generally have not had specific repayment terms, did not bear interest, are unsecured, and have been reflected our financial statements as other assets or other liabilities.

1 unchanged sentence

The interest rate, set at the beginning of each quarter, is the prime rate plus 1.0% on the average daily cash balances advanced.

At December 31, 2022, we had a receivable from related parties of $108.2 million.

At December 31, 2023, we had a receivable from related parties of $96.5 million and recognized interest income of $9.5 million during the current period.

Director Independence

38 unchanged sentences

The following documents are filed as Exhibits to this Report:

Number Description

3.1 Certificate of Restatement of Articles of Incorporation of American Realty Investors, Inc., dated August 3, 2000 (incorporated by reference to Exhibit 3.0 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).

15 unchanged sentences

Subsidiaries of the Registrant.

Purchases of Equity Securities by the Issuer and Affiliated Purchases

Rule 13a-14(a) Certification by Principal Executive Officer.

Rule 13a-14(a) Certification by Principal Financial Officer.

Certification Pursuant to 18 U.S.C.

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Number Description

101.INS XBRL Instance Document

8 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AMERICAN R EALTY I NVESTORS , I NC .

AMERICAN REALTY INVESTORS, INC.

March 21, 2024 By:

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

(Principal Executive and Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

5 unchanged sentences

JAKUSZEWSKI Director March 21, 2024

/s/ FERNANDO V.

LARA CELIS Director March 21, 2024

MUNSELLE Director March 21, 2024

1 unchanged sentence

PHILLIPS Director March 21, 2024

/s/ RAYMOND D.

Director March 23, 2023

/s/ BRADLEY J.

MUTH President and Chief Executive Officer March 23, 2023

Muth (Principal Executive Officer)

JOHNSON Executive Vice President and Chief Financial Officer March 21, 2024

Johnson (Principal Financial Officer)

Johnson (Principal Executive and Financial Officer)

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures