AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
	For the Three Months Ended
	March 31,
	2014			2013
	(dollars in thousands, except per share amounts)
Revenues:
Rental and other property revenues (including $175 and $165 for the three months ended 2014 and 2013, respectively, from related parties)	$	20,583		$	20,350
Expenses:
Property operating expenses (including $156 and $204 for the three months ended 2014 and 2013, respectively, from related parties)		10,317			9,982
Depreciation and amortization		4,476			3,755
General and administrative (including $918 and $890 for the three months ended 2014 and 2013, respectively, from related parties)		1,994			2,012
Provision on impairment of notes receivable and real estate assets		-			-
Net income fee to related party		490			56
Advisory fee to related party		2,242			2,554
Total operating expenses		19,519			18,359
Operating income		1,064			1,991
Other income (expenses):
Interest income (including $3,797 and $3,410 for the three months 2014 and 2013, respectively, from related parties)		4,117			3,541
Other income		178			2,536
Mortgage and loan interest (including $798 and $910 for the three months ended 2014 and 2013, respectively, from related parties)		(8,474	)		(9,444	)
Deferred borrowing costs amortization		(939	)		(2,461	)
Loan charges and prepayment penalties		(1,582	)		(3,937	)
Gain (loss) on sale of investments		-			(8	)
Earnings from unconsolidated subsidiaries and investees		70			213
Litigation settlement		3,839			(45	)
Total other expenses		(2,791	)		(9,605	)
Loss before gain on land sales, non-controlling interest, and taxes		(1,727	)		(7,614	)
Gain (loss) on land sales		753			(35	)
Net loss from continuing operations before taxes		(974	)		(7,649	)
Income tax benefit		1,870			2,673
Net income (loss) from continuing operations		896			(4,976	)
Discontinued operations:
Net income (loss) from discontinued operations		(710	)		411
Gain on sale of real estate from discontinued operations		6,053			7,227
Income tax expense from discontinued operations		(1,870	)		(2,673	)
Net income from discontinued operations		3,473			4,965
Net income (loss)		4,369			(11	)
Net (income) loss attributable to non-controlling interest		(819	)		385
Net income attributable to American Realty Investors, Inc.		3,550			374
Preferred dividend requirement		(613	)		(613	)
Net income (loss) applicable to common shares	$	2,937		$	(239	)
Earnings per share - basic
Net loss from continuing operations	$	(0.05	)	$	(0.45	)
Net income from discontinued operations		0.30			0.43
Net income (loss) applicable to common shares	$	0.25		$	(0.02	)
Earnings per share - diluted
Net loss from continuing operations	$	(0.05	)	$	(0.45	)
Net income from discontinued operations		0.30			0.43
Net income (loss) applicable to common shares	$	0.25		$	(0.02	)
Weighted average common shares used in computing earnings per share		11,525,389			11,525,389
Weighted average common shares used in computing diluted earnings per share		11,525,389			11,525,389
Amounts attributable to American Realty Investors, Inc.
Net income (loss) from continuing operations	$	77		$	(4,591	)
Net income from discontinued operations		3,473			4,965
Net income applicable to American Realty Investors, Inc.	$	3,550		$	374

AMERICAN REALTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
	March 31,			December 31,
	2014			2013
	(dollars in thousands, except share and par value amounts)
Assets
Real estate, at cost	$	770,960		$	799,698
Real estate held for sale at cost, net of depreciation ($27,282 for 2014 and $2,390 for 2013)		9,787			16,427
Real estate subject to sales contracts at cost, net of depreciation ($2,036 for 2014 and $1,949 for 2013)		23,335			27,598
Less accumulated depreciation		(120,468	)		(143,429	)
Total real estate		683,614			700,294
Notes and interest receivable
Performing (including $138,086 in 2014 and $145,754 in 2013 from related parties)		145,670			153,275
Non-performing		3,129			3,140
Less allowance for doubtful accounts (including $15,809 in 2014 and 2013 from related parties)		(19,579	)		(19,600	)
Total notes and interest receivable		129,220			136,815
Cash and cash equivalents		18,384			16,437
Restricted cash		27,736			32,929
Investments in unconsolidated subsidiaries and investees		3,990			3,789
Receivable from related party		34,751			14,086
Other assets		42,461			38,972
Total assets	$	940,156		$	943,322
Liabilities and Shareholders’ Equity
Liabilities:
Notes and interest payable	$	629,364		$	618,930
Notes related to assets held for sale		15,717			17,100
Notes related to subject to sales contracts		20,991			23,012
Deferred revenue (including $74,303 in 2014 and 2013 from sales to related parties)		76,148			76,148
Accounts payable and other liabilities (including $15,954 in 2014 and $15,394 in 2013 to related parties)		59,400			73,271
		801,620			808,461
Shareholders’ equity:
Preferred stock, Series A: $2.00 par value, authorized 15,000,000 shares, issued and outstanding 3,353,954 shares in 2014 and 2013 (liquidation preference $10 per share), including 900,000 shares in 2014 and 2013 held by subsidiaries. Series K: $2.00 par value, authorized, issued and outstanding 135,000 shares in 2014 and 2013, respectively (liquidation preference $22 per share)		4,908			4,908
Common stock, $0.01 par value, authorized 100,000,000 shares; issued 11,941,174 shares and outstanding 11,525,389 shares in 2014 and 2013		115			115
Treasury stock at cost; 415,785 shares in 2014 and 2013 and 229,214 shares held by TCI (consolidated) as of 2014 and 2013		(6,395	)		(6,395	)
Paid-in capital		102,280			102,974
Retained earnings		(8,245	)		(11,795	)
Total American Realty Investors, Inc. shareholders' equity		92,663			89,807
Non-controlling interest		45,873			45,054
Total equity		138,536			134,861
Total liabilities and equity	$	940,156		$	943,322