The following discussion and analysis by management should be read in
conjunction with the unaudited Condensed Consolidated Financial Statements and
Notes included in this Quarterly Report on Form 10-Q (the "Quarterly Report")
and in our Form 10-K for the year ended December 31, 2021 (the "Annual Report").

This Report on Form 10-Q contains forward-looking statements within the meaning
of the federal securities laws, principally, but not only, under the captions
"Business", "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations". We caution investors that any
forward-looking statements in this report, or which management may make orally
or in writing from time to time, are based on management's beliefs and on
assumptions made by, and information currently available to, management. When
used, the words "anticipate", "believe", "expect", "intend", "may", "might",
"plan", "estimate", "project", "should", "will", "result" and similar
expressions which do not relate solely to historical matters are intended to
identify forward-looking statements. These statements are subject to risks,
uncertainties, and assumptions and are not guarantees of future performance,
which may be affected by known and unknown risks, trends, uncertainties and
factors that are beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. We caution you that, while forward-looking statements reflect our
good faith beliefs when we make them, they are not guarantees of future
performance and are impacted by actual events when they occur after we make such
statements. We expressly disclaim any responsibility to update our
forward-looking statements, whether as a result of new information, future
events or otherwise. Accordingly, investors should use caution in relying on
past forward-looking statements, which are based on results and trends at the
time they are made, to anticipate future results or trends.

Some of the risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements include, among others, the following:

•general risks affecting the real estate industry (including, without
limitation, the inability to enter into or renew leases, dependence on tenants'
financial condition, and competition from other developers, owners and operators
of real estate);

•risks associated with the availability and terms of construction and mortgage financing and the use of debt to finance acquisitions and developments;

•the demand for apartments and commercial premises in our markets and the effect on occupancy and rental rates;

• our ability to obtain financing, enter into joint venture agreements in connection with or self-finance the development or acquisition of properties;

•the risks associated with the timing and amount of sales of properties and the resulting gains/losses associated with such sales;

• inability to effectively manage our growth and expansion into new markets or successfully integrate acquisitions

•risks and uncertainties affecting real estate development and construction (including, but not limited to, construction delays, cost overruns, failure to obtain necessary permits and public opposition to such activities );

•risks associated with national and local economic downturns, rising interest rates and volatility in securities markets;

•costs of compliance with the Americans with Disabilities Act and other similar laws and regulations;

•potential liability for uninsured losses and environmental contamination;

•the risks related to our dependence on key personnel whose continuity of service is not guaranteed; and

•other risk factors identified in this Form 10-Q, including those described under “Risk Factors”.

The risks included here are not exhaustive. Some of the risks and uncertainties
that may cause our actual results, performance, or achievements to differ
materially from those expressed or implied by forward-looking statements,
include among others, the factors listed and described at Part I, Item 1A. "Risk
Factors" Annual Report on Form 10-K, which investors should review.

————————————————– ——————————


We continue to closely monitor the impact of the COVID-19 pandemic on all aspects of our business and our real estate portfolio. Although we have not experienced any significant disruptions in the three months ended December 31, 2021 Since the COVID-19 pandemic, our commercial properties have experienced a decline in occupancy. We believe this decline is temporary and do not expect a significant drop in rental income.

We are unable to predict the impact that the COVID-19 pandemic will have on our
financial condition, results of operations and cash flows due to numerous
uncertainties. These uncertainties include the scope, severity and duration of
the pandemic, the actions taken to contain the pandemic or mitigate its impact
and the direct and indirect economic effects of the pandemic and containment
measures, among others. The pandemic continues to have an impact on the U.S.
economy and on the local markets in which our properties are located. Nearly
every industry has been impacted directly or indirectly, and the commercial real
estate market has come under pressure due to numerous factors, including
preventative measures taken by local, state and federal authorities to alleviate
the public health crisis such as mandatory business closures, quarantines, and
restrictions on travel and "shelter-in-place" or "stay-at-home" orders.

Management presentation

We are an externally advised and managed real estate investment company that
owns a diverse portfolio of income-producing properties and land held for
development throughout the Southern United States. Our portfolio of
income-producing properties includes residential apartment communities
("multifamily properties"), office buildings and retail properties ("commercial
properties"). Our investment strategy includes acquiring existing
income-producing properties as well as developing new properties on land already
owned or acquired for a specific development project.

Our operations are managed by Pillar Income Asset Management, Inc. ("Pillar") in
accordance with an Advisory Agreement. Pillar's duties include, but are not
limited to, locating, evaluating and recommending real estate and real
estate-related investment opportunities. Pillar also arranges our debt and
equity financing with third party lenders and investors. We have no employees.
Employees of Pillar render services to us in accordance with the terms of the
Advisory Agreement. Pillar is considered to be a related party due to its common
ownership with American Realty Investors, Inc. ("ARL"), who is our controlling

Here is a summary of our recent acquisition, divestiture, financing and development activities:

Acquisitions and disposals

•On March 30, 2021, we sold a 50% ownership interest in Overlook at Allensville
Phase II, a 144 unit multifamily property in Sevierville, Tennessee to Macquarie
for $2.6 million resulting in gain on sale of $1.4 million. Concurrent with the
sale, we each contributed our 50% ownership interests in Overlook at Allensville
Phase II into VAA.

•On August 26, 2021, we sold 600 Las Colinas, a 512,173 square foot office
building in Irving, Texas for $74.8 million, resulting in gain on sale of $27.3
million. We used the proceeds to pay off the mortgage note payable on the
property (See "Financing Activities") and for general corporate purposes.

•During the year ended December 31, 2021, we sold a total of 134.7 acres of land
from our holdings in Windmill Farms for $20.2 million, in aggregate, resulting
in gains on sale of $10.3 million. In addition, we sold 14.1 acres of land from
our holdings in Mercer Crossing for $9.0 million, resulting in a gain on sale of
$6.4 million.

•On January 14, 2022we sold Toulon, a 240-unit multi-family building to
Gautier, Mississippi for $26.8 millionresulting in a gain on the sale of $9.4 million. We used the proceeds to reimburse the $14.7 million mortgage note payable on the property and for general business purposes.

• During the three months ended March 31, 2022we sold a total of 8.6 acres of land from our holdings in Wind farms for $2.3 millionin total, resulting in gains on the sale of $2.0 million.


————————————————– ——————————


Fundraising activities

•On March 2, 2021we have extended our $1.2 million ready on Athens for August 28, 2022.

•On March 4, 2021we extended the maturity of our loan on Wind farms until
February 28, 2023 at a reduced interest rate of 5%.

•On August 25, 2021we replaced the existing Villas loan at Bon Secour with a new one $20.0 million loan which bears interest at 3.08% and matures on
September 1, 2031.

•On August 26, 2021we paid the $35.9 million ready on 600 Las Colinas in connection with the sale of the Underlying Interest (see “Acquisitions and Dispositions”).

•On January 14, 2022the loan on Toulon was repaid as part of the sale of the underlying building (See “Acquisitions and Disposals”).

•On March 3, 2022the loan on Stanford Center was extended to February 26, 2023.

Development Activities

During 2021, we spent $14.0 million on our ongoing development of Windmill
Farms. Our expenditure includes $1.1 million on the development of land lots for
sale to single family home developers and $13.0 million on reimbursable
infrastructure investments. During the three months ended March 31, 2022, we
spent $1.9 million on our ongoing development of Windmill Farms. Our expenditure
includes $1.1 million on the development of land lots for sale to single family
home developers and $0.8 million on reimbursable infrastructure investments.

We have investment in nine notes receivable that were issued to fund the
development of multifamily properties . As of March 31, 2022, one of the
projects was in construction, two were in lease-up and six were stabilized. In
2022, we advanced $8.6 million on these development notes. Each of these notes
are convertible, at our option, into a 100% ownership interest in the underlying

Other Developments:

In 2022, we recorded a loss of $29.6 million on the revaluations of certain assets (“Earn Out Obligation”) that were sold as part of our investment in VAA.

On November 17, 2021, we entered into a Major Decision with Macquarie to engage
a broker and initiate a sale of all the properties held by VAA, which are listed
in Item 2. Properties as Joint Venture properties. In connection with the sale,
VAA will distribute seven of its existing properties to us (referred to herein
as the "Holdback Properties") and we in turn, will contribute one of our
properties ("Contributed Property") into the portfolio offered for sale to
third-parties. The sales price for the Holdback Properties and Contributed
Property will be the estimated value of these properties as stated in the
agreement, multiplied by the ratio of the actual sales price of the portion of
the VAA Portfolio sold to a third party to the estimated value of the those
properties that were provided in the agreement.

Each of the properties in the VAA Portfolio is appraised on an annual basis as
part of our filing requirement with the TASE. As of March 31, 2022, the fair
value of the VAA Portfolio, based on these appraisals was approximately $1.4
billion. The appraised value reflects an aggregate of individual property
appraised value and does not reflect a premium that is sometimes offered in a
portfolio sale. These values reflect a compression of cap rates for multifamily
properties during the last year. However, there can be no assurances that these
values will be realized. The Major Decision agreement will expire on August 1,
2022, if the VAA Portfolio has not been sold.

Our ownership interest in VAA is held by SPC, and is therefore subject to the
bond covenants of the three series of bonds that have been issued by SPC. These
provisions include restrictions on the distribution of cash from SPC (See Note
12 - Bonds Payable in our consolidated financial statements).

————————————————– ——————————


Critical accounting policies

The preparation of our consolidated financial statements in conformity with
United States generally accepted accounting principles ("GAAP") requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those

Some of these estimates and assumptions include judgments on revenue
recognition, estimates for common area maintenance and real estate tax accruals,
provisions for uncollectible accounts, impairment of long-lived assets, the
allocation of purchase price between tangible and intangible assets,
capitalization of costs and fair value measurements. Our significant accounting
policies are described in more detail in Note 2-Summary of Significant
Accounting Policies in our notes to the consolidated financial statements in the
Annual Report. However, the following policies are deemed to be critical.

Fair value of financial instruments

We apply the guidance in ASC Topic 820, "Fair Value Measurements and
Disclosures", to the valuation of real estate assets. These provisions define
fair value as the price that would be received to sell an asset or paid to
transfer a liability in a transaction between market participants at the
measurement date, establish a hierarchy that prioritizes the information used in
developing fair value estimates and require disclosure of fair value
measurements by level within the fair value hierarchy. The hierarchy gives the
highest priority to quoted prices in active markets (Level 1 measurements) and
the lowest priority to unobservable data (Level 3 measurements), such as the
reporting entity's own data.

The valuation hierarchy is based on the transparency of the inputs of the valuation of an asset or a liability at the valuation date and comprises three levels defined as follows:

Level 1 – Unadjusted quoted prices for identical, unrestricted assets or liabilities in active markets.

Level 2 - Quoted prices for similar assets and liabilities in active markets,
and inputs that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the financial instrument.

Level 3 – Unobservable inputs that are significant in measuring fair value.

The categorization of a financial instrument in the valuation hierarchy is based on the lowest level of entry that is significant for the measurement of fair value.

Related parties

We apply ASC Topic 805, "Business Combinations", to evaluate business
relationships. Related parties are persons or entities who have one or more of
the following characteristics, which include entities for which investments in
their equity securities would be required, trust for the benefit of persons
including principal owners of the entities and members of their immediate
families, management personnel of the entity and members of their immediate
families and other parties with which the entity may deal if one party controls
or can significantly influence the decision making of the other to an extent
that one of the transacting parties might be prevented from fully pursuing our
own separate interests, or affiliates of the entity.

Operating results

Many of the variations in the results of operations, discussed below, occurred
because of the transactions affecting our properties described above, including
those related to the Lease-Up Properties and the Disposition Properties (each as
defined below).

For purposes of the discussion below, we define "Same Properties" as those
properties that are substantially leased-up and in operation for the entirety of
both periods of the comparison. Non-Same Properties for comparison purposes
include those properties that have been recently constructed or leased-up
("Lease-up Properties") and properties that have been disposed of ("Disposition
Properties"). A developed property is considered leased-up, when it achieves
occupancy of 80% or more.We move a property in and out of Same Properties based
on whether the property is substantially leased-up and in operation for the
entirety of both periods of the comparison. Accordingly, the Same Properties
consist of all properties, excluding the Lease-up Properties and the Disposition
Properties for the periods of comparison.

————————————————– ——————————


For the comparison of the three months ended March 31, 2022 to the three months
ended March 31, 2021, the Lease-up Properties are Forest Grove, Parc at Denham
Springs Phase II and Sugar Mill Phase III; and the Disposition Properties are
Overlook at Allensville Phase II, 600 Las Colinas and Toulon.

The following table summarizes our operating results for the three months ended March 31, 2022 and 2021:

                                                                      Three Months Ended
                                                                           March 31,
                                                                                   2022              2021            Variance

Multi-family segment

  Revenue                                                                       $  3,229          $  3,836          $   (607)
  Operating expenses                                                              (1,721)           (2,123)              402
                                                                                   1,508             1,713              (205)
Commercial Segment
  Revenue                                                                          4,252             6,525            (2,273)
  Operating expenses                                                              (2,307)           (3,709)            1,402
                                                                                   1,945             2,816              (871)
Segment operating income                                                           3,453             4,529            (1,076)

Other non-segment income (expense) items

  Depreciation and amortization                                                   (2,349)           (3,327)              978
  General, administrative and advisory                                            (5,536)           (4,895)             (641)
  Interest, net                                                                      787            (1,903)            2,690
  Loss on extinguishment of debt                                                  (1,639)                -            (1,639)
  Gain on foreign currency transactions                                            3,772             7,617            (3,845)
  Gain sale or write down of assets                                               11,148            16,103            (4,955)
  Income from joint ventures                                                       4,706             3,336             1,370
  Other income                                                                       278             1,427            (1,149)
Net income                                                                      $ 14,620          $ 22,887          $ (8,267)

Comparison of the three months ended March 31, 2022 at the end of three months
March 31, 2021:

Our $8.3 million decline in net profit in the three months ended March 31, 2022 is mainly attributed to the following:

•The $0.9 million the decrease in the profit of the commercial segment is due to the
Layout properties.

•The $2.7 million increase in interest, net is primarily due a $1.1 million
increase in interest income, a $1.0 million decrease in interest from mortgage
notes payable and a $0.5 million decrease in interest on bonds payable. The
decrease in interest on the mortgage notes payable is due to the Disposition
Properties and the decrease in interest on bonds is due to the lower principal
balance outstanding.

•The loss on extinguishment of debt is due to the early pay off of the mortgage
note payable on Toulon in connection with sale of the underlying property (See
"Acquisitions and Dispositions" and "Financing Activities" in Management's

•The decrease in gains on foreign currency transactions is due to variations in the
WE Conversion rate of the dollar and the new Israeli shekel.

• The decrease in the gain on the sale or impairment of assets is due to the decrease in the sale of land to Wind farms.

•The $1.4 million The increase in income from joint ventures is due to the increase in the occupancy rate of various rental properties at VAA.

•The decrease in other income is related to the collection of bad debts in 2021.


————————————————– ——————————


Cash and capital resources

Our principal sources of cash have been, and will continue to be, property
operations; proceeds from land and income-producing property sales; collection
of notes receivable; refinancing of existing mortgage notes payable; and
additional borrowings, including mortgage notes and bonds payable, and lines of

Our principal liquidity needs are to fund normal recurring expenses; meet debt
service and principal repayment obligations including balloon payments on
maturing debt; fund capital expenditures, including tenant improvements and
leasing costs; fund development costs not covered under construction loans; and
fund possible property acquisitions.

We anticipate that our cash and cash equivalents as of March 31, 2022, along
with cash that will be generated in the remainder of 2022 from notes and
interest receivables, will be sufficient to meet all of our cash requirements.
We intend to selectively sell land and income-producing assets, refinance or
extend real estate debt and seek additional borrowings secured by real estate to
meet our liquidity requirements. Although history cannot predict the future,
historically, we have been successful at refinancing and extending a portion of
our current maturity obligations.

The following summary discussion of our cash flows is based on the consolidated
statements of cash flows in our consolidated financial statements, and is not
meant to be an all-inclusive discussion of the changes in our cash flows for the
periods presented below (dollars in thousands):

                                                          Three Months 

Finished March, 31st,

                                                             2022                  2021             Incr /(Decr)
Net cash used in operating activities                 $        (4,178)         $    (901)         $      (3,277)
Net cash provided by investing activities             $         5,646          $  14,148          $      (8,502)
Net cash used in financing activities                 $       (38,769)      

($25,155) ($13,614)

The increase in cash flows used for operating activities is mainly explained by the $3.8 million decrease in income distributions from unconsolidated joint ventures.

The decrease in cash provided by investing activities is primarily due an
increase in purchase of short-term investments of $16.6 million, a decrease in
collection of notes receivable of $8.2 million and a decrease in distribution
from joint venture of $7.4 million offset in part by an increase in proceeds
from sale of assets of $14.1 million and a increase in originations and advances
on notes receivable of $9.9 million.

The increase in cash used in financing activities is primarily due to the $13.0
million increase in payments of mortgages, notes and bonds payable. The increase
in payments of mortgages, notes and bonds payable is due to the pay off of the
loan on Toulon in connection with the sale of the underlying property (See
"Financing Activities" in Management's Overview).

Funds from operations (“FFO”)

We use FFO in addition to net income to report our operating and financial
results and considers FFO and FFO-diluted as supplemental measures for the real
estate industry and a supplement to GAAP measures. The National Association of
Real Estate Investment Trusts ("Nareit") defines FFO as net income (loss)
(computed in accordance with GAAP), excluding gains (or losses) from sales of
properties, plus real estate related depreciation and amortization, impairment
write-downs of real estate and write-downs of investments in an affiliate where
the write-downs have been driven by a decrease in the value of real estate held
by the affiliate and after adjustments for unconsolidated joint ventures.
Adjustments for unconsolidated joint ventures are calculated to reflect FFO on
the same basis. We also present FFO excluding the impact of the effects of
foreign currency transactions.

FFO and FFO on a diluted basis are useful to investors in comparing operating
and financial results between periods. This is especially true since FFO
excludes real estate depreciation and amortization, as we believe real estate
values fluctuate based on market conditions rather than depreciating in value
ratably on a straight-line basis over time. We believe that such a presentation
also provides investors with a meaningful measure of our operating results in
comparison to the operating results of other real estate companies. In addition,
we believe that FFO excluding gain (loss) from foreign currency transactions
provide useful supplemental information regarding our performance as they show a
more meaningful and consistent comparison of our operating performance and
allows investors to more easily compare our results.

————————————————– ——————————


We believe that FFO does not represent cash flow from operations as defined by
GAAP, should not be considered as an alternative to net income as defined by
GAAP, and is not indicative of cash available to fund all cash flow needs. We
also caution that FFO, as presented, may not be comparable to similarly titled
measures reported by other real estate companies.

We compensate for the limitations of FFO by providing investors with financial
statements prepared according to GAAP, along with this detailed discussion of
FFO and a reconciliation of net income to FFO and FFO-diluted. We believe that
to further understand our performance, FFO should be compared with our reported
net income and considered in addition to cash flows in accordance with GAAP, as
presented in our consolidated financial statements.

The following table reconciles our net income attributable to the Company to FFO
and FFO-basic and diluted, excluding gain from foreign currency transactions for
the three months ended March 31, 2022 and 2021 (dollars and shares in

                                                                             Three Months Ended
                                                                                 March 31,
                                                                                       2022              2021
Net income attributable to the Company                                             $  14,502          $ 22,632
Depreciation and amortization                                                          2,349             3,327
Gain on sale or write down of assets                                                 (11,148)          (16,103)
Gain on sale of land                                                                   1,989             5,957

Depreciation and amortization of joint ventures not consolidated on a pro rata basis

                                                                     (2,579)           (1,870)
FFO-Basic and Diluted                                                                  5,113            13,943
Loss on extinguishment of debt                                                         1,639                 -
Gain on foreign currency transaction                                                  (3,772)           (7,617)

$2,980 $6,326

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