<SEC-DOCUMENT>0001193125-12-164233.txt : 20120416
<SEC-HEADER>0001193125-12-164233.hdr.sgml : 20120416
<ACCEPTANCE-DATETIME>20120416141400
ACCESSION NUMBER:		0001193125-12-164233
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20120509
FILED AS OF DATE:		20120416
DATE AS OF CHANGE:		20120416
EFFECTIVENESS DATE:		20120416

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:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15663
		FILM NUMBER:		12760687

	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>DEF 14A
<SEQUENCE>1
<FILENAME>d333293ddef14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
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<TITLE>Definitive Proxy Statement</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">UNITED STATES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2">SECURITIES AND EXCHANGE COMMISSION </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">WASHINGTON, D.C. 20549 </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SCHEDULE 14A INFORMATION </B></FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Proxy Statement Pursuant to Section 14(a) of the Securities Exchange of 1934 (Amendment No. <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> )
</FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px; margin-left:1%; text-indent:-1%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filed by the Registrant&nbsp;&nbsp;<FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT> </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1%; text-indent:-1%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filed by a Party other than the Registrant&nbsp;&nbsp;<FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1%; text-indent:-1%"><FONT STYLE="font-family:Times New Roman" SIZE="2">Check the appropriate box: </FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Preliminary Proxy Statement.</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3" NOWRAP><FONT STYLE="font-family:Times New Roman" SIZE="2">CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY&nbsp;(AS PERMITTED BY RULE 14a-6(e)(2)).</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Proxy Statement.</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Definitive Additional Materials.</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Soliciting Material Pursuant to Section&nbsp;240.14a-12.</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">AMERICAN REALTY INVESTORS, INC.</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1">(Name of Registrant As Specified In Its Charter)</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1">(Name of Person(s) Filing Proxy Statement if other than the Registrant)</FONT></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5"><FONT STYLE="font-family:Times New Roman" SIZE="2">Payment of Filing Fee (Check the appropriate box):</FONT></TD></TR>
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<TD HEIGHT="8" COLSPAN="4"></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">No fee required.</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.</FONT></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Title of each class of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">2)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Aggregate number of securities to which transaction applies:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">3)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):</FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Proposed maximum aggregate value of transaction:</FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">5)</FONT></TD>
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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Total fee paid:</FONT></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
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<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Fee paid previously with preliminary materials.</FONT></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="2">Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of its filing.</FONT></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">1)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Amount Previously Paid:</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px" align="left">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">2)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Form, Schedule or Registration Statement No.:</FONT></P>
<P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px"><FONT SIZE="1">&nbsp;</FONT></P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">3)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Filing Party:</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Date Filed:</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:1px">&nbsp;</P></TD></TR>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>AMERICAN REALTY INVESTORS, INC. </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>NOTICE OF ANNUAL MEETING OF STOCKHOLDERS </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="4"><B>TO BE HELD ON MAY 9, 2012 </B></FONT></P> <P STYLE="margin-top:36px;margin-bottom:0px; text-indent:5%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3">American Realty Investors, Inc.
will hold its Annual Meeting of Stockholders on Wednesday, May&nbsp;9, 2012, at 10:15 a.m., local Dallas, Texas time, at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234. The purpose of the meeting is to: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:5%; text-indent:5%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&middot;</B> Elect a Board of four directors to serve until the next Annual Meeting of Stockholders
and until their successors are duly-elected and qualified. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:5%; text-indent:5%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&middot;</B> Ratify the
appointment of Farmer, Fuqua&nbsp;&amp; Huff, P.C. as the independent registered public accounting firm. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:5%; text-indent:5%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="3"><B>&middot;</B> Act upon such other matters as may properly be presented at the Annual Meeting. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:5%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="3">Only Stockholders of record at the close of business on April&nbsp;4, 2012 will be entitled to vote at the meeting. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:5%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3">Your vote is important. Whether or not you plan to attend the meeting, please complete, sign, date and return the
enclosed proxy card in the accompanying envelope provided. Your completed proxy will not prevent you from attending the meeting and voting in person should you choose. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:5%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3">Dated: April&nbsp;6, 2012. </FONT></P>
<P STYLE="font-size:18px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="3">By order of the Board of Directors,</FONT></P></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3">/s/ Louis J. Corna</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3">Louis J.
Corna</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3">Executive Vice President, General Counsel,</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT
STYLE="font-family:Times New Roman" SIZE="3">Tax Counsel and Secretary</FONT></P></TD></TR>
</TABLE></DIV> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center> <P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>This Proxy Statement is available at </B><B><I><U>www.amrealtytrust.com</U></I></B><B> </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>Among other things, the Proxy Statement contains information regarding </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&nbsp;&nbsp;&middot; The date, time and location of the meeting </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&middot; A list
of the matters being submitted to Stockholders </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>&middot; Information concerning voting in person </B></FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>AMERICAN REALTY INVESTORS, INC. </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PROXY STATEMENT </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>FOR THE ANNUAL MEETING OF STOCKHOLDERS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>TO BE HELD MAY 9, 2012
</B></FONT></P> <P STYLE="margin-top:24px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors of American Realty Investors, Inc. (the &#147;Company,&#148; or &#147;we&#148; or
&#147;us&#148;) is soliciting proxies to be used at the 2011 Annual Meeting of Stockholders (the &#147;Annual Meeting&#148;). Distribution of this Proxy Statement and a Proxy Form is scheduled to begin on April&nbsp;9, 2012. The mailing address of
the Company&#146;s principal executive offices is 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>About the Meeting
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Who Can Vote </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Record holders of Common Stock of the Company at the close of business on Wednesday, April&nbsp;4, 2012 (the &#147;Record Date&#148;) may vote at the Annual Meeting. On that date, 11,525,389 shares of
Common Stock were outstanding. Each share is entitled to cast one vote. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>How Can You Vote </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you return your signed proxy before the Annual Meeting, we will vote your shares as you direct. You can specify
whether your shares should be voted for all, some or none of the nominees for director. You can also specify whether you approve, disapprove or abstain from the other proposal to ratify the selection of auditors. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If a proxy is executed and returned but no instructions are given, the shares will be voted according to the
recommendations of the Board of Directors. The Board of Directors recommends a vote <B>FOR</B> Proposals 1 and 2. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Revocation of Proxies
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">You may revoke your proxy at any time before it is exercised by (a)&nbsp;delivering a written notice of
revocation to the Corporate Secretary, (b)&nbsp;delivering another proxy that is dated later than the original proxy, or (c)&nbsp;casting your vote in person at the Annual Meeting. Your last vote will be the vote that is counted. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Vote Required </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The holders of a majority of the shares entitled to vote who are either present in person or represented by a proxy at the Annual Meeting will constitute a quorum for the transaction of business at the
Annual Meeting. As of April&nbsp;4, 2012, there were 11,525,389 shares of Common Stock issued and outstanding. The presence, in person or by proxy, of stockholders entitled to cast at least 5,762,695 votes constitutes a quorum for adopting the
proposals at the Annual Meeting. If you have properly </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-1-
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signed and returned your proxy card by mail, you will be considered part of the quorum, and the persons named on the proxy card will vote your shares as you have instructed. If the broker holding
your shares in &#147;street&#148; name indicates to us on a proxy card that the broker lacks discretionary authority to vote your shares, we will not consider your shares as present or entitled to vote for any purpose. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">A plurality of the votes cast is required for the election of directors. This means that the director nominee with the
most votes for a particular slot is elected to that slot. A proxy that has properly withheld authority with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">For the other proposal, the affirmative vote
of the holders of a majority of the shares represented in person or by proxy entitled to vote on the proposal will be required for approval. An abstention with respect to such proposal will not be voted, although it will be counted for purposes of
determining whether there is a quorum. Accordingly, an abstention will have the effect of a negative vote. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As
of the Record Date, affiliates held 8,424,925 shares representing approximately 73.1% of the shares outstanding. These affiliates have advised the Company that they currently intend to vote all of their shares in favor of the approval of both
proposals. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you received multiple proxy cards, this indicates that your shares are held in more than one
account, such as two brokerage accounts, and are registered in different names. You should vote each of the proxy cards to ensure that all your shares are voted. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Other Matters to be Acted Upon at the Annual Meeting </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">We
do not know of any other matters to be validly presented or acted upon at the Annual Meeting. Under our Bylaws, no business besides that stated in the Annual Meeting Notice may be transacted at any meeting of stockholders. If any other matter is
presented at the Annual Meeting on which a vote may be properly taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Expenses of Solicitation </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Company is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. Some of our directors,
officers and employees may solicit proxies personally, without any additional compensation, by telephone or mail. Proxy materials will also be furnished without cost to brokers and other nominees to forward to the beneficial owners of shares held in
their names. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Available Information </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Our internet website address is <U><I>www.amrealtytrust.com</I></U>. We make available free of charge through our website our most recent Annual Report on Form 10-K, Quarterly Reports on Forms 10-Q,
Current Reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission. In addition, we have posted the Charters of our Audit
Committee, Compensation Committee, and our Governance and Nominating Committee, as well as our Code of Business Conduct and Ethics, Code of Ethics for </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-2-
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Senior Financial Officers, Corporate Governance Guidelines and Director Independence Standards, all under separate headings. These charters and principles are not incorporated in this instrument
by reference. We will also provide a copy of these documents free of charge to stockholders upon written request. The Company issues Annual Reports containing audited financial statements to its common stockholders. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Multiple Stockholders Sharing the Same Address </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Securities and Exchange Commission (the &#147;SEC&#148;) rules allow for the delivery of a single copy of an annual report and proxy statement to any household at which two or more stockholders
reside, if it is believed the stockholders are members of the same family. Duplicate account mailings will be eliminated by allowing stockholders to consent to such elimination, or through implied consent if a stockholder does not request
continuation of duplicate mailings. Depending upon the practices of your broker, bank or other nominee, you may need to contact them directly to continue duplicate mailings to your household. If you wish to revoke your consent to householding, you
must contact your broker, bank or other nominee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you hold shares of common stock in your own name as a
holder of record, householding will not apply to your shares. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If you wish to request extra copies free of
charge of any annual report, proxy statement or information statement, please send your request to American Realty Investors, Inc., Attention: Investor Relations, 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234 or call (800)&nbsp;400-6407.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Questions </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">You may call our Investor Relations Department at 800-400-6407 if you have any questions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>PLEASE VOTE&#150;YOUR VOTE IS IMPORTANT </B></FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-3-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Corporate Governance and Board Matters </B></FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The affairs of the Company are managed by the Board of Directors. The Directors are elected at the annual meeting of
stockholders each year or appointed by the incumbent Board of Directors and serve until the next annual meeting of stockholders or until a successor has been elected or approved. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">During the past three years, changes have occurred in the membership of the Board of Directors. Ted P. Stokely (a
director and Chairman since November 2002) resigned as a director and Chairman of the Board effective May&nbsp;26, 2009. Sharon Hunt (a director since February&nbsp;20, 2004) resigned as a director on January&nbsp;31, 2011. Martha C. Stephens and RL
S. Lemke were elected directors on February&nbsp;1, 2011. On October&nbsp;13, 2011, each of Martha C. Stephens and RL S. Lemke resigned as directors. On October&nbsp;25, 2011, the Board of Directors re-elected Sharon hunt as a director. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Current Members of the Board </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The members of the Board of Directors (all of whom were elected by the stockholders at the last annual meeting held on December&nbsp;10, 2009) on the date of this proxy statement, and the committees of
the Board on which they serve, are identified below: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="28%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD WIDTH="24%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="14%"></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP ALIGN="center" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000; padding-left:8px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Director</B></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Audit</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Committee</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compensation</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Committee</B></FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:8px">
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Governance</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>and</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Nominating</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Committee</B></FONT></P></TD></TR>


<TR>
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Henry A. Butler</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD></TR>
<TR>
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD></TR>
<TR>
<TD HEIGHT="8" STYLE="BORDER-LEFT:1px solid #000000; padding-left:8px">&nbsp;</TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-left:8px"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2">Chair</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#252;</FONT></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Role of the Board&#146;s Committees </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors has standing Audit, Compensation and Governance and Nominating Committees. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>Audit Committee</I></B>. The functions of the Audit Committee are described below under the heading &#147;<I>Report
of the Audit Committee.</I>&#148; The charter of the Audit Committee was adopted February&nbsp;19, 2004, and is available on the Company&#146;s Investor Relations website (www.amrealtytrust.com). The Audit Committee was originally formed on
February&nbsp;19, 2004. All of the members of the Audit Committee are independent within the meaning of SEC regulations, the listing standards of the New York Stock Exchange and the Company&#146;s <I>Corporate Governance Guidelines</I>.
Mr.&nbsp;Munselle, a member and Chair of the Committee, is qualified as an audit committee financial expert within the meaning of SEC regulations and the Board has determined that he has accounting and related financial management expertise within
the meaning of the listing standards of the New York Stock Exchange. All of the members of the Audit Committee meet the independence and experience requirements of the listing standards of the New York Stock Exchange. The Audit Committee met eight
times during 2011. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-4-
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>Governance and Nominating Committee</I></B>. The Governance and
Nominating Committee is responsible for developing and implementing policies and practices relating to corporate governance, including reviewing and monitoring implementation of the Company&#146;s <I>Corporate Governance Guidelines</I>. In addition,
the Committee develops and reviews background information on candidates for the Board and makes recommendations to the Board regarding such candidates. The Committee also prepares and supervises the Board&#146;s annual review of director
independence and the Board&#146;s performance self-evaluation. The charter of the Governance and Nominating Committee was adopted on March&nbsp;17, 2004, and is available on the Company&#146;s Investor Relations website
(<I>www.amrealtytrust.com</I>). All of the members of the Committee are independent within the meaning of the listing standards of the New York Stock Exchange and the Company&#146;s <I>Corporate Governance Guidelines. </I>The Governance and
Nominating Committee met one time during 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><I>Compensation Committee</I></B>. The Compensation
Committee is responsible for overseeing the policies of the Company relating to compensation to be paid by the Company to the Company&#146;s principal executive officer and any other officers designated by the Board and make recommendations to the
Board with respect to such policies, produce necessary reports on executive compensation for inclusion in the Company&#146;s proxy statement in accordance with applicable rules and regulations and to monitor the development and implementation of
succession plans for the principal executive officer and other key executives and make recommendations to the Board with respect to such plans. The charter of the Compensation Committee was adopted on March&nbsp;17, 2004, and is available on the
Company&#146;s Investor Relations website (<I><U>www.amrealtytrust.com</U></I>). All of the members of the Committee are independent within the meaning of the listing standards of the New York Stock Exchange and the Company&#146;s <I>Corporate
Governance Guidelines</I>. The Compensation Committee is to be comprised of at least two directors who are independent of management and the Company. The Compensation Committee met one time during 2011. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Presiding Director </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">On June&nbsp;17, 2004, the Board created a new position of presiding director, whose primary responsibility is to preside over periodic executive sessions of the Board in which management directors and
other members of management do not participate. The presiding director also advises the Chairman of the Board and, as appropriate, Committee chairs with respect to agendas and information needs relating to Board and Committee meetings, provides
advice with respect to the selection of Committee chairs and performs other duties that the Board may from time to time delegate to assist the Board in the fulfillment of its responsibilities. In September 2010, the non-management members of the
Board designated Ted R. Munselle to serve in this position until the Company&#146;s annual meeting of stockholders to be held following the fiscal year ended December&nbsp;31, 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Selection of Nominees for the Board </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Governance and
Nominating Committee will consider candidates for Board membership suggested by its members and other Board members, as well as management and stockholders. The Committee may also retain a third-party executive search firm to identify candidates
upon request of the Committee from time to time. A stockholder who wishes to recommend a prospective nominee for the Board should notify the Company&#146;s Corporate Secretary or any member of the Governance and Nominating Committee in writing with
whatever supporting material the stockholder considers appropriate. The Governance and Nominating Committee will also consider whether to nominate any </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-5-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
person nominated by a stockholder pursuant to the provisions of the Company&#146;s bylaws relating to stockholder nominations. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Once the Governance and Nominating Committee has identified a prospective nominee, the Committee will make an initial
determination as to whether to conduct a full evaluation of the candidate. This initial determination will be based on whatever information is provided to the Committee with the recommendation of the prospective candidate, as well as the
Committee&#146;s own knowledge of the prospective candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination will be based primarily on the need for additional Board members to
fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the evaluation factors described below. If the Committee determines, in consultation with the Chairman of the Board and other Board members as
appropriate, that additional consideration is warranted, it may request the third-party search firm to gather additional information about the prospective nominee&#146;s background and experience and to report its findings to the Committee. The
Committee will then evaluate the prospective nominee against the standards and qualifications set out in the Company&#146;s <I>Corporate Governance Guidelines, </I>including: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the ability of the prospective nominee to represent the interests of the stockholders of the Company; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the prospective nominee&#146;s standards of integrity, commitment and independence of thought and judgment; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the prospective nominee&#146;s ability to dedicate sufficient time, energy, and attention to the diligent performance of his or her duties,
including the prospective nominee&#146;s service on other public company boards, as specifically set out in the Company&#146;s <I>Corporate Governance Guidelines</I>; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board;
</FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the extent to which the prospective nominee helps the Board reflect the diversity of the Company&#146;s stockholders, employees, customers, guests
and communities; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">the willingness of the prospective nominee to meet any minimum equity interest holding guideline. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Committee also considers such other relevant factors as it deems appropriate, including the current composition of the Board, the
balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees. In connection with this evaluation, the Committee determines whether to interview the prospective nominee, and
if warranted, one or more members of the Committee, and others as appropriate, interview prospective nominees in person or by telephone. After completing this evaluation and interview, the Committee makes a recommendation to the full Board as to the
persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Committee. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-6-
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Bylaws of the Company provide that any stockholder entitled to vote at
the Annual Meeting in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such stockholders&#146; intention to make such nomination has been delivered personally to, or has been
mailed to and received by the Secretary at the principal office of the Company not later than 60 nor more than 90 days prior to the first anniversary date of the preceding year&#146;s annual meeting. If a stockholder has a suggestion for candidates
for election, the stockholder should follow this procedure. Each notice from a stockholder must set forth (i)&nbsp;the name and address of the stockholder who intends to make the nomination and the name of the person to be nominated, (ii)&nbsp;the
class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting and as of the date of such notice, (iii)&nbsp;a representation that the stockholder intends to
appear in person or by proxy at the meeting to nominate the person specified in the notice, (iv)&nbsp;a description of all arrangements or understandings between such stockholder and each nominee and any other person (naming those persons) pursuant
to which the nomination is to be made by such stockholder, (v)&nbsp;such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules, and
(vi)&nbsp;the consent of each nominee to serve as a director of the Company if so elected. The chairman of the Annual Meeting may refuse to acknowledge the nomination of any person not made in compliance with this procedure. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Determinations of Director Independence </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In February 2004, the Board enhanced its <I>Corporate Governance Guidelines. </I>The <I>Guidelines </I>adopted by the Board meet or exceed the new listing standards adopted during that year by the New
York Stock Exchange. The full text of the <I>Guidelines </I>can be found in the Investor Relations section of the Company&#146;s website (<I><U>www.amrealtytrust.com</U></I>). A copy may also be obtained upon request from the Company&#146;s
Corporate Secretary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pursuant to the <I>Guidelines, </I>the Board undertook its annual review of director
independence in May 2011. During this review, the Board considered transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including those reported under
<I>&#147;Certain Relationships and Related Transactions&#148; </I>below. The Board also examined transactions and relationships between directors or their affiliates and members of the Company&#146;s senior management or their affiliates. As
provided in the <I>Guidelines</I>, the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As a result of this review, the Board affirmatively determined that directors Ted R. Munselle, Robert A. Jakuszewski and
Sharon Hunt are each independent of the Company and its management under the standards set forth in the <I>Corporate Governance Guidelines</I>. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Board Meetings During Fiscal 2011 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Board met eight times during fiscal 2011. No incumbent director attended fewer than 75% of the meetings of the Board, and each director attended all of the meetings of the Committees on which he or
she served. Under the Company&#146;s <I>Corporate Governance Guidelines</I>, each Director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including by attending meetings of the
stockholders of the Company, the Board and Committees of </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-7-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
which he or she is a member. In addition, the independent directors met in executive session four times during fiscal 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Directors&#146; Compensation </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Each non-employee director
is currently entitled to receive an annual retainer of $22,500 plus reimbursement for expenses. Prior to January&nbsp;4, 2010, when the Board of Directors reduced fees, each non-employee director was entitled to an annual retainer of $45,000. The
Chairman of the Board does not currently receive any additional fee per year. The Chairman of the Audit Committee also receives an annual fee of $500. In addition, each independent director receives an additional fee of $1,000 per day for any
special services rendered by him to the Company outside of his or her ordinary duties as a director, plus reimbursement of expenses. The Company also reimburses directors for travel expenses incurred in connection with attending Board, committee and
stockholder meetings and for other Company-business related expenses. Directors who are also employees of the Company or its Advisor receive no additional compensation for service as a director. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">During 2011, $84,875 was paid to the non-employee directors in total directors&#146; fees for all services, including the
annual fee for service during the period from January&nbsp;1, 2011 through December&nbsp;31, 2011. Those fees received by directors were Sharon Hunt ($20,624), Ted R. Munselle ($33,494), Robert A. Jakuszewski ($32,994) and Martha C. Stephens
($15,833.34). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">In January 1999, the stockholders of a predecessor of the Company approved the Directors Stock
Option Plan which was assumed by the Company in 2000 (the &#147;Directors Plan&#148;) which provides for the availability of options to purchase up to 40,000 shares of Common Stock. The Directors Plan provided for automatic annual grants of options
to directors of the Company who, at the time of grant of an option were not, and had not been for at least one year, either an employee or officer of the Company or any of its affiliates. Options granted pursuant to the Directors Plan are
immediately exercisable and expire on the earlier of the first anniversary of the date on which a director ceases to be a director or ten years from the date of grant. Each non-employee director was granted an option to purchase 1,000 shares at an
exercise price of $17.71 per share on January&nbsp;11, 1999, the date stockholders approved the Directors Plan. On January&nbsp;1, 2000, 2001, 2002, 2003, 2004 and 2005, each qualifying director was granted an option to purchase 1,000 shares at an
exercise price of $18.53, $13.625, $9.87, $8.09, $9.13 and $9.70 per share, respectively. Each qualifying director was awarded an option to purchase an additional 1,000 shares on January&nbsp;1 of each year. The Directors Plan was terminated by the
Board of Directors on December&nbsp;15, 2005. At December&nbsp;31, 2011, options covering 2,000 shares were exercisable at $9.70 per share. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In January 1998, stockholders of a predecessor of the Company approved the 1997 Stock Option Plan (the &#147;Option Plan&#148;) which provides for options to purchase up to 300,000 shares of Common Stock.
The Option Plan was assumed by the Company in August 2000. The Option Plan is intended principally as an incentive for and as a means of encouraging ownership of the Company&#146;s Common Stock by eligible persons, including directors and officers
of the Company. Options may be granted either as an incentive stock option (which qualifies for certain favorable tax treatment) or as a non-qualified stock option. Incentive stock options cannot be granted to, among others, persons who are not
employees of the Company or any parent or subsidiary of the Company, or to persons who fail to satisfy certain criteria concerning ownership of less than 10% of the shares of Common Stock of the Company. The Option Plan was administered by the Stock
Option Committee, which consisted of three independent directors of the Company, Messrs. Munselle and White and Ms.&nbsp;Hunt. The exercise price per share of an option </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-8-
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is not be less than 100% of the fair market value per share on the date of grant. The Company received no consideration for the grant of an option. The Option Plan was terminated by the Board of
Directors on December&nbsp;15, 2005. None of the executive officers nor any of the directors of the Company hold any options under the Option Plan. Effective July&nbsp;1, 2008, all outstanding options under the Option Plan expired. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Stockholders Communication with the Board </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Stockholders and other parties interested in communicating directly with the presiding director or with the non-Management directors as a group may do so by writing to Ted R. Munselle, Director, Post
Office Box 830163, Richardson, Texas 75083-0163. Effective March&nbsp;22, 2004, the Governance and Nominating Committee of the Board also approved a process for handling letters addressed to members of the Board but received at the Company. Under
that process, the Corporate Secretary of the Company reviews all such correspondence and regularly forwards to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Corporate Secretary, deals
with the functions of the Board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and
received by the Company and request copies of any such correspondence. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Chairman of the Audit Committee and handled in accordance
with procedures established by the Audit Committee with respect to such matters. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Code of Ethics </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company has adopted a Code of Business Conduct and Ethics, which applies to all directors, officers and employees
(including those of the Contractual Advisor). In addition, the Company has adopted a code of ethics entitled &#147;Code of Ethics for Senior Financial Officers&#148; that applies to the principal executive officer, president, principal financial
officer, chief financial officer, principal accounting officer and controller. The text of both documents is available on the Company&#146;s Investor Relations website (<U><I>www.amrealtytrust.com</I></U>). The Company intends to post amendments to
or waivers from its Code of Ethics for Senior Financial Officers (to the extent applicable to the Company&#146;s principal executive officer, principal financial officer or principal accounting officer) at this location on its website. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compliance with Section&nbsp;16(a) of Reporting Requirements </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Section&nbsp;16(a) under the Securities Exchange Act of 1934 requires the Company&#146;s directors, executive officers
and any persons holding 10% or more of the Company&#146;s shares of Common Stock are required to report their ownership of the Company&#146;s shares of Common Stock and any changes in that ownership to the Securities and Exchange Commission (the
&#147;Commission&#148;) on specified report forms. Specific due dates for these reports have been established, and the Company is required to report any failure to file by these dates during each fiscal year. All of these filing requirements were
satisfied by the Company&#146;s directors and executive officers and holders of more than 10% of the Company&#146;s Common Stock during the fiscal year ended December&nbsp;31, 2010. In making these statements, the Company has relied upon the written
representations of its directors and executive officers and the holders of 10% or more of the Company&#146;s Common Stock and copies of the reports that each has filed with the Commission. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-9-
</FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of Certain Beneficial Owners and Management </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of Certain Beneficial Owners </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The following table sets forth the ownership of the Company&#146;s Common Stock, both beneficially and of record, both individually and in the aggregate, for those persons or entities known by the Company
to be the beneficial owners of more than 5% of its outstanding Common Stock as of the close of business on April&nbsp;4, 2012. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="63%"></TD>
<TD VALIGN="bottom" WIDTH="11%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="11%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Name and Address of Beneficial Owner</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Amount&nbsp;and&nbsp;Nature&nbsp;of<BR>Beneficial&nbsp;Ownership*</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Approximate<BR>Percent&nbsp;of&nbsp;Class**</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Arcadian Energy, Inc. (formerly</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">International Health Products, Inc.)</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">2010 Valley View Lane, Suite 250</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,684,341(d)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">14.61%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Prime Stock Holdings, Inc.</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">1603 LBJ Freeway, Suite 800</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1,546,228(a)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">13.42%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Realty Advisors, Inc.</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">1603 LBJ Freeway, Suite 800</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,155,736(a)(b)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">70.76%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Realty Advisors LLC</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">1603 LBJ Freeway, Suite 800</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,609,508(b)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">57.35%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ryan T. Phillips</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">1603 LBJ Freeway, Suite 800</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px; margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dallas, Texas 75234</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,183,338(a)(b)(c)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">71.00%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:10%">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 1,546,228 shares owned by Prime Stock Holdings, Inc.
(&#147;PSH&#148;) which is wholly-owned<U></U> by Realty Advisors, LLC, over which each of the directors of PSH, Ryan T. Phillips and Mickey Ned Phillips, may be deemed to be beneficial owners by virtue of their positions as directors of PSH. The
directors of PSH disclaim beneficial ownership of such shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 6,609,508 shares owned directly by Realty Advisors LLC
(&#147;RALLC&#148;), over which each of the managers, Gene S. Bertcher and Daniel J. Moos, may be deemed to be beneficial owners by virtue of their positions as managers of RALLC. The managers of RALLC disclaim beneficial ownership of such shares.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(c) Includes 27,602 shares owned by the Gene E. Phillips&#146; Children&#146;s Trust of which Ryan T.
Phillips is a beneficiary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 1,684,341 shares
owned by Arcadian Energy, Inc. (&#147;AEI&#148;), over which, Craig E. Landess and Christina A. Morin, the directors of AEI may be deemed to be the beneficial owner by virtue of their positions as directors of AEI. Mr.&nbsp;Landess and
Ms.&nbsp;Morin each disclaims beneficial ownership of such shares. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-10-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Security Ownership of Management </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following table sets forth the ownership of the Company&#146;s Common Stock, both beneficially and of record, both
individually and in the aggregate for the directors and executive officers of the Company as of the close of business on April&nbsp;4, 2012: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="65%"></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="13%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom" NOWRAP ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Name and Address of Beneficial</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Owner</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Amount&nbsp;and&nbsp;Nature&nbsp;of<BR>Beneficial&nbsp;Ownership**</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Approximate<BR>Percent&nbsp;of</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Class***</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Gene S. Bertcher</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;8,392,323(2)(3)(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">72.82%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Henry A. Butler</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;236,587(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.05%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;8,392,323(2)(3)(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">72.82%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Alfred Crozier</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;8,392,323(2)(3)(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">72.82%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;236,587(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.05%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Daniel J. Moos</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;8,397,323(2)(3)(4)(5)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">72.86%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;237,587(1)(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.06%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;237,587(1)(4)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">2.06%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">All directors and executive officers as a group (9 people)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;8,397,323(1)(2)(3)(4)(5)</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">72.86%&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:10px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="line-height:8px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000;width:10%">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">*&nbsp;Less than 1%. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">**&nbsp;&#147;Beneficial Ownership&#148; means the sole or shared power to vote, or to direct the voting of, a security or investment power with respect to a security, or any combination thereof.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">***&nbsp;Percentages are based upon 11,525,389 shares of Common Stock outstanding at April&nbsp;6, 2011.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Each of Sharon Hunt and Ted R. Munselle has options to
purchase shares of Common Stock of the Company which are exercisable within 60 days of April&nbsp;4, 2012. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 6,609,508 shares owned by RALLC, over which the managers and
executive officers of RALLC may be deemed to be the beneficial owners by virtue of their positions as managers and executive officers of RALLC. The managers and executive officers of RALLC disclaim beneficial ownership of such shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 1,546,228 shares owned by PSH, over which the executive
officers of PSH may be deemed to be the beneficial owners by virtue of their positions as executive officers of PSH. The executive officers of PSH disclaim beneficial ownership of such shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 236,587 shares owned by Transcontinental Realty Investors,
Inc. (&#147;TCI&#148;) over which the directors and executive officers of TCI may be deemed to be the beneficial owners by virtue </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-11-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
of their positions as directors and executive officers of TCI. The directors and executive officers of TCI disclaim beneficial ownership of such shares. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Includes 5,000 shares owned by Daniel J. Moos. </FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PROPOSAL 1 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>ELECTION OF DIRECTORS </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Four directors are to be elected at the Annual Meeting. Each director elected will hold office until the Annual Meeting following the fiscal year ending December&nbsp;31, 2012. All of the nominees for
director are now serving as directors of the Company. Each of the nominees has consented to being named in this proxy statement as a nominee and has agreed to serve as a director if elected. The persons named on the proxy card will vote for all of
the nominees for director listed unless you withhold authority to vote for one or more of the nominees. The nominees receiving a plurality of votes cast at the Annual Meeting will be elected as directors. Abstentions and broker non-votes will not be
treated as a vote for or against any particular nominee and will not affect the outcome of the election of directors. Cumulative voting for the election of directors is not permitted. If any director is unable to stand for re-election, the Board
will designate a substitute. If a substitute nominee is named, the persons named on the proxy card will vote for the election of the substitute director. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The nominees for directors are listed below, together with their ages, terms of service, all positions and offices with the Company or the Company&#146;s advisor, other principal occupations, business
experience and directorships with other companies during the last five years or more. The designation &#147;affiliated&#148; when used below with respect to a director means that the director is an officer, director or employee of the Company or the
advisor. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Henry A. Butler, 61 (Affiliated) </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Broker &#150; Land Sales (since April&nbsp;30, 2011) for Pillar Income Asset Management, Inc. (&#147;Pillar&#148;) and
(July 2003 to April&nbsp;30, 2011) for Prime Income Asset Management, LLC (&#147;Prime&#148;) and (1992 to June 2003) for Basic Capital Management, Inc. (&#147;BCM&#148;); Director (since July 2003) and Chairman of the Board (since May 2009) of the
Company, Director (since December 2001) and Chairman of the Board (since May 2009) of Transcontinental Realty Investors, Inc. (&#147;TCI&#148;) and Director (December 2001 to July&nbsp;1, 2003) and since February&nbsp;8, 2011 of Income Opportunity
Realty Investors, Inc. (&#147;IOT&#148;); owner/operator (1989-1991) of Butler Interests, Inc. Vice President (since August&nbsp;3, 2000) of the Company and (since February&nbsp;1, 2011) of TCI and (since February&nbsp;8, 2011) of IOT. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Sharon Hunt, 69 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Ms.&nbsp;Hunt is a Licensed Realtor in Arkansas with Keystone Realty. She was President and owner of Sharon&#146;s Pretzels, Inc. (until sold in 1997), a Dallas, Texas food products entity; director (1991
to 2000) of a 501(c)(3) non-profit corporation involved in the acquisition, renovation and operation of real estate. Ms.&nbsp;Hunt was a director of the Company from February&nbsp;20, 2004 to January&nbsp;31, 2011 and was re-elected as a director of
the Company on October&nbsp;25, 2011. She was a director (February 2004 to January&nbsp;31, 2011) and again (since October&nbsp;25, 2011) of TCI and has been a director of IOT since October&nbsp;25, 2011. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-12-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Robert A. Jakuszewski, 49 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Vice President-Sales and Marketing (since September 1998) of New Horizons Communications, Inc.; Consultant (January
1998-September 1998) for New Horizon Communications, Inc.; Regional Sales Manager (1996-1998) of Continental Funding; Territory Manager (1992-1996) of Sigvaris, Inc.; Senior Sales Representative (1988-1992) of Mead Johnson Nutritional Division,
USPNG; Sales Representative (1986-1987) of Muro Pharmaceutical, Inc. Mr.&nbsp;Jakuszewski has been a director of IOT since March&nbsp;16, 2004, and a director of TCI and the Company since November&nbsp;22, 2005. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Ted. R. Munselle, 56</B> </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Vice President and Chief Financial Officer (since October 1998) of Landmark Nurseries, Inc.; President (December 2004 to August 2007) of Applied Educational Opportunities, LLC, an educational organization
which had two career training schools located in Texas; Director (since February 2004) of the Company and TCI and (since May 2009) IOT; Certified Public Accountant (since 1980) who was employed as an Audit Partner in two Dallas, Texas based CPA
firms (1986 to 1998), as an Audit Manager at Grant Thornton LLP (1983 to 1986) and as Audit Staff to Audit Supervisor at Laventhal&nbsp;&amp; Horwath (1977 to 1983). Director of IOT since May&nbsp;21, 2009. Mr.&nbsp;Munselle is also a director
(since February&nbsp;17, 2012) of Spindletop Oil&nbsp;&amp; Gas Company, a publicly held Texas corporation whose stock is traded in the Over-The-Counter (&#147;OTC&#148;) market. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>The Board of Directors unanimously recommends a vote FOR </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>the election of all of the Nominees named above. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>PROPOSAL 2
</B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>RATIFICATION OF APPOINTMENT OF INDEPENDENT </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>REGISTERED PUBLIC ACCOUNTING FIRM </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee has
appointed Farmer, Fuqua&nbsp;&amp; Huff, P.C. as the independent registered public accounting firm of American Realty Investors, Inc. for the 2012 fiscal year and to conduct quarterly reviews through September&nbsp;30, 2012. The Company&#146;s
Bylaws do not require that stockholders ratify the appointment of Farmer, Fuqua&nbsp;&amp; Huff, P.C. as the Company&#146;s independent registered public accounting firm. Farmer, Fuqua&nbsp;&amp; Huff, P.C. has served as the Company&#146;s
independent registered public accounting firm for each of the fiscal years ended December&nbsp;31, 2004, 2005, 2006, 2007, 2008, 2009, 2010 and 2011. The Audit Committee will consider the outcome of this vote in its decision to appoint an
independent registered public accounting firm next year; however, it is not bound by the stockholders&#146; decision. Even if the selection is ratified, the Audit Committee, in its sole discretion, may change the appointment at any time during the
year if it determines that such a change would be in the best interest of the Company and its stockholders. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">A
representative of Farmer, Fuqua&nbsp;&amp; Huff, P.C. will attend the Annual Meeting. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from the
stockholders. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-13-
</FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>The Board of Directors recommends a vote FOR the ratification </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>of the appointment of Farmer, Fuqua&nbsp;&amp; Huff, P.C. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>as the Company&#146;s independent registered public accounting firm. </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Fiscal Years 2010 and 2011 Audit Firm Fee Summary </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The following table sets forth the aggregate fees for professional services rendered to the Company for the years 2009
and 2010 by the Company&#146;s principal accounting firms, BDO Seidman, LLP and Farmer, Fuqua&nbsp;&amp; Huff, P.C.: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="46%"></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD>
<TD VALIGN="bottom" WIDTH="3%"></TD>
<TD></TD>
<TD></TD>
<TD></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2010</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="6" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>2011</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Type of Fee</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Farmer,&nbsp;Fuqua<BR>&amp; Huff, P.C.</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>BDO&nbsp;Seidman,<BR>LLP</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Farmer,&nbsp;Fuqua<BR>&amp; Huff, P.C.</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>BDO&nbsp;Seidman,<BR>LLP</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>


<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Audit Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$223,200&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$215,700&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Audit-Related Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Tax Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$13,300&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$30,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$13,300&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$27,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">All Other Fees</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:1px solid #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD>
<TD HEIGHT="16" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Total</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$236,500&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$30,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$229,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;$27,000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">&nbsp;&nbsp;</FONT></TD></TR>
<TR STYLE="font-size:1px">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD VALIGN="bottom"> <P STYLE="border-top:3px double #000000">&nbsp;</P></TD>
<TD>&nbsp;</TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">All services rendered by the principal auditors are permissible under applicable laws and
regulations and were pre-approved by either the Board of Directors or the Audit Committee, as required by law. The fees paid the principal auditors for services as described in the above table fall under the categories listed below: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Audit Fees</I>. These are fees for professional services performed by the principal auditor for the
audit of the Company&#146;s annual financial statements and review of financial statements included in the Company&#146;s 10-Q filings and services that are normally provided in connection with statutory and regulatory filing or engagements.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Audit-Related Fees</I>. These are fees for assurance and related services performed by the
principal auditor that are reasonably related to the performance of the audit or review of the Company&#146;s financial statements. These services include attestations by the principal auditor that are not required by statute or regulation and
consulting on financial accounting/reporting standards. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>Tax Fees</I>. These are fees for
professional services performed by the principal auditor with respect to tax compliance, tax planning, tax consultation, returns preparation and review of returns. The review of tax returns includes the Company and its consolidated subsidiaries.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><I>All Other Fees</I>. These are fees for other permissible work performed by the principal
auditor that do not meet the above category descriptions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">These services are actively monitored (as to both
spending level and work content) by the Audit Committee to maintain the appropriate objectivity and independence in the principal auditor&#146;s core work, which is the audit of the Company&#146;s consolidated financial statements. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-14 -
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Report of the Audit Committee </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Of the Board of Directors </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee of the Board of Directors is composed of three directors, each of whom satisfies the requirements of independence, experience and financial literacy under the requirements of the New
York Stock Exchange and the SEC. The Audit Committee has directed the preparation of this report and has approved its content and submission to the stockholders. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee is responsible for, among other things: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">retaining and overseeing the independent registered public accounting firm that serves as our independent auditor and evaluating their performance
and independence; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing the annual audit plan with management and the independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">pre-approving any permitted non-audit services provided by our independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">approving the fees to be paid to our independent registered public accounting firm; </FONT></P></TD></TR></TABLE>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing the adequacy and effectiveness of our internal controls with management, internal auditors and the independent registered public
accounting firm; </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">reviewing and discussing the annual audited financial statements and the interim unaudited financial statements with management and the registered
public accounting firm; and </FONT></P></TD></TR></TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT STYLE="font-family:Times New Roman" SIZE="2">&#149;</FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">approving our internal audit plan and reviewing reports of our internal auditors. </FONT></P></TD></TR></TABLE>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee operates under a written charter adopted by the Board of Directors. The Committee&#146;s
responsibilities are set forth in this charter which is available on our website at <U><I>www.amrealtytrust.com</I></U>. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of the Company&#146;s financial statements, the adequacy of the Company&#146;s system of
internal controls, the Company&#146;s risk management, the Company&#146;s compliance with legal and regulatory requirements, the independent auditors&#146; qualifications and independence, and the performance of the Company&#146;s independent
auditors. The Committee has sole authority over the selection of the Company&#146;s independent auditors and manages the Company&#146;s relationship with its independent auditors. The Committee has the authority to obtain advice and assistance from
outside legal, accounting or other advisors as the Committee deems necessary to carry out its duties and receive appropriate funding, as determined by the Committee, from the Company for such advice and assistance. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Committee met eight times during 2010. The Committee schedules its meetings with a view to ensuring that it devotes
appropriate attention to all of its tasks. The Committee&#146;s meetings include private sessions with the Company&#146;s independent auditors without the presence of the Company&#146;s management, as well as executive sessions consisting of only
Committee members. The Committee also meets senior management from time to time. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-15-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Management has the primary responsibility for the Company&#146;s financial
reporting process, including its system of internal control over financial reporting and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The
Company&#146;s independent auditors are responsible for auditing those financial statements in accordance with professional standards and expressing an opinion as to their material conformity with U.S. generally accepted accounting principles and
for auditing management&#146;s assessment of, and the effective operation of, internal control over financial reporting. The Committee&#146;s responsibility is to monitor and review the Company&#146;s financial reporting process and discuss
management&#146;s report on the Company&#146;s internal control over financial reporting. It is not the Committee&#146;s duty or responsibility to conduct audits or accounting reviews or procedures. The Committee has relied, without independent
verification, on management&#146;s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States of America and on the opinion of
the independent registered public accountants included in their report on the Committee&#146;s financial statements. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">As part of its oversight of the Company&#146;s financial statements, the Committee reviews and discusses with both management and the Company&#146;s independent registered public accountants all annual
and quarterly financial statements prior to their issuance. During 2010, management advised the Committee that each set of financial statements reviewed had been prepared in accordance with accounting principles generally accepted in the United
States of America, and reviewed significant accounting and disclosure issues with the Committee. These reviews include discussions with the independent accountants of the matters required to be discussed pursuant to Statement on Auditing Standards
No.&nbsp;61 (Codification of Statements on Auditing Standards), including the quality (not merely the acceptability) of the Company&#146;s accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the
financial statements and disclosures related to critical accounting practices. The Committee has also discussed with Farmer, Fuqua&nbsp;&amp; Huff, P.C. matters relating to its independence, including a review of audit and non-audit fees, and
written disclosures from Farmer, Fuqua&nbsp;&amp; Huff, P.C. to the Company pursuant to Independence Standards Board Standard No.&nbsp;1 (Independence Discussions with Audit Committees). The Committee also considered whether non-audit services,
provided by the independent accountants are compatible with the independent accountant&#146;s independence. The Company also received regular updates on the amount of fees and scope of audit, audit-related and tax services provided. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">In addition, the Committee reviewed key initiatives and programs aimed at strengthening the effectiveness of the
Company&#146;s internal and disclosure control structure. As part of this process, the Committee continued to monitor the scope and adequacy of the Company&#146;s internal controls, reviewed staffing levels and steps taken to implement recommended
improvements in any internal procedures and controls. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Based on the Committee&#146;s discussion with
management and the independent accountants and the Committee&#146;s review of the representation of management and the report of the independent accountants to the Board of Directors, the Audit Committee recommended to the Board of Directors, and
the Board of Directors has approved, that the audited consolidated financial statements be included in the Company&#146;s Annual Report on Form 10-K for the year ended December&nbsp;31, 2011, filed with the Securities and Exchange Commission. The
Audit Committee and the Board of Directors have also selected Farmer, Fuqua&nbsp;&amp; Huff, P.C. as the Company&#146;s independent registered public accountants and auditors for the fiscal year ending December&nbsp;31, 2012. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-16-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">AUDIT COMMITTEE </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>


<TR>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Pre-Approval Policy for Audit and Non-Audit Services </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Under the Sarbanes-Oxley Act of 2002 (the &#147;SO Act&#148;), and the rules of the Securities and Exchange Commission
(the &#147;SEC&#148;), the Audit Committee of the Board of Directors is responsible for the appointment, compensation and oversight of the work of the independent auditor. The purpose of the provisions of the SO Act and the SEC rules for the Audit
Committee role in retaining the independent auditor is two-fold. First, the authority and responsibility for the appointment, compensation and oversight of the auditors should be with directors who are independent of management. Second, any
non-audit work performed by the auditors should be reviewed and approved by these same independent directors to ensure that any non-audit services performed by the auditor do not impair the independence of the independent auditor. To implement the
provisions of the SO Act, the SEC issued rules specifying the types of services that an independent auditor may not provide to its audit client, and governing the Audit Committee&#146;s administration of the engagement of the independent auditor. As
part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that they do not impair the auditor&#146;s independence. Accordingly, the Audit
Committee has adopted a written pre-approval policy for audit and non-audit services (the &#147;Policy&#148;), which sets forth the procedures and conditions pursuant to which services to be performed by the independent auditor are to be
pre-approved. Consistent with the SEC rules establishing two different approaches to approving non-prohibited services, the policy of the Audit Committee covers pre-approval of audit services, audit-related services, international administration tax
services, non-U.S. income tax compliance services, pension and benefit plan consulting and compliance services, and U.S. tax compliance and planning. At the beginning of each fiscal year, the Audit Committee will evaluate other known potential
engagements of the independent auditor, including the scope of work proposed to be performed and the proposed fees, and approve or reject each service, taking into account whether services are permissible under applicable law and the possible impact
of each non-audit service on the independent auditor&#146;s independence from management. Typically, in addition to the generally pre-approved services, other services would include due diligence for an acquisition that may or may not have been
known at the beginning of the year. The Audit Committee has also delegated to any member of the Audit Committee designated by the Board or the financial expert member of the Audit Committee responsibilities to pre-approve services to be performed by
the independent auditor not exceeding $25,000 in value or cost per engagement of audit and non-audit services, and such authority may only be exercised when the Audit Committee is not in session. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Executive Compensation </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Company has no employees, payroll or benefit plans and pays no compensation to its executive officers. The executive officers of the Company who are also officers or employees of Prime, the
Company&#146;s advisor, are compensated by Prime. Such executive officers perform a variety of services for Prime and the amount of their compensation is determined solely by Prime. Prime does not allocate the cash compensation of its officers among
the various entities for which it serves as advisor. See &#147;The Advisor&#148; for a discussion of the compensation payable to Prime under the Advisory Agreement. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-17-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compensation Committee Report </B></FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Compensation Committee of the Board of Directors is comprised of at least two directors who are independent of
management and the Company. Each member of the Compensation Committee must be determined to be independent by the Board under the Corporate Governance Guidelines on Director Independence adopted by the Board and under the NYSE standards for
non-employee directors and Rule 16b-3(b)(3)(i) of the rules and regulations promulgated under the Securities Exchange Act of 1934 and the requirements for &#147;outside directors&#148; set forth in Treasury Regulations, Section&nbsp;27(e)(3). Each
member of the Committee is to be free of any relationship that in the judgment of the Board from time to time may interfere with the exercise of his or her independent judgment. Each Committee member is appointed annually subject to removal at any
time by the Board and serves until his or her Committee appointment is terminated by the Board. The Compensation Committee is composed of three directors, each of whom meets the standards described above. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The purposes of the Compensation Committee are to oversee the policies of the Company relating to compensation to be paid
by the Company to the Company&#146;s principal executive officer (&#147;CEO&#148;) and any other officers designated by the Board and make recommendations to the Board with respect to such policies, produce necessary reports and executive
compensation for inclusion in the Company&#146;s proxy statement, in accordance with applicable rules and regulations, and monitor the development and implementation of succession plans for the CEO and other key executives and make recommendations
to the Board with respect to such plans. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company has no employees, payroll or benefit plans and pays no
compensation to its executive officers. The executive officers of the Company, who are also officers or employees of Prime Income Asset Management LLC (&#147;Prime&#148;), are compensated by Prime. Such executive officers perform a variety of
services for Prime, and the amount of their compensation is determined solely by Prime. Prime does not allocate the cash compensation of its officers among the various entities for which it may serve as advisor or sub-advisor. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The only remuneration paid by the Company is to directors who are not officers or directors of Prime. These independent
directors (i)&nbsp;review the business plan of the Company to determine that it is the best interest of the stockholders, (ii)&nbsp;review the advisory contract and recommend any appropriate changes thereto, (iii)&nbsp;supervise the performance of
the Company&#146;s advisor, and review the reasonableness of the compensation paid to the advisor in terms of the nature and quality of services performed, (iv)&nbsp;review the reasonableness of the total fees and expenses of the Company, and
(v)&nbsp;select, when necessary, a qualified, independent real estate appraiser to appraise properties to be acquired. See the sub caption &#147;Directors&#146; Compensation&#148; in the Proxy Statement for a description of the compensation paid.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The charter of the Compensation Committee was adopted on March&nbsp;17, 2004, and the members of the
Compensation Committee, all of whom are independent within the meaning of the listing standards of the NYSE and the Company&#146;s Corporate Governance Guidelines, are listed below. Since its formation on March&nbsp;17, 2004, the Compensation
Committee has annually reviewed its existing charter and regularly performed the tasks described above relating to the business plan, advisory contract, reasonableness of compensation paid to the advisor, and the reasonableness of the total fees and
expenses of the Company. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-18-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">COMPENSATION COMMITTEE </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD></TR>


<TR>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Sharon Hunt</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ted R. Munselle</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">Robert A. Jakuszewski</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Compensation Committee Interlocks and Insider Participation </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company&#146;s Compensation Committee is made up of non-employee directors who have never served as officers of, or
been employed by, the Company. None of the Company&#146;s executive officers serve on a board of directors of any entity that has a director or officer serving on this Committee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Executive Officers </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive officers of the Company are
listed below, all of whom are employed by Prime. None of the executive officers receive any direct remuneration from the Company nor do any hold any options granted by the Company. Their positions with the Company are not subject to a vote of
stockholders. The ages, terms of service and all positions and offices with the Company, Prime, BCM, other affiliated entities, other principal occupations, business experience and directorships with other publicly-held companies during the last
five years or more are set forth below. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Daniel J. Moos, 62 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">President and Chief Operating Officer (effective April 2007) of the Company, TCI, IOT and (effective March 2007) of Prime
and (effective April&nbsp;30, 2011) of Pillar; Senior Vice President and Business Line Manager of U.S. Bank (NYSE) working out of their offices in Houston, Texas from 2003 to April 2007; Executive Vice President and Chief Financial Officer, Fleetcor
Technologies a privately held transaction processing company that was headquartered in New Orleans, Louisiana from 1998 to 2003; Senior Vice President and Chief Financial Officer, ICSA a privately held internet security and information company
headquartered in Carlisle, Pennsylvania from 1996 to 1998; and for more than five years prior thereto was employed in various financial and operating roles for PhoneTel Technologies, Inc. which was a publicly traded telecommunication company on the
American Stock Exchange headquartered in Cleveland, Ohio (1992 to 1996) and LDI which was a publicly traded computer equipment sales/service and asset leasing company listed on the NASDAQ and headquartered in Corporation of Cleveland, Ohio.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Gene S. Bertcher, 63 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President (since May 2008) and Chief Financial Officer (since November&nbsp;2, 2009) of the Company, TCI and IOT. Prior thereto (from February 2008 to March 2008) he was Executive Vice
President and Interim Chief Financial Officer of the Company, TCI and IOT. Mr.&nbsp;Bertcher is (and will continue to be) President and Chief Financial Officer of New Concept Energy, Inc. (formerly CabelTel International Corporation), a Nevada
corporation (&#147;GBR&#148;) which has its common stock listed on the American Stock Exchange LLC, a position he has occupied since November&nbsp;1, 2004. From January&nbsp;3, 2003 until November&nbsp;1, 2004, Mr.&nbsp;Bertcher was also Chief
Executive Officer of GBR. He has been a certified public accountant since 1973; Mr.&nbsp;Bertcher has been a director since June 1999 (and was from November 1989 to September 1996) of GBR. Until November 1989, Mr.&nbsp;Bertcher was a partner in
Grant Thornton, LLP having served as the Chairman of its National Real Estate and Construction Committee. Executive Vice President and Chief Finance Officer of Pillar (since April&nbsp;30, 2011). </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-19-
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Louis J. Corna, 64 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel/Tax Counsel and Secretary (since February 2004), Executive Vice
President&#150;Tax (October 2001 to February 2004), Executive Vice President&#150;Tax and Chief Financial Officer (June 2001 to October 2001) and Senior Vice President&#150;Tax (December 2000 to June 2001) of the Company, TCI, IOT and Prime and
(prior to July 2003) of BCM; Executive Vice President, General Counsel/Tax Counsel and Secretary (since February 2004), Executive Vice President&#150;Tax (July 2003 to February 2004) of Prime and PIAMI; Private Attorney (January 2000 to December
2000); Vice President&#150;Taxes and Assistant Treasurer (March 1998 to January 2000) of IMC Global, Inc.; Vice President&#150;Taxes (July 1991 to February 1998) of Whitman Corporation. Executive Vice President-General Counsel/Tax Counsel and
Secretary of Pillar (since April&nbsp;30, 2011). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Alfred Crozier, 59 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President-Residential Construction (since November 2006) of the Company, TCI and IOT; Managing Director of
Development for Woodmont Investment Company GP, LLC of Dallas, Texas from November 2005 to November 2006; President of Sterling Builders, Inc. of Spring, Texas from October 2003 to November 2005; Vice President of Westchase Construction, Ltd. of
Houston, Texas from August 2001 to September 2003. For more than five years prior thereto, Mr.&nbsp;Crozier was employed by various firms in the construction industry including, Trammell Crow Residential (February 1995 through February 2000) and The
Finger Companies (August 1991 through February 1995). Mr.&nbsp;Crozier is a licensed architect. Executive Vice President-Residential Construction (since April&nbsp;30, 2011). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Officers </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Although not an executive officer of the
Company, Daeho Kim currently serves as Treasurer. His position with the Company is not subject to a vote of stockholders. His age, term of service and all positions and offices with the Company, other principal occupations, business experience and
relationship with other entities during the last five years or more are set forth below. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Daeho Kim, 35 </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Treasurer (since October&nbsp;29, 2008) of the Company, TCI and IOT. For more than five years prior thereto, Mr.&nbsp;Kim
has been employed by Prime in various financial capacities including Cash Manager and Assistant Director of Capital Markets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In addition to the foregoing executive officers, the Company has several vice presidents and assistant secretaries who are not listed herein. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>The Advisor </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Although the Board of Directors is directly
responsible for managing the affairs of the Company and for setting the policies which guide it, day-to-day operations are performed by a contractual advisor under the supervision of the Board of Directors. The duties of the advisor include, among
other things, locating, investigating, evaluating and recommending real estate and mortgage note investment and sales opportunities, as well as financing and refinancing sources. The advisor also serves as a consultant to the Board of Directors in
connection with the business plan and investment decisions made by the Board. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-20-
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Prime was (from October&nbsp;1, 2003 to April&nbsp;30, 2011) the contractual
advisor to the Company. Effective April&nbsp;30, 2011, Pillar replaced Prime as the Contractual Advisor to the Company. Pillar is a Nevada corporation which is owned by Prime Income Asset Management, Inc. (&#147;PIAMI&#148;), which is owned by
RALLC. RALLC is a Nevada limited liability Company, the sole member of which is Realty Advisors, Inc. (&#147;RAI&#148;), a Nevada corporation owned by a Trust for the benefit of the children of Gene E. Phillips. Mr.&nbsp;Phillips is not an officer
or director of Pillar, PIAMI, RALLC, RAI nor ARL, nor is he a Trustee of the trust. Mr.&nbsp;Phillips does serve as a representative of the trust and is involved in daily consultation with the officers of Pillar and has significant influence over
the conduct of Pillar&#146;s business, including the rendering of advisory services and the making of investment decisions for itself and the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Under the Advisory Agreement, Pillar is required to annually formulate and submit for Board approval a budget and business plan containing a twelve-month forecast of operations and cash flow, a general
plan for asset sales and purchases, borrowing activity and other investments. Pillar is required to report to the Board, on a quarterly basis, the Company&#146;s performance against the business plan. In addition, all transactions require prior
Board approval, unless they are explicitly provided for in the approved plan or are made pursuant to authority expressly delegated to Pillar by the Board. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The Advisory Agreement also requires prior approval of the Board for the retention of all consultants and third party professionals, other than legal counsel. The Advisory Agreement provides that Pillar
shall be deemed to be in a fiduciary relationship to the stockholders; contains a broad standard governing Pillar&#146;s liability for losses by the Company; and contains guidelines for Pillar&#146;s allocation of investment opportunities as among
itself, the Company and other entities it advises. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Advisory Agreement provides for the advisor to receive
monthly base compensation at the rate of 0.0625%&nbsp;per month (0.75% on an annualized basis) of Average Invested Assets. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">In addition to base compensation, Pillar, an affiliate of Pillar, or a related party receives the following forms of additional compensation: </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(1) an acquisition fee for locating, leasing or purchasing real estate for the Company in an amount equal
to the lesser of (a)&nbsp;the amount of compensation customarily charged in similar arm&#146;s-length transactions, or (b)&nbsp;up to 6% of the costs of acquisition, inclusive of commissions, if any, paid to non-affiliated brokers; </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(2) a disposition fee for the sale of each equity investment in real estate in an amount equal to the
lesser of (a)&nbsp;the amount of compensation customarily charged in similar arm&#146;s-length transactions, or (b)&nbsp;3% of the sales price of each property, exclusive of fees, if any, paid to non-affiliated brokers; </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(3) a loan arrangement fee in an amount equal to 1% of the principal amount of any loan made to the
Company arranged by Pillar; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(4) an incentive fee equal to 10% of net income for the year in
excess of a 10% return on stockholders&#146; equity, and 10% of the excess of net capital gains over net capital losses, if any, realized from sales of assets; </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-21-
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 <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(5) a mortgage placement fee, on mortgage loans originated
or purchased, equal to 50%, measured on a cumulative basis, of the total amount of mortgage origination and placement fees on mortgage loans advanced by the Company for the fiscal year. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; margin-left:4%; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">(6) a construction management fee equal to 6% of the so-called &#147;hard costs&#148; only of any costs
of construction on a completed basis, based upon amounts set forth as approved on any architect 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. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Advisory Agreement further provides that Pillar shall bear the cost of certain expenses
of its employees, excluding fees paid to the Company&#146;s directors; rent and other office expenses of both Pillar and the Company (unless the Company maintains office space separate from that of Pillar); costs not directly identifiable to the
Company&#146;s assets, liabilities, operations, business or financial affairs; and miscellaneous administrative expenses relating to the performance by Pillar of its duties under the Advisory Agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">If and to the extent that the Company shall request of Pillar, or any director, officer, partner or employee of Prime, to
render services to the Company other than those required to be rendered by Pillar under the Advisory Agreement, such additional services, if performed, will be compensated separately on terms agreed upon between such party and the Company from time
to time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Advisory Agreement automatically renews from year to year unless terminated in accordance with
its terms. Management believes that the terms of the Advisory Agreement are at least as fair as could be obtained from unaffiliated third parties. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">Situations may develop in which the interests of the Company are in conflict with those of one or more directors or officers in their individual capacities or of Pillar, or of their respective affiliates.
In addition to services performed for the Company, Pillar actively provides similar services as agent for, and advisor to, other real estate enterprises, including persons and entities involved in real estate developing and financing, including IOT
and TCI. The Advisory Agreement provides that Pillar may also serve as advisor to those entities. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">As advisor,
Pillar is a fiduciary of the Company&#146;s public investors. In determining to which entity a particular investment opportunity will be allocated, Pillar will consider the respective investment objectives of each entity and the appropriateness of a
particular investment in light of each such entity&#146;s existing mortgage note and real estate portfolios and business plan. To the extent any particular investment opportunity is appropriate to more than one such entity, such investment
opportunity will be allocated to the entity that has had funds available for investment for the longest period of time, or, if appropriate, the investment may be shared among various entities. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Effective April&nbsp;30, 2011, the Company and Pillar entered into a Cash Management Agreement to further define the
administration of the Company&#146;s day-to-day investment operations, relationship contracts, flow of funds and deposit and borrowing of funds. Under the Cash Management Agreement, all funds of the Company are delivered to Prime which has a deposit
liability to the Company 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%&nbsp;per annum, as set quarterly on the first day of each calendar quarter.
Borrowings for the benefit of the Company bear the same interest rate. The term of the Cash </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-22-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
Management Agreement is coterminous with the Advisory Agreement, and it is automatically renewed each year unless terminated with the Advisory Agreement. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pillar may assign the Advisory Agreement only with the prior consent of the Company. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The managers and principal officers of Pillar are set forth below: </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


<TR>
<TD WIDTH="35%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="31%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="32%"></TD></TR>


<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Name</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Office(s)</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Mickey N. Phillips</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Manager</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Ryan T. Phillips</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Manager</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Daniel J. Moos</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">President and Chief Operating Officer</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Gene S. Bertcher</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President and Chief Financial Officer</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J. Corna</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" NOWRAP> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel, Tax Counsel and Secretary</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Micky N. Phillips is the brother of Gene E. Phillips, and Ryan T. Phillips is the son of
Gene E. Phillips. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Property Management and Real Estate Brokerage </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Triad Realty Services LP (&#147;Triad&#148;), an affiliate provided property management services to the Company&#146;s
properties for a fee of 6% or less of the monthly gross rents collected on the residential properties under its management and 3% or less of the monthly gross rents collected on the commercial properties under its management. Triad subcontracted
with other entities for the provision of property-level management services at various rates. The general partner of Triad is PIAMI. The limited partner of Triad is HRS Holdings LLC (&#147;HRSHLLC&#148;). Triad subcontracted the property-level
management and leasing of a number of the Company&#146;s commercial properties (shopping centers, office buildings and individual warehouses) to Regis Realty I, LLC (&#147;Regis I&#148;), which is entitled to receive property and construction
management fees and leasing commissions in accordance with the terms of its property-level management agreement with Triad. Regis I is owned by HRSHLLC. Since January&nbsp;1, 2003, Regis Hotel I, LLC has managed eleven of the Company&#146;s hotels.
The sole member of Regis I and Regis Hotel I, LLC is HRSHLLC. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Regis I provides real estate brokerage services
to the Company and receives brokerage commissions in accordance with the Advisory Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Certain Relationships and
Related Transactions </B></FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Policies with Respect to Certain Activities </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Article ELEVENTH of the Company&#146;s Articles of Incorporation provides that the Company shall not, directly or
indirectly, contract or engage in any transaction with (1)&nbsp;any director, officer or employee of the Company, (2)&nbsp;any director, officer or employee of the advisor, (3)&nbsp;the advisor, or (4)&nbsp;any affiliate or associate (as such terms
are defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of any of the aforementioned persons, unless (a)&nbsp;the material facts as to the relationship among </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-23-
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">
or financial interest of the relevant individuals or persons and as to the contract or transaction are disclosed to or are known by the Company&#146;s Board of Directors or the appropriate
committee thereof, and (b)&nbsp;the Company&#146;s Board of Directors or appropriate committee thereof determines that such contract or transaction is fair to the Company and simultaneously authorizes or ratifies such contract or transaction by the
affirmative vote of a majority of independent directors of the Company entitled to vote thereon. Article ELEVENTH defines an &#147;Independent Director&#148; (for purposes of that Article) as one who is neither an officer or employee of the Company,
nor a director, officer or employee of the Company&#146;s advisor. This definition predates the Company&#146;s director independence guidelines adopted in February 2004. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company&#146;s policy is to have such contracts or transactions approved or ratified by a majority of the
disinterested directors with full knowledge of the character of such transactions, as being fair and reasonable to the stockholders at the time of such approval or ratification under the circumstances then prevailing. Such directors also consider
the fairness of such transactions to the Company. Management believes that, to date, such transactions have represented the best investments available at the time and that they were at least as advantageous to the Company as other investments that
could have been obtained. The Company may enter into future transactions with entities the officers, directors or stockholders of which are also officers, directors or stockholders of the Company, if such transactions would be beneficial to the
operations of the Company and consistent with the Company&#146;s then-current investment objectives and policies, subject to approval by a majority of disinterested directors as discussed above. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company does not prohibit its officers, directors, stockholders or related parties from engaging in business
activities of the types conducted by the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Certain Business Relationships </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Pillar, the Company&#146;s advisor is an entity of which PIAMI is the sole owner. PIAMI is owned by RALLC. Pillar is also
a company for which Messrs. Bertcher, Corna, Crozier and Moos (all executive officers of the Company) serve as executive officers. The executive officers of the Company also serve as executive officers of TCI and IOT, and owe fiduciary duties to
each of those entities as well as to Pillar under applicable law. TCI has the same relationship with Prime as does the Company. Mr.&nbsp;Bertcher is also an officer and director of GBR and as such owes fiduciary duties to GBR. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company contracts with affiliates of Pillar for property management services. Currently, Triad provides such property
management services. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company owns an equity interest in TCI which in turn owns over 80% of the Common
Stock IOT. At December&nbsp;31, 2011, the Company, through two wholly-owned subsidiaries, owned approximately 82% of TCI&#146;s outstanding common stock. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Related Party Transactions </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Historically, the Company,
TCI, IOT, Prime and Pillar have each engaged in, and may continue to engage in, business transactions, including real estate partnerships, with related parties. Management believes that all of the related party transactions represented the best
investments available at the time and were at least as advantageous to the Company as could have been obtained from unrelated parties. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-24-
</FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company paid advisory fees of $15.8 million, construction supervision
fees of $1,800,000, net income fees of $100,000, acquisition fees of $400,000, mortgage brokerage and equity refinancing fees of $1.6 million and cost reimbursements of $4.9 million to Prime in 2011. The Company paid property acquisition fees of
$100,000, real estate brokerage fees of $1.5 million and property and construction management and leasing commissions of $2.9 million to Regis I in 2011. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>Operating Relationships </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Company received rental
revenue of $2.6 million in 2010, $2.9 million in 2009 and $3.4 million in 2008 from Prime and its affiliates for rental of Company owned properties including Addison Hanger, Browning Place, Eagle Crest, Fenton Center, Folsom Land, GNB, One Hickory,
Senlac Thermalloy and Two Hickory. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>Advances and Loans </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">From time to time, the Company and its affiliates have made advances to each other, which have not had specific repayment
terms, did not bear interest until July&nbsp;1, 2005, are unsecured and have been reflected in the Company&#146;s financial statements as other assets or other liabilities. Effective July&nbsp;1, 2005, such advances bear interest at 1% above prime
rate per annum. At December&nbsp;31, 2011, the Company owes Prime $12.2 million. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>OTHER MATTERS </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Board of Directors knows of no other matters that may be properly or should be brought before the Annual Meeting.
However, if any other matters are properly brought before the Annual Meeting, the persons named in the enclosed proxy or their substitutes will vote in accordance with their best judgment on such matters. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>FINANCIAL STATEMENTS </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2">The audited financial statements of the Company, in comparative form for the years ended December&nbsp;31, 2010 and 2011 are contained in the 2011 Annual Report to Stockholders, which is being mailed to
stockholders in April 2011 at the same time as the mailing of this proxy statement. However, such report and the financial statements contained therein are not to be considered part of this solicitation. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>SOLICITATION OF PROXIES </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT
STYLE="font-family:Times New Roman" SIZE="2"><B>THIS PROXY STATEMENT IS FURNISHED TO STOCKHOLDERS TO SOLICIT PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF AMERICAN REALTY INVESTORS, INC. </B>The cost of soliciting proxies will be born by the
Company. Directors and officers of the Company may, without additional compensation, solicit by mail, in person or by telecommunication. </FONT></P>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-25-
</FONT></P>


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<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>FUTURE PROPOSALS OF STOCKHOLDERS </B></FONT></P>
<P STYLE="margin-top:18px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Stockholder proposals for our Annual Meeting to be held in 2012 must be received by us by December&nbsp;31, 2012, and
must otherwise comply with the rules promulgated by the Securities and Exchange Commission to be considered for inclusion in our proxy statement for that year. Any stockholder proposal, whether or not to be included in our proxy materials, must be
sent to our Corporate Secretary at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><center>
<P STYLE="line-height:6px;margin-top:0px;margin-bottom:2px;border-bottom:1pt solid #000000;width:21%">&nbsp;</P></center>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B>COPIES OF AMERICAN REALTY INVESTORS, INC.&#146;S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011 TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (WITHOUT EXHIBITS) ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE THROUGH OUR WEBSITE <U>WWW.AMREALTYTRUST.COM</U> OR UPON WRITTEN REQUEST TO AMERICAN
REALTY INVESTORS, INC., 1800 VALLEY VIEW LANE, SUITE 300, DALLAS, TEXAS 75234, ATTN: INVESTOR RELATIONS. </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">Dated: April&nbsp;6, 2012. </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TR>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="2">By Order of the Board of Directors,</FONT></TD></TR>
<TR>
<TD HEIGHT="49"></TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="3">/s/ Louis J. Corna</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Times New Roman" SIZE="2">Louis J.
Corna</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Executive Vice President, General Counsel,</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="2">Tax Counsel and Secretary</FONT></TD></TR>
</TABLE></DIV>
 <p STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">-26-
</FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>ANNUAL MEETING OF STOCKHOLDERS OF </B></FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="6"><B>AMERICAN REALTY INVESTORS, INC. </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="3"><B>May 9, 2012 </B></FONT></P> <P STYLE="margin-top:36px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2"><B><U>NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL</U>:
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="2">The Notice of Meeting, proxy statement, proxy card </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="2">are available at www.amrealtytrust.com </FONT></P> <P STYLE="margin-top:36px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5">Please sign, date and mail </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5">your proxy card in the </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
STYLE="font-family:Times New Roman" SIZE="5">envelope provided as soon </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="5">as possible. </FONT></P>
<P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:SYMBOL">&#175;</FONT></FONT><FONT
STYLE="font-family:Times New Roman" SIZE="1">&nbsp;&nbsp;Please detach along perforated line and mail in the envelope
provided.&nbsp;&nbsp;</FONT><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:SYMBOL">&#175;</FONT></FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"> </FONT></P>
<P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR>
<TD VALIGN="middle"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="5"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="3">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="3">20430000000000000000&nbsp;&nbsp;8</FONT></TD>
<TD NOWRAP VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="3">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="3">050912&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>The Board of Directors of American Realty Investors, Inc. recommends approval of all nominees for election as directors </B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>and a vote FOR ratification of the appointment of Farmar, Fuqua and Huff, P.C. as the Independent registered public accounting firm.
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE&nbsp;&nbsp;</B><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT><B></B><B> </B></FONT></P> <P STYLE="line-height:3px;margin-top:0px;margin-bottom:2px;border-bottom:0.5pt solid #000000">&nbsp;</P>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1">FOR</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1">AGAINST</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1">ABSTAIN</FONT></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="9"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="1">1.&nbsp;&nbsp;&nbsp;&nbsp;Election of Directors:</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="1">2.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="1">Ratification of the Appointment of Farmer, Fuqua &amp; Huff. P.C. as the Independent Registered Public Accounting Firm,</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD></TR>
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<TD HEIGHT="16" COLSPAN="2" STYLE="BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
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<TD VALIGN="bottom" COLSPAN="3"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>NOMINEES:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="1">3.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="7"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="1">In their discretion on any other matters which may properly come before the meeting or any adjournment(s) thereof.</FONT></P></TD></TR>
<TR>
<TD VALIGN="top">
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.60em; text-indent:-1.60em"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;<B>FOR&nbsp;ALL&nbsp;
NOMINEES</B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.60em; text-indent:-1.60em"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT
STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;<B>WITHHOLD&nbsp;AUTHORITY FOR&nbsp;ALL&nbsp;NOMINEES</B></FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<P STYLE="margin-top:0px;margin-bottom:0px; margin-left:1.60em; text-indent:-1.60em"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;<B>FOR&nbsp;ALL&nbsp;
EXCEPT</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px; margin-left:2.00em"><FONT STYLE="font-family:Times New Roman" SIZE="1">(See&nbsp;instructions&nbsp;below)</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="right"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="1">O</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT
STYLE="font-family:Times New Roman" SIZE="1">O</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="1">O</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="right"><FONT
STYLE="font-family:Times New Roman" SIZE="1">O</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="1">Henry&nbsp;A.&nbsp;Butler</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="1">Sharon Hunt</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT STYLE="font-family:Times New Roman" SIZE="1">Robert&nbsp;A.&nbsp;Jakuszewski</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT STYLE="font-family:Times New Roman" SIZE="1">Ted R.
Munselle</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" STYLE="BORDER-RIGHT:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="top" COLSPAN="9"> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>The Board of Directors of American
Realty Investors, Inc. recommends approval of all nominees for election as directors and a vote FOR ratification of the appointment of Farmer, Fuqua and Huff, P.C. as the Independent registered public accounting firm.</B></FONT></P></TD></TR>
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<TD VALIGN="top" COLSPAN="9" STYLE="BORDER-BOTTOM:1px solid #000000"> <P STYLE="margin-left:5.00em; text-indent:-5.00em" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B><U>INSTRUCTIONS:</U>&nbsp;&nbsp;To&nbsp;withhold authority
to vote for any individual &nbsp;&nbsp;nominee(s), mark &#147;FOR ALL EXCEPT&#148; and &nbsp;&nbsp;fill in the circle next to each nominee you wish &nbsp;&nbsp;to withhold, as shown here:</B>&nbsp;&nbsp;</FONT><FONT
STYLE="font-family:Times New Roman" SIZE="4"></FONT><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#108;</FONT></FONT></P></TD>
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<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD COLSPAN="7" VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TR>
<TD VALIGN="top" COLSPAN="5" STYLE="BORDER-BOTTOM:1px solid #000000"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="1">To change the address on your account, please check the box at right and indicate your new address in the
address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle" ALIGN="center" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="middle" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
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</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
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<TR STYLE="font-size:1px">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000">&nbsp;</TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-TOP:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-TOP:1px solid #000000; BORDER-RIGHT:1px solid #000000; padding-right:8px">&nbsp;</TD></TR>
<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="1">Signature&nbsp;of&nbsp;Stockholder</FONT></P></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="1">Date:&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="1">Signature&nbsp;of&nbsp;Stockholder&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="1">Date:&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-LEFT:1px solid #000000; BORDER-BOTTOM:1px solid #000000"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" STYLE="BORDER-RIGHT:1px solid #000000; BORDER-BOTTOM:1px solid #000000; padding-right:8px"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B>Note:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT STYLE="font-family:Times New Roman" SIZE="1"><B></B>Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney,
trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized
person.</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
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<TR>
<TD VALIGN="top"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT></P></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT></TD></TR>
</TABLE>

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<TD VALIGN="bottom"><FONT STYLE="font-family:Times New Roman" SIZE="1"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
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<TD VALIGN="bottom" BGCOLOR="#ffffff"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#ffffff"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT></FONT></P></TD></TR>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="4"><B>AMERICAN REALTY INVESTORS, INC.</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="6"></TD>
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<TD VALIGN="bottom" COLSPAN="5" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE</B></FONT></P>
<P STYLE="margin-top:0px;margin-bottom:1px" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2012.</B></FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
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<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="6"></TD>
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<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="5"> <P STYLE="margin-top:0px;margin-bottom:1px; text-indent:2.00em" ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2">The undersigned stockholder of AMERICAN REALTY INVESTORS, INC. hereby appoints HENRY
A. BUTLER and LOUIS J. CORNA, and each of them proxies with full power of substitution in each of them, in the name, place and stead of the undersigned, as attorneys and proxies to vote all shares of Common Stock, par value $0.01 per share, of
AMERICAN REALTY INVESTORS, INC. which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on Wednesday, May 9, 2012, at 10:15 a.m., local Dallas, Texas time, at 1603 LBJ Freeway, Suite 800, Dallas, Texas 75234, or
any adjournment(s) thereof, with all powers the undersigned would possess if personally present, as indicated below, for the transaction of such business as may properly come before said meeting or any adjournment(s) thereof, all as set forth in the
April 6, 2012 Proxy Statement for said meeting.</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
</TABLE> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">


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<TD VALIGN="middle" COLSPAN="3" ALIGN="center"><FONT STYLE="font-family:Times New Roman" SIZE="3"><B>(Continued and to be signed and dated on the reverse side)</B></FONT></TD>
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<TR>
<TD VALIGN="top" BGCOLOR="#ffffff"> <P ALIGN="justify"><FONT STYLE="font-family:Times New Roman" SIZE="2"><FONT STYLE="font-family:Times New Roman" SIZE="4"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#110;</FONT></FONT></FONT></P></TD>
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<TD VALIGN="bottom" ALIGN="right"><FONT STYLE="font-family:Times New Roman" SIZE="2">14475&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" BGCOLOR="#ffffff"><FONT SIZE="1">&nbsp;</FONT></TD>
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