<SEC-DOCUMENT>0000950123-10-071908.txt : 20110314
<SEC-HEADER>0000950123-10-071908.hdr.sgml : 20110314
<ACCEPTANCE-DATETIME>20100803175838
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-10-071908
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20100803

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMERICAN REALTY INVESTORS INC
		CENTRAL INDEX KEY:			0001102238
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE OPERATORS (NO DEVELOPERS) & LESSORS [6510]
		IRS NUMBER:				752847135
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1800 VALLEY VIEW LANE
		STREET 2:		SUITE 300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
		BUSINESS PHONE:		4695224200

	MAIL ADDRESS:	
		STREET 1:		1800 VALLEY VIEW LANE
		STREET 2:		SUITE 300
		CITY:			DALLAS
		STATE:			TX
		ZIP:			75234
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<TITLE>corresp</TITLE>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">METZGER &#038; McDONALD PLLC<BR>
<FONT style="FONT-variant: SMALL-CAPS">A PROFESSIONAL LIMITED LIABILITY COMPANY</FONT><BR>
<FONT style="FONT-variant: SMALL-CAPS">ATTORNEYS, MEDIATORS &#038; COUNSELORS</FONT></DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%"></TD>
    <TD width="5%"></TD>
    <TD width="30%"></TD>
    <TD width="5%"></TD>
    <TD width="30%"></TD>
</TR>
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<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT style="FONT-variant: SMALL-CAPS">Steven C. Metzger</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="FONT-variant: SMALL-CAPS">3626 N. Hall Street, Suite&nbsp;800</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT style="FONT-variant: SMALL-CAPS">Direct Dial 214-740-5030</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="FONT-variant: SMALL-CAPS">Dallas, Texas 75219-5133</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="FONT-variant: SMALL-CAPS">Facsimile 214-224-7555</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top"><FONT style="FONT-variant: SMALL-CAPS">smetzger@pmklaw.com</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="FONT-variant: SMALL-CAPS">214-969-7600</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="FONT-variant: SMALL-CAPS">214-523-3838</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="FONT-variant: SMALL-CAPS"><u>www.pmklaw.com</u></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top"><FONT style="FONT-variant: SMALL-CAPS">214-969-7635</FONT></TD>
</TR>
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</TABLE></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">August&nbsp;3, 2010</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Via EDGAR</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Securities and Exchange Commission<BR>
100 F Street, N.E.<BR>
Washington, D.C. 20549</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">Attn:</TD>
    <TD>&nbsp;</TD>
    <TD>Jessica Baberich, Assistant Chief Accountant<br>
Wilson K. Lee, Staff Accountant</TD>
</TR>
</TABLE></DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Re:</TD>
    <TD>&nbsp;</TD>
    <TD>American Realty Investors, Inc. (Commission File No.
001-15663; CIK No.&nbsp;0001102238) &#151; Form&nbsp;10-K for the fiscal year ended
December&nbsp;31, 2009 filed on March&nbsp;31, 2010</TD>
</TR>
</TABLE></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Ladies and Gentlemen:</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On behalf of American Realty Investors, Inc., a Nevada corporation (&#147;ARL&#148;) this
letter is being filed as correspondence uploaded on the EDGAR system on behalf of
ARL in response to a letter of comment from the Staff of the Securities and Exchange
Commission dated July&nbsp;9, 2010. Schedule&nbsp;1 annexed to this letter contains the
responses to the comments of the Staff. In each instance on such Schedule, for
convenience, each comment of the Staff is repeated, followed in each instance by the
applicable response to such comment or explanation. Also included in such response,
where appropriate, is a letter/page reference to the text to the applicable document
or instrument referred to in the comment.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This letter is being filed under the EDGAR system in direct response to the
comments of the Staff. If you would like to discuss any item concerning the
referenced matter included in this letter or Schedule&nbsp;1, please do not hesitate to
contact the undersigned at any time at 214-740-5030 direct or Gene S. Bertcher,
Executive Vice President and Chief Financial Officer of ARL at 469-522-4238 direct.</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Very truly yours,</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">/s/ Steven C. Metzger</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 50%">Steven C. Metzger</DIV>

<DIV align="left" style="margin-top: 12pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">cc:</TD>
    <TD>&nbsp;</TD>
    <TD>Gene S. Bertcher<br>
Executive Vice President and Chief Financial Officer<br>
American Realty Investors, Inc.<br>
1800 Valley View Lane, Suite&nbsp;300<br>
Dallas, Texas 75234</TD>
</TR>
</TABLE></DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SCHEDULE 1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>Response to Comments of the Staff of<BR>
The Securities and Exchange Commission<BR>
by letter dated July&nbsp;9, 2010 with respect to<BR>
Form&nbsp;10-K for the fiscal year ended December&nbsp;31, 2009<BR>
American Realty Investors, Inc.<BR>
Commission File No.&nbsp;001-15663</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><DIV align="center"><DIV style="FONT-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information is to provide a response to comments of the Staff of the Securities
and Exchange Commission rendered by letter dated July&nbsp;9, 2010 with respect to Form 10-K Annual
Report to the Securities and Exchange Commission for the fiscal year ended December&nbsp;31, 2009 of
American Realty Investors, Inc. (the &#147;Company&#148; or &#147;ARL&#148;). For convenience, each comment of the
Staff is restated below, with our response noted immediately following the comment. Also included
in such response is a letter/page reference to the text of each instrument where applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><U><B>Form&nbsp;10-K for the Year Ended December&nbsp;31, 2009</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Financial Statements and Notes</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><B>Note
2 &#151; Real Estate, pages 52 - 54</B></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Comment/Observation No.&nbsp;1. </B>As discussed on page 72 within note 21, we note that you
agreed to fund LK-Four Hickory LLC for projection shortfalls and approximately $1.0&nbsp;million for
move-in discounts and other concessions. You also disclose that you and Limkwang Nevada, Inc.
unconditionally guaranteed the punctual payment when due of a $28.0&nbsp;million note payable for
LK-Four Hickory, LLC. Please clarify if these are all of the risks and obligations that were
retained from the sale of Four Hickory in 2007 (as disclosed on page 36); if not, please provide us
with a detailed description of the other risks and obligations. Your discussion should address the
consequences should you default on any of your obligations to the LLC. In addition, you disclose
on page 29 that you account for your investment in LK-Four Hickory LLC using the equity method;
please tell us how you considered the guidance in Topic 810 of the FASB Accounting Standards
Codification in determining whether the LLC was a variable interest entity along with your primary
beneficiary analysis, if applicable. Specifically, please discuss the organizational structure of
the LLC including the ownership percentage and the role and rights of each respective member as
well as a comparison of your retained risk and obligations to your proportionate interest in the
LLC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Response to Comment/Observation No.&nbsp;1. </B>The following addresses our investment on LK- Four
Hickory, LLC (&#147;LKFH&#148;) at December&nbsp;31, 2009:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Organizational Structure </B>- In October, 2007 a subsidiary of American Realty
Investors, Inc. sold, for $39,700,000 an office building known as Four Hickory Center (&#145;the
building&#148;) to LKFH, an entity owned approximately 71% by an unrelated third party (Korean investor
Limkwang Nevada, Inc. or &#147;LK Nevada&#148;) and 29% by Four Hickory Center, LLC (&#147;Hickory&#148;), a subsidiary
of
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ARL. To accomplish the transaction LK Nevada contributed $10
million in cash and Hickory contributed $4&nbsp;million in cash with LKFH assuming the existing
bank debt($26,000,000). The ownership percentage of the new entity was determined by the relative
proportion of cash contributed by each of the investors (approximately 71% to LK Nevada and 29% to
Hickory). As a condition of the sale, ARL, agreed to pay $1,000,000 to LKFH, representing the
amount of free rents and tenant improvements included in leases in existence at the time of sale.
This was a purchase price reduction and was accounted for as a reduction in the sales proceeds and
the gain on sale. This item was resolved at the time of sale and does not expose ARL to future
costs or profit reduction and therefore is not a variable interest. As a purchase price reduction
resolved at the time of sale, it is not a form of continuing involvement by ARL in the building.
In connection with the sale an operating agreement was entered into by the partners. The
operating agreement called for the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pro-rata voting rights by ownership interest,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Guarantee of the mortgage debt by each partner,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest rate adjustment provision where ARL would subsidize or receive
reimbursement in the event the mortgage interest rate is above or below a target rate
of 6.5%,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating shortfall provision, where ARL would fund operating shortfalls
greater that 5% of projections for a period of 5&nbsp;years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Non-guaranteed preferred return distributions of 7% on the partners equity
investment.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Accounting treatment </B>- LKFH is evaluated for proper accounting treatment on a periodic
basis as required under applicable accounting literature. Our analysis has consistently concluded
that LKFH is not a Variable Interest Entity (&#147;VIE&#148;) and that ARL would not be the primary
beneficiary if it were a VIE. All potential variable interests are evaluated and are considered
contingent in nature, remote in probability and insignificant in consequence.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Maximum exposure </B>- ARL&#146;s maximum exposure to loss under the operating agreement is
ARL&#146;s initial investment plus or minus it&#146;s 29% equity in earnings to date which is approximately
$4&nbsp;million, or 0.2% of ARL&#146;s assets at December&nbsp;31, 2009. There are no provisions or other items
that extend ARL&#146;s risks beyond that.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Materiality </B>- At December&nbsp;31, 2009, ARL had total assets of $1.8&nbsp;billion and total equity
of $211&nbsp;million. LKFH had assets of $40&nbsp;million, liabilities of $29&nbsp;million and equity of $11
million. ARL had an equity investment in LKFH of approximately $4&nbsp;million. Since ARL accounts for
its investment in LKFH on the equity method, ARL&#146;s equity in earnings of LKFH are already included
in ARL&#146;s financial statements. Therefore, if LKFH were consolidated with ARL, the effect would be
an increase in total assets and liabilities (including minority interest) of $36&nbsp;million or
approximately 2% with no effect on net income or shareholder&#146;s equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The inclusion or omission of disclosures would not impact the decision making of any
potential users of the ARL financial statements. The one disclosure that would be missing
if LKFH were in fact a VIE, and ARL is not the primary beneficiary, is ARL&#146;s maximum exposure to
losses. The terms of the LKFH operating agreement indicate that ARL is exposed to first dollar
losses but
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">that exposure is limited to ARL&#146;s investment of $4&nbsp;million. The maximum exposure to
loss by ARL is approximately 0.2% of ARL&#146;s total assets or 2% of total equity at December&nbsp;31, 2009
an amount not material to ARL financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;LKFH is immaterial to ARL on a qualitative basis as consolidation or additional disclosures
would not cause ARL to fail any debt covenants, violate any agreements or cause any negative
reaction from its customers, creditors or others.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our analysis of the above factors under SAB 99 concludes that the accounting treatment of
LKFH as either an equity method investment or as a VIE is not material to the financial statements
of ARL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Comment/Observation No.&nbsp;2. </B>Furthermore, as disclosed on page 53 of your 2007 Form
10-K, we note that in November&nbsp;2007, you sold a 71% interest in the Four Hickory building to
LK-Four Hickory LLC for $39.7&nbsp;million. You retained 29% and recorded a gain on sale of $15.4
million, with $3.7&nbsp;million of the gain being deferred. Please tell us the terms of the sale, if
not already addressed in our previous comment, and the basis in Topic 360-20 of the FASB Accounting
Standards Codification you relied upon for determining the recognition and deferral of the gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Response to Comment/Observation No.&nbsp;2. </B>The following addresses our accounting for the sale of
Four Hickory Center in 2007:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Terms of the sale </B>- The sale by ARL to LKFH was consummated by contract of sale in
October, 2007. The buyer&#146;s investment was $14&nbsp;million, including $10&nbsp;million from LK Nevada, an
unrelated party. The cash investment of approximately 35% (25% by LK Nevada) of the sales price
and assumption of the existing debt is more than adequate to demonstrate the buyer&#146;s commitment.
The sale did not include a receivable to the seller therefore the sales price was fully collected.
The seller has transferred the usual risk and rewards of ownership to the buyer. Since ARL, has an
equity investment in LKFH of $4&nbsp;million or approximately 29%, the sale was considered a partial
sale under the relevant account literature and 29% of the gain on sale was deferred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Accounting treatment </B>- Applicable accounting literature states that if a seller is involved
with a property after it is sold that results in retention of substantial risks or rewards of
ownership, the absence of continuing involvement criterion has not been met. The seller may have
continuing involvement when the seller is required to support operations for a specified limited
period. If support is required for a limited time, profit on the sale shall be recognized on the
basis of performance of the services required. Performance of those
services shall be measured by the costs incurred over the period during which the services are
performed. Profit shall begin to be recognized when there is reasonable assurance that future rent
will cover operating expenses and debt service. In addition, applicable accounting literature
states that if the seller is required to support the operations of the property after the sale and
if the transaction is in substance a sale, the seller shall recognize profit to the extent that
proceeds exceed all of the sellers costs related to the entire property.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The operating shortfall, interest rate agreement or move-in discounts and other concessions
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">do not constitute &#147;retention of <I>substantial </I>risks or rewards of ownership&#148;. The move-in discount
and other concessions provision was completed at the time of sale. The operating shortfall and
interest rate agreements are contingent in nature, not subject to reasonable estimation and based
on probability analysis at the time of sale, considered remote. To date, no additional support has
been paid in connection with the any of the terms of the operating agreement. In addition, at the
time of the sale, and through the current date, property rent covers all operating expenses and
debt service. Also, since all of the proceeds have been received and they exceeded all of the
sellers costs, profit recognition is permitted. Therefor, no additional gain amounts need be
considered for deferral.
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>AMERICAN REALTY INVESTORS, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>ACKNOWLEDGMENT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned, on behalf of American Realty Investors, Inc., a Nevada corporation (the
&#147;Company&#148;), in connection with a response to a comment letter from the Staff of the Securities and
Exchange Commission dated July&nbsp;9, 2010, do hereby acknowledge on behalf of the Company that:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Company is responsible for the adequacy and accuracy of
disclosure in
filings with the Securities and Exchange Commission (the &#147;Commission&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Staff comments or changes to disclosure in response to Staff
comments do
not foreclose the Commission from taking any action with respect to the filings.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Company may not assert Staff comments as a defense in any
proceeding
initiated by the Commission or any person under the federal securities laws of the United
States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the undersigned has executed this Acknowledgment on and as of the
3<SUP style="FONT-size: 85%; vertical-align: text-top">rd</SUP> day of August, 2010.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">AMERICAN REALTY INVESTORS, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Gene S. Bertcher
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Gene S. Bertcher, Executive Vice&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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