Here are 1-3 brief analogies for Transcontinental Realty Investors (TCI):

• Like Berkshire Hathaway, but for real estate.
• Like Loews Corporation, but for real estate.

• Apartment Properties: TCI invests in and holds a portfolio of residential apartment complexes across the U.S.
• Office Buildings: The company owns and invests in various commercial office buildings.
• Shopping Centers: TCI includes retail shopping centers within its diverse real estate portfolio.
• Land Investments: The company invests in both developed and undeveloped land parcels.
• Real Estate Mortgage Loans: TCI provides or invests in mortgage loans secured by real estate.

Transcontinental Realty Investors (TCI) is a real estate investment company that generates revenue primarily through leasing properties and investing in mortgage loans. As such, it does not have a few identifiable "major customer companies" in the traditional sense, but rather a diverse base of tenants and borrowers. Therefore, the company primarily serves the following categories of customers:

• Residential Tenants: Individuals and families who lease apartment units for housing.
• Commercial Office Tenants: Businesses, ranging from small enterprises to larger corporations, that lease office space for their operational needs.
• Retail Tenants: A variety of businesses, including national brands and local establishments, that lease space within shopping centers to operate their retail stores and services.

• Pillar Income Asset Management, Inc.
• Affiliated Computer Services, Inc.

The key risks to Transcontinental Realty Investors (TCI) primarily revolve around its inconsistent earnings quality, operational profitability challenges, and inherent real estate market dynamics.

1. Reliance on One-Off Gains and Inconsistent Core Earnings: TCI's reported earnings have been significantly influenced by non-recurring, one-off gains from property and land sales, rather than consistent core operational profitability. Critics note that these transactional gains can inflate headline profit figures, masking a longer-term trend of declining annual earnings, which was a 15.1% annual decline over a five-year period. This reliance on episodic sales for profitability raises questions about the sustainability and quality of the company's earnings, especially as quarterly revenue has remained relatively stable without correlating with large earnings per share increases. The shift in Funds From Operations-adjusted from recurring interest income to transactional gains also indicates a less predictable income stream.
2. High Operational Costs, Fluctuating Interest Income, and Debt Management: The company consistently faces challenges stemming from high operational costs that impact overall profitability. Additionally, TCI has experienced significant fluctuations and declines in interest income, which can further squeeze its financial performance. While current balance sheet leverage is considered moderate, the company has historically utilized a high amount of debt, and managing this debt while facing fluctuating income and high costs remains a pertinent financial risk for a real estate investment company.
3. Real Estate Market Competition and Property Obsolescence: As a real estate investment company, TCI operates in a highly competitive market where numerous entities vie for properties and tenants. This intense competition can affect property sales prices, rental rates, and occupancy levels across its diverse portfolio of apartments, office buildings, and shopping centers. Furthermore, the inherent risk of functional obsolescence over time for its properties poses a challenge, potentially leading to decreased demand, lower valuations, and increased capital expenditures for renovations to remain competitive. Adverse market conditions or issues with existing tenants could also negatively impact TCI's ability to attract new tenants, renew leases, and collect rent, thereby affecting cash flow and growth.

The increasing prevalence and adoption of flexible workspace (often referred to as "Real Estate as a Service" or "Space-as-a-Service") and co-living models. These new business models challenge the traditional long-term leasing structure for office and residential properties, which form a significant part of Transcontinental Realty Investors' portfolio. They offer tenants greater flexibility, shorter terms, and bundled services, potentially eroding demand for TCI's conventional offerings.

Transcontinental Realty Investors (TCI) operates in various segments of the U.S. real estate market. The addressable market sizes for its main products and services in the U.S. are as follows:

• Apartments (Multifamily Residential): The U.S. multifamily market size was valued at USD 265 billion in 2022 and is projected to reach USD 466 billion in 2030.
• Office Buildings: The U.S. office real estate market size was estimated at USD 1.5 trillion in 2025.
• Shopping Centers (Retail): The retail sector accounted for a 27% share of sales volume across the four major commercial real estate sectors in 2024. Given that the U.S. commercial real estate market size in terms of transaction value is projected to grow from USD 1.66 trillion in 2024, this implies a retail real estate transaction value of approximately USD 448.2 billion in 2024.
• Developed and Undeveloped Land: The market size for land development in the U.S. is estimated at USD 22.6 billion in 2026.
• Mortgage Loans on Real Estate: The U.S. home loan market reached USD 2.42 trillion in 2026 and is forecasted to grow to USD 3.17 trillion by 2031.

Expected Drivers of Future Revenue Growth for Transcontinental Realty Investors (TCI)

Over the next 2-3 years, Transcontinental Realty Investors (TCI) is expected to drive future revenue growth through several key initiatives:

1. Lease-up and Stabilization of New Multifamily Developments: TCI has significantly invested in multifamily development projects, with several properties like Alera, Bandera Ridge, and Merano substantially completed. The Mountain Creek project is also slated for completion in 2026. As these new multifamily properties complete their lease-up phases and achieve stabilized occupancy, they are expected to contribute to increased rental revenue. In 2025, TCI allocated approximately $69 million towards multifamily development projects.
2. Increased Occupancy and Rental Rates in Existing Commercial Properties: The company's commercial segment demonstrated improved revenue in 2025, primarily attributed to higher occupancy levels at its Stanford Center property. Continued efforts to enhance occupancy and potentially implement strategic rental rate adjustments across its existing portfolio of four office buildings, encompassing approximately 1.0 million rentable square feet, are anticipated to boost commercial revenue.
3. Development and Sale of Land and Residential Lots: TCI is actively engaged in the development of land, particularly within Windmill Farms, with plans to convert raw land into residential lots. While gains from land sales can be episodic, the ongoing development and subsequent sale of these lots are expected to contribute to the company's revenue streams.

Capital Allocation Decisions (Last 3-5 Years)

Capital Expenditures

• Transcontinental Realty Investors Inc.'s latest trailing twelve months (TTM) Capital Expenditures (CapEx) stand at $87.95 million.
• Approximately $69 million was spent on construction in 2025, primarily financed with property construction loans to advance the growth pipeline.
• Over the past five years, the highest CapEx recorded was $90.08 million (June 30, 2025), while the lowest was -$110.16 million (March 31, 2022), which can indicate asset sales exceeding new purchases.