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DALLAS-A trio of Dallas-based real estate companies has abandoned a $61-million merger proposal set in motion late last year to resolve a three-year dispute brought by California shareholders. The action came about two weeks after the lead player announced a joint venture to form a Korean REIT.

American Realty Investors Inc. withdrew an SEC filing, placed Feb. 22, 2002, for the proposed merger with Transcontinental Realty Investors Inc. and Income Opportunity Investors Inc. The trio’s man in charge, Gene E. Phillips, is out of town and could not be reached for comment before publication time.

Phillips is a widely recognized local powerbroker, said to own more land in the Dallas-Fort Worth metroplex than anyone else and one of the region’s most colorful characters. Last fall, he announced the merger in Real Estate Forum and then set the wheels in motion. Phillips is the representative to the Gene E. Phillips Children’s Trust, sole owner of Basic Capital Management which controls the trio of companies, all headquartered at Mercer Crossing in Dallas.

In mid-March, American Realty’s board chairman and director, Ted P. Stokely, told GlobeSt.com that the trio had satisfied the requirements of the final settlement agreed upon in October 2001 with the shareholders. At that time, he said the merger–designed to create a $1.6-billion New York Stock Exchange-listed corporation–was “on hold.” In recent days, the “on hold” has changed to a “no go.”

A press release, issued from the trio’s inner sanctum, said “that its board of directors has determined that it is not in the best interest of American Realty to continue to pursue previously proposed mergers.” Launched in November 2002, the share purchase put another 1.21 million shares of Transcontinental common stock and 258,470 shares of Income Opportunity into American Realty’s hands. The companies are continuing to operate and trade individually.

An American Realty contact tells GlobeSt.com that the abandoned merger is not related to the Korean joint venture with the Korean Exchange Bank and WOORI Securities to advise the newly created REIT, Realty Korea CR.

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