8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act

Date of Report: August 16, 2005

(Date of Earliest Event Reported)

AMERICAN REALTY INVESTORS, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	001-15663	75-2847135
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)

1800 Valley View Lane, Suite 300

Dallas, Texas 75234

(Address of principal executive offices)

469-522-4200

(Registrant= s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

G Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

G Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

G Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

G Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 2 B Financial Information

Item 2.02. Results of Operations and Financial Condition

On August 16, 2005, American Realty Investors, Inc. (A ARL@ or the A Company@ ) announced its operational results for the quarter ended June 30, 2005. A copy of the announcement is attached as Exhibit A 99.1.@

The information furnished pursuant to Item 2.02 in this Form 8-K, including Exhibit A 99.1@ attached hereto, shall not be deemed to be A filed@ for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless we specifically incorporate it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. We undertake no duty or obligation to publicly-update or revise the information furnished pursuant to Item 2.02 of this Current Report on Form 8-K.

Section 9 B Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits

(c) Exhibits.

The following exhibit is furnished with this Report:

Exhibit Designation	Description of Exhibit
99.1*	Press Release dated August 16, 2005
_____________________ *Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly-caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly-authorized.

Dated: August 16, 2005 AMERICAN REALTY INVESTORS, INC.

By: /s/ Ted P. Stokely_____________

Ted P. Stokely

Chairman of the Board

EX-99.

EXHIBIT 99.1

American Realty Investors, Inc. Reports Second Quarter 2005 Results

DALLAS (August 16, 2005) -- American Realty Investors, Inc. (NYSE: ARL), a Dallas-based real estate investment company, announced today that the company reported a net loss of $(3.4) million and net income of $16.7 million, or $(0.33) and $1.64 per share, for the three and six months ended June 30, 2005, compared to net losses of $(10.1) million and $(9.4) million, or $(0.95) and $(0.88) per share, in the same periods in 2004.

Income, sales and related expenses and costs for the three and six months of 2005 resulted in increased income from operations of $19.9 million and $57.8 million, compared to $10.0 million and $27.1 million in the 2004 comparable periods, and included:

• Increases in income from rents to $42.2 million and $82.4 million in 2005, from $39.0 million and $77.3 million in 2004. The increase was primarily attributable to completed apartment construction, offset by reduced commercial occupancy.

• Decreases in property operations expenses to $29.5 million and $57.8 million in 2005, from $30.8 million and $57.9 million in 2004. The decrease was primarily attributable to reduced commercial occupancy and management fees, offset by increases due to completed apartment construction.

• Increases in restaurant sales to $9.4 million and $18.0 million in 2005, from $8.8 million and $17.0 million in 2004. Cost of sales increased to $7.1 million and $13.9 million in 2005, from $6.9 million and $13.1 million in 2004. Gross margins increased to $2.3 million and $4.1 million from $1.9 million and $3.9 million in 2004. The increases were primarily attributable to increases of 2.1% in same-store sales in 2005. Also, two new concepts were not open during the 2004 periods.

• Land sales, cost of sales, and gain on land sales was $12.0 million, $7.1 million and $4.9 million in three months ended June 30, 2005. No land was sold in the second quarter of 2004. Land sales, cost of sales, and gain on land sales was $64.3 million, $35.2 million and $29.1 in the six months ended June 30, 2005, compared to $31.7 million, $22.2 million, and $3.8 million in 2004. The gain on land sales for the six months ended June 30, 2004 included the deferral of $5.7 million of gains on current period sales.

Other income increased to $2.5 million and $4.2 million in 2005, compared to $2.0 million and $3.5 million in 2004. Other income included:

• Interest income of $1.2 million and $2.8 million in 2005, which approximated the $1.6 million and $2.7 million in 2004.

• An improvement in equity in the income (loss) of investees to $152,000 and $212,000 in 2005, compared to $(55,000) and $(201,000) in 2004.

• Gain on foreign currency transaction was $228,000 in the three and six months ended June 30, 2005, compared to $1.2 million in 2004, related to ARI's Polish hotel operations.

Other expenses (excluding property operations expenses and costs of sales for restaurants and land) of $28.1 million and $57.8 million in the three and six months of 2005 approximated the $27.6 million and $58.1 million in 2004, and included:

• An increase in interest expense to $15.4 million and $31.2 million in 2005, from $14.7 million and $30.3 million in 2004. Commercial interest decreased due to reduced mortgage interest rates and land interest decreased due to reduced mortgage balances, offsetting increased apartment interest due to completed construction.

• Depreciation and amortization expense of $5.9 million and $11.7 million in 2005 approximated the $5.9 million and $11.7 million in 2004. An increase in apartment depreciation, due to completed construction, was offset by decreases in commercial and hotel depreciation.

• An increase in general and administrative expenses to $4.9 million and a decrease to $7.7 million in 2005, compared to $4.2 million and $8.9 million in 2004. The changes were primarily due to increased legal fees in 2005 and the timing of state tax accruals in 2004.

• A decrease in advisory, net income and incentive fees, in total, to $2.1 million and an increase to $6.5 million in 2005, compared to $2.3 million and $5.2 million in 2004. Advisory fees of $2.7 million and $5.6 million in 2005 approximated the $2.4 million and $5.2 million in 2004. Net income fees and incentive fees were $(658,000) and $819,000 in 2005, compared to $(79,000) for the three months ended June 30, 2004. There were no net income fees or incentive fees for the six-month period in 2004.

Net income from discontinued operations (non-land properties sold or held-for-sale) decreased to $3.0 million and $13.7 million in 2005, compared to $6.2 million and $19.5 million in 2004, representing 11 properties sold or held-for-sale in 2005 and 27 properties sold in 2004. Included in the net income from discontinued operations were:

• Gains on real estate sales of $4.1 million and $15.1 million in 2004, compared to $6.7 million and $20.6 million in 2004.

• Equity in gains on real estate sales by investees of $113,000 and $896,000 in 2004.

About American Realty Investors, Inc.

American Realty Investors, Inc., a Dallas-based real estate investment company, holds a diverse portfolio of equity real estate located across the U.S., including office buildings, apartments, hotels, shopping centers and developed and undeveloped land. For more information, go to ARI's web site at www.amrealtytrust.com.

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AMERICAN REALTY INVESTORS, INC.

FINANCIAL HIGHLIGHTS

	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2005	2004			2005	2004
	(dollars in thousands, except per share)
Income from rents	$42,247		$38,960	$82,371			$77,339
Operations expense	29,516		30,823	57,842			57,872
Operating income	12,731		8,137	24,529			19,467
Land sales	11,965		0	64,270			31,682
Cost of sales	7,052		0	35,179			22,190
Deferral of gains on current period sales	0		0	0			5,740
Gain on land sales	4,913		0	29,091			3,752
Restaurant sales	9,413		8,823	18,033			16,992
Cost of sales	7,140		6,924	13,894			13,137
Gross margin	2,273		1,899	4,139			3,855
Income from operations	19,917		10,036	57,759			27,074
Interest and other income	2,112		762	3,809			2,450
Equity in income (loss) of investees	152		(55)	212			(201)
Gain on foreign currency transaction	228		1,249	228			1,249
Other expenses	28,129		27,634	57,777			58,143
Net income (loss) from continuing operations	(5,720)		(15,642)	4,231			(27,571)
Loss from discontinued operations	(1,123)		(578)	(1,381)			(1,981)
Gain on sale of real estate	4,125		6,655	15,112			20,589
Equity in investees' gain on sale of real estate	0		113	0			896
Net income from discontinued operations	3,002		6,190	13,731			19,504
Net income (loss)	(2,718)		(9,452)	17,962			(8,067)
Preferred dividend requirement	(649)		(650)	(1,299)			(1,300)
Net income (loss) applicable to Common shares	$ (3,367)		$ (10,102)	$ 16,663			$ (9,367)
Basic earnings per share:
Net income (loss) from continuing operations	$ (0.63)		$ (1.53)	$ 0.29			$ (2.72)
Discontinued operations	0.30		.58	1.35			1.84
Net income (loss) applicable to Common shares	$ (0.33)		$ (0.95)	$ 1.64			$ (0.88)
Diluted earnings per share:
Net income (loss) from continuing operations	$ (0.63)		$ (1.53)	$ 0.32			$ (2.72)
Discontinued operations	0.30		.58	1.04			1.84
Net income (loss) applicable to Common shares	$ (0.33)		$ (0.95)	$ 1.36			$ (0.88)
Weighted average Common shares used to compute earnings per share:
Basic	10,149,000		10,608,932	10,149,000			10,626,799
Diluted	10,149,000		10,608,932	13,161,501			10,626,799

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