TCI's Q3 Net Income Plummets 58% Despite Revenue Growth

TL;DR

**TCI's Q3 profit drop is a red flag, showing development costs are eating into the bottom line despite revenue gains; proceed with caution.**

AI Summary

TRANSCONTINENTAL REALTY INVESTORS INC (TCI) reported a significant decrease in net income attributable to the company for the three months ended September 30, 2025, falling to $724,000 from $1,707,000 in the prior year, a 57.6% decline. For the nine months ended September 30, 2025, net income attributable to the company also decreased to $5,511,000 from $5,754,000, a 4.2% reduction. Total revenue increased to $12,835,000 for the three months, up from $11,607,000, and to $37,003,000 for the nine months, up from $35,279,000. This revenue growth was primarily driven by a 28.9% increase in Commercial Segment NOI to $1,866,000 for the three months and a 64.5% increase to $4,836,000 for the nine months. However, higher operating expenses, including a 30.3% increase in general and administrative expenses to $1,594,000 for the three months and a 29.1% increase in income tax provision to $4,936,000 for the nine months, impacted profitability. The company also saw a substantial increase in real estate assets, with 'Construction in progress' rising to $198,985,000 at September 30, 2025, from $140,046,000 at December 31, 2024, indicating significant development activity, particularly in Windmill Farms.

Why It Matters

TCI's sharp decline in Q3 net income, despite overall revenue growth, signals potential margin pressures and increased operational costs that investors should scrutinize. The substantial investment in 'Construction in progress,' particularly in the Windmill Farms development, indicates a long-term growth strategy, but also ties up significant capital and introduces execution risk. For employees of Pillar Income Asset Management and Regis Realty Prime, who manage TCI's properties, continued development could mean job stability, but a dip in profitability might affect future compensation. Customers could see new properties come online, potentially increasing supply in certain markets. Competitively, TCI's aggressive development could position it for future market share, but the current financial performance suggests challenges in translating revenue into bottom-line profits, potentially making it less attractive compared to more efficient peers in the real estate sector.

Risk Assessment

Risk Level: medium — The company's net income attributable to the Company decreased by 57.6% for the three months ended September 30, 2025, to $724,000 from $1,707,000, and cash used in investing activities increased significantly to $49,203,000 from $27,082,000 in the prior year period. This, coupled with a net cash outflow from operating activities of $2,175,000, indicates potential liquidity strain and a reliance on financing activities, which provided $40,546,000 in cash, to fund operations and development.

Analyst Insight

Investors should closely monitor TCI's ability to monetize its significant 'Construction in progress' investments, particularly the Windmill Farms project, and assess if future revenues from these developments can offset rising operating expenses and interest costs. Consider holding off on new investments until there's clearer evidence of improved profitability and positive cash flow from operations, as the current trend suggests capital-intensive growth without immediate returns.

Financial Highlights

revenue

$12,835,000

total Assets

$699,259,000

net Income

$724,000

eps

$0.08

cash Position

$29,640,000

revenue Growth

+6.3%

Revenue Breakdown

Key Numbers

• $724,000 — Net income attributable to the Company (Q3 2025) (Decreased by 57.6% from $1,707,000 in Q3 2024)
• $5,511,000 — Net income attributable to the Company (YTD Q3 2025) (Decreased by 4.2% from $5,754,000 in YTD Q3 2024)
• $12,835,000 — Total revenue (Q3 2025) (Increased from $11,607,000 in Q3 2024)
• $37,003,000 — Total revenue (YTD Q3 2025) (Increased from $35,279,000 in YTD Q3 2024)
• $198,985,000 — Construction in progress (September 30, 2025) (Increased from $140,046,000 at December 31, 2024)
• $49,203,000 — Net cash used in investing activities (YTD Q3 2025) (Increased from $27,082,000 in YTD Q3 2024)
• $2,175,000 — Net cash used in operating activities (YTD Q3 2025) (Shifted from $17,057,000 provided in YTD Q3 2024)
• $40,546,000 — Net cash provided by financing activities (YTD Q3 2025) (Increased from $93,000 in YTD Q3 2024)
• $1,594,000 — General and administrative expenses (Q3 2025) (Increased by 30.3% from $1,223,000 in Q3 2024)
• $4,936,000 — Income tax provision (YTD Q3 2025) (Increased by 29.1% from $1,818,000 in YTD Q3 2024)

Key Players & Entities

• TRANSCONTINENTAL REALTY INVESTORS INC (company) — Registrant
• Pillar Income Asset Management, Inc. (company) — Manages day-to-day operations and is a related party
• Regis Realty Prime, LLC (company) — Manages three commercial properties and is a related party
• American Realty Investors, Inc. (company) — Owns approximately 78% of TCI
• Windmill Farms (company) — Major development project in Kaufman County, Texas
• NYSE (regulator) — Stock exchange where TCI is listed
• FASB (regulator) — Financial Accounting Standards Board
• Nevada (regulator) — State of incorporation for TCI
• Dallas (person) — Location of principal executive offices
• Kaufman County Texas (person) — Location of Windmill Farms development

FAQ

Risk Factors

• Declining Net Income Despite Revenue Growth [high — financial]: Net income attributable to the company decreased by 57.6% to $724,000 in Q3 2025 from $1,707,000 in Q3 2024, despite a 6.3% increase in total revenue. This indicates pressure on margins due to rising expenses.
• Increased Operating Expenses [medium — operational]: General and administrative expenses rose by 30.3% to $1,594,000 in Q3 2025, and the income tax provision increased by 29.1% for the nine months ended September 30, 2025. These higher costs are eroding profitability.
• Significant Increase in Construction in Progress [medium — financial]: Construction in progress surged by 42.1% to $198,985,000 at September 30, 2025, from $140,046,000 at December 31, 2024. This substantial investment in development projects carries inherent risks related to cost overruns, delays, and market absorption.
• Shift in Cash Flow from Operations [medium — financial]: Net cash used in operating activities shifted from $17,057,000 provided in YTD Q3 2024 to $2,175,000 used in YTD Q3 2025. This change, coupled with increased investing and financing activities, warrants close monitoring.
• Increased Capital Expenditures [medium — financial]: Net cash used in investing activities increased significantly to $49,203,000 for the nine months ended September 30, 2025, up from $27,082,000 in the prior year, reflecting the substantial development activity.
• Reliance on Related Party Management [low — financial]: The company relies on Pillar Income Asset Management, Inc. and Regis Realty Prime, LLC for its day-to-day operations and management. Advisory fees to related parties were $2,151,000 in Q3 2025 and $6,587,000 year-to-date, representing a significant expense.

Industry Context

The real estate investment trust (REIT) sector, particularly those focused on multifamily and commercial properties, is influenced by interest rate environments, economic growth, and local market dynamics. TCI operates in this competitive landscape, with a strategy focused on acquisition, development, and ownership. The current environment sees increasing development activity, as evidenced by TCI's rising 'Construction in progress' balance, which can lead to future revenue streams but also carries execution and market absorption risks.

Regulatory Implications

As a publicly traded company, TCI is subject to SEC regulations and reporting requirements, including the timely filing of 10-Q and 10-K reports. Changes in accounting standards, such as ASU 2023-09 and ASU 2024-03, require ongoing evaluation and potential adjustments to financial reporting. Compliance with tax regulations is also critical, as indicated by the significant income tax provision.

What Investors Should Do

1. Monitor expense growth closely.
2. Analyze the performance and risks of development projects.
3. Evaluate the impact of related party transactions.
4. Assess the sustainability of commercial segment NOI growth.

Key Dates

• 2025-09-30: End of Q3 2025 — Reporting period for the 10-Q, showing a significant decline in net income despite revenue growth and substantial investment in development.
• 2025-12-31: End of Fiscal Year 2024 — Baseline for comparison of real estate assets, particularly 'Construction in progress' which has seen a large increase.

Glossary

NOI

Net Operating Income, defined as property revenue less direct property operating expenses. It excludes depreciation, interest, G&A, advisory fees, and income taxes. (Key metric used by the CODM to evaluate segment performance, showing strong growth in the Commercial Segment.)

Construction in progress

Costs incurred for real estate projects that are under development but not yet completed and placed into service. (Significant increase to $198,985,000 indicates substantial ongoing development activity, a key driver of cash flow and future revenue potential, but also a source of risk.)

CODM

Chief Operating Decision Maker, the individual responsible for assessing performance and allocating resources. For TCI, this is the President and CEO. (Their evaluation metric (NOI) highlights segment performance, with the Commercial Segment showing robust growth.)

Related Parties

Entities or individuals that have the ability to control or significantly influence the financial and operating decisions of another entity. In this case, Pillar Income Asset Management and Regis Realty Prime. (The company relies on these related parties for management and operations, with associated fees impacting profitability.)

Variable component

Portion of rental revenue that fluctuates, often based on usage or other performance metrics, as opposed to a fixed base rent. (Shows an increase in variable rental revenue, contributing to overall revenue growth.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, TRANSCONTINENTAL REALTY INVESTORS INC (TCI) has demonstrated revenue growth, with total revenue increasing by 6.3% for Q3 2025 and 5.1% year-to-date. However, profitability has significantly declined, with net income attributable to the company dropping by 57.6% in Q3 2025. This divergence is primarily due to a substantial increase in operating expenses, including a 30.3% rise in general and administrative expenses for the quarter, and a significant increase in the income tax provision year-to-date. Furthermore, the company is undertaking aggressive development, as evidenced by a 42.1% increase in 'Construction in progress' and a near doubling of net cash used in investing activities, while operating cash flow has shifted from positive to negative.

Filing Documents

• tci-20250930.htm (10-Q) — 980KB
• tci2025093010-qex311.htm (EX-31.1) — 10KB
• tci2025093010-qex312.htm (EX-31.2) — 10KB
• tci2025093010-qex321.htm (EX-32.1) — 6KB
• 0000733590-25-000029.txt ( ) — 5824KB
• tci-20250930.xsd (EX-101.SCH) — 47KB
• tci-20250930_cal.xml (EX-101.CAL) — 58KB
• tci-20250930_def.xml (EX-101.DEF) — 167KB
• tci-20250930_lab.xml (EX-101.LAB) — 488KB
• tci-20250930_pre.xml (EX-101.PRE) — 351KB
• tci-20250930_htm.xml (XML) — 921KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Balance Sheets at September 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 4 Consolidated Statements of Equity for the three and nine months ended September 30, 2025 and 2024 5 Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3.

Quantitative and Qualitative Disclosures About Market Risks

Quantitative and Qualitative Disclosures About Market Risks 25 Item 4.

Controls and Procedures

Controls and Procedures 26

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 26 Item 1A.

Risk Factors

Risk Factors 26 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26 Item 3. Defaults Upon Senior Securities 26 Item 4. Mine Safety Disclosures 26 Item 5. Other Information 26 Item 6. Exhibits 27

Signatures

Signatures 28 2 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED BALANCE SHEETS (dollars in thousands, except share and par value amounts) (Unaudited) September 30, 2025 December 31, 2024 Assets Real estate $ 612,109 $ 557,388 Cash and cash equivalents 11,897 19,915 Restricted cash 17,743 20,557 Short-term investments 70,797 79,800 Notes receivable (including $ 57,468 and $ 61,245 at September 30, 2025 and December 31, 2024, respectively, from related parties) 123,678 128,229 Receivables from related party 167,037 163,518 Other assets (including $ 644 and $ 1,595 at September 30, 2025 and December 31, 2024, respectively, from related parties) 131,195 101,138 Total assets $ 1,134,456 $ 1,070,545 Liabilities and Equity Liabilities: Mortgages and other notes payable $ 223,486 $ 181,856 Accounts payable and other liabilities (including $ 29 and $ 601 at September 30, 2025 and December 31, 2024, respectively, to related parties) 49,171 32,103 Accrued interest 3,455 3,194 Deferred revenue 581 581 Total liabilities 276,693 217,734 Equity Shareholders' Equity: Common stock, $ 0.01 par value, 10,000,000 shares authorized; 8,639,316 shares issued and outstanding 86 86 Additional paid-in capital 262,007 261,399 Retained earnings 576,304 570,793 Total shareholders' equity 838,397 832,278 Noncontrolling interest 19,366 20,533 Total equity 857,763 852,811 Total liabilities and equity $ 1,134,456 $ 1,070,545 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenues: Rental revenues (including $ 146 and $ 159 for the three months ended September 30, 2025 and 2024, respectively, and $ 435 and $ 495 for the nine months ended Sep

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 1. Organization As used herein, the terms "the Company", "we", "our", or "us" refer to Transcontinental Realty Investors, Inc., a Nevada corporation, which was formed in 1984. Our common stock is listed on the New York Stock Exchange ("NYSE") under the symbol "TCI". We are owned approximately 78 % by American Realty Investors, Inc. ("ARL"), whose common stock is listed on the NYSE under the symbol "ARL", and 8 % by the controlling shareholder of ARL. Our primary business is the acquisition, development and ownership of income-producing residential and commercial real estate properties. In addition, we opportunistically acquire land for future development in in-fill or high-growth suburban markets. From time to time, and when we believe it appropriate to do so, we will also sell land and income-producing properties. We generate revenues by leasing apartment units to residents, and leasing office, industrial and retail space to various for-profit businesses as well as certain local, state and federal agencies. We also generate income from the sales of income-producing properties and land. At September 30, 2025, our portfolio of properties consisted of: Four office buildings comprising in aggregate of approximately 1,060,236 square feet; Fourteen multifamily properties, owned directly by us, comprising of 2,328 units; Four multifamily properties in development comprising in 906 units; and Approx imately 1,792 acres of devel oped and undeveloped land. Our day to day operations are managed by Pillar Income Asset Management, Inc. ("Pillar"). Pillar's duties include, but are not limited to, locating, evaluating and recommending real estate and real estate-related investment opportunities, asset management, property development, construction management and arranging debt and equity financing with third party lenders and investors. We have no employees; all of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) whether we are the primary beneficiary, we consider qualitative and quantitative factors, including ownership interest, management representation, ability to control decision and other contractual rights. We account for entities in which we have less than a controlling financial interest or entities where we are not deemed to be the primary beneficiary under the equity method of accounting. Accordingly, we include our share of the net earnings or losses of these entities in our results of operations. Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board ("FASB" issued ASU 2023-09 Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires entities to disclose additional information with respect to the effective tax rate reconciliation and to disclose the disaggregation by jurisdiction of income tax expense and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of ASU 2023-09 on our consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of these standards on our consolidated financial statements. 3. Earnings Per Share Earnings per share ("EPS") is computed by dividing net income attributable to the Company by the weighted-average numbe

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 4. Supplemental Cash Flow Information The following presents the schedule of interest paid and other supplemental cash flow information: Nine Months Ended September 30, 2025 2024 Cash paid for interest $ 4,374 $ 4,656 Cash paid for taxes $ 2,010 $ 3,200 Cash - beginning of period Cash and cash equivalents $ 19,915 $ 36,700 Restricted cash 20,557 42,327 $ 40,472 $ 79,027 Cash - end of period Cash and cash equivalents $ 11,897 $ 39,507 Restricted cash 17,743 29,588 $ 29,640 $ 69,095 The following is a schedule of noncash investing activity: Nine Months Ended September 30, 2025 2024 Accrued development costs $ 7,803 $ 5,360 5. Operating Segments Segment information is prepared on the same basis that our chief operating decision maker ("CODM") reviews information to assess performance and make resource allocation decisions. Our CODM is our President and Chief Executive Officer. We operate in two reportable segments: (i) the acquisition, development, ownership and management of multifamily properties ("Residential Segment") and (ii) the acquisition, ownership and management of commercial real estate properties ("Commercial Segment"). The services for our segments include rental of property and other tenant services, including parking and storage space rental. The key operating metric that the CODM utilizes to evaluate the segments is net operating income ("NOI"), which we defined as property revenue less direct property operating expenses. NOI excludes depreciation, interest income and expenses, general and administrative expenses, advisory fees and income taxes. 9 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) The following table presents our reportable segments for the three and nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Multifamily Segment Revenues $ 8,528 $ 8,266 $ 25,785 $ 25,451 Segment expenses Property tax and insurance ( 2,679 ) ( 2,424 ) ( 7,736 ) ( 7,830 ) Repairs and maintenance ( 1,248 ) ( 1,230 ) ( 2,874 ) ( 2,865 ) Other property expenses ( 1,182 ) ( 988 ) ( 3,070 ) ( 2,663 ) NOI from multifamily segment 3,419 3,624 12,105 12,093 Commercial Segment Revenues 4,307 3,341 11,218 9,828 Segment expenses Property tax and insurance ( 803 ) ( 827 ) ( 2,035 ) ( 2,769 ) Repairs and maintenance ( 625 ) ( 341 ) ( 1,267 ) ( 941 ) Other property expenses ( 1,013 ) ( 1,179 ) ( 3,080 ) ( 3,179 ) NOI from commercial segment 1,866 994 4,836 2,939 Total NOI from segments $ 5,285 $ 4,618 $ 16,941 $ 15,032 The table below reflects the reconciliation of NOI to net income for the three and nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total NOI from segments $ 5,285 $ 4,618 $ 16,941 $ 15,032 Other non-segment items of income (expense) Depreciation and amortization ( 2,936 ) ( 3,120 ) ( 8,881 ) ( 9,429 ) General and administrative ( 1,594 ) ( 1,223 ) ( 4,329 ) ( 3,898 ) Advisory fee to related party ( 2,151 ) ( 1,944 ) ( 6,587 ) ( 5,789 ) Interest income 4,748 5,917 13,358 17,244 Interest expense ( 1,651 ) ( 2,075 ) ( 5,170 ) ( 5,806 ) Income from unconsolidated joint venture — 283 — 827 Gain on sales or write-down of assets 755 — 5,593 — Income tax provision ( 1,572 ) ( 546 ) ( 4,936 ) ( 1,818 ) Net income $ 884 $ 1,910 $ 5,989 $ 6,363 10 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 6. Lease Revenue We lease our multifamily properties and commercial properties under agreements that are classified as operating leases. Our multifamily property leases generally include minimum rents and charges for ancillary services. Our commercial property leases generally include minimum rents and recoveries for property taxes and common area maintenance. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. The following table summarizes the components of our rental revenue for the three and nine months ended September 30, 2025 and 2024: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Fixed component $ 11,329 $ 10,841 $ 33,723 $ 32,667 Variable component 590 233 1,133 874 $ 11,919 $ 11,074 $ 34,856 $ 33,541 The following table summarizes the future rental payments that are payable to us from non-cancelable leases. The table excludes multifamily leases, which typically have a term of one-year or less: 2025 $ 14,143 2026 14,017 2027 13,237 2028 11,134 2029 8,629 Thereafter 18,928 $ 80,088 7. Real Estate Activity Below is a summary of our real estate as of September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Land $ 104,316 $ 104,076 Building and improvements 375,822 375,430 Tenant improvements 20,136 16,629 Construction in progress 198,985 140,046 Total cost 699,259 636,181 Less accumulated depreciation ( 87,150 ) ( 78,793 ) Total real estate $ 612,109 $ 557,388 We incurred depreciation expense of $ 2,756 and $ 2,966 for the three months ended September 30, 2025 and 2024, respectively, $ 8,357 and $ 8,970 for the nine months ended September 30, 2025 and 2024, respectively. 11 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) Construction Activities Construction in progress consists of the development of Windmill Farms and the costs associated with our ground-up development projects. Windmill Farms is a collection of freshwater districts ("Districts") in Kaufman County Texas that is being developed into single family lots, multifamily properties and retail properties. In connection with the project, we develop the infrastructure in Windmill Farms in order for the land to appreciate and to sell land units ("lots") to home builders for construction of single family homes. We receive reimbursement of the infrastructure costs ("District Receivables") through the issuance of municipal bonds by the Districts. As of September 30, 2025, we have $ 55,657 in District Receivables included in other assets (See Note 10 – Other Assets ) and $ 47,066 of land lot development costs included in construction in progress. We have entered into several development agreements with Pillar (See Note 12 – Related Party Transactions ) to develop multifamily properties. Each of these development projects is being funded in part by a construction loan (See Note 11 – Mortgages and Other Notes Payable) . The following is a summary of construction costs incurred as of September 30, 2025 : Project Units Location Total Project Cost Costs Incurred Expected Completion Date Alera 240 Lake Wales, FL $ 55,330 $ 53,292 December 2025 Bandera Ridge 216 Temple, TX 49,603 45,232 November 2025 Merano 216 McKinney, TX 51,910 47,577 November 2025 Mountain Creek 234 Dallas, TX 49,971 5,818 June 2027 906 $ 206,814 $ 151,919 Sale of assets Gain on sale or write-down of assets, net for the three and nine months ended September 30, 2025 and 2024 consists of the following: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Land (1) $ 755 $ — $ 4,847 $ — Other — — 746 — Total $ 75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 8. Short-term Investments The following is a summary of our short term investment as of September 30, 2025 and December 31, 2024: September 30, 2025 December 31, 2024 Corporate bonds, at par value $ 58,035 $ 80,000 Demand notes 12,965 325 71,000 80,325 Less discount ( 203 ) ( 525 ) $ 70,797 $ 79,800 The average interest rate on the investments was 4.99 % and 5.20 % at September 30, 2025 and December 31, 2024, respectively. 13 Table of Contents TRANSCONTINENTAL REALTY INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 9. Notes Receivable The following table summarizes our notes receivable as of September 30, 2025 and December 31, 2024: Carrying value Property/Borrower September 30, 2025 December 31, 2024 Interest Rate Maturity Date ABC Land and Development, Inc. $ 4,408 $ 4,408 9.50 % 6/30/26 ABC Paradise, LLC 1,210 1,210 9.50 % 6/30/26 Autumn Breeze(1) 1,043 1,451 5.00 % 7/1/28 Bellwether Ridge(1) 3,798 3,798 5.00 % 11/1/26 Dominion at Mercer Crossing(2) 6,167 6,167 8.25 % 6/7/28 Forest Pines(1) 6,472 6,472 5.00 % 5/1/27 Inwood on the Park(3)(4) 19,985 20,208 4.45 % 6/30/28 Kensington Park(3)(4) 5,196 6,994 4.45 % 3/31/27 Lake Shore Villas(3)(4) 4,852 5,855 4.45 % 12/31/32 Prospectus Endeavors 496 496 6.00 % 10/23/29 McKinney Ranch 3,926 3,926 6.00 % 9/15/29 Ocean Estates II(3)(4) 3,591 3,615 4.45 % 5/31/28 One Realco Land Holding, Inc. 1,728 1,728 9.50 % 6/30/26 Parc at Ingleside(1) 3,759 3,759 5.00 % 11/1/26 Parc at Opelika Phase II(1)(5) 3,190 3,190 10.00 % 1/13/23 Parc at Windmill Farms(1)(5) 7,886 7,886 5.00 % 11/1/22 Phillips Foundation for Better Living, Inc.(3) — 107 Plaza at Chase Oaks(3)(4) 11,303 11,772 4.45 % 3/31/28 Plum Tree(1) 1,240 1,478 5.00 % 8/17/28 Polk County Land 3,000 3,000 9.50 % 6/30/26 Riverview on the Park Land, LLC 1,045 1,045 9.50 % 6/30/26 Spartan Land 5,907 5,907 6.00 % 1/16/27 Spyglass of Ennis(1) 4,705 4,705 5.00 % 11/1/28 Steeple Crest(1) 6,230 6,358 5.00 % 8/1/26 Timbers at The Park(3)(4) 11,072 11,146 4.45 % 12/31/32 Tuscany Villas(3)(4) 1,469 1,548 4.45 % 4/30/27 $ 123,678 $ 128,229 (1) The note is convertible, at our option, into a 100 % ownership interest in the underlying property, and is collateralized by the underlying property. (2) The note bears interest at prime plus 1.0 %. (3) The borrower is determined to be a related party due to our significant investment in the performance of the collatera

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) (Unaudited) 10. Other Assets At September 30, 2025 and December 31, 2024, our other assets are comprised of the following: September 30, 2025 December 31, 2024 Acquisition deposits $ 15,229 $ 15,824 District receivables (1) 55,657 54,518 Interest receivable (2) 17,140 16,388 Tenant and other receivables 4,686 3,989 Prepaid expenses and other assets 9,107 7,964 Income tax receivable 29,376 — Deferred tax assets — 2,455 $ 131,195 $ 101,138 (1) Represents roads, sewer, and utility infrastructure costs in connectio

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