AMERICAN REALTY INVESTORS INC (ARL)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered higher total revenue ($12.16M) and rental revenues ($11.51M) with EPS of $0.18, up year-over-year from $0.07; net income attributable to common shares rose to $2.83M vs. $1.17M in Q2 2024 .
• Equity income from unconsolidated JVs surged to $19.50M, a major swing from a loss in Q2 2024, driving overall profitability despite continued negative EBIT margins .
• Occupancy improved to 82% (94% multifamily; 57% commercial), supported by leasing at Stanford Center and modest rental revenue growth .
• No formal guidance or earnings call transcript was available; near‑term narrative catalysts are debt reduction ($10.8M loan payoff at 770 South Post Oak) and continued lot sales/gains from Windmill Farms .

What Went Well and What Went Wrong

What Went Well

• “Total occupancy was 82% at June 30, 2025, which includes 94% at our multifamily properties and 57% at our commercial properties.” This supports rent stability and incremental growth .
• “During the three months ended June 30, 2025, we sold 30 single family lots…for $1.4 million, resulting in a gain on sale of $1.1 million.” Transaction gains aided bottom line .
• “On May 30, 2025, we paid off the $10.8 million loan on 770 South Post Oak with cash on hand.” Balance sheet de‑risking lowers forward interest expense run‑rate .

What Went Wrong

• EBIT remained negative with net operating loss of $1.01M as operating structure (advisory fee, depreciation) continued to pressure GAAP operating results .
• Interest income declined sequentially and y/y ($3.35M in Q2 vs. $4.79M in Q2 2024), tempering earnings growth from transactions and JV income .
• Management narrative cites lower operating expenses, yet consolidated “Total operating expenses” rose to $13.17M from $13.05M y/y, indicating mixed expense dynamics (insurance/property taxes lower vs. advisory fee higher) .

Financial Results

Core Financials (Sequential trend)

Year-over-Year Comparison (Q2 2024 vs. Q2 2025)

Margins (GAAP)

Values with * retrieved from S&P Global.

KPIs and Drivers

Guidance Changes

Note: The Q2 press release/8-K did not include forward guidance .

Earnings Call Themes & Trends

No earnings call transcript was available for Q2 2025 in our document set.

Management Commentary

• “Total occupancy was 82% at June 30, 2025, which includes 94% at our multifamily properties and 57% at our commercial properties.”
• “During the three months ended June 30, 2025, we sold 30 single family lots…resulting in a gain on sale of $1.1 million.”
• “On May 30, 2025, we paid off the $10.8 million loan on 770 South Post Oak with cash on hand.”
• Management highlighted rental revenue growth tied to improved occupancy at Stanford Center and lower operating costs (insurance and property taxes) .

Q&A Highlights

No Q&A content was available due to lack of a transcript in our sources for Q2 2025.

Estimates Context

• S&P Global consensus for ARL’s Q2 2025 EPS and revenue was unavailable; coverage appears limited for this microcap REIT. Actuals: EPS $0.18 and total revenue $12.16M in Q2 2025 .
• With no consensus, there are no formal “beat/miss” determinations; estimate models likely need to incorporate the unusually large $19.5M equity income contribution and ongoing transaction gains .

Values retrieved from S&P Global when applicable.

Actuals vs. Consensus (Q2 2025)

Key Takeaways for Investors

• Profitability was driven by a sharp swing in equity income from unconsolidated JVs ($19.5M), masking continued negative EBIT margins; sustainability of JV income is the key debate .
• Occupancy and rental revenue trended positively, aided by Stanford Center and broader stabilization, supporting cash flows despite commercial occupancy still at 57% .
• Balance sheet improved with the payoff of a $10.8M loan; expect incremental interest expense relief in subsequent quarters .
• Transaction gains continue (Windmill Farms), providing episodic earnings support; monitor pipeline of land/asset monetizations for repeatability .
• Advisory fee dynamics and other operating costs require attention; reported narrative of lower operating expenses contrasts with modest y/y increase in total operating expenses .
• With no guidance and no consensus coverage, trading may hinge on updates around leasing (commercial), JV performance, and asset sales rather than traditional estimate beats/misses .
• Near-term focus: watch commercial leasing pace, further debt reduction, and any clarity on JV income cadence to assess durability of earnings trajectory .